The COVID-19 pandemic forced organizations to make difficult decisions. For example, while many organizations could allow their employees to work remotely, many “essential” industries did not have this luxury. Organizations obliged to continue their work in the face of danger faced numerous challenges and decisions regarding how to structure their work. New research (Steinbach et al., 2021) examined how organizational responses to these challenges shaped stakeholder attitudes.
ORGANIZATIONAL ACTION AND CEO BENEVOLENCE
The researchers examined 77 organizations using data from several sources. Results indicated that when firms provided their employees with bonus or “hero” pay, paid time off, and other additional benefits, the public was more likely to discuss the firm in a positive light via Twitter compared to firms that did not take these actions.
Additionally, the researchers examined letters from CEOs to shareholders at the onset of the pandemic for benevolence behaviors. This refers to a CEO’s intent to benefit stakeholders by showing concern for others, acting in ways that keep stakeholders safe, and refraining from acting in self-interest at someone else’s expense. Results indicated that the relationship between compensation bonuses and positive responses on Twitter became stronger when CEOs displayed more benevolent behavior.
The results from this study provide a potential blueprint for organizations to follow to help shape public attitudes towards their firms in times of crisis. The researchers note that the findings of the study tell a story in which organizations are often rewarded, and rarely harmed, by public opinion when they take immediate action to protect employee well-being. Additionally, the researchers suggest that organizations may be viewed more favorably when they appear to instinctively take action to protect their employees, rather than waiting to develop more calculated responses. In all, organizations should strive to act quickly to protect their employees when faced with novel and disruptive work events.
Steinbach, A. L., Kautz, J., & Korsgaard, M. A. (2021). Caring for their own: How firm actions to protect essential workers and CEO benevolence influenced stakeholder sentiment during the COVID-19 pandemic. Journal of Applied Psychology, 106(6), 811–824.