Does Culture Pay? Evidence from Crowdsourced Employee Engagement Data
Abstract: Corporate culture is increasingly important for retention and employee motivation. First, using a new survey tool with PayScale.com, I show that culture is strongly correlated with employee engagement and both firm productivity and occupational skills. Second, using plausibly exogenous variation in employees' outside options, I find that the average employee is willing to give up 1.7% of their annual earnings ($1,159/year) for a standard deviation increase in culture and that higher income employees are willing to give up even more. These results suggest that companies use culture to hire and retain talented workers.
