Creating Certainty from Uncertainty. Paternalism, CSR and the Mechanisms of Employee Welfare

What does it need for a successful employment relationship? How socially responsible can a company be towards its employees? Businesses face these questions when they hire and decide the scope of potential in-work benefits. In historical perspective, such activities were subsumed under a paternalist agenda, describing an employer’s authority claim over an employee in exchange for stable employment. In contemporary perspective, corporate social responsibility (CSR) programs, management, and employee relations are framing the form of employment and define its scope. However, what is the link between these two perspectives?

The paper’s answer comes from a systemic analysis of the employment related key CSR and historical paternalist activities of British and German companies. It is argued that a company cannot be socially irresponsible in its CSR employment activities and that, while management indeed professionalised from the historical paternalist relationship, the mechanisms of providing in-work benefits remained the same. CSR is a business’ means to communicate with its non-business environment by ordering the complexity of demands and addressing some of them. In outcome, businesses gain legitimacy and present themselves as a good member of society; violating commonly held societal norms would prevent such a status. Moreover, businesses typically operate within prescribed economics and structures. They exist to turn profits and actions are chosen on the basis of their previous and likely future success; CSR is part of these operations. In the past, paternalist employers also used these two mechanisms: they conformed to societal expectations and provided benefits that were commonly held to be acceptable; and they used their own experiences to model employment in their companies.

The paper contributes to critical discussions of CSR by providing a theory informed analysis of options and limitations of employment-related welfare activities. It additionally contributes to comparative research of in-work benefits and shows their historical continuity.