Engaged employees improve the bottom line.

Does CSR matter to your company?

Dave Kinnear1-On Leadership

Isn’t it enough to keep people employed and earn a profit?

The short answers to those two questions are: yes Corporate Social Responsibility (CSR) matters and no it isn’t enough to just employ people and earn a profit; and it never really has been otherwise. The truth is that now there is more transparency (like it or not) around what companies and business owners are doing. And there is obviously much discontent over the widening gap between the “haves” and the “have nots” or, if you will, between the 1% and the 99% to use the now quite ubiquitous rallying cry of the Occupy Wall Street Crowd.

I’ve noticed an increase in the number of business speakers who are “pitching” employee engagement as a critical discipline for the coming year. Why? Well, for one thing, as the economy improves, we will need to do more to keep our key employees. If you’ve had to cut back on wages, bonuses and benefits, you may want to do whatever you can to restore those wages, bonuses and benefits. If we are not able to do that for profitability and cash flow reasons, then we will need to find other ways to encourage employee involvement in our enterprise. Green Research found that 80% of major corporations are planning to invest significantly in employee engagement in 2012. According to Gallup, 86% of engaged employees say they feel happy at work compared to only 11% of those employees who feel disengaged. So what does this all mean to the company? Companies with high levels of employee engagement saw increases in their bottom line. Towers Watson calculated improvements on average of 19.2% for engaged organizations and a decline in bottom line results of almost 33% for those companies scoring in the lower levels of employee engagement.

One of the ways employees feel engaged is if they are allowed to volunteer their time for causes they support. Many companies are finding ways to support their employees by giving them time, or allowing them to “earn” time that they can volunteer for an appropriate charity organization. Some companies are even exploring the idea of partnering with a not for profit organization and giving their employees an opportunity to volunteer, raise funds, etc. The Social Enterprise movement is pairing for-profit businesses with not-for-profit businesses so that there is a cross-learning opportunity. The not-for-profit organization may have some great ideas for employee engagement since they spend much of their time getting volunteers energized around a mission. The for-profit company can share best practices for containing costs, continuous improvement of processes and managing the paid staff properly. It is a win-win situation in most cases.

As social media continues to grow (businesses are finding the new Google+ to be a great platform) and mature, businesses are finding that they have no choice but to be catering to their customers who often use these platforms almost exclusively. These tools are also used by the consumer to determine the quality of the vendor they are considering. They look for referrals and/or ranking by their friends. They do not believe paid advertisements. Companies have to be involved with the social media sites if for no other reason than to know what is being said about their brands and to know what is going on in their community. The social responsibility part of all this is to make sure that the company is engaged in the community.

The National Association of Corporate Directors sent out a Public Company Governance Survey and found that the highest priority at 72% of the respondents was strategic planning and oversight while only 2% put CSR at the top of their priorities. This suggests that many boards will be working to catch up to their more nimble and media savvy competitors. If the trends in transparency, CSR and employee engagement continues, then we will soon find that “good business” is not only the norm, but a requirement to compete.