Corporate Philanthropy Increases Workers’ Productivity - Study

Working to benefit a good cause increases employee productivity by up to 30 per cent, according to the findings of a new UK study.

Research from the University of Southampton showed that when workers were given a social incentive such as a charitable donation linked to their job, performance increased by an average of 13 per cent, rising to 30 per cent amongst those who are initially the least productive.

“A lot of studies have shown how financial incentives, like bonuses and stock options, can improve performance,” University of Southampton economist Dr Mirco Tonin, lead author of the study, said.

“But our results provide empirical support for the growing recognition that some workers are also motivated by advancing social causes through their efforts.

“Our results indicate that social incentives may be slightly less effective than financial incentives in motivating workers, but the difference is not as large as one might have expected. The motivational impact of social incentives, coupled with sufficient tax breaks or additional advantages coming from customers, regulators, or investors, would make them as effective for employers as offering financial incentives.”

Performance was most improved (increasing by 26 per cent overall) when workers could decide how much of their pay they wanted contribute through workplace giving. When donations were optional, over half of participants chose to give a proportion of their own pay to a charity of their choice.

“We find that offering subjects some discretion in choosing their own payment scheme leads to a substantial improvement in performance,” Dr Tonin said. “This suggests that firms willing to introduce corporate giving programs may want to consider giving employees the opportunity to ‘opt in.'”

Researchers offered students at University of Southampton the chance to take part in the study, which involved completing four one-hour online data entry sessions, over the course of a week. Productivity was measured by the number of entries students made within the sessions and the accuracy of those entries.

Students received £20 (A$37.20) for completing the four sessions and were divided into four groups, each with different levels of additional financial and social incentives.

Some groups were given various increments of performance related pay, based on the number of entries they made, while others were given differing forms of social incentives; from a lump sum donation to a charity (given upon finishing the task), to donations made for each completed entry.

“Both varieties of social incentive (lump sum and performance based) were equally effective at increasing performance,”Dr Michael Vlassopoulos, co-author of the study said.

“We can see that social incentives have a positive impact in the number of entries made, without compromising accuracy.”

The study, Corporate Philanthropy and Productivity: Evidence from an Online Real Effort Experiment, will be published in the forthcoming edition of Management Science.