Intrinsic motivation comes from a combination of purpose, autonomy, and mastery. If employees lack purpose, their engagement diminishes. Many companies address this gap through corporate philanthropy – should they?
The advocates for corporate philanthropy might say that working together towards a higher purpose benefits companies because (1) employees connect with each other and their communities, (2) employees develop deeper sense of pride in their company, (3) non-profits receive volunteer sweat equity and/or donations and (4) companies strengthen their brand image.
But wait, say critics. Companies that decide to benefit “communities” are effectively redistributing profits in a way that may run counter to shareholder objectives. Companies that engage in corporate philanthropy are also taking choice from employees. For example, I remember disliking the corporate pressure for 100% participation during United Way drives. What I resented was that the firm demanded my resources to support their charity. Instead, critics assert, companies should follow the Friedman Doctrine and let shareholders decide how (or if) they want to use profits to benefit society.
For a slightly different take on corporate philanthropy, consider that the Business Roundtable recently announced they were going to run their companies to benefit all “stakeholders,” including “customers, employees, suppliers, communities, and shareholders.” This announcement appeared to distance businesses from their historical position of shareholder primacy. Or read this Boston Consulting Group article about Optimizing for Both Social and Business Value.
Ultimately, customers and employees will dictate the degree of corporate philanthropy, if any, a company should sponsor.
- Corporate boards can choose to change money distribution in ways to benefit communities.
- Consumers exercise power through their spending choices. If they disagree with a company’s social platform, consumers can boycott and take their business elsewhere.
- Employees (especially in a tight labor market) choose where they work. If they want to work in a company invested in the community, they can certainly do so.
The pivot point is that the concept of using corporate philanthropy to increase employee engagement seems benign enough because the free market economy puts sufficient checks and balances on philanthropy. My experience with The Home Depot Foundation was positive and I was (am) proud to be associated with a customer who invests in the community. Now, if my participation had been mandatory, I expect I would have felt quite differently.
Double the Donation has a good article here with some statistics on employee engagement.