The cost of a firm’s commitment to CSR may be
offset by its appeal to motivated employees who work harder for lower
Survey and register data indicate that many
employees prefer a socially responsible employer and will accept a lower
wage to achieve this. Laboratory experiments support the hypothesis that
socially responsible groups are more productive than others, partly because
they attract cooperative types, partly because initial cooperation is
reinforced by group dynamics. Overall, the findings indicate corporate
social responsibility may have cost advantages for firms.
Greater representation of women on
decision-making teams may better represent women’s preferences but may not
help economic performance
Women’s representation on corporate boards,
political committees, and other teams is increasing, in part because of
legal mandates. Understanding the effects of gender diversity in terms of
economic performance is important to assess the impact of these changes.
Data on team dynamics and gender differences in preferences (risk-taking
behavior, taste for competition, prosocial behavior) show how gender
composition influences group decision-making and subsequent performance
through channels such as investment decisions, internal management,
corporate governance, and social responsibility.
What can we learn about discrimination in hiring?
Anti-discrimination policies play an important role in public
discussions. However, identifying discriminatory practices in the labor market is not an easy
task. Correspondence testing provides a credible way to reveal discrimination in hiring and
provide hard facts for policies. The method involves sending matched pairs of identical job
applications to employers posting jobs—the only difference being a characteristic that signals
membership to a group.
How different procedures might succeed in
Alternative dispute resolution procedures such as
arbitration and mediation are the most common methods for resolving wage,
contract, and grievance disputes, but they lead to varying levels of success
and acceptability of the outcome depending on their design. Some innovative
procedures, not yet implemented in the real world, are predicted to improve
on existing procedures in some ways. But controlled tests of several
procedures show that the simple addition of a nonbinding stage prior to
binding dispute resolution can produce the best results in terms of cost
(monetary and “uncertainty” costs) and acceptability.
Sexual orientation seems to affect job access
and satisfaction, earning prospects, and interaction with colleagues
Studies from countries with laws against
discrimination on the basis of sexual orientation suggest that gay and
lesbian employees report more incidents of harassment and are more likely to
report experiencing unfair treatment in the labor market than are
heterosexual employees. Gay men are found to earn less than comparably
skilled and experienced heterosexual men. For lesbians, the patterns are
ambiguous: in some countries they have been found to earn less than their
heterosexual counterparts, while in others they earn the same or more. Both
gay men and lesbians tend to be less satisfied with their jobs than their
Workers care about employers’ social causes, but
the public sector does not attract particularly motivated employees
Employees show more commitment to an employer
that promotes the greater good, and they work harder too. Moreover, many
people are willing to give up some of their compensation to contribute to a
social cause. Being able to attract a motivated workforce would be
particularly important for the public sector, but this goal remains elusive.
Indeed, there is evidence for the public sector that paying people more or
underlining the career opportunities (as opposed to the social aspects)
associated with public sector jobs is instrumental in attracting a more
productive workforce, without having a negative impact on intrinsic
Firm-sponsored training benefits both workers
and firms through higher wages, increased productivity and innovation
Workers participating in firm-sponsored training
receive higher wages as a result. But given that firms pay the majority of
costs for training, shouldn’t they also benefit? Empirical evidence shows
that this is in fact the case. Firm-sponsored training leads to higher
productivity levels and increased innovation, both of which benefit the
firm. Training can also be complementary to, and enhance, other types of
firm investment, particularly in physical capital, such as information and
communication technology (ICT), and in organizational capital, such as the
implementation of high-performance workplace practices.
Do pay incentives and financial participation
schemes have an effect on a firm’s performance?
Many firms offer employees a remuneration
package that links pay to performance as a means of motivation. It also
improves efficiency and reduces turnover and absenteeism. The effects on
productivity depend on the type of scheme employed (individual or group
performance) and its design (commissions, piece-rate or sharing schemes).
Individual incentives demonstrate the largest effect, while group or team
incentives are smaller in magnitude. The case for government intervention
through tax breaks and other financial incentives is highly debated due to
differences across firms and the potential for economic inefficiencies.