Supporting worthy causes helps a business buff up its image and can open the door to valuable networking opportunities. Those effects of charitable giving have been supported by much research and practical experience. But does corporate philanthropy have any effect on employees? The answer to that question hasn't been as clear.
Even while surveys show that millennial employees would take less pay to work for socially responsible employers, there hasn't been research into how corporate philanthropy might affect workers' attitudes. But now, new research finds that corporate giving can, in fact, make employees more satisfied with their jobs. However, not all ways of giving work equally well in increasing employee job satisfaction, the study also found.
For the new study, a team of researchers, led by Emily Block, Assistant Professor at the University of Notre Dame's Mendoza College of Business, analyzed three years of data on attitudes of 14,577 employees in 53 offices of a ﬁnancial services ﬁrm. They expected to find that supporting charities with money, goods, services or employees' time made workers feel better about an employer. They also wanted to examine what happened when companies gave in certain ways. For example, did it matter whether gifts were to smaller, local charities or national causes strategically chosen by the main office?
As the researchers wrote in the Journal of Business Ethics, workers at charitable-minded offices were, indeed, significantly more likely to agree with statements such as, "Overall, I would say this is a great place to work," and "I rarely think about looking for a new job with another organization." The researchers also noted that employees were happier when they got opportunities to volunteer with charities their companies supported.
However, the study did not provide support for the idea that employees become more positive about employers that give money to the same causes the employees support. And, in a surprise, the researchers found that giving to big-name charities like Junior Achievement or the American Cancer Society was more likely to make employees happy than giving to less-prominent local causes.
Business News Daily talked with Block about whether businesses should give, what they should expect and how to leverage the impact of gifts. [See Related Story: What Is Corporate Social Responsibility?]
Business News Daily: Before we discuss the research, what should readers know about your background on this topic?
Emily Block: One of my key areas of scholarship is around the management of organizational reputation. I have published on why high-reputation firms are more likely to engage in corporate crime, how firms may recover from reputational threats and how different types of reputation violations impact firms. I have a Ph.D. in organizational behavior from the University of Illinois.
BND: Why did you decide to study how corporate philanthropy affects employees?
Block: We were advising an organization that was looking to make changes in the way it did corporate philanthropy — specifically, to move toward offices being forced to give to a few strategic targets rather than choose their own. We saw that there were lots of studies that looked at the external impact but that very few studies looked at how this impacted the organization internally. Thus, this was a great opportunity to fill a theoretical space and give very practical advice to an organization.
BND: Were you able to identify any specific benefit of corporate giving on employees, such as improved productivity or less absenteeism?
Block: This is really the first study of its kind to look at the internal benefits of corporate giving. However, our outcome variable — employee engagement — has been linked to a number of positive outcomes.
BND: Were you surprised by any findings?
Block: I personally expected the move toward strategic giving to drive less positive employee attitudes. The research suggested that there were alternative explanations — affiliation with high-status organizations versus participation in decision making — and I had expected that the participation in decision making would outweigh the value of large visible affiliations. It appears that employees are more deeply impacted by making a bigger difference than directing funds to their own causes.
BND: Did your research uncover any risks of corporate giving? Can it ever be harmful?
Block: Our findings didn't illustrate that.
BND: What about limitations? Are there effects that business giving might be expected to have, but doesn't?
Block: I had really expected that "skin in the game" (employees giving their own money) would matter. These findings were nonsignificant. It blew my mind. I have an inclination that a broader measure of skin in the game beyond this organization might find there are some types of skin in the game that matter. It would be a great follow-up question.
BND: What should a business owner considering philanthropy take from this?
Block: That coupling this giving with opportunities for employees to have contact with the beneficiaries of the gift will allow for them to benefit in multiple ways.
BND: What's your next research project?
Block: I am looking at the ways that organizations handle ethical violations and the impact they have on subsequent reporting of violations.