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Warren Buffet is quoted as saying, “Good profits simply are not inconsistent with good behavior.” It’s a sentiment that many businesses have taken to heart, as evidenced by the rising popularity of cause marketing campaigns and B Corp certifications. Some companies, such as TOMS and Warby Parker, have even turned being “good” into a business model, building an entire category of for-profit companies that have set out to change the world while increasing their profits.
Corporate social responsibility (CSR) is not a new concept. Companies of all sizes take CSR very seriously, developing systems and programs designed to do good in the world, which in turn increase positive PR, sales, and customer loyalty. But there’s another side of doing good that’s often overlooked by companies—at drastic cost to the bottom line. A 2013 report from Gallup estimated that employee disengagement, which is at an all-time high since Gallup first began polling employees in 2000, costs U.S. companies an astonishing $450-$550 billion dollars in lost productivity each year. Indeed, only 30% of U.S. workers are actively engaged, enthusiastic, and committed to their workplace. The remaining 70% of employees, who are either not engaged or actively disengaged, feel emotionally disconnected from their workplace and are therefore less productive and more likely to miss work, negatively influence customers and fellow employees, and even steal from their company. For business owners, these data are sobering. With Americans now working an average of 47 hours per week, it’s disheartening to think about how much of that time is spent working against profitability.
A 2013 study on employee engagement (Anik, et al) offers a ray of hope. Prosocial bonuses—incentives with a shifted focus from self to others—are shown to produce measurable benefits for employees and organizations.
In order to test the effects of prosocial bonuses, employees in several different experiments were given money and instructed to spend it either on themselves or on a teammate. Following reported monthly sales as an indication of performance, the researchers discovered that for every $10.00 an employee spend on his or herself, the company received $3.00 back. For every $10.00 an employee spent to benefit a teammate, the company received $52.00 in return.
In another experiment, the researchers gave bank employees charity vouchers ranging in value between $25.00 and $50.00. The employees that received the higher value vouchers to donate to charity later reported greater happiness and job satisfaction than those who received a lower amount or who did not receive a voucher at all in the control group.
“In almost every country in the world,” said one of the study authors during a TEDx talk on the subject of money and happiness, “people who give money to charity are happier than people who don’t give money to charity.” And happier employees, it turns out, are more likely to come up with new ideas, solve complex problems, and feel more actively engaged in the workplace.
So how can companies use this information to increase employee satisfaction, engagement, and company profit margins? Keep the following tips in mind:
– Karli Larson is the former Education & Charities Manager for TisBest. Connect with her on Twitter @KAnneTweets