The Recruiting Payoff of Social Responsibility
Companies are realizing that not only can a reputation for corporate social responsibility be good for branding, publicity and the bottom line, it can also be a valuable recruiting tool. They’re incorporating their values into recruiting and advertising materials more and more both to attract the best candidates and to weed out the ones who wouldn’t be a good fit.
By Gretchen Weber
wenty
years ago, human rights records, environmental policies and levels of community
involvement wouldn’t have been on the radar screen for some job seekers when
deciding which companies to target in their employment searches.
Today, the situation is different. In light of recent
corporate scandals, as well as growing global awareness, the public’s
expectations for corporate responsibility have changed. Along with that, so have
the standards for much of today’s top talent. Companies of all shapes and sizes
are realizing that not only can a reputation for corporate social responsibility
be good for branding, publicity and the bottom line, it can also be a valuable
recruiting tool.
Accepting lower pay
A study released in 2003 revealed that companies perceived as
socially responsible often have a competitive edge when it comes to attracting
top recruits. Researchers at Stanford University and the University of
California, Santa Barbara, surveyed 800 MBA students from 11 leading North
American and European business schools and found that 94 percent would accept a
lower salary--an average of 14 percent lower--to work for a firm with a
reputation for being environmentally friendly, caring about employees and caring
about outside stakeholders such as the community.
Stanford professor David B. Montgomery says that this 2004
study is the first empirical analysis of the influences that factors such as
high ethical standards, environmental sustainability and caring about employees
have on MBA job choices. The students were asked to rank 14 attributes in order
of importance when choosing a job. Intellectual challenge topped the list, with
financial package coming in at only 80 percent as important, and a reputation
for
ethics and caring about employees ranked third at 77 percent.
These results wouldn’t surprise Robert Morgan, president
of employment solutions at the staffing firm Spherion. Morgan says that a
reputation for social responsibility can often be the determining factor when a
candidate is deciding between two or three companies.
While opportunities for
career growth and
work/life balance often top the list of what candidates are looking for,
Morgan says, a reputation for corporate social responsibility isn’t far behind.
At the same time, often the most powerful recruiting benefits from being seen as
socially "good" are less direct, he says. "When you’re out doing good in the
community, you get lots of PR, which raises brand awareness," Morgan says.
"These companies also have a strong employee brand, and employees are out
talking about their company and feeling proud, and as awareness increases, their
recruiting brand goes up."
This kind of
branding can
be what attracts candidates to a specific company in the first place, Morgan
says. Sheri Southern, vice president of partner resources for Starbucks North
America, joined the coffee giant six years ago. She says that the Starbucks
reputation for strong values was a major reason she targeted the company in her
job search. "I really wanted to work at a company that treats its employees with
respect and as part of the solution instead of the opposite."
It’s about recruiting
Just as the public and job seekers are paying more
attention to the ethics and missions of corporations, many companies themselves
are shifting to a more values-based model of business.
Marc Gunther, a senior writer at Fortune magazine,
argues in his latest book, Faith and Fortune: The Quiet Revolution to Reform
American Business, that bit by bit, a new model of business is replacing the
old Industrial Age approach of maximizing short-term profit by charging
consumers as much as possible and paying workers and suppliers as little as
possible. The new model, he says, is being adopted in various forms not just by
small, socially responsible firms, but also by such industry leaders as Ford and
DuPont. It’s based on developing a network of long-term relationships that
benefit multiple parties. Great companies, he argues, serve their workers,
customers, owners and the common good. By contrast, he says, the companies that
put their stock prices first end up being the Enrons, the
Tycos
and the WorldComs of recent years.
This values shift occurring in many companies is not
rooted simply in an altruistic desire to do good in the world, although Gunther
says the fact that the current generation of CEOs came of age in the 1960s
influences their views on issues such as women in the workplace and
environmentalism. What it comes down to, he says, is that for many
companies, this new model is a good business strategy. "The primary driver of
corporate social responsibility is the desire of companies to attract better
employees and engage the people they already have," Gunther says. "When I talk
to companies and ask why they are investing in the environment or the local
community, time and time again they say it’s all about attracting the best
people."
David Gebler, president and founder of Working Values, a
business ethics and training company in Sharon, Massachusetts, says that how a
company projects its values and ethics has become a competitive differentiator
in terms of recruiting, and he sees more and more companies realizing this.
Gebler says his firm developed an ethics training game called the Ethics
Challenge for 130,000-employee
Lockheed
Martin. It uses a board-game format, characters from the cartoon "Dilbert,"
and a series of scenarios involving workplace ethical dilemmas to be used as
touchstones for discussions. Lockheed Martin recruiters bring the game to
colleges to demonstrate to prospective recruits the company’s commitment to
ethical responsibility, Gebler says.
Companies are incorporating their values into recruiting
and advertising materials more and more, Gebler says, as a way to both attract
the best candidates and to weed out the ones who wouldn’t be a good fit
culturally. "They are telling people right upfront, ‘This is what we stand for
here,’ " he says. "People want to work for companies with articulated values.
They gravitate toward those companies because they really know what they are
getting into."
"What’s the right answer?"
Starbucks articulates its values all over the place--its
Web site, its recruiting and promotional materials and the backs of employees’
business cards. Through a process called Mission Review, which encourages
employees (called "partners") to voice concerns to company leaders about whether
or not company practices are consistent with Starbucks’ mission statement, the
company strives to ensure that it never strays too far from its principles.
Dave Pace, executive vice president for partner resources,
recalls last fall when he received a Mission Review comment from a partner
questioning why there was no paid-leave benefit for adoptive parents. "We had to
think, ‘What’s the right answer for the kind of company we are?’ " Pace says.
Within three weeks, the company had instituted a two-week paid-leave benefit for
adoptive parents.
In addition to having a reputation for treating employees
well, Starbucks is also known for its outreach programs into communities both
where stores operate and where its coffee is grown. From donations to local,
national and international charities to implementing a preferred-supplier
program to encourage suppliers to be more socially responsible to its
announcement that starting this year it will stock stores with 10 percent
recycled paper products, Starbucks has an extensive portfolio of social
responsibility initiatives.
"We do it because it’s the right thing to do," Pace says.
"But from my perspective it’s also a terrific recruiting and retention tool.
These days, people want to work for an organization that stands for something
beyond profitability. Not just one that’s successful on Wall Street."
Just too good
Becoming more socially responsible as a company does have a
potential downside, Gunther says. "It is possible to become too good a place to
work," he says. He cites the case of Hewlett Packard in the 1990s.
The company had always been known as a good place to work,
he says, but at that point, just as the technology industry was changing rapidly
and innovation became more important than ever, HP’s very employee-friendly
policies became a disadvantage.
"People tell me that at some point people went to work
there just because it was family-oriented and because of the camaraderie, and it
lost its competitive edge," Gunther says. "In business, your strength can become
your weakness."
Workforce Management Online, January 2005
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Gretchen Weber is a freelance writer in Boston. E-mail editors@workforce.com to comment.
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