The cost of a firm’s commitment to CSR may be
offset by its appeal to motivated employees who work harder for lower
Survey and register data indicate that many
employees prefer a socially responsible employer and will accept a lower
wage to achieve this. Laboratory experiments support the hypothesis that
socially responsible groups are more productive than others, partly because
they attract cooperative types, partly because initial cooperation is
reinforced by group dynamics. Overall, the findings indicate corporate
social responsibility may have cost advantages for firms.
How different procedures might succeed in
Alternative dispute resolution procedures such as
arbitration and mediation are the most common methods for resolving wage,
contract, and grievance disputes, but they lead to varying levels of success
and acceptability of the outcome depending on their design. Some innovative
procedures, not yet implemented in the real world, are predicted to improve
on existing procedures in some ways. But controlled tests of several
procedures show that the simple addition of a nonbinding stage prior to
binding dispute resolution can produce the best results in terms of cost
(monetary and “uncertainty” costs) and acceptability.
Do pay incentives and financial participation
schemes have an effect on a firm’s performance?
Many firms offer employees a remuneration
package that links pay to performance as a means of motivation. It also
improves efficiency and reduces turnover and absenteeism. The effects on
productivity depend on the type of scheme employed (individual or group
performance) and its design (commissions, piece-rate or sharing schemes).
Individual incentives demonstrate the largest effect, while group or team
incentives are smaller in magnitude. The case for government intervention
through tax breaks and other financial incentives is highly debated due to
differences across firms and the potential for economic inefficiencies.