Companies who prioritise donating to charity, helping their local community, funding social enterprises and increasing the number of disabled people in their workforce are more likely to retain staff, have a strong brand image and be productive, a new report from the Centre for Social Justice (CSJ) reveals.
In a study of a broad range of business practices, the CSJ finds that among businesses that adopt charity policies that lead to them being rated as socially responsible, employee turnover is reduced by almost a third (30 per cent).
The costs of replacing an employee can be up to 90 per cent of the employee’s annual salary, making employee retention a key priority for businesses.
Young people are more concerned about the social purpose of their employer company than older generations. Millennials are over five times more likely to stay with their current employer ‘when they have a strong connection to their employer’s purpose.’ Non-millennials are twice as likely to count it as a significant factor.
A company’s social purpose can also help drive up productivity, the report finds. One study cited by the CSJ finds that ‘the mission or purpose of my company’ is one of the twelve best predictors of employee engagement and performance.
Social responsibility lies with businesses
The report suggests the younger generation’s concern about corporate charity and social responsibility will increase the pressure on business to think about their wider role in society, in addition to making a profit.
The report cites examples of good business practice such as Deutsche Bank, which has a fund for small businesses with difficulties accessing finance to grow, and Microsoft, which launched an apprenticeship scheme to help its partners address recruitment challenges and skills shortages, so far providing training to 11,000 young people.
The social enterprise Ninety, which specialises in agile digital transformation, is seeking to bring about social change by generating £1 billion for charitable grants and social investment over a 30-year period. Ninety passes 90 per cent of its distributable profits to its charitable foundation, while the remaining 10 per cent is distributed to staff and key partners.
Andy Cook, chief executive of Centre for Social Justice, thinks that businesses are the nation’s wealth creators and they generate the money for all our vital government services – education, health and welfare, to name but three.
Cook adds, ‘Businesses create jobs, provide training for employees, promote economic activity among suppliers, invest in innovation, and deliver products and services to customers.
‘They support society by their very existence. However, by taking small steps to take their contribution even further, they can make a huge difference to their employees’ lives and the wider community.
‘By funding small businesses and that otherwise would not be granted loans, by investing in apprenticeships, by helping those who struggle to find work such as those with disabilities or low skills, businesses can do great social good.
He concludes, ‘The aim of this report by the CSJ is to showcase the incredible examples of business initiative so that ideas can be spread and shared as widely as possible.’