Turnover is a constant headache for any organization, and one that has been made much worse during the coronavirus pandemic. The need for belt-tightening has led to unprecedented layoffs and furloughs, to the point that the United Nations’ International Labour Organization predicted a seven percent decrease in worldwide working hours in the second quarter of 2020, the equivalent of 195 million full-time jobs.
Retention, then, is not the concern at present. But when the U.S. emerges from this economic crisis, it will be. And there is a growing consensus that a company can best encourage it by engaging in a mission that goes beyond the bottom line.
Major corporations have come to this realization; fully 70 percent of the business leaders responding to a 2015 Boston College study believed that social responsibility made for a more stable workforce, and even more — 75 percent — were of the opinion that it enhanced their recruitment.
For that and many other reasons, companies have redoubled their philanthropic efforts. It’s the ultimate win-win: companies get to make a difference in their communities while simultaneously keeping employees (and customers) driven and engaged.
Here’s a closer look at why this works.
It Resonates with Millennials
Such matters resonate in particular with Millennials, who will comprise 75 percent of the workforce by 2025. One study concluded that 76 percent of those in that age group consider corporate social responsibility (CSR) when deciding where to work, 75 percent would take a pay cut to work for a socially responsible company and 64 percent wouldn’t take the job at all if a given business didn’t have CSR as part of its mission. Most telling of all is that 88 percent of Millennials equate social responsibility with job fulfillment.
A company’s philanthropic position can help reinforce and delineate its culture and market value. Potential employees in other age groups are no less discerning; over half say they won’t work for a company that isn’t socially responsible.
The Challenges of Turnover
Turnover is certainly something best kept to a minimum. One study concluded that replacing an employee will cost somewhere between six and nine months worth of a salaried worker’s pay, while another study, more nuanced in nature, said the toll depends on where a person stands in the pecking order. Replacing someone in a low-paying position requires 16 percent of that person’s salary to find a replacement. For someone in a mid-level job, it rises to 20 percent. For executives, it’s a staggering 213 percent.
There are various things to take into account, including advertising, interviewing and onboarding. Beyond that are unseen costs, like the gap in productivity between an established worker and a newcomer, until the latter person gets up to speed.
Engagement is Key
Engagement has long been recognized as a key to retention. A Gallup poll revealed that half of American workers would describe themselves as not being engaged, while another 20 percent are actively disengaged, and that such workers cost the U.S. economy between $483 billion and $605 billion a year. The flip side is that engaged workers are not only more productive, but more likely to emerge as leaders and influencers, beating the drum for the brand in question.
There are various other benefits to philanthropic efforts, beyond ensuring a stable workforce. Most obvious is the fact that businesses can make the world or the community a better place — very much the point of philanthropy to begin with -- as shown by Facebook, which donated $120 million to local schools after opening its campus in Menlo Park, Calif. In addition, there is a company called HardWood Bargains, which was among those businesses to partner with the American Forest Foundation on an initiative to plant 50 million trees in the U.S.
It Engenders Goodwill
Philanthropy also engenders goodwill and allows a business to build connections, both of which are crucial to growth. Over 85 percent of the business leaders responding to the aforementioned Boston College study were of the opinion that CSR improved their company’s reputation.
A separate study of employees showed that 61 percent of them believe engaging in charitable works alleviates stress, improves their mood and gives them a greater sense of purpose. And still another study concluded that 37 percent of employees feel a greater connection to the company if it is committed to philanthropy. And again, there are no greater advocates for a business than employees who buy into its mission.
These are uncertain times, times when conventional wisdom cannot always be applied to business -- or, really, any other aspect of life. But when the U.S. economy emerges from this economic slump, it is expected that some (though not all) realities will still apply. In particular, it is clear that there is a correlation between retention and CSR -- that it leads to greater employee satisfaction and engagement, and a more stable, productive organization.