How Corporate Citizenship Impacts Employee Engagement

June, 2012 by Sarah Ketvirtis (MSLOC 2012)

Abstract

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.

Introduction

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. 

Study Design

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. 

Analysis

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

determine whether a significant relationship between employee engagement scores existed between organizations that offered corporate citizenship and those that did not. Additionally, t-tests were used to determine if engagement scores were correlated with employee participation in corporate citizenship activities (within the last year). ANOVA was used to better understand how the extent of an organizations corporate citizenship programming (measured by organizations that offer zero, one, two or three categories of corporate citizenship) impacted engagement scores. ANOVA was also used to evaluate the relationship between the degree of employee participation in corporate citizenship programming and engagement scores. Mean scores were used determine the perceived importance of individual corporate citizenship initiative as well as what initiatives organizations are currently offering. 

Findings

Corporate Citizenship & Employee Engagement

Mean Engagement ScoresOrganizations have been clamoring for years to find out if corporate citizenship activities make a difference in the engagement level of their employees and the research shows that it does. This study showed that on average, employees who work for organizations that offer corporate citizenship are significantly more engaged (M=3.79) than employees who work for organizations that don’t offer corporate citizenship activities (M=3.29), (p<.05). 

When an organization offers corporate citizenship activities, the engagement level of its employees is higher. At the same time, employees who work at organizations that don’t currently offer corporate citizenship activities stated that they would feel more enthusiasm at work and more dedication to their organization if it began offering corporate citizenship activities.

Organizational Commitment

As an organization’s commitment to corporate citizenship increases, so do engagement levels. One key indicator of an organization's commitment to corporate citizenship is the breadth of initiatives offered. The more dedicated an organization is about its corporate citizenship programming the more philanthropic, community involvement and social innovation opportunities it tends to offer. While no single category had a stronger link to employee engagement than another, this study showed that organizations who offer activities in all three categories of corporate citizenship have employees who are significantly more engaged (M=3.94) than organizations that don’t offer any corporate citizenship activities (M=3.29), (p<.05). As such, organizations should strive to create comprehensive corporate citizenship programming by offering various philanthropic, community involvement and social innovation opportunities. 

Comprehensive Programming

Employee Involvement

The more available, hands on and integrated corporate citizenship is in an organization the more it will positively impact employee engagement scores. Individuals who have been involved in corporate citizenship activities in the past year (M=3.86) are significantly more engaged than individuals who have not been involved (M=3.27), (p<.05).

Accordingly, when designing corporate citizenship programs, the more opportunities that organizations can provide for employees to get involved in various capacities the higher engagement scores will be. Involvement is traditionally achieved through volunteering however organizations should consider other alternatives, for example, asking employees to bring in mugs or planning an “ideas fest” where employees can team up and propose ideas for socially responsible projects and initiatives for the organization to consider.

As an individual increases his/her level of participation by getting involved in multiple corporate citizenship activities their engagement scores go up. On average, individuals who participate in all three types of corporate citizenship are significantly more engaged (M=4.07) than those that participate in one type (M=3.51) or don’t participate at all (M=3.25), (p<.05). Accordingly, organizations should focus on providing more opportunities for employees to get involved with corporate citizenship. 

What is Important to Employees?

By better understanding the value that employees place on specific corporate citizenship initiatives, organizations can provide opportunities that create the most meaning for employees. When asked which corporate citizenship opportunities were most important to them, employees felt most strongly that their organization should offer energy efficiency initiatives (M=4.49), followed by social innovation opportunities (M=4.39) and employee charitable contribution matching programs (M=4.37). It is interesting to note that employees felt that both grant making (M=3.80) and cash & gift donations (M=4.03) were less important. Whether an organization is adding to their existing corporate citizenship programming or is starting from scratch, they can benefit from learning what is important to employees.

Employee Perceived Importance of Each Initiative

What Do Organizations Currently Offer?

As corporate citizenship continues to grow, it is beneficial to gain a better understanding of the types of initiatives that are currently being offered by organizations. Respondents reported that energy efficiency initiatives are offered at 113 out of 165 of the organizations they work for; making it the most commonly offered activity. Interestingly, energy efficiency is also most important to employees. Accordingly, there is an opportunity for organizations already offering energy efficiency initiatives to expand their current programming and other organizations to begin offering energy efficiency initiatives if they are not already doing so. Get creative, where possible consider how to get employee input and design initiatives that provide opportunities for employees to get involved.

There are other areas where what matters to employees does not line up with what organizations are offering. While social business innovations, employee contribution matching programs and ongoing volunteering are important to employees, respondents reported that less than 50% of their organizations offer initiatives in these areas. This is another area where organizations have the opportunity to increase their commitment to and their employee's involvement in corporate citizenship. Organizations should provide more opportunities for their employees to get involved in social business innovation, employee contribution matching programs and ongoing volunteering opportunities since these were activities that employees reported as being important to them. 

Initiatives Currently Being Offered by Organizations

Limitations

The major limitation of this study is that an organization's corporate citizenship offering is just one of the many variables that can impact an employee’s engagement score. While this study showed that a correlation did exist between engagement and corporate citizenship there are many other variables that could factor into a respondent's answers on the engagement questions.

Another limitation of the study is the small sample size for organizations that do not offer any corporate citizenship activities (n=28). Similarly the small sample sizes of organizations that didn't offer philanthropy (n=12), community involvement (n=25), or social innovation (n=19) made it difficult to look across the three categories of corporate citizenship to determine a relationship.

Finally, corporate citizenship is an evolving topic with no agreed upon definitions or categories. As such, the terminology and definitions used vary across organizations and industries. While each term was defined in the survey, an individual's perceptions and interpretations will cause responses to vary which is a limitation of this study. 

Recommendations

Corporate citizenship is becoming an increasingly important topic in the media and within organizations. While this article shows that corporate citizenship is a powerful lever that organizations can use to increase employee engagement scores, there are a variety of other reasons organizations should participate in corporate citizenship. Several research studies have connected corporate citizenship to key organizational success factors including performance and profit (Maxfield, 2008; Shen & Chang, 2009). In addition, studies on prospective employees found that corporate citizenship is perceived positively by the public and results in a good reputation which in turn helps the organization attract better talent (Turker, 2009). Finally, many organizations participate in corporate citizenship simply because they can and it is a "good thing to do."

Irrespective of an organization's original reason for doing good in the world, this article shows that organizations that offer corporate citizenship initiatives have higher engagement scores. Accordingly, it is important for organizations to consider their employees as a key stakeholder when they design their external corporate citizenship programming. While past studies have focused on external stakeholders, evidence suggests that externally focused corporate citizenship has a positive impact on employee engagement (Lin, 2010; Rego et al., 2010). This article provides further insight into how employee engagement scores are impacted by corporate citizenship programming.

There are three key implications for corporate citizenship programming:

  • Employee engagement scores are higher in organizations that offer corporate citizenship programming versus those organizations that do not.
  • The more committed an organization is to creating comprehensive corporate citizenship programming consisting of initiatives in the categories of philanthropy, community involvement and social innovation, the higher the employee engagement scores are.
  • Engagement scores for employees who have been involved with their organization's corporate citizenship programming in the past year are higher than those that have not. In addition, the more involved an employee is (in philanthropy, community involvement and social innovation versus only one or two categories), the higher their engagement scores.

The insights of this article are beneficial to individuals and organizations, those with existing programs and those in the planning phases, that view corporate citizenship and employee engagement as topics critical to a successful business strategy. By better understanding the value that employees place on externally focused corporate citizenship, organizations can provide opportunities that create the most meaning for employees and thus lead to higher engagement scores. 

Organizational Leaders

Organizational leaders should utilize the key findings of this study to increase employee engagement scores. Highly engaged employees are twice as likely to be top performers, miss fewer days of work and are likely to stay with the organization longer (Irvine, 2009). This article shows that corporate citizenship leads to higher engagement scores. Moreover, engagement scores will increase when organizations offer comprehensive programming that employees can get involved in personally.

As such, organizational leaders and HR leaders who want to increase engagement scores should look to corporate citizenship as a powerful lever. They should begin by considering their employees as a key stakeholder when designing, evaluating or making additional investments to their corporate citizenship strategy and programming. In addition, they should look for opportunities to expand the breadth and depth of programming while providing valuable opportunities for as many employees as possible to get involved. The final step is to ensure that the corporate citizenship programming is effectively communicated across the organization because higher participation rates lead to a more engaged workforce. 

Individuals

Individual OpportunitiesCorporate citizenship opportunities often begin with someone who has an idea and puts it into action. An employee may decide that too many plastic cups are discarded daily and take it upon him/herself to put a sign on the water cooler asking co-workers to bring in reusable glasses. Another employee may decide that printing single sided is an inefficient use of resources and speak with the operations department about changing the printer default setting around the office to double sided. The possibilities are unlimited.

Individuals or employees reading this article should think about the areas of corporate citizenship that they are interested in and inspired to get involved in. Then they should reach out to the person or department responsible for corporate citizenship at their organization to get more involved. Individuals who work at organizations that don't currently offer any corporate citizenship activities should not be discouraged but instead see this as an opportunity to speak with leadership or to start something at a grass roots level.

Additionally, when looking for a new job, potential employees should expand the criteria they use to select an organization. In addition to the job description, salary, health benefits, etc. employees should inquire about the organizations commitment to corporate citizenship and include that in their decision making process. These actions will begin to hold organizational leaders and their organizations accountable for the social responsibility they have to their community and the world. 

Future Research

This study looked across a variety of industries and organizations and showed a significant relationship between corporate citizenship and employee engagement. However, it was not possible to determine which corporate citizenship activities had the strongest relationship to engagement. Future research could look at the corporate citizenship activities offered within one organization to determine this. Future research could also look for demographic relationships as the sample sizes in this study were too small to do so.

Final Thoughts

As organizations consider the role of business in society and strive for higher engagement scores, it is important that they realize that "doing good" in the world through philanthropic giving, volunteer programs and social business innovations provides lasting benefits to shareholders and employees. While corporate citizenship activities may vary across organizations one thing is certain, they are making a difference in the lives of employees as measured by increased engagement scores.

What corporate citizenship activity are you most enthusiastic about? "Our organization had an “ideas fest” where individuals or groups of employees came up with ideas that the organization could pursue. Then we all voted on which ideas to move forward with."

Why are you most enthusiastic about this? "A solution that is both good for communities and for business will stand a decent chance of being scaled to a size where it wil[l] actually lead to social change.” -Survey Respondent

This simple example illustrates that by providing corporate citizenship opportunities for employees to get involved in; organizations are providing meaningful experience for employees to make an impact on society which will in turn lead to increased engagement scores. 

Article and Author Information

Sarah Ketvirtis wrote this article in March 2012 for the Capstone 3 Research Analysis and Interpretation course. This executive summary assignment is the culmination of a nine-month capstone research project. Sarah graduated from the MSLOC program in 2012 and is the Director of Organizational Development at SymphonyIRI Group. Read more of Sarah's work: Knowledge Sharing: Leveraging Trust and Leadership to Increase Team Performance.

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