Corporate philanthropy enhances productivity

Corporate philanthropy enhances productivity

Corporate philanthropy enhances productivity
While incentives like bonuses and stock options improve performance, corporate philanthropy can also increase workers' productivity, new research has found.

Working to benefit a good cause increases productivity by up to 30 percent,  researchers from the University of Southampton said.

When workers are given a social incentive such as a charitable donation linked to their job, performance increases by an average of 13 percent, rising to 30 percent among those who are initially the least productive.

"But our results provide empirical support for the growing recognition that some workers are also motivated by advancing social causes through their efforts," said economist Mirco Tonin, lead author of the study.

Performance was most improved (increasing by 26 percent overall) when workers could decide how much of their pay they wanted to contribute.

When donations were optional, over half of participants chose to give a proportion of their own pay to a charity of their choice.

The 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," Tonin noted.

When participants could choose how much of their performance related pay they would like to share with a charity, and how much they wanted to keep for themselves, performance increased considerably.

Those who chose to donate gave an average of 20 percent of their per entry rate, with women being more generous than men, the authors noted.
The study is forthcoming in the journal Management Science.
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