What happens when your company shares information on its corporate social responsibility (CSR) with potential hires? I’m glad you asked! Daniel Hedblom and John List from the University of Chicago and Brent Hickman from Washington University in St. Louis have a stunning evidence-based answer. In fact, their research is my pick for the top CSR academic study of 2019. (Yes, I’m that nerdy.)
Hedblom, Hickman and List went to a lot of trouble to determine the impact CSR communications has on prospective hires in the real world, as opposed to a lab, and to be able to attribute any impacts to the communications as opposed to uncovering only correlations (for you nerds, they did a randomized field experiment). They started by creating a company. For real. “HHL Solutions” (their surname initials) hired remote workers to analyze online photos and enter data that served companies as real as Uber. Indeed, Uber is an HHL client. Unlike ordinary companies, however, HHL Solutions conducted an experiment. It shared information on its CSR with a randomly-selected half of the individuals who expressed interest in the job. Specifically, the email sent to prospects with the description of the position and instructions on how to apply included the following paragraph about HHL’s CSR:
“Some of our clients work in the nonprofit sector with various charitable causes. For example, with projects aimed at improving access to education for underprivileged children. We believe that these organizations are making the world a better place and we want to help them in doing so. Due to the charitable nature of their activity, we only charge these clients at cost.”
The other half of interested individuals received a “neutral” email that had all the same details about the job (hours, pay, tasks, etc.) but excluded the above information on HHL’s CSR. What difference could these few sentences of public-relations content make? A lot, it turns out.
Twenty-five percent more of the CSR-informed group than the uninformed group applied for the job. That’s a substantial bump. Because this research varied the wages offered, it also uncovered that incentivizing that many more applicants using pay would require a 36% wage increase. This recruitment boon is impressive enough, but the CSR communication did more. Workers hired through the CSR-informed process produced more per hour, slacked off less and had 25% lower per-unit production costs than those who were not informed about the CSR.
The above findings suggest that a company employing more than 411 data-entry workers could spend $1,000,000 on its CSR and the program would still be profitable for the company. While this study breaks new ground in monetizing the effect of CSR, it sits atop a sturdy foundation of evidence linking worker sense of social purpose (doing good for others or a societal cause) to behavior. See, for example, my prior posts on the impact social purpose has on performance and on other work-related and personal benefits. Hedblom, Hickman and List sum up the implications of their findings well: “CSR should not be viewed as a necessary distraction from a profit motive, but rather as an important part of profit maximization.”
Amazingly, the CSR that transformed workers isn’t all that unusual. Discounting prices for nonprofits is hardly award-winning or eye-popping CSR. HHL hasn’t involved 100% of employees in volunteering as CSAA Insurance Group, a AAA insurer, has; or sorted through its trash to eliminate 42% of solid waste as Caesars Entertainment has; or donated half its product to charitable causes as TOMS Shoes has (full disclosure: I work with all three companies). Most people are aware that many tech firms, ad agencies and even lawyers at the most cut-throat firms routinely offer nonprofits a price break, as HHL does. If ordinary CSR turns people into more interested, motivated and productive workers, what might exceptional CSR do for workers? Let’s hope research answers that question soon. Are you reading this, Santa?
Don’t miss the next post. Subscribe!