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Corporate Philanthropy Boosts Employee Productivity–But Is That A Good Thing?

It turns out that people will work harder if they’re promised money that they can donate to charity.

Corporate Philanthropy Boosts Employee Productivity–But Is That A Good Thing?
[Illustrations: Igor Nazarenko via Shutterstock]

Many workers today receive bonuses or stock options to increase their performance. Many companies today also donate to charities through corporate philanthropy programs. Now economists are investigating the extent to which the two should go together.

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A new study, from researchers at the University of Southampton, looks at whether remote workers who performed data entry tasks increased their productivity in response to “social” productivity incentives. The study isn’t the first to look at this question, but it’s the first to set up an experiment that compares social incentives to purely financial ones. The difference between the two was not as large as the researchers expected.

“The motivational impact of social incentives, coupled with sufficient tax breaks or additional advantages coming from customers, regulators, or investors, would make [social incentives] as effective for employers as offering financial incentives,” says study co-author Michael Vlassopoulos.

When a charitable donation was linked to their job, the subjects’ performance rose 13% on average and 30% among those who were initially the least productive. That was not much less than performance increased with direct pay for each accurate entry.

There also wasn’t much difference between productivity increases of workers who got to donate a flat lump sum to charity and those who got to donate based on their number of accurate entries. “One interpretation for this finding is that the presence of social incentives enhances the sense of identification with the job (and particularly so for those lacking the intrinsic motivation to perform the job),” the paper says.

The study was conducted with 320 university student subjects online, who received 20 pounds for completing four one-hour data entry sessions over the course of a week and then different kinds of incentives for each entry they completed. Performance rose the most overall when the workers got to decide if and how much of their pay to contribute to a charity of their choice (about half chose to give in this scenario, and gave an average of 20% of their per-entry rate.)

All of this makes a good financial case for corporate giving and other corporate social responsibility initiatives, the authors believe. The study’s lead author, economist Mirco Tonin, cites data that 240 leading U.S. companies, including 60 of the largest 100 companies on the Fortune 500 list, gave the equivalent of around 1% of their pre-tax profits, or more than $600 per employee, to charity in 2013.

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But if employee charitable contributions are to replace bonuses (even if voluntarily), the implications are troubling from a workers’ perspective, shifting the burden of giving onto employees and awarding the benefits to the company. “Our findings indicate that in occupations and sectors with characteristics that engender prosocial behavior (such as health, education, and social care), a given level of productivity can be achieved with fewer financial incentives,” the authors write.

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About the author

Jessica Leber is a staff editor and writer for Fast Company's Co.Exist. Previously, she was a business reporter for MIT’s Technology Review and an environmental reporter at ClimateWire.

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