Building Trust in a Digital World: Socially Responsible HR Practices in Sri Lanka

Introduction

As Sri Lanka transitions to a more digital environment, businesses have new hurdles in creating trust and sustaining solid employee connections. Implementing socially responsible HR practices is one of the most important strategies for businesses to solve these difficulties.

Figure 1

Understanding Institutional Theory

Institutional theory, suggests that organizations are influenced by the social and cultural environments in which they operate. These environments influence organizational structures, practices, and behaviors in response to societal expectations, regulatory frameworks, and industry standards. In the context of human resources, institutional theory proposes that firms use HR practices not just to improve performance but also to meet society expectations of fairness, equality, and responsibility. (David, et al., 2019) In Sri Lanka, where traditional values like as respect, fairness, and trust are strongly valued, socially responsible HR practices may considerably improve business credibility and employee engagement.

 

The Role of Socially Responsible HR Practices in Sri Lanka

In Sri Lanka, as firms adjust to fast digitization, it is critical to ensure that HR practices are consistent with social norms and expectations. According to institutional theory, firms that exercise social responsibility are more likely to earn legitimacy and confidence from their employees. Social responsibility in human resources can take many forms, including ethical recruiting, fair remuneration, gender equality, employee well-being, and corporate social responsibility (CSR) programs. 

A key area where socially responsible HR practices may foster trust is during the recruiting process. In Sri Lanka, where diversity and inclusion are becoming increasingly essential, firms that support open and equitable recruiting methods are more likely to gain the trust of prospective workers. Firms that create an environment where everyone feels respected, supported, and able to contribute their unique talents and perspectives to the organization in recruiting are viewed as more trustworthy and can attract top talent. (Halpin, 2024) Furthermore, offering competitive wages and benefits, while ensuring equity in pay, is another example of socially responsible HR practice. Employees are more likely to trust organizations that pay attention to fairness in compensation, as it signals respect for their contributions. (Pimenta, et al., 2023) (Diriya Sri Lanka, 2022)

Figure 2

Trust and Transparency in the Digital Era

As Sri Lankan firms use more digital technology, there is a greater demand for openness in HR procedures, particularly in areas like as performance management and data privacy. Institutional theory emphasizes the need of transparency in obtaining employee trust, since businesses that are transparent about their procedures and decision-making processes have more legitimacy in the eyes of their employees.

In the digital age, when personal data is a valuable commodity, businesses must take extra precautions to protect employee privacy and guarantee that data is collected lawfully. Businesses in Sri Lanka are under increasing pressure from workers and regulators to implement privacy-protecting policies and avoid the exploitation of personal data. Sri Lanka's Data Protection Act requires enterprises to be open about how they acquire, utilize, and keep employee data. Organizations who follow these standards not only avoid legal ramifications, but also develop trust with their workers by displaying a dedication to data protection and privacy.

Figure 3

The Benefits of Socially Responsible HR Practices

Organizations in Sri Lanka can profit greatly from implementing socially responsible HR practices. First, socially responsible HR practices contribute to a healthy company culture based on justice, trust, and transparency, resulting in increased employee happiness and engagement. A study involving 827 employees found that employees who believe their employers are socially responsible are more likely to stay with the company and promote it to others, resulting in lower attrition and better recruiting outcomes. (Glavas & Kelley, 2014)

Furthermore, organizations that prioritize social responsibility are frequently viewed as industry leaders, which improves their reputation and appeal to investors, clients, and customers. For example, MAS Holdings and Hayleys PLC have been recognized for their CSR activities, which include community development projects, environmental sustainability, and employee welfare programs. (MAS Holdings, 2023) (Hayleys PLC, 2024) These measures not only assist develop trust among workers, but also boost the organization's general reputation in the marketplace.

  

Conclusion

In the digital era, developing trust in Sri Lankan workplaces is more important than ever. Organizations that use socially responsible HR practices based on institutional theory can align their operations with social standards, enhance employee trust, and improve overall organizational performance. As Sri Lankan organizations continue to adapt to technological developments, implementing socially responsible HR practices would not only boost internal relationships but also improve the company's external reputation and long-term profitability.

References

David, R. J., Tolbert, P. S. & Boghossian, J., 2019. Institutional Theory in Organization Studies. [Online]
Available at: https://oxfordre.com/business/display/10.1093/acrefore/9780190224851.001.0001/acrefore-9780190224851-e-158
[Accessed 19 11 2024].

Diriya Sri Lanka, 2022. Fair Compensation Is a Must!. [Online]
Available at: https://diriya.lk/fair-compensation-is-a-must/
[Accessed 19 11 2024].

Glavas, A. & Kelley, K., 2014. The Effects of Perceived Corporate Social Responsibility on Employee Attitudes. Business Ethics Quarterly, 24(2), pp. 165-202.

Halpin, M., 2024. Importance of Diversity and Inclusion Strategies in Recruitment. [Online]
Available at: https://reciteme.com/news/diversity-and-inclusion-in-recruitment/#:~:text=What%20is%20Diversity%20in%20Recruitment,backgrounds%2C%20demographics%2C%20and%20experiences.
[Accessed 19 11 2024].

Hayleys PLC, 2024. Annual Report 2023/24, Colombo: Hayleys PLC.

MAS Holdings, 2023. Impact Report 2023, Colombo: MAS Holdings.

Pimenta, S., Duarte, A. P. & Simões, E., 2023. How socially responsible human resource management fosters work engagement: the role of perceived organizational support and affective organizational commitment. [Online]
Available at: https://www.emerald.com/insight/content/doi/10.1108/srj-10-2022-0442/full/html
[Accessed 19 11 2024].