Any successful
CSR program produces positive returns to employees. We’ve all seen research
showing how a company’s sustainability program creates a more satisfied and committed
workforce.
We intuitively
understand how this happens: If you feel engaged in your company’s mission,
you’re probably happy to work hard on its behalf. This is true for a growing
portion of the workforce seeking purposeful careers.
Enthusiastic employees
also make productive employees, creating a virtuous cycle for the company’s CSR
investments and its competitive advantage.
But let’s go
beyond the easy narrative; sustainable HR management involves more than
creating a culture of co-worker goodwill.
Tangible value
of CSR
ProjectROI, a
report put out last summer by IO Sustainability and Babson College and
sponsored by Verizon and Cambell Soup Company, provides hard evidence of the
financial and business returns of CSR investments and, more important,
discusses the company practices that can unleash them.
In their
review of over 300 studies, co-authors Steve Rochlin and Stephen Jordan lay the
question of whether ESG practices "drive or distract" from tangible
financial performance to rest. They examine everything from market value and
risk reduction to branding and sales, documenting quantitative evidence that
CSR programs can improve company performance.
For each
employee that is retained, companies can save up to 90 to 200 percent of that
employee’s salary.
On the HR
front, the numbers are impressive: CSR programs can increase productivity up to
13 percent and reduce the employee turnover rate by up to 50 percent for large,
publicly traded companies. For each employee that is retained, companies can
save up to 90 to 200 percent of that employee’s salary.
Prospective
employees also view firms with high corporate social performance as more
attractive; workers are willing to take up to a 5 percent pay cut to work at
these firms.
Further,
workers that are well informed about the company’s CSR efforts are more likely
to go "above and beyond" by doing extra work not required for
payment, particularly high performing workers.
Case study:
IBM’s Corporate Service Corps generates 300% ROI
Take the case
from the report of IBM’s Corporate Service Corps program, which enables
employees to share their professional skills with a company in a developing
country.
IBM
Global IBM
employees on a Corporate Service Corps trip to Peru.
In addition to
contributing to skill development and new market creation, the Corporate
Service Corps attracts top talent to IBM and bolsters retention.
Staff turnover
for participants in the program is 1 percent, compared to a company-wide rate
of 12 percent.
Since the
program’s launch in 2008, IBM cites a $600 million return on its $200 million
investment.
The secret’s
in the sauce
These numbers
prove CSR’s potential benefits, but they are far from the end of the story. The
difference between a substantive CSR program and empty PR efforts is
everything, said Rochlin.
As Rochlin
shared with us, "The companies that get value from CSR and sustainability
are the ones that fit the design of their programs into their business model,
strategy and culture. Once they do that, they commit to CSR as a core
discipline that has metrics to create value. It’s not enough to run through a
checklist of CSR activities."
As with every
aspect of business management, some CSR investments succeed and others will
fail. Their design and management is key.
This means
articulating a commitment to specific goals, aligning CSR practices with
business strategy, establishing quantifiable management metrics and seeking
authentic buy-in.
A four-pronged
approach can help:
1. Fit
Company CSR
should align with its core attributes given its products, industry and
branding. For HR, this means understanding employee expectations for a CSR
program and communicating how it fits with their needs and company goals. A
company can identify three typical employee segments based on their attitudes
to CSR — Idealists, Enthusiasts and Indifferents — to guide the focus of its
initiatives.
2. Commit
Treat
employees well, through thick and thin. Companies that make moderate
commitments to CSR fare poorly, the paper finds. When CSR is pursued
deliberately and consistently, financial performance is enhanced.
3. Manage
ProjectROI
encourages companies to view CSR practices as a value-creating asset base. The
same management disciplines applied to regular business functions also should
apply to CSR assets. Involving employees as partners in developing CSR strategy
and related implementation delivers dual benefits of building an effective
approach and improving employee engagement metrics.
4. Connect
Linking CSR
initiatives to specific values can resonate with employees’ personal
motivations and cultivate company pride. When employees feel closer to a CSR
program, they are more invested in its success and the company as a whole. HR
departments then can showcase these employee-driven CSR initiatives to attract
talent seeking impactful work.
-Green Biz
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