Corporate Responsibility Benefits Continue to Build
Here’s another argument for corporate responsibility programs: Employees are less likely to leave companies that have strong corporate responsibility initiatives.
That’s the implication of research into the decisions of New York City lawyers after 9/11. The researchers studied the career paths of attorneys who experienced “mortality-related shocks” that led them to question the careers they had chosen.
The lawyers who were born in New York City (and were therefore “likely to be more psychologically affected by the attacks”) were 30 percent more likely than their non-NYC-born colleagues to work elsewhere or even leave the legal profession. This pattern held true even among attorneys who worked in the same office.
Traumatic events can cause people to re-evaluate their lives. When they do, they can respond by looking for ways to make more meaningful contributions to society. After 9/11, for example, Teach for America and the Peace Corps reported an increase in applicants.
But this research — conducted by researchers at Brigham Young University, the University of Maryland and the University of Michigan, and published in the Academy of Management Journal — also found that the turnover of NYC-born lawyers was “substantially attenuated in firms with larger investments in pro bono” work.
This research suggests that there is “an expanded role for CSR as insurance” against workforce turnover.
An Expanded Role
The researchers concluded that businesses that want to retain employees can increase their likelihood of doing so by investing more seriously in corporate responsibility programs. These investments “may prevent employees from negatively evaluating their jobs following shocks that cause them to reflect on whether their work helps others.” This finding points to “an expanded role for CSR as insurance” against workforce turnover.
The case for an emphasis on corporate responsibility isn’t new, of course. But it is building — and is increasingly seen as a smart human-resources practice. In a thoughtful response to Fortune’s “Change the World” list, released in September, Michael Porter, a Harvard Business School professor, and Mark Kramer, cofounder of the Shared Value Initiative, note that the investment community is finally catching on to the fact that corporate responsibility — properly integrated into a company’s strategic business — makes bottom-line sense.
“For a long time, investors remained skeptical that social factors were a valid consideration when allocating capital resources, much less relevant to securities analysis,” Porter and Kramer write. “Now investors have begun to recognize that shared value strategies are entirely different from social responsibility programs or public relations. Companies that commit to a new corporate purpose can generate disproportionate shareholder returns.”
An example Porter and Kramer offer: When CVS Health began to emphasize a commitment to the improvement of health, the company’s stock over the past five years outperformed that of competitor Walgreens by 50 percent. Walgreens looks to narrow this gap with emphasis on its own healthcare clinics.
And one major contributor to this increase, the authors say, is “improved employee motivation.” And this, in a way, also supports what the study of New York lawyers found.