What goes around: Corporate volunteering boosts the bottom line

Corporate volunteering boosts the bottom line

One Friday night a month, five BP Canada employees prep and serve dinner at a homeless shelter in Calgary. They'll probably not utter a word about natural gas while chopping, slicing and dicing; they're unlikely to debate marketing strategy as they do the dishes. But as part of a corporate volunteer program, their efforts will increase shareholder value, raise their company's community profile and even boost productivity back at the office.

Like other smart managers around the world, executives at BP know that company giving brings big gains. According to a survey of 700 corporations by the U.K.'s Business in the Community, a corporate responsibility and advocacy organization, 40% indicated volunteerism benefits their bottom line. Perhaps that's why one-third of British companies have formal time-off policies for employee volunteers. So do another one-third in the United States.

In Canada, 64% of companies surveyed by Ottawa-based Volunteer Canada and corporate citizenship promoter Imagine of Toronto have an annual budget for volunteer programs. Top causes include the United Way, Junior Achievement and Habitat for Humanity. There are also many programs tailored to business know-how, such as one at Microsoft Canada, where 12 employees have been using their expertise to create a new digital library for the blind. Where translating Harry Potter into braille used to cost about $100, now visually impaired children can download a free audio version.

Aside from helping those in need, the most obvious benefit to all this corporate nice-nice is improved morale and team-building. “It's amazing to see our employees get so passionate,” says Paula Knight, Microsoft Canada's director of community affairs. “It really drives them.” The results can be so tangible that about 44% of Canadian companies have actually used volunteer programs to keep up employees' spirits during mergers, acquisitions or downsizing, according to the Volunteer Canada and Imagine survey.

Not only do workers who do good feel good, they also do a better job. A recent report cited by Volunteer Canada showed employee competency gains of 14% to 17% as a direct result of volunteering. Says Cathy Wellesley, IBM Canada's manager of corporate community relations: “When we talk about volunteering to the employees, we remind them that it's a great thing to do in terms of skill development that they can bring back to their own work.”

Not surprisingly, volunteer programs pay off in employee retention, too. Paul Maltby, a sales and market manager, has been with the Royal Bank of Canada for 16 years. He enjoys what he does nine to five–but he also likes the corporate support he gets for his after-hours gig as a Cub Scout leader. Maltby's office is flexible when his troop demands his attention. Plus, he's received two $500 grants in a “dollars for doers” program that funds RBC employees who donate 40 hours to charity. Small gestures for a multimillion-dollar business? Maybe, but they have big emotional impact in a process-driven industry.

RBC is not alone. The Security Benefit Group, an investment firm based in Topeka, Kan., found that three years after formalizing its volunteer program, staff turnover fell to 7%, from 22%. Almost 90% of companies surveyed in a 1998 U.S. study by the Points of Light Foundation, a volunteerism advocacy group, said workplace volunteerism cut down employee churn. Given that the replacement cost for an employee is estimated at a quarter to five times their annual salary, volunteer programs provide significant savings on HR expenses.

In addition to winning allegiance from those on the payroll, being a corporate sweetheart can woo hot recruits for less than the usual price. A 1997 survey conducted by Net Impact, a U.S. MBA network devoted to social change, showed half of recent North American MBA grads said they'd take less money to work for a company they felt gave back to the community. “I'm finding younger people today are becoming more selective in terms of the companies they want to work for,” says Microsoft's Knight. “It's incredible the priority put on the social responsibility of companies.”

Corporate caring is increasingly important to customers, as well. In a 1999 Environics poll, 53% of Canadians thought social responsibility was a key differentiator for a company, above brand or finances. That perception is especially true for businesses where product distinction is diminishing. As John Jelinek, vice-president of public affairs for Ford Canada, says: “As the technical sophistication of cars and trucks gets closer to being equal, our customers have told us that they want to buy from a company that they're proud of, where they know what you stand for.”

Giving employees 16 hours of paid volunteer time a year then, is a savvy marketing move for Ford. Unlike ads and press releases, received with mounting cynicism, employees doing yard cleanup for seniors or donning hip waders to count fish populations in Ontario's Credit River are concrete displays of company values. “Our corporation is really sending missionaries out into the community, trying to put a face to the company,” says Jelinek. “It's not just this big white glass building sitting by the side of the road with a Ford oval on the top of it. It's Joe and Norm and Stacey and Alice.”

After the corporate scandals of the past few years, Joe and Norm and Stacey and Alice are also crucial to building trust with investors and the government. “The Enron, WorldCom, the-list-goes-on-com situation has somewhat hurt the face of business in the eyes of many stakeholders,” says Paul Lucas, president and CEO of GlaxoSmithKline Canada, which is based in Mississauga, Ont. “The expectations of us as business people and companies have increased. We need to demonstrate that we're good corporate citizens.”

At one time, all a company needed to do to prove its concern for the communities where it did business was to cut a cheque for charity. But a public-opinion study by pollster GlobeScan in December revealed 80% of Canadians hold companies completely or partially responsible for encouraging employees to volunteer. As Helen Simpson, communications director for Imagine, notes: “There is a move away from corporate philanthropy to more community investment.”

OK, so you've met public demand to roll up your sleeves and get involved in the community. You've charmed bureaucrats, investors and suppliers. Your staff has what Allan Luks of New York's Big Brothers Big Sisters calls “helper's high.” They plan to stick around and give management their all for years to come. But what about good old-fashioned profit? As Ford's Jelinek says: “There's got to be some business reason to do this other than the opportunity to feel good.”

Thankfully, there is. In 2000, the Jantzi Social Index (which tracks 60 socially responsible companies) revealed that those who helped others got a high all their own–they had a 5% better return on investment than the TSE 300. Total assets invested by socially concerned investors rose 183% in 1999. The bottom line: businesses that do good do well.

And, as Simpson points out: “You've got your employees, and they're volunteering already. Why not take advantage of it?” Heartwarming, isn't it?