Study: Mission-motivated employees perform better despite lower pay

Dive Brief:

Employees motivated by a social mission outperform their peers, despite earning 20% less, researchers found in a study published in The Accounting Review.
Participants who chose a social mission job at 20% less pay outperformed participants who did the same job earning 20% more than was offered for non-social-mission work, the study found.
"Our study should be particularly encouraging to startups that have a strong social mission but a very tight budget," said Laura Wang, assistant professor of accountancy at the University of Illinois at Urbana-Champaign, one of the authors of the paper. "It tells them that they don’t have to sacrifice staff quality — and, indeed, are likely even to enhance it — by offering below-market pay."

Dive Insight:

The findings also might apply to cases where conventional companies create discrete units with distinct social missions and give them autonomy in hiring and pay decisions, Wang said.

The findings are based on two experiments. In one, a group of participants was given a choice between a job that paid market rate and one that paid below-market rate but also offered a bonus for doing mission-related work. A second group was given the same choice, except that the pay for the second job, which included the social mission bonus, was above market-rate.

Participants in the low-pay group ended up performing better on a 40-point scale, scoring 19.6 compared to 16.36 scored by the high-pay group, a difference of 17%. A third group, earning market-rate pay, was later added. The low-pay group also outscored that group.

In the second experiment, the low-pay group demonstrated better cooperation than both the market-rate and above market-rate group.

"Those willing to work for low pay on behalf of a social mission tend to be trusting of others willing to do the same," the researchers said. "Below-market pay increases perceived partner value congruence, which increases expected partner cooperation and therefore facilitates team cooperation on a task that contributes directly to the organizational mission."