EFFECTIVENESS OF CORPORATE SOCIAL RESPONSIBILITY IN CONTROLLING THE IMPACT OF JOB STRESS ON ORGANIZATIONAL COMMITMENT

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1 EFFECTIVENESS OF CORPORATE SOCIAL RESPONSIBILITY IN CONTROLLING THE IMPACT OF JOB STRESS ON ORGANIZATIONAL A STUDY OF BANKING SECTOR OF PAKISTAN Syeda Nazish Zehra Rizvi (Corresponding Author) Lecturer, Institute of Business and Information Technology, University of the Punjab Lahore, Pakistan. Salman Asad Rana ABSTRACT Job stress is one of the problems that exists in almost every organization, every sector and most probably every country. Pakistan is a developing country and stress factor in Pakistan is prevailing in the various industries from many years. The research analyzes the impact of this commonly occurring organizational issue on the organization commitment of employees. Furthermore the research puts forward a tool for reducing this negative impact, in the form of corporate social responsibility. It is statistically analyzed, using questionnaires and SPSS 19, if the Ethical CSR and CSR towards employees practiced by organizations can reduce job stress and increase organization commitment. KEYWORDS: Job stress, Organization commitment, Corporate Social Responsibility, CSR, Pakistan banking sector. INTRODUCTION Human resources play a vital role in making organizations capable to achieve their desired goals. The efficient and effective working of an organization depends on how quality work force you have. Where employers look for skillful workforce, employees also do need some reasons to stay committed to their organizations. Employees now want to see themselves important for organization. When employees observe opportunities for learning and growth with their employer they show committed to that organization. One of the most important factor affecting satisfaction and then ultimately organizational commitment is stress. Job stress is a growing problem that results in substantial costs to individual employees and work organizations on the job (Hart, P.M. and C. Cooper, 2001). COPY RIGHT 2012 Institute of Interdisciplinary Business Research 321

2 It is a common perception that Job stress is one of the major causes towards low organizational commitment. But the question is what factor can contribute to overcome the effect of job stress of an individual. The question is so burning but the answer is so blurred. In recent researches we have found that organizations fulfilling their social responsibility towards the betterment of their employees, found there employees more committed to the organization then before. Corporations are looking for a growth which is sustainable. More and more amount of money is to be incurred to adopt CSR as a strategic tool (Ali, Imran 2010). Corporate social responsibility (CSR) can be a way for companies to improve their reputation in market. But can CSR contribute to overcome or reduce the effect of job stress on organizational commitment? This research looks into the possibility. REVIEW OF LITERATURE JOB STRESS The word stress has been derived from a Latin word stringere that means drawing tight (Doyle, E. and Christines. 2003). The concept of stress comes from medicine. Cannon research (1915) formed physiology with respect to the physiological responses of stress (Quick, J.C., C.L. Cooper, J.H. Gavin, 2003). Afterwards in 20 th century, the consequences not only in clinical but also in social psychology were examined by scholars (Levinson, M.H., 2004). It s been more than two decades, researchers conclude job stress as a major concern for organizations at both individual as well as organizational level (Darr, W. and G. Johns, 2008). Job factors included the working environment factors, job complexity, work scheduling, level of control and freedom (Jewell, L.N., 1998). Individual factors include conflicting roles and ambiguities, embarrassing changing, volume of work overload, relationships with employees and lack of support (Ivancevich, J.M. and M.T. Matteson, 2001). Job stress factors associated with organization are culture of the organization, limited role in decision making, management of the organization, lack of opportunities for growth, job security, organizational policies and inadequate communication (Palmer, S., C. Cary and T. Kate, 2003). Job Stress has been widely recognized as global challenge. The climbing figures of the employees being suffering from job stress cannot be ignored. Absenteeism (being absent COPY RIGHT 2012 Institute of Interdisciplinary Business Research 322

3 from the work place) and presenteeism (being present physically but not productive) has remarkably increased. With such an increasing amount of loss, this burning problem needs to be addressed. The losses are so huge that this issue needs to be given a serious attention. We need to look for the causes behind job stress. ORGANIZATIONAL The word commitment refers to loyalty and attachment and one of the emerging concepts is organizational commitment in organizational studies. It reveals the extent to which employees feel themselves associated with organization and its goals. The idea of organizational commitment has fascinated substantial consideration over recent years and has been emerged as central objective for human resource management (Lydka, Helen., 1994). Initial researches aimed on defining the idea and recent researches continue to observe organizational commitment (Angle, H. L., and Perry J. L., 1981). Meyer and Allen (1991) presented a model in which there were recognized three types of commitment: 1. Affective commitment; 2. Continuance commitment; and 3. Normative commitment. All the mentioned three types of organizational commitment are psychological state that either characterizes the employee s relationship with the organization or has the implications to affect whether the employee will continue with the organization (Meyer, Allen, & Smith, 1993). There lies a negative relationship between job satisfaction and organizational commitment. As the stress level in an individual increases, it leads to decrease in satisfaction level which ultimately causes low level of organizational commitment (Elangovan, 2001). Intentions to quit among employees increases when low level of organizational commitment prevails among them (Elangovan, 2001; Meyer & Allen, 1990).Increased level of job stress results in decreased level of organizational commitment which directly influence to give up continuing with organization (Parasuraman, Alutto, 1994). The cooperative relationships with bosses, communication with in groups, and opportunity for growth and advancements have positive relation with organizational commitment (Jaramillo, Nixon &Sams, 2005). COPY RIGHT 2012 Institute of Interdisciplinary Business Research 323

4 Corporate social responsibility CSR has also termed as corporate citizenship which means that a company should be a good neighbor in its host community (U.S. Agency for international development, catalyst consortium, 2002). According to Carroll. A (1983), Corporate social responsibility involves the conduct of a business so that it is economically profitable, law abiding, ethical and socially supportive. To be socially responsible then means that profitability and obedience to the law are foremost conditions when discussing the firm s ethics and the extent to which it supports the society in which it exists with contributions of money, time and talent. Most of the organizations in Pakistan are concerned with making profits. The state of CSR in Pakistan is still in its infancy. A few organizations have CSR plans and among them, mostly is multinationals following their own CSR approach. The local industry is unfortunately unaware of the benefits of CSR or they are afraid of dangers by adopting CSR. (Ambreen, 2005) RESEARCH METHODOLOGY Unit of analysis were employees of different banking organizations. The research tool that has been used to conduct primary research is questionnaire. The questionnaire comprises of three sections: Section Job Stress questions Section Organizational Commitment questions Section Corporate social responsibilities Korean occupational stress scale (KOSS-SF), developed by Chang et al. (2005), was used to measure job stress. It consisted of 24 items. Allen and Meyer (1996) model of organizational commitment was adopted. In the questionnaire each dimension of organizational commitment affective, continuance, and normative was measured by eight items. CSR has been measured by using Maignan and Ferrell model of CSR and the questionnaire measures two dimensions i.e. ethical responsibilities and responsibilities towards employees. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 324

5 Affective Organizational Commitment Continuance Normative Job Stress Corporate Social Responsibility Social Employees TARGET POPULATION DEMOGRAPHICS Age: Qualification level: Gender: Designation: Experience: years Graduation, Master s & LLB Both males & females From officer level to group head < years SAMPLING FRAME 250 employees were surveyed in the sample. Among the mentioned 5 banks, I selected 50 employees from each bank: 1. Bank Alfalah Limited 2. United bank Limited 3. Allied bank Limited 4. Faysal Bank Limited COPY RIGHT 2012 Institute of Interdisciplinary Business Research 325

6 5. KASB Bank Limited RESULTS AND ANALYSIS 1. JOB STRESS AND ORGANIZATIONAL H 1 : Job stress is associated to Organizational Commitment H o : Job stress has no relationship with Organizational Commitment. JOB STRESS ORGANIZATIONAL Pearson Correlation ** JOB STRESS Sig. (2-tailed).000 N Pearson Correlation ** 1 ORGANIZATIONAL Sig. (2-tailed).000 N **. Correlation is significant at the 0.01 level (2-tailed). The Pearson correlation shows a moderate level (-0.553) in strength but significant correlation between Job Stress and Organizational Commitment. The negative sign communicates that the relationship is inverse. It is confirmed that job stress and organizational commitment are associated to each other in such a way that one increases and other decreases. 2. CSR AND ORGANIZATIONAL H 1 : CSR is associated to Organizational Commitment H o : CSR has no relationship with Organizational Commitment. The Pearson correlation shows a moderate level correlation (0.469) in strength but significant correlation between CSR and Organizational Commitment. It is confirmed that CSR and organizational commitment are associated to each other. As the value of p < a (alpha) (0.01, 99% confidence interval). As < 0.01, we reject the null hypothesis and accept our alternate hypothesis. It is proved that employees are more committed to organizations which perform CSR activities. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 326

7 ORGANIZATIONAL CORPORATE SOCIAL RESPONSIBILITY **. Correlation is significant at the 0.01 level (2-tailed). ORGANIZATIONAL CORPORATE SOCIAL RESPONSIBILITY Pearson Correlation ** Sig. (2-tailed).000 N Pearson Correlation.469 ** 1 Sig. (2-tailed).000 N CSR AND JOB STRESS H 1 : CSR is associated to Job Stress H o : CSR has no relationship with Job Stress The Pearson correlation shows a moderate level correlation (-0.401) in strength but significant correlation between CSR and Job stress. The negative sign communicates that the relationship is inverse. It is confirmed that CSR and job stress are associated to each other in such a way that one increases and the other decreases. CORPORATE RESPONSIBILITY SOCIAL JOB STRESS CORPORATE RESPONSIBILITY SOCIAL Pearson Correlation ** Sig. (2-tailed).000 N Pearson Correlation ** 1 JOB STRESS Sig. (2-tailed).000 N **. Correlation is significant at the 0.01 level (2-tailed). 4. JOB STRESS, ORGANIZATIONAL & CSR Regression analysis of job stress, organizational commitment, and CSR formulates the following equation: Organizational Commitment = (0.241 * CSR) + ( * Job Stress) COPY RIGHT 2012 Institute of Interdisciplinary Business Research 327

8 5. MULTIPLE CORRELATIONS BETWEEN JOB STRESS AND ORGANIZATIONAL DIMENSIONS: The Pearson correlation shows a moderate level (-0.440) in strength but significant correlation between Job Stress and Normative Commitment as well as Job Stress and Affective Commitment. The correlation between Job stress and continuance commitment is weak (-0.246) but significant. The negative sign communicates that the relationship is inverse. It is confirmed that job stress is associated to affective, continuance and normative commitment in such a way that one increases and other decreases. JOB AFFECTIVE CONTINUANCE NORMATIVE STRESS Pearson Correlation ** ** ** JOB STRESS Sig. (2-tailed) N Pearson AFFECTIVE Correlation ** *.552 ** Sig. (2-tailed) N Pearson CONTINUANCE Correlation **.161 * ** Sig. (2-tailed) N Pearson NORMATIVE Correlation **.552 **.316 ** 1 Sig. (2-tailed) N **. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed). 6. MULTIPLE CORRELATIONS BETWEEN ORGANIZATIONAL AND CSR DIMENSIONS: The data proves that employees have more feeling of commitment to organizations which perform Towards Employees CSR activities. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 328

9 ORGANIZATION AL ETHICAL CSR RESPONSIBILITIES TOWARDS EMPLOYEES Pearson Correlation **.323 ** ORGANIZATIONAL Sig. (2-tailed) N Pearson Correlation.391 ** ** ETHICAL CSR Sig. (2-tailed) N Pearson Correlation.323 **.169 ** 1 RESPONSIBILITIES TOWARDS EMPLOYEES Sig. (2-tailed) N **. Correlation is significant at the 0.01 level (2-tailed). CONCLUSION Considering all the data analysis, it can be concluded that job stress is inversely related to the organization commitment. As the job stress prevailing in the employees of the various organizations increases they become more and more de-motivated and dissatisfied. It ultimately results in decrease in Organizational commitment. Results have proved that all the types of Organizational Commitment i.e. Affective, Continuance, and Normative commitment are inversely related to job stress. As a result of all these, the organization commitment will be low and employees will have job switching behavior. On the other hand, Corporate Social Responsibility has been resulted in a formula to boost up Organizational Commitment. The results revealed that there lies a positive relationship between Organizational Commitment and CSR. If an organization performs CSR activities, i.e. Ethical CSR and responsible towards employee CSR, the analyses reveals an increase in the employees commitment level. Employees perceive that they are getting the required benefits from their organization and their needs are being satisfied by the organization in the form of responsibility that is offered towards employees such as various allowances, insurance, adequate salaries etc and as a result, they show loyal behavior that is called as commitment. Results revealed that except from Continuance commitment, CSR increases Affective and Normative Commitment and overall CSR contributes 30.5% of the increase in Organizational Commitment. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 329

10 CSR not only proved to be a boost for organizational commitment but also displayed the ability to decrease the stress factor. Findings concluded that CSR carries an inverse relation with Job stress. If CSR level is raised by the organization, the prevailing stress level in the employees will decrease. Both Ethical CSR and Responsibility towards employees decrease the level of stress. Summing up the whole, we can say that Job stress is an element that decreases Organizational commitment. If you want to increase Organizational Commitment in your employees, then you must have to handle the stress factor. For this purpose a tool like Corporate Social Responsibility will not only increase Organizational Commitment but also contribute to decrease the negative effect of Job stress. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 330

11 References Ali, Imran, Corporate social responsibility influences, employee commitment and organizational performance. African Journal of Business Management Vol. 4(12), pp Ambreen, W. (2005).Evaluation of the state of corporate social responsibility in Pakistan and strategy for implementation. Angle, H. L., & Perry, J. L. (1981). An empirical assessment of organization commitment and organizational effectiveness. Administrative Science Quarterly, 26, Carroll, A. B. (1983). Corporate social responsibility: Will industry respond to cut-backs in social program funding? Vital Speeches of the Day, 49, p Chang SJ, Koh SB, Kang D, Kim SA, Kang MG, Lee CG et al (2005) Developing an occupational stress scale for Korean employees (in Korean). Korean J Occup Environ Med 17: Doyle, E. and Christines., Work and Organizational Psychology, An. Introduction with attitude: Psychology Press, Taylor and Francis Group, pp: Darr, W. and G. Johns, 2008.Work, stress, health and absenteeism. J. Occupational Health Psychology, 13: Elangovan, A.R. (2001), Causal ordering of stress, satisfaction and commitment, and intention to quit: a structural equations analysis, Leadership & Organization Development Journal, 22(4), Hart, P.M. and C. Cooper, Occupational Stress: Toward a More Integrated Framework, Handbook of Industrial, Work and Organizational Psychol., 2: Ivancevich, J.M. and M.T. Matteson, Organizational behavior and management, Business publications, Inc, pp: Jewell, L.N., Contemporary industrial, organizational psychology, 3rd., Pacific Grove, CA: Brooks/Cole, Pub. Co., Jaramillo, F., Nixon, R. and Sams, D,. (2005), The effect of law enforcement stress on organizational commitment, An International Journal of Police Strategies & Management, 28 (2), Hart, P.M. and C. Cooper, Occupational Stress: Toward a More Integrated Framework, Handbook of Industrial, Work and Organizational Psychol., 2: Jewell, L.N., Contemporary industrial, organizational psychology, 3rd., Pacific Grove, CA: Brooks/Cole, Pub. Co., Jaramillo, F., Nixon, R. and Sams, D,. (2005), The effect of law enforcement stress on organizational commitment, An International Journal of Police Strategies & Management, 28 (2), Levinson, M.H., Managing organizational stress through general semantics. Et Cetera, 61(2): Meyer, J.P. & Allen, N.J. (1991). A Tree-component conceptualization of organizational commitment. Human Resource Management Review, 1, COPY RIGHT 2012 Institute of Interdisciplinary Business Research 331

12 Palmer, S., C. Cary and T. Kate, 2003.Model of Organizational Stress, Health Education J.,6: Parasuraman, Saroj and Alutto, Joseph A. (1984), Sources and Outcomes of Stress in Organizational Settings: Toward the Development of a Structural Model, the Academy of Management Journal, 27 (2) Quick, J.C., C.L. Cooper, J.H. Gavin, 2003.Stress, health and well-being at work. In J. Greenberg (Ed.), Organizational behavior. The state of science, pp: Mahwah: Lawrence Erlbaum Associates. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 332

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