We already know that corporate sustainability can, under certain circumstances, be positively related to firm performance. There are likely a host of different factors playing into that. Today I want to focus on just one: the preferences of corporate employees. We know that employees are motivated by a range of job attributes. People like to have a big salary, a good work-life balance, they like others to view their job positively, they like to have autonomy in their work, and, crucially for our discussion today, they like to feel like their work has a positive social impact on society. The reality is, most corporate employees will have to accept some kind of sacrifice when it comes to their job search. So they might find a high-paying job that gives them autonomy, but perhaps the social impact they’re actually having isn't as big as they like it to be, or perhaps they prefer to have a different type of impact. So you can imagine working for a firm that gives products and services to relatively affluent customers, but perhaps those products and services never even reach the lower income brackets, or perhaps these products and services don't do anything to alleviate poverty, inequality or so on. So what can employees do? One option is they could simply volunteer in their free time, work for NGOs or development organizations, so completely shift their jobs. Of course, that is associated usually with actually a salary reduction. So the reality then is most corporate employees will stay in their corporate jobs, but they will have what we call a residual preference for social impact. So they wish they could have more or just a different type of social impact. So firms that can actually activate those employees talk to those employees and provide them with the opportunity to create social impact without having to leave their corporate careers might benefit because such employees could be happier, more motivated and stay longer with the firm. So with two of my co-authors, Justin Singh and Michelle Rogan, we tried to figure out whether this would be the case. So we looked inside one large management consulting firm, and that firm gives corporate employees the chance to participate in projects that are really socially impactful, usually for a duration of about three to six months. So the question was, would they stay longer with the firm? The first thing we figured out is those kinds of people that are interested in these types of projects generally are higher performing than their peers. So this is not a bunch of slackers that can't hack it in their corporate careers, these are good people wanting to do this. Of course, this kind of difference in preference going into the project creates some empirical challenges. So you have to be very careful in setting up the comparison between the people who do this work and those that do not. After doing that, we found that people who take part in the project actually have a 36 percent reduction and attrition. So if you’re looking at this over each year, each year these kinds of people are one third less likely to leave the firm. So this is a big deal if you think about recruiting cost and the cost of training people. We should be clear though we were looking at people who wanted to do this kind of work, right, so we can't be sure if we force all corporate employees to do social good for the world as part of their careers, that we would also find this effect. And also we found that very long projects, taking people away to save the world for very long periods of time actually didn't have such a positive retention effect. And finally because these were people who actually come from Europe or the U.S., we found taking them away to very sort of distant places usually at very low levels of economic development actually didn't have such a positive effect either. So we don't know if that is because the projects weren't as good, or because they were so good that those people simply decided to quit their corporate careers and completely change and shift to the development sector. The next question we were interested in is why are people attracted to this, why do they value this? So we asked people if and how much of a salary reduction they would accept to select into this kind of work. So if people accept the salary reduction, you can be pretty sure they value it. So we found only 15 percent of people had said we have no interest, we will not accept a salary reduction, whereas the majority said we'll accept a reduction between 10 and 30 percent. Why? So the reasons differed a little bit between people. So some people really said this is about making an impact on the world, and I find that personally meaningful. While others said, actually this is a way for me to get ahead a little bit in my career, either inside the consulting firm, or in my career after the consulting firm. So putting this together we do know that corporate sustainability can help firm performance, probably because it does have a positive effect on employees, it might lower the attrition rates. But the design of these kinds of initiatives is very important. So how long people are going away, where they're going, and what type of benefits they will actually get out of it in terms of their personal meaning or in terms of their career. And of course the really big question, which we don't know the answer to yet, is are the same kinds of projects that are best for society, also the projects that are best for employees, and are those projects ultimately also best for the firm? So, to be figured out.
