Employer Altruism Might Backfire If Employees Don’t Buy It

Some employers hold that socially responsible actions, such as charitable donations made on behalf of their staff, spur their employees to work harder, or at least hold their employer in higher regard. At very least, employers believe making a donation on behalf of employees does no harm.

Results of a research experiment showed such incentives could hurt productivity.

These beliefs might be wrong, despite 67% of CEOs believing organization altruism is essential for attracting and motivating the best possible staffers. And when actions behind these beliefs are improperly applied, employers might be doing harm to employee morale, according to Intentions for Doing Good Matter for Doing Well: The Negative Effects of Prosocial Incentives, a paper from the University of Regensburg in Germany’s Chair of Empirical Economics Lea Cassar and Columbia Business School Management Division Chair Stephan Meier.

There are two main ways corporate altruism might have a negative impact on morale. The first is when an organization’s social actions don’t align with a given employee’s values. The second occurs when the actions an employer takes are “instrumental” — based on employees meeting certain performance goals. In that case, when there is a perception that social responsibility is being used as a lever for increasing workloads without any additional compensation, the adverse impact on morale is particularly strong: employees may end up actively resenting their employer.

Granted, the opposite effect can be true when employee values are in line with an organization’s initiatives, according to the report authors. Among some worker populations, social initiatives have been used to increase productivity more successfully than monetary incentives. The key determinant appears to be the perceived employer motive for taking the action.

Cassar and Meier described an experiment in which individuals were given an opportunity to have an employer make a charitable donation if the employees did extra work — specifically, creating additional marketing slogans beyond a required quantity. The researchers found the proportion of workers who created more than three slogans was five percentage points lower when their additional work resulted in a charitable donation made on their behalf. In contrast, when the reward was a monetary incentive that went directly to them, the percentage of workers who did the extra work increased by 11 percentage points.

The study also challenged the idea that all corporate altruism is viewed positively by potential employees. Outsiders who were told potential employers based contributions on increased employee output said those employers were less likely to be good to their employees than employers who made contributions without making the donations conditional on employee performance.

The report authors concluded that organization leaders who align their social responsibility actions with their business interests, or which use their actions to spur productivity, are not aware of the potential negative impact their choices may have. In short, organizations hoping to benefit from their social responsibility actions have to be perceived as acting in a truly altruistic, as opposed to strategic, fashion.