Businesses need to put in place clear measurement tools for the kind of social impact they make. Anything less will be detrimental. Image Credit: Shutterstock

In today’s hyper-competitive market for talent, businesses that continue to ignore their impact on society are not just living in the past - they’re failing to recognize a key driver of business success in the future. Concepts such as DEI, ESG or CSR aren’t new buzzwords or trends, and it takes a particularly blinkered business to have ignored them, while their collective momentum has rapidly grown to be the dominant force in today’s most attractive corporate cultures. The reality is that two-thirds of employees globally would choose to work for an organisation with strong social and environmental conscience. This trend is not going anywhere. While pay continues to be a critical factor in attracting and retaining talent, over the next decade, as a younger generation who are more environmentally conscious and attuned to social justice enter the workforce, we will see more employees opting for companies that align with their social values.

Critics may argue that standing up for social causes is a distraction from the company’s true purpose: profit. Milton Friedman’s famous essay in the 1970s stated, ‘There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits’. However, this over-reduction misses more than a few critical facts.

Look beyond profit motives

Firstly, businesses do not and cannot succeed in societies that fail. A company’s social impact is quickly becoming its license to operate – where its actions are assessed through a long-term view of the business’s effects on all stakeholders.

Secondly, companies have a lot to gain in considering their social impact. Firms that take a stand and integrate social impact in their organisational DNA enjoy an enhanced brand reputation amongst current and future talent, with impact-driven organisations also tending to have lower employee turnover.

As companies look to build back better in a post-pandemic world – they must therefore ask themselves; how can they respond to these changing expectations? How will they not be left behind?

They need to listen to employees’ concerns. For any meaningful change to materialise, it is critical to gauge which social causes are of most concern to your employees. While this may sound elementary, unfortunately, not enough is being done here.

Listening in

Listening to your employees helps an organisation identify those social causes that matter most to their workforce, creates new ideas, while fostering trust and respect, and showing employees that their diverse viewpoints are valued beyond the work they do.

Second, they need to weigh those societal issues against the organisation’s core values. It is critical to match those causes with your corporate purpose – your raison d’être. Organisations must extract ‘value from their values’ and assess which societal concerns, varying from gender pay gap, diversity in the workforce or climate risks aligns with their purpose. This mindset helps companies better live their values and take action to bring about positive change.

Thirdly, they need to encourage employees to be agents for change. Empowering employees to spearhead change in the areas that deeply matter to them connects their actions on social issues to their overall employee experience, instead of them being separate from work. When given the right environment, employees will relate to the company’s overall mission and feel a sense of shared purpose that strengthens their values, and increases their loyalty towards their employer. Make it known and heard

Organizations need to clearly communicate the difference they are making. For example, our recent study on Powering the Future of Work found that 36 per cent of employees believe their organisation is not contributing to reducing climate change. To bridge this potential awareness gap, companies must regularly speak about their initiatives that make a positive societal impact, communicate their actions to potential candidates, and leverage internal and external communication channels so that employees share their experiences of being part of the positive difference they’re making.

As a society, we have come a long way in recognising the responsibility of corporations towards society. Over 50 years ago, Milton Friedman thought he had answered the role of businesses in society. Today, the world is in a very different place.

The reality is if companies don’t accelerate the momentum of their social impact, they stand to lose immensely in the global war for talent.