Organizational Values, HR Bundles & Collaboration with Nonprofit Organizations: A Conceptual Framework.
| Author | Jain, Ankur |
| Position | Human resource |
All over the world, cross-sector collaborations have been accepted as an effective and powerful route to addressing economic, social and environmental challenges. (Koschmann, Kuhn & Pfarrer, 2012). Businesses are reexamining their traditional practices and increasing community engagement in ways that also have corporate relevance (Austin, 2002b). Therefore, collaborations between businesses and Nonprofit Organizations (NPOs) are increasingly gaining prominence. Despite the growing trend and importance of Business--NPO collaborations, research is rather fragmented and limited (Arenas, Lozano & Albareda, 2009). The objective of this paper is to develop a conceptual framework to understand how organizational values and internal HR practices influence the kind of collaboration that ensues between a business and an NPO.
The case in point is India's Companies Act 2013, article 135 which mandates that companies with a net worth of Rs. 500 crore or turnover of Rs 1,000 crore or net profit of Rs 5 crore or more in a fiscal year are required to spend at least 2% of their average net profit on Corporate Social Responsibility (CSR) activities. Economic Times (2018) estimates that the total CSR spending by top 500 companies is likely to cross Rs 50,000 crore (7000 million USD) in 2019, since the applicability of the CSR law in 2014. This is quite an achievement in terms of investment in social responsibility by for profit businesses. However, many companies have neither the capability nor the infrastructure to pursue social goals. Organizations increasingly partner with nonprofit organizations to implement their CSR projects (Fontana, 2018). KPMG (2018) reports that in 2016-17, a total of 1895 CSR projects were implemented in India out of which 967 projects were executed through implementing agencies demonstrating the importance of business--NPO partnerships in fulfilling this important social mission.
Businesses and NPOs work with very different motivations. Businesses aim at maximizing shareholder's wealth while NPOs have a public interest in mind. This difference in philosophy is likely to create conflicts when the two collaborate for a common goal. If we look at it from the business' perspective, a basic question facing practitioners and researchers alike is what kind of collaborations will suit the needs of businesses (Austin, 2002b). If the motivation of the business is clear to the NPO, it can selectively and more efficiently engage with the business.
Prior research on Business--NPO collaboration is normative in outlook proposing that alliances evolve from a lower order to a higher order interaction (Austin, 2000a; 2000b) or finding the most effective way of co-creation of value (Austin & Seitanidi, 2012). Research on why collaborations happen is largely scattered with researchers looking at isolated causes of collaboration like reputation and image improvement (Kourula & Halme, 2008; Stuart, 2000); employee motivation, retention, increased customer patronage and appreciation by investors (Austin, 1998). There have been calls for more in-depth researches exploring the factors that determine how collaborations between corporates and NPOs are formed (Fairfield & Wing, 2008).
People 'socially' and 'symbolically' construct and sustain their 'organization realities' (Gioia & Pitre, 1990), which help them retain a meaningful character and give them a sense of direction. An important purpose of human resource management is to create and maintain this coherent understanding that sustains relationships and enable collective action. This paper uses sensemaking (Weick, 1995) as a theoretical base to suggest that the value system in organizations form the interpretive frame of reference through which the management and employees look at the current working environment which greatly influences the way they take decisions and the HR practices that they employ. We propose that the HR practice that gets adopted in an organization depends on the value system that an organization has, which in turn influence the motivations for collaboration with NPOs thereby resulting in different types of business--NPO partnerships.
"The cornerstone for building a richer value exchange is the identification of overlapping missions and compatible values" (Austin, 2000b: 24). In the context of Business--NPO collaboration, the present research provides a framework that enables businesses to opt for the collaborative strategy that fits their values and human resource practices. It draws from Austin's (2000a, 2000b) research on strategic collaboration between non-profits and businesses to suggest which partnering style would be the most likely to fulfil collaboration motivation for Businesses.
Organizational Values
Core values are the fundamental reasons why people unite for a common purpose giving an organization its "timeless character" (Collins & Porras, 1996). These values guide the actions and decisions of organizational members and form an important part of their organizational identity (Grant, 2010). Organizational values are shared and accepted norms (Argandona, 2003) that suggest what is expected of organizational members and how the allocation of resources shall happen (Edwards & Cable, 2009).
Values define the ethical character of organizations describing what ends are worth pursuing and what means are admissible (Enz, 1988). Values manifest as work climate which forms 'psychologically meaningful' description of practices (Schneider, 1975). In their research on ethical climates, Victor and Cullen (1988: 102) posit that "organizational norms have an ethical basis" which inform members of the organization what they can do and what they ought to do. They show that ethical criteria used for organizational decision making could be of mainly three types--'egoism', 'benevolence' and 'principles'. The value of egoism is largely concerned with company profit and efficiency while the value of benevolence and principles are more to do with team interest, professional codes and social responsibility. Organizations seek to achieve multiple goals, but these values are reflected in whatever decision is taken, whatever strategy is formulated and whatever practices are adopted.
Human Resource (HR) Bundles of Practices
Research largely supports that human resources are a source of long-term competitive advantage for a firm (Wright, McMahan & McWilliams, 1994; Huselid, 1995) and that human resource management practices and systems enhance organizational performance (Schuler & Jackson, 2005). Human Resource Management (HRM) is a broad term that encompasses--HR practices like recruitment, selection, compensation, performance management, rewards and recognition. HR policies which direct and also constrain the development of specific practices and HR philosophies which specify values that inform both policies and practices (Jackson & Schuler, 1995). Jackson and Schuler further suggest that these practices, policies and philosophy comprise a system that attracts, develops, motivates and retains employees who ensure effective functioning and survival of the organization.
The importance of HRM in the fulfilment of strategy has gained a foothold in both strategy and HRM literature. "The strategic perspective of HR, which has been labeled strategic human resource management (SHRM)" seeks to demonstrate how HRM practices impact organizational performance (Delery & Doty, 1996: 802). SHRM categorizes the modes of theorizing into universalistic, contingency and configurational approaches (Delery & Doty, 1996; Gooderham, Parry & Ringdal, 2008). Universalistic theories concern themselves with the best HR practices that are generalizable and promote organizational success (Huselid, 1999; Pfeffer, 1994). Gooderham et al. (2008) reject the universal applicability of HR practices and contend that universalistic theories fail to take into account the firm context. Contingency theory posits that HR policies need to be in synch with other aspects of the organization like 'strategic position' in order to be effective (Delery & Doty, 1996). The configurational perspective moves away from a bivariate contingency theory (Doty & Glick, 1994) to a more holistic inquiry that seeks to identify "unique patterns of factors" or HR bundles that together are responsible for maximal performance (Delery & Doty, 1996).
Previous research combines interrelated HR practices into bundles (MacDuffie...
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