Have you noticed that brands seem to be a bit on edge lately? Gutsy moves by Nike notwithstanding, companies are going out of their way not to ruffle too many feathers. To show what nice people they are. To prove they’re making the world a better place – not just making a quick buck.
That’s because companies no longer hold the iron-clad upper hand they used to. Disgruntled employees can tell their stories on Glassdoor, thwarting recruiting efforts. And frustrated customers grab their flamethrowers and take to social media faster than you can say “Pepsi video”. Add to that, Sen. Warren’s proposed Accountable Capitalism Act, which seeks to further empower both customers and employees.
So when reports came out on three household-name companies who are known for corporate social responsibility efforts and are reporting massive revenue gains (more on that in a moment), I sat up and took notice.
Actually, none of this is new
For years, Salesforce CEO Marc Benioff has been telling anyone who’ll listen about the importance of rewarding stakeholders – employees, customers, and the communities in which you operate – not just your shareholders. Indeed, this is the essence of Sen. Warren’s legislation.
What most company leaders fail to realize, however, is that corporate social responsibility (CSR) benefits businesses and shareholders just as much, if not more, than the stakeholders Benioff is championing. And Benioff should know: his company is way ahead of the curve here, while still delivering an astounding 57% return to shareholders over the last year, according to their annual report.
Dismiss this as “unicorn magic” if you like, but do so at your peril. A 2011 study conducted by the National Bureau of Economic Research and published by Harvard Business Review found a positive causal link between CSR and stock price. Companies that voluntarily adopt environmental and social policies dramatically out-perform those that do not in the long term.
Create more value by valuing employees
Regardless of whether you sell to Millennials, they matter to you. A lot. They’re now the biggest age cohort in the US workforce and they’re keen to work at companies with a good CSR game.
Contrary to their reputation for self-centeredness, this generation has a strong sense of purpose and cares deeply about issues of social justice. According to studies released in 2015 and 2016, 80% of Millennials make charitable contributions, 70% volunteer at least once a year, and 37% spend at least ten hours annually volunteering.
Their reputation for being fickle, however, has a stronger basis in fact. The 2016 study showed that 1 in 4 would leave their job after less than a year if a new opportunity arose elsewhere. In a 2-year timeframe, the number goes up to almost 1 in 2.
The challenge for employers, then, is to meet these purpose-filled candidates where they are and channel all that energy into work they find meaningful. Tactics like giving low-level employees more decision making power and giving all employees paid time off to volunteer in the community are on the rise. In fact, nearly 25% of US companies offer volunteer time off.
It’s not just about courting Millennial employees, however. Employee volunteerism, for example, is widely regarded as a boost to a company’s reputation as a great place to work – not to mention their overall brand halo.
Companies that voluntarily adopt environmental and social policies dramatically out-perform those that do not.
As the #DeleteUber movement reminded us, customers care about what goes on inside a company’s walls. So take a page from Benioff and Warren’s playbook. The organizations poised to thrive in this new era are those who think not just about their shareholders, but also their employee and community stakeholders.
And in case you’re wondering, the three companies proving this out are it’s Salesforce, Dominoes, and Costco. When the stock price gains 20% or more year over year, you know there’s a lot going right.
Special thanks to Sarah Goff-Dupont for her contribution to this article. The article also appears on Inc.com.