NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Social enterprises are increasingly lauded as an important mechanism to address development and climate challenges in low- and middle-income countries. Not only do they aim to tackle specific social and ecological issues that are at the core of their missions, but they also catalyse positive impact through their operations. For example, compared to traditional businesses, social enterprises are closer to closing the gender gap in entrepreneurship that exists in many countries. And in some regions, such as in sub-Saharan Africa, data suggests that they may create more jobs than comparable commercial entities — particularly for individuals who face barriers to labour markets, like women and people from poor communities. 

However, social enterprises also face unique challenges: To take one prominent example, they are often resource-constrained in comparison to their counterparts in the traditional business and public sectors. This can affect their ability to recruit a skilled workforce, as social enterprises must compete for talent with corporations, which can offer higher pay, and with the public sector, which offers potentially safer jobs. In response, many social enterprises leverage their mission in their talent strategy: Because they often cannot match the benefits offered by their competitors, they promise impactful work — i.e., a job that allows their employees to feel good about their work, and the difference they’re making for other people and the planet.

However, working for a social enterprise, or indeed any organisation with a social mission, does not guarantee that employees will experience their work as impactful. Sometimes, workers experience a sense of dissonance between their belief that their work will make a difference and their doubts about whether it actually does so — something I label the “subjective impact gap.” This experience is common among social enterprise workers, whose work requires them to tackle complex and overwhelming societal problems, while accepting that the impact of their efforts may often be uncertain, invisible, delayed, difficult to measure — or even negative.

The subjective impact gap is a challenge for both individuals and social enterprises. It elicits negative emotions, which can counteract the positive emotional impact of mission-focused work — something that can be compounded by the downsides of working in a resource-constrained environment, on a career path that some people feel lacks legitimacy when compared to the typical corporate world. It can cause social enterprise workers to experience doubt, disillusionment, frustration, disappointment, regret, guilt and even shame, which are difficult to navigate. Consequently, the subjective impact gap can contribute to lower motivation, engagement and commitment among an enterprise’s staff — even causing some to leave the organisation. 

For these reasons, a successful mission-oriented talent strategy requires social enterprises to close this gap to retain talent. But how can their leaders accomplish this? I’ll explore five strategies for closing the subjective impact gap below.

1. Acknowledge the subjective impact gap

The very first thing social enterprise leaders can do to close the subjective impact gap is to normalise its existence. The subjective impact gap is common. It is something that social entrepreneurs, employees and even volunteers experience. This is not surprising given the combination of the often-heroic tone of the discourse around social enterprises (which frequently base their brands on the notion that they’re “saving the world”), and the complex and uncertain nature of these organisations’ actual work. 

However, the subjective impact gap is not a topic that’s regularly discussed inside social enterprises and within the social entrepreneurship ecosystem. This means that individuals must struggle with it alone, which likely makes these negative emotions more intense. By normalising the subjective impact gap and having open conversations about it, people involved in social enterprises are likely to experience the gap with fewer negative emotions, feel less lonely, and receive emotional support from peers.

2. Understand the causes of the subjective impact gap

Social enterprise leaders can take specific actions to reduce the dissonance that their employees and colleagues experience, but first they must understand why the subjective impact gap occurs. My own research shows that this gap emerges in two distinct situations — when individuals lack feedback and when they face negative feedback — and each of these can be addressed with different tactics.

The subjective impact gap often emerges when there is a lack of feedback that confirms that individuals’ work makes a difference. For example, employees may not have day-to-day contact with the beneficiaries of the enterprise’s work, either because they work in the design, but not the delivery, of services — or because the main beneficiary is the environment, which does not provide direct and immediate feedback. Even if individuals in social enterprises have access to impact measurement that shows the enterprise’s contribution to positive outcomes, they may not necessarily see how their work relates to these positive outcomes in terms of their daily tasks. Additionally, impact reporting typically occurs too infrequently to confirm that individuals’ current work is contributing to their organisation’s broader mission. In this regard, the lack of feedback creates ambiguity and doubt about whether an individual’s work really makes an impact.

The other reason why the subjective impact gap emerges is because of negative impact feedback. Negative feedback in this context is not related to an individual person’s performance: Instead, it is related to the level and direction of impact created by the entire social enterprise and its members. Individuals in social enterprises experience negative impact feedback when they receive clear indications that the positive outcomes the organisation has generated are lower than anticipated, or when evidence of negative impact arises. When this happens, individuals have clear and objective indicators that their work does not make a difference — or at least that it doesn’t make as much of a difference as they thought.

3. Create psychological closeness

To address the lack of feedback described above, social enterprise leaders need to create psychological closeness between employees and the impact of their work. Individuals are psychologically close to events, issues or groups when they perceive them to be personally relevant, aligned with their deeply held beliefs or self-image, and present in their daily experiences. Psychological closeness is like a bridge that connects two islands: The shorter the bridge, the closer the islands — and the easier it is for the individual to visit.

How can an enterprise’s leaders create psychological closeness? They need to generate more opportunities for interactions between employees and service users. This can be through direct online or offline interactions, such as conversations, reflective sessions, events, celebrations or job shadowing other members of the team. Such interactions are particularly important for employees who do not interact with service users in their roles at the organisation — for example, those working in finance or human resources.

Indirect interactions can also create psychological closeness between a social enterprise’s employees and its impact and service users. These interactions can be fostered by sharing case studies and indicators of positive outcomes with staff when they emerge, instead of waiting for an impact report to be ready months or years later. Leaders of social enterprises can also embed physical cues of the impact made by individuals’ work in the organisational environment — for example, by posting pictures of grateful service users or “thank you” notes from them around the office. Or if the organisation has an ecological purpose, it can ensure that its physical surroundings embody and highlight that purpose: For instance, all the office furniture in a waste reduction-focused enterprise can be second-hand or upcycled, to serve as a reminder of the precious materials that the organisation is preventing from ending up in a landfill.

4. Encourage a long-term perspective

To address any negative impact feedback that social enterprise workers receive, leaders need to encourage a long-term perspective. Social enterprises often tackle wicked problems that have no easy or quick solutions. It can take decades for positive change to materialise. And importantly, a single organisation cannot solve these social or ecological issues on its own. These aspects of social enterprises’ work make negative impact feedback common. However, this feedback in itself does not need to be discouraging. 

Encouraging employees to accept that positive change takes time is an important step in closing the subjective impact gap. It is also a practical acknowledgement of the realities of catalysing and maintaining positive social change in a capitalist system. Accepting this reality is not the equivalent of giving up: Rather, it represents a pragmatic approach that enables patience and persistence, keeping the focus on learning and improvement when indicators of low or even negative impact emerge.

5. Broaden the notion of impact

Finally, social enterprise leaders can reduce the subjective impact gap by broadening the notion of impact beyond the specific mission of the organisation. This can help workers see how their work makes a difference in multiple directions. Social enterprises contribute to communities and economies not only directly through their mission, but also indirectly — for example, through their supply chains, equitable and inclusive employment practices, and support for new social enterprises. These indirect forms of impact deserve to be celebrated, and individuals should be encouraged to consider them as additional ways in which they can make a difference through their work.

Social enterprise leaders can also help employees see how their work makes an impact inside the organisation — for example, by acknowledging and celebrating how staff members help and support each other emotionally and practically by pitching in on each other’s work or brainstorming solutions together. It’s common for co-workers in social enterprises to support each other, because their shared work is difficult and their resources are limited. However, this supportive environment should not be taken for granted. By recognising and celebrating the help workers generously provide each other inside the organisation, leaders can reframe what “impactful work” really means, and provide workers with additional feedback that shows how their work matters.

When can closing the subjective impact gap backfire?

Closing the subjective impact gap can benefit both employees and organisations, enhancing employee wellbeing and giving social enterprises a way to maximise the benefits of a talent strategy that relies on the mission of the organisation for both recruitment and retention.

However, the tactics social enterprise leaders utilise to close the subjective impact gap can also backfire. For instance, creating psychological closeness and broadening the notion of impact can result in new activities for employees, such as job shadowing or events after working hours. This can potentially increase workloads for employees who are already stretched thin — and work overload can be harmful not only for employees’ wellbeing, but also for social enterprises themselves, as it can reduce performance.

Creating psychological closeness and broadening the notion of impact can also result in inefficiencies. For example, workers may be motivated to prioritise tasks that have visible impact, such as supporting colleagues or mentoring individuals in new social enterprises. Consequently, they may neglect or deprioritise tasks that do not have this immediate and visible impact — including tasks that are critical for the organisation, such as quality assurance checks or shift scheduling. Social enterprise leaders should take steps to avoid these potential downsides when working to close the subjective impact gap among their employees.

Working for social enterprises can be a way to build an impactful career, yet the focus on impact brings its own set of challenges — not least of which are the frequent doubts among employees about whether their work indeed makes a difference. Social enterprise leaders have an important role to play in closing this subjective impact gap, thus maximising the benefits of their mission-oriented talent strategy, while enhancing the wellbeing of their employees.

Andreana Drencheva is a Senior Lecturer (Associate Professor) in Entrepreneurship at King’s College London. 

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