The Better Incentive: A Bonus or Workplace Giving?
Numerous studies indicate that companies with workplace giving and employee volunteering programs outperform those with more traditional financial incentives.
Numerous studies indicate that companies with workplace giving and employee volunteering programs will experience the benefit of positive employee attitudes, overall satisfaction, and increased performance that the usual financial incentives cannot achieve on their own.
By Chris Jarvis
It is widely accepted among HR professionals that giving employees pay incentives and other job related perks generates emotional commitment to the company. This is based on a concept known as the social exchange theory that states people will reciprocate according to what they receive. In fact, the theory posits that “all human relationships are formed by the use of a subjective cost-benefit analysis and the comparison of alternatives”.
So when companies provide these typical HR incentives, the employees interpret this support as “a signal that the organization values and cares about their well-being, and following the norm of reciprocity, they are motivated to reciprocate by developing a stronger emotional bond with the organization”.
Want to dig deeper? Check out:
- Giving Commitment: Employee Support Programs and the Prosocial Sensemaking Process
- Exchange and Power in Social Life
- Social Exchange Theory
Here’s the problem: the social exchange theory is only partially correct. In fact, in his bookDrive, Daniel Pink cites several studies that demonstrate that in certain circumstances increased monetary incentives can significantly diminish employee performance.
Want to dig deeper? Check out:
- The Business Case for Employee Volunteering – Case #1
- 8 Examples Of Monetary Rewards Leading To Worse Outcomes, by Mario Herger
HR Benefits Money Can’t Buy
Employee volunteering and workplace giving programs are designed to generate prosocial behavior, i.e. “a voluntary behavior intended to benefit another”. Typically, we express this type of behavior through acts of sharing, donating, and volunteering. As we’ve noted before, Adam Grant, a professor at the Wharton School and author of the upcoming book Give and Take: A Revolutionary Approach to Success suggests:
“The act of giving to support programs strengthens employees’ affective commitment to their organization by enabling them to see themselves and the organization in more prosocial, caring terms.”
A recent study asked the question: “Instead of giving your employees more money to spend on themselves, what if you provide them the same bonuses with one caveat: they must be spent on prosocial actions towards charities and co-workers?”
What did they find?
- “Prosocial bonuses may lead to the strengthening of existing relationships and even the formation of new relationships; such positive interpersonal relationships predict job engagement and job satisfaction.”
- “Prosocial bonuses might lead to increased cooperation and cohesiveness between team members, which can improve team performance in part by encouraging helping behaviors.”
- “Prosocial spending may increase general feelings of reciprocity among members of organizations, leading both to greater cooperation and punishment of ‘shirkers’ or ‘free riders’ – those employees who are not contributing to the goals of the organization.”
Want to dig deeper? Check out:
Sounds good! But I’ve got 3 questions …
1. What about salary levels? Does this affect prosocial benefits?
2. Does it work if companies tell employees what they have to do?
3. Is this just a western concept? Will it work in other places the same way?
First: money matters.
Prosocial benefits only mattered once the employee achieved a certain level of income. But it may be less than what most people think (I want to be clear that I’m not trying to get away with paying people less than they are worth).
In the blog we wrote discussing how and when engagement kicks in via prosocial activity, we cited some of Daniel Pink’s research (again from his book Drive) which demonstrates that money can act as a negative in job performance. In fact, the best choice is to pay people enough that it acts as neither a de-incentive or as an incentive.
Want to dig deeper? Check out:
- Relational Job Design and the Motivation to Make a Prosocial Difference
- Prosocial Motivation at Work: When, Why, and How Making a Difference Makes a Difference
Second: choice is essential.
Telling employees that they have to or should participate will negate the effects of prosocial behavior. We work with companies to ensure they take a ‘both/and’ approach. The company can have a single focus and incentivize participation, but they also need to support prosocial behavior that doesn’t fit those specific activities and outcomes.
Employees need to be able to freely choose to participate.
Employees must also freely choose where to distribute the dollar value (or other value). It may be a limited set of options, which is fine. For example, letting employees donate money to one of 5 or 10 nonprofits that fit the companies social investment priorities.
Third: Does it work for everyone?
Seriously? From all over the world, even given all the differences in culture and societal makeup?
Yes.
Science indicates that all things being equal, prosocial bonuses work for all human beings based on our physiological and neurological makeup.
“Behavioral and functional neuroimaging studies have demonstrated that being nice and caring for others makes us feel good by the release of dopamine through the projection of neural pathways from the brainstem to the nucleus accumbens. The fronto-mesolimbic reward network is engaged to the same extent when individuals receive monetary rewards and when they freely choose to donate money to charitable organizations.”
Want to dig deeper? Check out:
We can help.
The Realized Worth Global Team has the skill and experience you need to help you create an outstanding employee volunteering and workplace giving program. We will work with you to engage employees in your corporate citizenship program. Our goal is to meet each person at “their highest level of engagement”.
Take a look at some of the projects we’ve been working on recently.
Stay tuned, we’ve got lots more great insights to share with you on our blog.
Give us a call if you’d like to talk further at 855.926.4678. Or email us at contact@realizedworth.com.
