Employees and consumers expect even small employers to be more socially responsible throughout the year
As the holiday season rolls around, so does the pressure on many small employers to give, whether to a local charity or a more global cause.
That demand is no longer limited to a once-a-year donation. Both customers and employees are increasingly demanding more corporate social responsibility from businesses of all sizes. The result is a trickle down of workplace giving programs that used to be found only in larger firms, according to Bryan de Lottinville, president and CEO of Benevity Social Ventures, a Calgary company that offers web-based philanthropy solutions for companies.
“Whether you’re a small or larger company, you’re competing for the same employees and the same customers,” he said.
More than one-half (57 per cent) of Canadian consumers said they had punished companies they regarded as socially irresponsible by taking their business elsewhere, according to a 2009 study by Toronto-based market research firm GlobeScan.
And the 2009 Edelman goodpurpose Study — conducted in 10 countries including Canada — found 67 per cent of respondents said they would switch to a different brand if it supported a good cause.
“From a business perspective, philanthropy today is not philanthropy,” said Gena Rotstein, president and founder of Dexterity Consulting, a charity consulting business in Calgary. “It’s about leveraging your company in your community.”
Workplace giving also appears to be more critical than ever when it comes to recruitment and engagement. More than one-third of workers said they would take a pay cut to work for a socially responsible firm, according to a 2010 study of 1,001 Americans by the global research firm Penn Schoen Berland. That number jumps to one-half for Millennial workers between 18 and 24 years old.
“Workplace giving creates a sense of community for them,” said Rotstein. It also feeds into their desire to have more meaning in their work life than their parents did, she said.
However, employers should not support every cause that comes along. Programs such as those offered by United Way work better for large employers that have HR departments to manage contributions, said Rotstein. Small businesses should focus on workplace giving initiatives that tie in with the company’s social vision, she said.
“Clearly identify your social values, whether from the top down or the bottom up, then look at opportunities,” said Rotstein. “Ask what time, treasures or talents can feed into that. Are we donating time, product, our own intellectual property or something else?”
Choice an important factor for success
It’s important for employees to have choice, which is often the downfall of larger workplace giving programs, said De Lottinville. They “force” employees to belong to the boss’ pet cause.
Seventy-three per cent of 50 companies in a 2010 study by the LBG Research Institute saw employee donations increase after changing their giving models to ones with more choice. At the same time, 81 per cent of employees want companies to match their contributions dollar for dollar, according to a 2009 Cone Cause report.
“That same dollar you give could turn into two dollars,” said de Lottinville. “By matching, you’re ensuring the program is resonating. The conventional model of the giant cardboard cheque for the CEO’s pet charity is outdated. Let employees give to whatever they want.”
Even with the best of intentions, giving can still go awry. Employers should be conscious about how and which charities their brand is attached to, said Rotstein.
“You need to check the books and meet the staff,” she said. “You need to manage the risks just like any other program.”
Employers also need to consider how their brand is being used, she said. Will the charity use it to make connections with competitors? Who else will be approached?
Finally, it’s important to consider the time commitment and whether the company has the people power or administrative time to manage a giving program.
Not doing anything, however, is not an option, said David Ohreen, who teaches philosophy and business ethics at Mount Royal University in Calgary.
“Until recently, there hasn’t been the same expectation from a consumer point of view,” he said. “They expect big companies such as Shell and Encana to give. When profits are in the billions of dollars, people want to know what they’re doing with that money. But it’s starting to spill down.”
The correlation between corporate social responsibility — giving — and profitability is still unclear based on research. The initiative does have importance in terms of strategic initiatives, such as recruitment and retention, but there’s no proof it will improve the bottom line.
“If there’s no link between giving and profitability, then why are you doing it?” said Ohreen. “Because it’s the right thing to do.”
The standard rule of thumb for corporate giving is about one per cent of pre-tax profits, according to both Ohreen and Rotstein. But even this amount is insufficient considering the profits of many larger companies, said Ohreen.
However, smaller firms can achieve this goal in a number of ways: by giving employees time off to volunteer, offering business expertise to non-profits, sponsoring events or supporting one-time workplace fundraisers, he said.
The key is to consider workplace giving a long-term business strategy, not something short term meant to boost image or placate employees, said Ohreen.
“In the long term, it’s a strategic advantage for reputation and it does speak to the expectations of society about being good corporate citizens,” he said. “It’s also very important for employees to feel they’re making a meaningful contribution.”
Workplace giving is “not just a fad,” said de Lottinville, and small employers are wise to attach themselves to some form of workplace giving.
“Within five years, every company, large or small, will have a program,” he said. “The ability to differentiate themselves will be key to the future. The differentiator will be what you do with that program and how much you invest in it.”
Danielle Harder is a Whitby, Ont.-based freelance writer and editor of Canadian Employer, a newsletter published by Canadian HR Reporter that focuses on human resources for small- and medium-sized organizations. For more information, visit www.hrreporter.com/tce.
