By Denise Howell, VolunteerMatch CFO
For businesses, nonprofits and government, measuring and reporting on their success is no longer just about profitability, shareholder value and return on investment in the traditional accounting sense. We are moving to the “triple bottom line” of profit, people and planet. Here at VolunteerMatch, we place just as high an emphasis on our social value impact as our financial performance.
Although measuring social contributions and sustainability is still very much evolving, every measure we take is vital. One factor which is easy for your organization to incorporate is a paid time off for volunteering policy (VTO) as an employee benefit.
On the face of it, it doesn’t make great financial sense. If your employees are out of the office, they aren’t at work meeting deadlines, or otherwise contributing to the company’s profitability and success, right?
The evidence is very much to the contrary.
VTO, as part of a comprehensive strategy toward an organization’s overall commitment to sustainability and community offers a substantiated plethora of benefits to companies – this explains why 60 percent, according to a 2014 CECP report of 261 of the world’s largest companies, offer VTO as a benefit to their employees. Studies by the Society for Human Resource Management put this number decidedly lower, likely because they have a broader base of employers including smaller organizations, but their annual research still indicates the percentage is on the rise and climbing each year.
Let’s explore some of the benefits, both short and long-term, of VTO policies. No one out there would disagree that attracting the most talented employees is more competitive than ever. We see this in California every day. This year marks the first year in which the Millennial Generation becomes the majority of the US workforce, according to the Pew Research Center.
Millennials have an unjustified reputation for being self-absorbed, probably, in part, because of the “selfie” craze. The Millennial generation is perceived by many as leading the charge, which would imply a degree of narcissism. Actually, nothing could be further from the truth. Deloitte’s 2015 Millennial Survey provides a clear message to employers that a majority of Millennials do not believe business is invested enough in their commitment to the immediate communities in which they operate, and to society overall. Yet, this is an explicit priority and a decisive factor for Millennials in deciding whether to accept a job offer and remain loyal to a company.
All companies need to attract the best talent, so with the rise of Millennials in the workforce, it will be imperative for companies to make policies such as VTO a priority. Some companies, such as Patagonia and Dow, go the extra mile. They acknowledge their commitment to global sustainability and their values around the world by offering employees an opportunity to volunteer internationally at nonprofits which support their values.
Employees are every organization’s biggest investment. If you can’t attract the best talent, your company will suffer by losing the sharpest, most innovative and productive employees, and this will cost in both the short term and long term. CFOs know that less turnover certainly leads directly to cost efficiency. Less time and money on recruiting and training allows for greater focus on your mission. And, when employees are out providing valuable service to our communities, they are our partners in engaging the triple bottom line.
While I can’t provide financial metrics related specifically to VTO policies, I can share some powerful research on the performance implications of a company culture of sustainability and the social values/objectives of employees, community and customers.
Robert Eccles, Professor of Management Practice at Harvard Business School, published a report in 2012 on an 18-year study of 90 organizations with a high level of emphasis on employees, customers, community and the environment, against an equal number of organizations in a control group that do not. According the research, these highly engaged organizations significantly outperformed the others, both in stock market and accounting performance. They had sustained greater governance and loyalty. This is a compelling report and clarifies, among other research out there, that doing good not only does not sacrifice shareholder value, but actually enhances it.
While we have evidence that doing good enhances profitability, what about the other measures of success? The Boston College Center for Corporate Citizenship’s report “How Virtue Creates Value for Business and Society” concludes that CFOs, investors and market analysts are early in the process of adopting metrics and communicating them to their stakeholders and the market.
Some view these policies as compliance and risk management. They’re finding, currently, that tracking the financial impact of programs not inherently financial, but still very significant in measuring impact, can be difficult. One example is the increase in revenue through loyalty and goodwill. We are all hungry to continue to work on metrics which support what we experience as being true and critically important to our organizations – investing in the values of our employees and our communities leads to better, more productive and engaged employees and customer loyalty to an organization’s brand.
To answer the question “Should your company include VTO as an employee benefit?”, the answer is absolutely! In my role as a CFO, I strongly encourage you and everyone out there to adopt VTO policies as part of your efforts to attract and retain the best employees, improve your brand loyalty, and as a result of both – promote growth and increased revenue as well as the other measurements of your success.