Get a Good Return on Social Investment

22 November 2010

When looking to make savings, many companies make the mistake of cutting corporate contributions. Andrew Wilson, director of Corporate Citizenship, talks to three senior executives about how employee volunteer programmes have paid dividends in terms of staff development.

Over recent months, companies around the world have experienced unparalleled economic challenges. In the face of one of the deepest global economic downturns for decades, firms have had to cut back on non-essential functions, reduce staff numbers and control costs. Despite recent signs of an upturn in many markets, the pressure remains to scrutinise all spending decisions.

In such turbulent times, the temptation might be to reduce corporate contributions to local communities. A careful business case has to be made in order to justify spending shareholders' money on community investment initiatives. 

However, new research provides a strong justification for continued investment in this important aspect of corporate responsibility. A wellmanaged programme of community investment activities can deliver returns that far outweigh the costs involved. It seems that volunteer programmes are a cost-effective way to help employees develop business-relevant skills and competencies, while at the same time giving something back to society.

Research carried out by Corporate Citizenship on behalf of the City of London Corporation tracked the learning and development of 550 volunteers in 16 blue-chip companies including Aviva, Bank of America Merrill Lynch, Deutsche Bank, Ernst & Young, Nomura and Santander.

These volunteers were involved in a range of activities, predominantly in schools and colleges, and participated in everything from mentoring young students to taking a leadership role as a school governor. 

One of the most interesting findings was that while different volunteering activities can be used to develop skills and competencies, even a relatively modest amount of time spent away from the workplace involved in community projects can deliver development opportunities for staff.

"While different volunteering activities can be used to develop skills and competencies, even a relatively modest amount of time spent away from the workplace involved in community projects can deliver development opportunities for staff."

Across the board

The majority of volunteers reported skills development in three areas strongly related to their personal effectiveness: communication, coaching and adaptability.

More than four in ten employees also reported developing a set of skills and competencies closely related to their managerial effectiveness. These included influencing and negotiating, team working, leadership skills, planning and organisation, and problem solving.

It is important to note that this process of development took place across the board. Volunteers involved in the research were drawn from all levels within their companies, from graduate recruits to vice-presidents and directors.

And this is not simply a resource issue. The nature of support offered to volunteers varies across the companies. While some organisations offer quite generous allowances (up to four days paid time-off each year for volunteering activities) others have a more informal and ad hoc approach.

Even those companies that have relatively modest investments in volunteering programmes reported significant gains in the skills development of their volunteers.

Even if skills development is not the explicit goal of a volunteering programme, companies are reporting that there are business gains in this area, a view shared by Investec executive director and board member Alan Tapnack: "After many years of philanthropic giving we launched our formal Social Investment programme in 2008, with education as a major focus. We didn't set out with the intention of developing the skills of our employees through Social Investment, but many of our volunteers have said that they have learned and gained much through being involved in our education initiatives."

Measurable success

A cynic might argue that volunteers who have invested time and effort in their activities away from the workplace are highly likely to claim their time has been well spent and that they have learnt from the experience. However, it is vital to stress that this is not simply a self-reported gain in skills. The research asked line managers if they too had observed the skills development claimed by the volunteers.

The key finding is that 86% of line managers felt that volunteers did gain useful skills from their volunteering experience. Not only that, the research asked HR managers in these same companies whether the skills gained by employees are of relevance to the business. Again, the response was overwhelmingly positive. Companies reported that they were investing significant resources in training to develop these same skills and competencies in their staff.

This development potential of volunteering was recognised by all of the companies participating in the research, and, for Kevin Hogarth, global HR director for Freshfields Bruckhaus Deringer, the benefits have been clearly demonstrable.

"Since participating in the research, our learning and development and corporate social responsibility functions have started working together to create a more detailed matrix that is aligned to the firm's career milestones and clearly shows which skills are developed through different volunteering activities," he says. "Our people and the communities in which we operate will benefit far greater as a result."

Harness the power

In light of these findings, it is important to consider the way in which volunteering helps people develop skills and competences. The message is clear: it is the experiential nature of learning that is so powerful in developing skills.

Volunteering requires employees to step outside of their normal working role and build relations with people who have a different world view from their own. Employees report that moving out of their comfort zone in this way is useful in developing their skills and transferring them into the workplace. In addition, volunteering offers employees a chance they might not get in their day-to-day work to adopt a leadership role and learn from the process.

An important lesson to draw from the research is that if companies are to harness the power of volunteering as a route to learning and development, they need to manage the process properly.

There needs to be a clear link and strong working relationship between the leaders of the HR function and those responsible for CR in the business. This point is clearly illustrated by the experience of Société Générale, another company participating in the study.

"Providing opportunities to volunteer has proved to be an important factor in engaging staff, notably our programme to improve the basic skills of pupils in the local primary schools we have adopted," says Nigel Holmes, head of human resources, Société Générale UK.

"It is still early days for us in embedding volunteering and other CR activities into our staff development programmes, but this is our intention, which will be complemented by including CR on a voluntary basis into objective setting and performance appraisal."

Where's the value added?

So, if volunteering is able to offer these learning and developmental benefits, questions arise over the relative costs of skills development.

"Volunteers said they gained from the opportunity to do something meaningful that helps others, and that through this experience they feel better about themselves and their company."

The research goes into some depth to calculate how much it costs to run a volunteering programme in terms of management, additional expenditure, such as brokerage fees in setting up partnerships, and the direct expenses of volunteers. In summary, the average cost to run a volunteering programme among the 16 companies participating in the research was £381 per person, per annum.

In contrast, according to data from a UK survey on training costs, the typical training spend per employee can be as much as £1,400 per person, per annum. On this evidence, a strong case can be made that volunteering assignments are a highly cost-effective method of developing a range of mainstream, business-relevant skills and competencies.

Beyond the financial benefits flowing from the learning and development potential of volunteering, it is worth noting some of the wider business benefits. The majority of respondents reported that their experience of volunteering made them feel more positive across a range of measures, including self-confidence, a sense of well being and happiness, and commitment to the company.

Put simply, the volunteers said they gained from the opportunity to do something meaningful that helps others, and that through this experience they feel better about themselves and their company.

It is also important to recognise the reputational benefits for the business associated with volunteering. A company needs to be seen as a good corporate citizen, and investing in the local community in which it operates is one of the most obvious ways of demonstrating a commitment to corporate responsibility.

Finally, and perhaps most importantly, there are the positive social benefits that stem from the skills, experience and knowledge that community partners gain from the volunteers. This is a huge assistance to everyone involved. It would be an extremely complex task to assign a financial value to these additional benefits associated with the volunteering experience. However, it is vital that these positive returns are not forgotten when considering the costs and benefits of organising a volunteering programme.

Make a difference

Looking forward, the financial outlook is still relatively bleak; 2011 is likely to be another challenging year as the economic climate, although improving, remains uncertain. In this environment, companies will only succeed if they make sound investment decisions.

Everyone in business knows that cutting costs is the simplest way to bring immediate savings, improve the bottom line and ensure that the business remains competitive in the short term. But wise business leaders also appreciate that cost control needs to be carefully managed in order to avoid unintended and damaging consequences in the long term.

Some investment decisions, including the provision of targeted and systematic support in the communities in which a business operates, can make important but indirect contributions to the bottom line. A well-managed programme of community investment should start from a company's objectives and draw on its core competencies.

This research has shown that harnessing the capabilities, energy and enthusiasm of employees to make a positive difference in the community not only enhances a company's reputation, but delivers real benefits in terms of skills development and improved morale.

The experience of the companies involved in the study should be a powerful lesson for the case for corporate community investment.