Communicating Csr Culture Within Organizations1

COMMUNICATING CSR CULTURE WITHIN ORGANIZATIONS1

Communicating CultureWithin Organizations: A CSR Perspective

Stuart Haack

University of Southern California

Communicating Culture Within Organizations: A CSR Perspective

Younger generations that have recently entered the professional workforce are switching jobs more rapidly than ever before (Williams, 2011; Meister, 2012). In fact, the average Millennial, or individual part of Generation Y, only stays at their job for just over two years at a time (Meister, 2012). This is an alarming fact for organizations, as employee turnover is a large cost for employers today, reaching well into six figures in some situations (Williams, 2011; Sweetman, 2001). Furthermore, in the evolving and oversaturated marketplace, organizations are always seeking new and unique ways to stand out in the minds of their consumers, while also attracting the best talent in their industries (Porter, 2008). In order to identify ways to overcome these escalating realities, this essay researches two unique yet dependent organizational factors and ultimately proposes both academic and practical applicationsin its findings. These factors are organizational culture and corporate social responsibility (CSR). While both of these topics are highly researched and potentially valuable to organizations, there is little research done on how to implement the two in conjunction (Jaakson, Vadi & Tamm, 2009).

Why do these topics need to be researched as dependent factors? The benefits of CSR activities cannot reach their full potential without being embedded into an organization’s culture (Jaakson, Vadi & Tamm, 2009). For example, leadership within an organization cannot simply perform a few disingenuous charitable acts by management decree, such as donations or sponsorships, and expect to reap the benefits that come with CSR such as decreased employee turnover and increased customer preference (Hildebrand, Sen & Bhattacharya, 2011; Jaakson, Vadi & Tamm, 2009). CSR must be somehow be instituted deeply into the organization’s culture throughout every department and hierarchical levelto truly have a beneficial impact throughout the company. Therefore the goal of this essay is to combine the research of how the benefits of organizational culture and CSR can help overcome the issues organizations face today in employee turnover and revenue growth, while also understanding the importance and strategy of implementing CSR into organizational culture. Data was gathered from various academic and practitioner sources to study recent findings in the disciplines of organizational culture, communication, and CSR, and also through a group interview with Caesars Entertainment Director of Corporate Human Resources Chris Smith and Engagement Advisor Ronda Fraley.

Keywords: Organizational culture, corporate social responsibility (CSR), integration

A Background on Interviewees Chris Smith and Ronda Fraley

Chris Smith is the Director of Corporate Human Resources at Caesars Entertainment, the world’s largest gaming and entertainment corporation. Smith graduated Magna Cum Laude from the University of Nevada Las Vegas with a Bachelor of Science in Hotel Management in 1998. Since 2004, Smith has held many functions within the Human Resources department of Caesars Entertainment including employee training, talent acquisition, and strategy.

Ronda Fraley is the Engagement Advisor at Caesars Entertainment. Fraley earned her Bachelor of Business Administration with a focus on International Business from the University of Texas at Arlington in 2010. Fraley also earned a Certificate in International Business in 2009. Since graduating, Fraley has taken on roles within the CSR function of Caesars Entertainment including employee engagement, healthcare programs, and environmental initiatives.

How & Why to Implement Organizational Culture

Organizational culture is gaining more attention and understanding in the professional world every year (Keyton, 2010). According to Joanne Keyton (2010), a web search of the term “organizational culture” increased from 1.5 million hits in 2004 to 4.2 million hits in 2010. And there are certainly many reasons that organizational culture deserves to be researched and understood. Studies have shown that strategic management of organizational culture can lead to higher job satisfaction and decreased employee turnover (Strydom & Roodt, 2006). Furthermore, wielding a strong organizational culture can help increase employee motivation (Mihaela & Bratianu, 2012) and revenue (Warshawsky, 2006). But what is organizational culture? In order to create a shared understanding (Dixon & Dougherty, 2010), this essay must identify what organizational culture is and how it exists within organizations. Of course, due to its relative complexity and difficulty to quantify, organizational culture is still largely misunderstood in the professional world (Mihaela & Bratianu, 2012). Throughout this essay, organizational culture will be defined as a “set of fundamental values, traditions, symbols, informal rules, attitudes, behaviors that indicate[d] how people should act in a certain organisation” (Mandruleano, 2012, p. 83). Among many organizations, however, these cultural “artifacts” grow organically out of practice, learning, and sharing. So how and why should organizations put effort into managing culture within their organizations?

There are many arguments for the strategic management and implementation of organizational culture. Organizational culture can be one of the strongest employee motivators and a valuable predictor of organizational success (Mihaela & Bratianu, 2012; Rosenthal & Masarech, 2003). For employees, research has shown a correlation between organizational culture and job satisfaction (Strydom & Roodt, 2006). Of course, it is necessary that the correct culture be appropriately applied to its rightful industry and organization (Goodson, 2012), but when done correctly, research indicates that the results are fruitful through more clearly defined strategies, more active participation from management, and extended competitive advantages in the marketplace (Mahrokian, Chan, Mangkornkanok & Lee, 2010). In fact, these findings are strengthened in,

“J. Kotter and James Heskett’s landmark 1992 study, which revealed that over a 10-year period, companies that intentionally managed their cultures effectively outperformed similar companies that did not. Their findings included revenue growth of 682 percent versus 166 percent; stock price increases of 901 percent versus 74 percent; net income growth of 756 percent versus 1 percent; and job growth of 282 percent versus 36 percent.” (Warshawsky, 2006)

Furthermore, it is argued that employees in organizations typically partake in organizational learning, in which learning occurs less at the individual level and more at the group level, and therefore rites and rituals within the organization create shared meaning, communication, and understanding of the cultural artifacts within the organization (Cook & Yanow, 2011). This indicates that in order to create a shared vision and strategy within an organization (Martin, 1992; Heath & Heath, 2011), it would be wise to attempt to shape the culture that can guide that organization.

Finally, as culture creates an ongoing form of group learning (Cook & Yanow, 2011), organizations that need to remain agile and adaptive in the marketplace can use culture as a tool for consistent change (Mahrokian et. al, 2010; Cook & Yanow, 2011; Moore, 2011). This is especially important in the modern marketplace, in which organizations must remain in a constant state of flux and movement in order to adapt to constantly shifting market conditions, consumer needs and competitive forces (Moore, 2011; Porter, 2008; Worley & Lawler, 2006). With substantial research indicating positive benefits of a strategically managed organizational culture, there is clear evidence that organizational culture merits further exploration and testing. How then do organizations utilize communication strategies to appropriately implement culture among their various structures, processes and employees?

According to Joanne Martin, there are three unique perspectives with regards to communicating and developing cultures within organizations: an integration perspective, differentiation perspective, and a fragmentation perspective (1992). The integration perspective creates a linear, consistent understanding and implementation of the culture throughout the organization (Martin, 1992). The differentiation perspective utilizes ambiguity and inconsistency within organizational subcultures that allow employees to “say one thing and do another” (Martin, 1992, p. 12). The fragmentation perspective uses ambiguity as the norm, allowing for no conformity or consistency in cultures across or within groups of an organization (Martin, 1992). Because this essay centers around understanding how to implement CSR as a universal cultural theme consistently across an organization, the research will primarily focus on the perspective of integration.

According to Chris Smith of Caesars Entertainment, in order to integrate cultural themes within organizations, it is necessary to start from the top of the hierarchy and allow the cultural themes to trickle down. “We are not where we need to be yet. We need to put a higher level of expectation on our leaders. Incorporating culture in an organization starts with leadership” (C. Smith, personal communication, November 2, 2012). This is in alignment with the idea that managers play a very active and crucial role in the communication and implementation of cultures in organizations, especially in relation to the idea of leading by example(Kane-Urrabazo, 2006). Smith goes on to clarify,

“Some of our properties are doing a better job than others. Some actually require leadership to participate in at least one event per year that communicates our CSR initiatives, which instantly has effects on lower level employees. When they see their manager out there doing something that is building our organizational culture of doing good in the community, for whatever reason, they will begin to emulate that participation as well, even at work.” (personal communication, November 2, 2012)

But is leading from the top enough to create a sustainable and viable organizational culture? A research article entitled “Creating organizational cultures: Re-conceptualizing the relations between rhetorical strategies and material practice” by Mouton, Just, and Gabrielson sheds light on the dual importance of both communication strategies and active practice in shaping an organization’s culture (2012). Ronda Fraley echoes the need for both communication and action when she discussed how her organization is currently attempting to integrate employees into their changing organizational culture when she said,

“We use countless communication tools. To get employees to participate in our CSR events, which we are trying to build much of our culture around, we send out tons flyers and emails. The managers are supposed to post the flyers around the workplace so that the employees have plenty of opportunities to see these events. Then, the managers hold what we call “Buzz Sessions” which allow the managers an opportunity to build enthusiasm about the event in person with their employees. And like Chris said, we are trying to get leaders to get out and participate first and take a “lead by example” approach.” (personal communication, November 2, 2012)

Some organizational culture research has taken this a step further. Rosenthal and Masarech have built a best practices model for “building and sustaining a high performance culture” (2003, p. 8), which includes five independently necessary steps. These steps are to clarify (in which mission and values are identified), communicate (in which values are constantly communicated through various media channels and in-person forums), model (in which managers continually demonstrate the identified values), align (in which values must align with strategy and operations), and engage (in which managers inspire rather than mandate employees to participate in the set of cultural values) (Rosenthal & Masarech, 2003). However, there are times when cultural change is not as simple as communication and practice. This comes in the form of employee resistance to change (Block, 2011).To overcome resistance and gain momentum for change to occur, John Kotter, a leadership and change expert at Harvard Business School, and Holger Rathberger, a global manager, argue that there is an eight-step process to create a successful change effort (2006). They argue that successfully changing an organization requires leadership to (1) create a sense of urgency by showing employees the need for change, (2) creating a guiding team that has various skill sets that will help the change effort become successful, (3) developing a vision and strategy for change, (4) creating understanding and persuasion through communication, (5) empowering others to act by removing obstacles from the change effort, (6) systematically creating short-term wins by and celebrating subtle growth within the change effort, (7) continuing to push forward relentlessly even once the change has occurred, and (8) solidifying the new culture around the change,which will allow the new strategy to become an integral part of the organization (Kotter & Rathberger, 2006). By following this model and correctly implementing its process within an organizational culture change effort, managers can find ways to overcome resistance from employees when trying to implement their new organizational cultures.

Corporate Social Responsibility

Some researchers have found that the key to an organization’s long term success now hinges on its ability to “give back” to the community, participate in sustainable practices, and promote the social welfare of employees (Hildebrand, et al, 2011). Still others including renowned CSR opponent Milton Friedman argue that a for-profit organization’s only responsibility is to its shareholders, and a company only hurts its own profitability and ability to remain competitive in the marketplace by sharing focus with CSR initiatives (Carson, 1993). Likely due to its polarizing nature and potential benefits, CSR has become one of the most widely discussed and researched business practices and academic topics in recent years (Hildebrand, et al, 2011). Organizations in many industry verticals are finding ways to participate in social and environmental issues that seemingly have no direct link to their bottom-line revenue. Worldwide coffee chain Starbucks has long been dedicated to producing and serving “green,” sustainable coffee (Liodice, 2010). Ice cream maker Ben& Jerry’s started the Ben & Jerry’s Foundation, which donates 7.5% of the company’s yearly pre-taxed income to charitable organizations (Liodice, 2010). General Electric’s Ecomagination division is providing consumers and businesses with products that offer substantially greater environmental performance, thus reducing carbon footprints around the world (Liodice, 2010). And for every pair of Toms Shoes sold to a customer, another pair will be given to a needy child (Liodice, 2010).

According to Ronda Fraley, Caesars Entertainment also participates in a number of CSR programs, including Code Green, which practices more sustainable water and energy usage throughout their hotels and casinos, while also asking guests and employees to help cut down their usage of these resources as well. Beyond Code Green, Fraley also notes that Caesars Entertainment has a program known as HERO, in which employees can donate time to charities of their choosing to earn rewards and recognition within the organization. Furthermore, Fraley goes on to say that Caesars Entertainment participates in responsible gaming initiatives, political action committees, publicly supports LGBT events, and has begun a recent campaign to push for the hiring of veterans (personal communication, November 2, 2012).Clearly, many of the world’s largest organizations have made CSR a priority within their strategy. Which begs the question: Other than acting responsibly and feeling positive about their own actions, what do these organizations stand to gain from their own unique versions of CSR?

In order to understand how CSR can affect organizations and become implemented into the culture, this essay must first create shared understanding with regards to how CSR is defined (Dixon & Dougherty, 2010). Over decades of research, CSR has maintained an elusive definition. And even among scholarly agreement, there are still many different types of CSR subdivisions and initiatives (McWilliams & Siegel, 2001). As early as 1962, Thomas Kuhn noted that CSR “is in a continuing state of emergence” (McWilliams, Siegel & Wright, 2006, p. 16). Today, CSR topics are highly diverse in nature and include much of what businesses dooutside of their day-to-day businessoperations including environmental sustainability, community relations, political and socioeconomic activities, employee welfare, and more. For the purposes of this essay, CSR will be defined by Hopkins: “The aim of social responsibility is to createhigher and higher standards of living, while preserving the profitability of the corporation, for its stakeholders both within andoutside the corporation” (2006). Now that CSR has been defined, the implications of CSR will be explored.

While there are still valid arguments against business organizations implementing CSR into their strategic operations (Carson, 1993), the arguments in favor of CSR are beginning to gain momentum (Hillman & Keim, 2001; Waddock & Graves, 1997). Of course, CSR needs to be strategically implemented, aligning the economic and social goals of the organization (Lindgreen & Swaen, 2010). But when alignment occurs, the benefits to the organization can be great within both internal and external facets of business. Indeed, CSR has been linked to increased employee and customer identification (Hildebrand, et al, 2011). This means that employees who work for organizations that participate in CSR practices are more likely to want to stay with that organization. Furthermore, customers are more likely to buy from organizations that participate in CSR (Hildebrand, et al, 2011). CSR motivates internally within companies as well. As Chris Smith puts it, “Happy employees are more effective. And our employees love our CSR events” (personal communication, November 2, 2012). But CSR influence goes beyond simple emotions. A 1997 regression analysis showed that CSR can yield a heightened organizational performance (Waddock & Graves). Another study from 1997 showed that a better environmental performance can lead to improved financial performance, or more directly, “It pays to be green” (Russo & Fouts, p. 534). Also, being known by the public as a good employer that focuses on the welfare of its employees has been shown to have a positive financial link (Bird, Hall, Momente & Reggiani, 2007). Before purchasing stock in a company, a majority of shareholders now research organizational CSR practices (Maitland, 2007).Beyond these, there are even less tangible benefits to be had for companies participating in CSR practices, which come through issue avoidance. By maintaining an ethical, CSR-based culture, understanding social and community issues, and constantly learning about evolving public opinion, organizations such as British Petroleum and Enron, for example, could have avoided disasters that ultimately cost them huge sums of money (Bonini, Mendonca, & Oppenheim, 2006). On the other hand, organizations that utilize CSR to understand the constantly changing socioeconomic environment around them can use that information to their advantage by staying ahead of their industry. For example, Toyota understood the environmental concerns around the automobile industry and created the Prius, De Beers realized the controversy surrounding blood diamonds and began their “conflict-free diamonds” program, and Subway was able to capitalize on consumers’ waning opinion about the fast food industry (Bonini et al., 2006; Howard, 2000).