Companies benefit from committed employees

19 April 2017

Employees who personally identify with their company are more likely to make decisions that benefit their company than employees who do not identify as strongly. This finding can be found in the paper ‘Organization Identity and Earnings Manipulation’ written by Jan Bouwens, Peter Kroos (Amsterdam Business School) and Margaret Abernethy (University of Melbourne), that will be published in the journal ‘Accounting, Organizations and Society’.

While for some employees a company is a place where they work from 9 to 5, other employees have a strong connection with the company that employs them. Many businesses try to strengthen this connection by:

  • Determining whether the applicant is good fit for the company by focusing on questions related to this aspect in the recruitment and selection phase;
  • offering an comprehensive introductory programme when a new employee starts work at a company;
  • offering the prospect of personal growth and development during the employment period. 

Identification and creative accounting

The question posed by the researchers was whether this kind of personal identification with the company would lead to decisions that benefit the company.
The researchers showed that the chance of manipulating business results (creative accounting) decreases in proportion to the strength of an employee’s sense of commitment to the company. They also demonstrate how employees who depend on business results for determining their remuneration are more likely to manipulate results. However, the likelihood of this decreases when the employee identifies with the company’s fortunes.

These conclusions could be cause for companies to determine if an employee actually identifies with the company on a personal level before offering an employee a contract that is primarily based on performance.

Published by  Economics and Business