Allow Your Employees to Save the World and They Won't Leave Your Company
Employees who are temporarily seconded to work for NGOs and development organizations are less likely to leave the firm than their comparable peers, new research finds. We already knew that employees value the opportunity to take part in activities aimed to have an explicit societal impact. In Corporate Social Initiatives and Employee Retention (forthcoming in Organization Science) Christiane Bode (Department of Management and Technology), Jasjit Singh and Michelle Rogan (both INSEAD) state that this preference constitutes a potential strategic benefit for firms. Such employees are least likely to leave when the experience is relatively brief (e.g. in the range of 3 months), and when it takes place in a developed market, as opposed to very long experiences that require them to relocate to an emerging market. As for the latter, the employees may feel a disconnect with the organization upon returning to work which ultimately may drive them to leave the organization.
The results are based on data from a sample of 9,821 employees working for a global management consulting firm that allows their employees to participate in projects with an explicit societal impact in return for a significant pay-cut.
In particular the authors predicted that individuals choosing to participate in such corporate social initiatives (CSI's) are less likely to leave the firm voluntarily rather than being asked to leave the firm (leaving involuntarily). The authors propose that one explaination for this finding might be that the opportunity to participate in CSI allows these employees to experience both the benefits of a commercial career and to make a social impact from within the firm. Thus the firm is able to retain those individuals who desire a "hybrid career".
However, the authors argue and show evidence that when this experience is too long, employees no longer identify with the organization, or perceive a misfit when they return to the practice. Similar conclusions are drawn when the experience is in an emerging market. Here, this disconnect becomes greater due to an increase in geographical and cultural distance, and individuals returning from an emerging market are therefore more likely to leave the firm than those that return from a developed market.
One challenge the researchers had to overcome is that individuals that opt to participate in CSI may be different from those that do not. The data shows that they are younger, have been with the firm longer, are more likely to be female and perform slightly better. Therefore, in this setting it is not enough to show that employees participating in a CSI have a lower likelihood of leaving, as it is possible that such an effect is due to unobserved differences in their personal characteristics rather than with the actual CSI experience. In order to address this issue, the authors used a procedure that essentially matches the participants of a certain age, tenure, gender, country and prior performance with non-participants with those same characteristics. The analysis confirmed the authors' hypotheses: corporate social initiatives can indeed decrease the likelihood that employees leave, especially when the CSI project is done close to home and does not exceed three months.
This finding is important for firms as employee retention can be critical to performance, since much of the knowledge and skills that a firm can leverage are often captured in its employees. Thus, next to financial incentives, organizational culture, quality of work, and legal recourse, providing employees with the opportunity to make a social impact could help commercial firms retain their employees.