Corporate social responsibility (CSR) has, in recent years, become increasingly important to the business community.

This change reflects a recognition that the corporate world has an obligation to pursue goals other than pure profit and to develop projects and schemes that make the world a better place.

The financial pressures associated with the Covid-19 pandemic don’t appear to have blunted the desire to pursue CSR initiatives.

In fact, the opposite. Many businesses appear now to be even more acutely aware of their wider responsibilities, given we’ve all just had a year-long demonstration of the fragility and inequality of our society.

But CSR is not just about doing things because they are “right”. It also makes good business sense. One of the main ways in which it can help your business is by improving recruitment.

The direct link between CSR and recruitment

There’s a clear direct link between commitment to corporate social responsibility and improved recruitment.

A lot of this has to do with reputation. A study carried out by academics from the University of Vermont, Brock University and the University of Calgary found that on two specific fronts, CSR helps improve reputation and make potential candidates more attracted to a company.

In the study, the researchers showed subjects the “websites” of three fictitious companies and asked them to consider whether the made-up firms cared about staff and whether they’d like to work for them.

Person-organisation fit

Person-organisation fit is a metric that looks at how and whether people perceive that they have similar values to the organisation they work for or are applying for.

It’s a crucial part of the puzzle in which CSR helps recruitment: it shows candidates that organisations match their values. The study found that in areas like environmentalism and community service, the presence of CSR schemes seemed to have a positive effect on perceptions of person-organisation fit.

Signalling

This is to do with how applicants perceive a company from the outside. “Applicants often have limited information about recruiting organisations,” the researchers wrote. “So they use the information they do possess as signals about unknown working conditions.”

This means that candidates make inferences about working conditions and things like promotion opportunities based on the company’s external reputation.

The thinking, the researchers said, may go something like this: “If the company cares about the community it probably cares about its employees too.”

And figures from a more recent study, carried out by Qualtrics, an experienced management company, suggests that UK employees now care more about CSR initiatives than they did before the covid-19 pandemic.

This suits the person-organisation fit theory: people are more socially engaged because of the pandemic, more aware of injustice and convinced that things need to improve. They want companies to reflect that.

It stands to reason, based on this, that candidates will seek out those companies which pursue meaningful CSR schemes.

Forbes goes as far as suggesting that a company’s financial success “can no longer be separated from the internal and external esteem of the company”.

“Some research on performance even concludes that there is a significantly negative impact in terms of productivity and return on capital when a company abandons its social responsibility policy,” Forbes Councils member Laura Colombo writes.

The indirect link

There’s another piece to the puzzle. Putting Corporate social responsibility initiatives in place is good for the wider business, not just for recruitment efforts.

As Colombo writes in Forbes: “CSR has gone from being a cost centre to a revenue centre.”

“There are companies that have eventually seen their efforts multiply into positive balance-sheet items by making their headquarters greener, by providing adequate workspaces for their employees” and by improving their diversity.

“These companies become, in the eyes of the world, reliable and more appealing – and consequently, more successful,” Colombo says.

What’s more, it can improve customer relations and even provide improved access to capital, with more and more investors considering CSR in their investment decisions. And, of course, a more prestigious and better-performing business in itself will help with recruitment.

Candidates are demanding more from prospective employers: companies that don’t pursue CSR initiatives may be left behind, and struggle to find the right talent.

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