Employees of an international management consulting company were surveyed to discover what motivated them to volunteer for a corporate social initiative (CSI) that required them to take a temporary pay cut. Were they being purely altruistic, or did they also anticipate a private benefit?
Many companies are moving from stand-alone corporate social responsibility (CSR) projects to social initiatives fully integrated into corporate strategy. Christiane Bode, professor at the SDA Bocconi School of Management in Milan, Italy, and her co-
researcher had studied this same CSI previously, from the perspective of the employee who persuaded management and other stakeholders to undertake it. In this new study, she sought to determine the considerations that would motivate an employee to volunteer for such a project for less money.
Firms have come to see CSIs as worthwhile programs because they help attract, motivate, and retain talent. Employees value participating in projects with social impact, and such programs also increase goodwill for the firm. In addition, CSIs “could be seen as a leadership development tool, similar to executive education programs offered to high-performing employees,” Bode says. In this case, “there was also the hope that the initiative might prepare employees to better work in emerging markets where engaging with civil society might be a prerequisite also for successful implementation of commercial project work.”
Apart from the savings from paying less to those who volunteered, the firm could also assign a dollar value to the less-tangible benefits that would adhere from CSIs. By taking these factors into account, firms can gain “probably a good deal more” than the amount of compensation saved, said Barbara Dyer, senior lecturer and executive director of the Good Companies, Good Jobs Initiative at the MIT Sloan School of Management.
At the management consultancy that Bode studied, the CSI was structured to be self-sustaining. The firm saved $28 million in compensation paid out between 2002 and 2013 by reducing the pay of participating employees by either 25 percent or 50 percent, depending on the host country. The client social-impact organizations paid only a third of the fees normally charged, offsetting the firm’s hard-dollar savings.
Bode and her coauthor conducted 32 interviews with 20 CSI participants, including 12 interviewed both before and after their CSI participation. The interviews contributed to the design of a survey that the researchers later administered to the firm’s employees in the United States, Canada, the United Kingdom, and Ireland. The assessment measured employees’ interest in participating in a CSI with or without a pay cut and how much of a cut they’d accept.
Of the 665 employees who responded to the survey, 113 had already participated in the firm’s CSI. The researchers’ analysis focused mainly on the majority of employees who had not participated in the CSI, to avoid those whose perceptions might have been colored by experience.
The results showed that a significant fraction—roughly 25 percent—of employees was willing to accept “nontrivial” salary cuts for the CSI opportunity. What’s more, a significant portion of past CSI participants so valued the experience that they were willing to accept an even greater pay reduction for the opportunity to take part again. “This suggests that, in general, CSI participation continued to be attractive beyond just a one-time novelty,” the researchers write.
Many participants expected that in addition to “making a difference,” CSI participation would yield them private benefits, such as the opportunity to have more leadership responsibility sooner than they might in their regular jobs at firms.
Interestingly, employees with previous volunteer experience were, on average, relatively more optimistic about both making a difference and reaping private benefits than employees with MBAs. “For the type of person that selects into an MBA program, social impact work may overall be less attractive than for other types of employees, given their career aspirations,” Bode says. “Another explanation may be that individuals who have previously attained an MBA might have incurred large debts to pay for the degree, which is in line with our finding that MBAs are particularly sensitive to the requirement to accept a salary cut.”
Still, almost two-thirds of the CSI-willing employees whom the researchers interviewed personally expected CSI participation to yield a private benefit. “The diversity of experience that is gained through these projects builds greater cultural awareness, empathy, stronger team and leadership skills, and a range of analytic capabilities—all desirable qualities,” says MIT’s Dyer, who previously spent 18 years as a senior executive in a global corporation leading CSR strategy and programs. “The authors move the debate forward by recognizing and validating the layers of motivating factors that enter into employee choices to engage in corporate social initiatives.” n
Christian Bode and Jasjit Singh, “Taking a hit to save the world? Employee participation in a corporate social initiative,” Strategic Management Journal, vol. 39, 2018, pp. 1003-1030.
Read more stories by Marilyn Harris.