June, 2012 by Sarah Ketvirtis (MSLOC 2012)
Many organizations spend countless hours and energy on corporate citizenship initiatives and programming, also known as corporate social responsibility. Corporate citizenship includes a variety of activities ranging from cash or gift donations to volunteering programs to socially responsible products and services. While the debate about the benefits of socially responsible activities and corporate citizenship continues, the question remains, to what extent does "doing good" really matter?
While many articles look at the impact of corporate citizenship behavior from the external view of shareholders or customers, this article explores the impact of an organization’s corporate citizenship activities internally on employee engagement. It focuses on the relationship between employee engagement and three categories of externally focused corporate citizenship: philanthropy, community involvement and social innovation. A group of corporate employees were asked a series of questions to determine whether a relationship between their engagement level at work and the three categories of corporate citizenship existed.
The results indicate that the extent to which organizations are "doing good" for their communities and the world does matter to employees. Organizations that offer corporate citizenship programs do indeed benefit from significantly more engaged employees. In addition, the more committed an organization is to breadth and depth of their corporate citizenship programming and the more hands on employees can be, the higher their engagement scores.
Many organizations are facing the challenge of successfully motivating, engaging and retaining a talented pool of workers. Corporate citizenship is one lever that organizations can utilize to address this challenge. Given the fierce competition for talented employees and the growing commitment to corporate citizenship, there is increasing evidence that a company’s corporate citizenship activities are a legitimate, compelling and increasingly important way to engage and retrain top talent (Bhattacharya, Sen & Korschun, 2008).
What is Corporate Citizenship?
Corporate citizenship refers to an organizations responsibility to create business value by caring for the well-being of all stakeholders including the environment (Glavas & Piderit, 2009). Due to its voluntary nature, organizations engage in many different types of corporate citizenship from making philanthropic donations to establishing volunteer programs with non-profit organizations to preserving environmental resources to using core competencies to create products or services that help solve social issues. This article focuses on three categories of externally focused corporate citizenship: philanthropy, community involvement and social innovation.
Philanthropy: Monetary gifts or other donations given voluntarily by an organization to support the local community and offset any negative impact of their business (Wang, Choi & Li, 2008). Such activities may include but are not limited to cash donations, event sponsorship, grant making and employee charitable donation matching programs.
Community Involvement: Opportunities for employees to offer their time and skills to serve the community through volunteer/service events in an effort to help solve social issues around a range of issues including the environment, education, health, development, etc.
Social Innovation: Opportunities for employees to get involved in leveraging the core competencies of the organization to create business value and positive social change. This can be achieved many ways, including creating access to more socially responsible products and services or lowering costs (Saul, 2011). Some additional examples include:
- Decreasing the environmental impacts of the company through reuse and recycling or green technologies.
- Creating or re-designing a product, service or process that has an increased benefit for society. For example, an employee may come up with the idea to open up an office in a neighborhood with high unemployment or decrease the amount of sodium in processed foods.
- Developing a more Eco-efficient product/service/process (less resource and/or energy intensive). For example, an employee could figure out how to increase the amount of recycled materials used in a process
How Does Corporate Citizenship impact Employee Engagement?
Engaged employees are fully involved in, enthusiastic about and committed to acting in a way that benefits their organization. Research has found that engagement boosts operating income, increases employee productivity, lowers turnover risk, provides a greater ability to attract top talent and leads to higher total returns (Irvine, 2009). There is also confirmation that employees with favorable opinions of their organization’s socially responsible activities are more engaged, confident and likely to state an intention to stay with the organization (Kenexa, 2010). Accordingly, some organizations are making long-term commitments to corporate citizenship as part of their pledge to increase employee engagement. More corporations will support their communities via employee volunteer programs instead of just writing checks during tough economic times (McPherson, 2012). Thus, the relationship between employee engagement and corporate citizenship is an increasingly important topic for organizations.
There is evidence to suggest that employee engagement relates positively with externally focused discretionary citizenship or voluntary activities targeted toward benefiting society (Lin, 2010; Rego et al., 2010). As such, being able to further understand and leverage the value employees place on organizations that benefit the world is becoming more critical. Businesses can no longer operate solely for the benefit of owners or shareholders; younger generations of employees want organizations to do good for the world (Knight, 2006).
This article looks at corporate citizenship as one potential lever to influence employee engagement and asks:
- Is there a relationship between externally focused corporate citizenship and employee engagement?
- Which of the following three categories of corporate citizenship (philanthropy, community involvement or social innovation)has the strongest link to employee engagement?
Organizational leaders, HR and OD professionals and individuals interested in corporate citizenship and or employee engagement will benefit from this article. It will be of interest to organizations, both those with existing external corporate citizenship programs as well as organizations that are in the planning phases, that view corporate citizenship as a critical topic and business strategy. By better understanding the value that employees place on external discretionary citizenship, organizations can provide activities that create the most meaning for employees and lead to increased engagement.
This study aimed to find out more about how corporate citizenship focused externally on society and the environment impacts employee engagement. In order to be eligible to participate, individuals had to be currently employed by a for profit organization or corporation. A self-administered online survey was used to collect responses from employees working at corporations through e-mail and various social media tools. The online survey made it possible to reach a large number of individuals who could complete the survey at their convenience.
The survey consisted of both existing validated measures and custom ones. The dependent variable, employee engagement, was measured using a customized 5-question validated assessment from the Denison Organizational Culture Survey (2010). Philanthropy, community involvement and social innovation were measured by (1) a 5-question custom assessment for employees who work at an organization that doesn’t offer corporate citizenship and (2) a 26-question custom assessment for employees working at an organization that offers corporate citizenship activities.
This study produced 165 valid responses from employees working at for profit organizations. The study did not set out to find differences by demographic categories and in many cases the sample sizes would not allow meaningful differences to be detected. Still, it is important to note that no significant differences by gender, generation, region, or industry were found.
The study sample consisted of the following:
- 54% male and 46% female
- 15% baby boomers, 35% Gen Y and 50% Gen X
- 74% work for an organization based in the U.S. and 26% are based out of other regions of the world
- 21% with between zero and five years, 35% with five to ten years, 15% with 10 to 15 years and 34% with fifteen or more years work experience
- a wide variety of industries were represented with 18% financial services, 16% consulting, 12% internet, 8% manufacturing and the rest spread across various other industries
The quantitative data collected in this study was analyzed using SPSS to determine t-tests, ANOVA and mean scores. Item reliability (alpha score > .7) was checked for the employee engagement factor (.915). T-tests were used to