Social Impact: Research on Understanding Employee Decision-Making at Purpose-Driven Firms

by / ⠀Featured News / August 1, 2023
Social Impact: Research on Understanding Employee Decision-Making at Purpose-Driven Firms

Companies are increasingly emphasizing their commitment to social impact and the betterment of society. These mission-oriented companies seek to attract passionate and mission-driven employees who are motivated by more than just financial rewards. However, recent research suggests that this focus on social impact may have unintended consequences when it comes to employee negotiations and motivations. In this article, we will explore the potential financial drawbacks for workers in mission-oriented companies and discuss strategies for both job candidates and hiring managers to navigate these challenges.

The Rise of Social Impact Framing

More and more marketing, websites, and job posts are emphasizing the positive social impact that the company’s work has on people’s lives. Both for-profit and non-profit businesses and organizations are actively seeking “passionate” and “mission-oriented” employees with a strong sense of purpose. This focus on social effect is not without validity, as it can be indicative of companies’ real efforts to make positive contributions to society and can inspire workers by giving them a stronger sense of purpose in their jobs.

However, a series of studies published in Organization Science reveals a potential financial drawback for workers in mission-oriented companies. The research suggests that the use of social impact framing can inhibit employees from negotiating for higher pay, as they fear being perceived as greedy or inappropriate.

Perceived Norm Violation

The studies conducted by researchers consistently found that job candidates in mission-oriented companies were less likely to negotiate for higher pay compared to those in companies that did not emphasize social impact. Participants in these studies expressed concerns that asking for higher pay would be seen as selfish and counter-normative, putting them at risk of being passed up for the job.

In the first study, which involved 392 participants, those who received company descriptions with social impact framing were 32% less likely to negotiate. The most common reason cited for this reticence was the belief that negotiating would be viewed as greedy and inappropriate.

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These results were bolstered by another study including 438 undergraduates. Students who were shown an introduction video in which the company’s founder placed an emphasis on social effect were 43% less likely to try to negotiate a higher salary for themselves than students shown a video in which no such emphasis was placed. This result can be attributed to the widespread belief that discussing salary issues is frowned upon by management.

These results were replicated in three additional studies, which included workplace simulations and covered various industries such as education, healthcare, manufacturing, and finance. Interestingly, social impact framing primarily affected job candidate requests for monetary job rewards, such as salary and bonuses, while it had little impact on non-monetary rewards like vacation time and healthcare benefits.

Assumptions About Money and Doing Good

The underlying reason for the inhibitions job candidates experience when negotiating for higher pay in mission-oriented companies lies in long-standing assumptions about the relationship between money and the desire to do good work.

One common form of bias held by managers is the “motivation purity bias.” The prejudice here is that workers who are driven by financial incentives rather than intrinsic ones aren’t as committed to their work and shouldn’t be hired. Having more of one sort of motivation does not imply having less of the other, since studies have shown that both extrinsic and intrinsic drives work together to predict strong work performance.

Applicants still seem to be conscious of the prejudice against their desire for financial gain while applying for jobs. Candidates for jobs in the social impact sector often muffle their interest in monetary compensation because of concern of going against the organization’s norms and expectations, which assume that workers will be motivated by loftier incentives such as a sense of higher purpose.

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Takeaways for Job Candidates and Hiring Managers

While it might be tempting to view social impact framing as a cultural trend that benefits owners of capital at the expense of workers, it is essential to recognize that many organizations genuinely aim to contribute to society and create a positive impact. To navigate the potential financial downsides for workers, both job candidates and hiring managers can take certain steps.

Job Candidates:
Invest in Negotiation Skills: Building strong negotiation skills can empower job candidates to navigate the challenges of social impact framing. By developing effective negotiation strategies and techniques, candidates can approach discussions about compensation with confidence and assertiveness.
Research Company Practices: Before pursuing opportunities with mission-oriented companies, job candidates should investigate how these organizations treat their own employees. It is important to ensure that a company that emphasizes social impact also prioritizes the well-being and financial security of its employees.

Hiring Managers:
Hiring managers should be educated on how to identify and overcome their own biases against employees who are motivated by external factors. Managers can make better recruiting judgments and avoid dismissing individuals simply based on their desire in financial incentives if they realize that both extrinsic and intrinsic motives contribute to great performance.

Avoid Machiavellian Tactics: Organizations that genuinely strive to take an ethical approach to business should avoid using social impact framing as a tool to intentionally suppress pay. By aligning their communication and actions with their mission-oriented values, organizations can create a culture that supports both their social impact goals and the

FAQ

Q: Are mission-oriented companies only non-profit organizations?

A: No, mission-oriented companies can be both for-profit and non-profit organizations. The key characteristic is their emphasis on social impact and the betterment of society, regardless of their legal structure.

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Q: How can job candidates overcome the fear of being perceived as greedy when negotiating for higher pay in mission-oriented companies?

A: Job candidates can overcome this fear by investing in their negotiation skills and building confidence. By researching industry standards and preparing strong arguments for their desired compensation, candidates can approach negotiations with clarity and professionalism. It is important to remember that negotiating for fair compensation is a standard practice and not an indicator of greed.

Q: Do mission-oriented companies neglect the well-being of their employees?

A: Not necessarily. While research suggests that job candidates in mission-oriented companies may hesitate to negotiate for higher pay, it is important to recognize that many of these organizations genuinely strive to create a positive impact in society. However, it is crucial for job candidates to research and assess how these companies treat their employees before pursuing opportunities with them.

Q: Can mission-oriented companies offer non-monetary rewards instead of higher pay?

A: Yes, mission-oriented companies can offer various non-monetary rewards such as flexible working hours, professional development opportunities, healthcare benefits, and more. While social impact framing may primarily affect job candidate requests for monetary rewards, it does not necessarily deter them from asking for non-monetary benefits.

Q: How can hiring managers address biases against employee extrinsic motivation?

A: Hiring managers can address biases by being aware of their preconceived notions about the relationship between money and job motivation. Training programs that emphasize the importance of both intrinsic and extrinsic motivations in driving high performance can help managers make fair and informed hiring decisions. By recognizing that employees can be driven by multiple factors, including financial rewards, managers can create a more inclusive and supportive work environment.

 

First reported on Harvard Business Reivew

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