Genuine Workplace Philanthropy Can Redeem Corporate Reputation & Brand Value
Corporate philanthropy, when done genuinely and passionately across all levels of an organization, can help boost a company’s reputation and reverse a tarnished brand. For example, in early February 2015, one of the world’s largest banks was caught up in scandal – accused of actively helping clients illegally stash away billions to avoid taxes. While the bank accepted wrongdoing, they were quick to point out that they had “fundamentally changed” and touted their “sustainability” initiative – a corporate philanthropy program aimed at giving back to the community and the environment through giving, employee volunteering programs and more – as one proof point of their contrition.
Moreover, a recent article pointed to research done at Stanford University, on erring organizations, which found that fence-mending initiatives directed towards employees, local communities and customers were incredibly important to rebuilding “reputation capital” and public trust after a scandal.
Another study titled “The Cost of a Bad Reputation” found that a company’s reputation has a significant and direct impact on its attractiveness as an employer, on salary levels paid to attract desired talent, and on employee morale, productivity and retention over the long run. Additionally, 72% of the study’s participants said they’d rather work for a company where the CEO was involved in corporate responsibility and environmental issues. As a result, companies with good reputations save billions in lower salary and HR expenses every year.
The study found that experienced and qualified job candidates have strong reservations about joining corporations with bad reputations, and require significantly higher compensation as incentive to join. For example, half of those surveyed said they’d need more than a 50% pay-hike to move from a company with a good reputation to one with a bad reputation… and 76% said they would not join a company with a bad reputation even if they were unemployed!
While recruiting expense increases are in the millions of dollars, this great expense is literally dwarfed by the billions of salary cost differential.
For a company of bad repute, recruiting expenses go up by a few million dollars because of longer recruitment cycles. More importantly, companies with poor reputations spend billions more on higher salaries and lost productivity from low morale and high employee turnover. As a result, companies with poor reputations end up with lower profits relative to “good” companies that are preferred places to work at.
72% feel it is important to choose to work for a company whose CEO is involved in CR and/or environmental issues.
The study also found that job candidates favored companies where the CEO took an active role in promoting corporate citizenship and workplace giving. So it behooves organizations and their top executives to make corporate philanthropy a strategic priority that drives business growth. Additionally… reputation matters! So, in addition to building great corporate citizenship programs, an organization must publicize its workplace giving initiatives to build a solid, socially responsible reputation to attract talent. Finally, organizations that suffer from a reputation deficit should understand that public perception can be turned around by building programs that employees believe in, and should start by showing a strong commitment to long-term socially responsible goals.