The Influence of a Company’s Sustainability Initiatives on Its Employee Retention

Abstract

Companies focus on creating economic value for their shareholders while they ignore the negative impact of their activities on the environment and society. Hence, sustainability is becoming a crucial subject to the world to meet future generation needs by sustaining the environment and the welfare of the society. However, sustaining the society and the environment through corporate social responsibility practices externally starts by sustaining the social and environmental pillars internally which occurs by looking at the well-being of employees and the environment through sustainable HR and green human resources practices that are embedded under the pillars. Thus, sustainability practices/initiatives could have positive implications for the human resource practices of the companies. Given that, retaining employees has been one of the hardest challenges managements is going through. It is of importance to see how sustainability practices could help this. The purpose of this research is to examine if sustainability initiatives could lead to employee retention. Drawing upon different theories, the conceptual model generated hypotheses to analyze the impact of Sustainability pillars on Employee Retention mediated by Organizational Identification. Moreover, the relationship between the pillars and organizational identification is moderated by Organizational Green Culture. A survey was designed to measure the employee retention of the employees and was sent to the major companies in Lebanon and Sustainability practices of the companies were analyzed based on their annual reports using the GRI standard. The model was tested through the SMARTPLS software. The effect of the environmental pillar on employee retention was confirmed through organizational identification. However, the effect of the social pillar was not confirmed due to the small sample size and current Lebanese situation. Thus, with the presence of a strong green culture in an organization, both models of the pillars would influence retention through organizational identification. The model studied here is novel in the sense that no previous researchers to the best of our knowledge have studied the linkage between the four variables in one holistic model. The managerial implication is to motivate managers to include sustainability practices in their organization to reach the desired outcome.