Startups with a social vision miss out on valuable employees

For companies with a social purpose, recruiting new employees is usually not a problem. Candidates find these organisations because of their sympathy for the social vision of these companies. But for startups, this works differently: precisely by emphasizing a social vision in the recruitment procedure, they miss out on valuable candidates, says Timo van Balen of the Utrecht University School of Economics (U.S.E.). The social vision is not in line with the career advancement opportunities that candidates expect at a startup. Nevertheless, offering an attractive salary or equity package can change this. If you offer more compensation, there is a better balance between career perspective and social impact for potential employees.

Modern companies realize that emphasizing social values is very important for attracting people. And that certainly applies to the average organisation. However, startups that present themselves with a social vision, also raise doubts with job seekers about career opportunities. That is the paradox in the recruitment of startups with a social vision, says assistant professor Timo van Balen, who conducted this research together with Murat Tarakci (Rotterdam School of Management).

Communicating 'social purpose' produces self-selection
 

Normally, you want to attract as large and heterogeneous a pool of people as possible in your recruitment, so that you can create a quality match. But by communicating such a strong vision in the recruitment procedure, you actually make that group smaller, Van Balen continues. You have to be careful with saying that you want to make the world a better place, because it evokes many additional negative associations – for example: limited business growth, an inflexible entrepreneur or a lack of autonomy.

Diversity and functional conflict are needed for innovation

Recruiting on the basis of a social message seems attractive: Almost everyone wants to contribute something positive to society with their work. It may very well be that people find your company on their own, are super motivated and fit well with you. That may be your goal as a starting entrepreneur, in a world where you compete for the attention of qualified personnel. But the potential employees that are important for the growth of your organisation, for example those with a business or technical background, can also have slightly different preferences. You would miss out on those potential employees. And that's a shame, because diversity and functional conflict are indispensable for innovation within your organisation.

If you attract a larger pool of applicants, you have more opportunities to make an optimal match. In addition, you also prevent too much uniformity, which hinders the growth of your organisation.

The researchers' findings stem from two studies, Van Balen explains: We first found the most important effect through the analysis of vacancies on a large international vacancy website for startups. Secondly, we replicated this effect in an experiment on the basis of a real startup vacancy among master's students looking for a job. In this experiment, the researchers offered students the opportunity to apply for the vacancy. They kept the job description and conditions of the job unchanged, but they randomly varied whether or not the startup promoted a social vision.

If you attract a larger pool of applicants, you have more opportunities to make an optimal match

Limited career opportunities

The experiment shows that, although job seekers at startups with a social vision experience a strong similarity in basic values, they also see a strong limitation in the career opportunities. In this way, 'social' communication produces a strong funnel effect. For social enterprises, the social purpose is the core of the business. But candidates do not (yet) know the company and must therefore rely on what they read in the vacancy text, with all the interpretations that go with it.

Candidates must rely on what they read in the vacancy text, with all the interpretations that go with it

Van Balen explains: Yes, people already expect a startup to offer less salary than a large corporate. But I think very few people who enter the startup world don't secretly hope that the venture’s valuation will go up ten times and that they hold some equity.

Even more important according to Van Balen: Young job seekers often hope to boost their career by working in a small team, with a lot of responsibility and autonomy. This could help them significantly strengthen their CV, get into management positions more quickly, or learn more about their own entrepreneurial ambitions. The social vision works against this mental image.

Sufficient salary, a clear development perspective and a vision

Still, there is a nuance according to the research. When sufficient salary or employee stock options are offered, it compensates somewhat for the negative effects. It suggests that startups with a social vision should think carefully about how they want to highlight the career advancement opportunities for job seekers in their job postings. Simply saying that you want to make the world a better place does work well, especially for the younger job seekers.

That does not mean that as an enterprise with social purpose you should alter your goals or simply lie about it. However, it’s about the weight you give it in your communication. Purely ‘making impact' is simply not enough for young and ambitious employees. Up front, they want to have the feeling that working at the startup will also strengthen their career path.

More information

Would you like to know more? Please contact Timo van Balen: t.h.vanbalen@uu.nl.

Read: ‘For startups seeking talent: a lofty purpose can backfire’ on the website of Harvard Business Review.

Or read the article ‘Recruiting Talent through Entrepreneurs’ Social Vision Communication’ by Timo van Balen andMurat Tarakci (Rotterdam School of Management) in Organization Science (open access).