Employees will be valuing CSR credibility more and more.

By Dr. John Izzo

There is growing evidence consumers care about CSR when it comes to whom they buy from and survey evidence suggests employees like to work for companies that are good citizens. As someone who has spent over 20 years advising companies on their brand image and how to create highly engaged workforces, I am often asked by my clients if CSR really matters to employees. Even though surveys show employees rank it as a high factor for choosing an employer, it is almost never cited as the reason people leave companies, nor is it often cited as a prime reason for taking new employment. It raises an interesting and important question: How important is CSR to workers?

A friend of mine was one of the Enron whistleblowers. After her departure I asked her whether she felt people knew something was unethical about some of Enron’s practices. In essence she told me “people knew something was going on but as long as the stock price was going up, the vast majority of people did not seem to care that much.” So is CSR more of a paper tiger in terms of employee engagement?

To answer that question we can both look at the research as well as some anecdotal evidence. There is a strong body of evidence that suggests a very strong correlation between someone’s pride in working for an organization and their commitment to that workplace. Surely CSR is a part of what creates pride in your employer but it is not the only factor. Factors such as the perception of innovation, service/quality, as well as being on a “winning team” (which includes the stock performance) are also factors.

Gallup has done extensive surveys on employee engagement and identified 12 factors that drive employee engagement. Most of the factors are about the job itself (such as I get to do what I do best every day and I have the tools I need to do my job well) or the relationships I have at work (such as in the last seven days I have been recognized and my supervisor or someone at work cares about me). Only one of the 12 could be construed to relate directly to CSR: “the mission of this organization makes me feel my job is important.” Like the research on pride, this suggests that CSR is only one of many factors that drive engagement.

Anecdotally, I have often heard employees talk about the CSR efforts of their companies. Years ago at a Fairmont hotel, a housekeeper told me how much it meant to her that the hotel chain worked hard to encourage guests to recycle in the days when few hotel chains did so. There is little doubt this contributed to her engagement, but it was balanced with many other factors. Another example came to me from a man who supervised oil rigs for a large multinational oil company. He told me his new employer was much more careful about following environmental regulations and going above and beyond the “regs” than his previous employer who often cut corners. Again, he communicated to me that this was important to him and made him feel good about his employer, but it was not a make or break factor.

In answering this question, however, there is an “x” factor, which companies should consider. Over the last 15 years, social responsibility and being “green” have made the largest gains of any other factors which employees use to determine where they want to work. Although it is still not the prime factor for most employees, its trajectory as a value suggests that in the future it may become much more important than it is now.

What’s more, surveys suggest that as many as 15-20% of younger workers today (under 30) are hard-core committed “greens.” This means that for this demographic cohort, being socially responsible is core to their identity. Companies that are competing for talent, especially young talent, might consider that your CSR reputation could be THE factor that eliminates you as a potential employer for this group. In essence, you will be fishing in a pool of talent that is 20% smaller than your competitors. Your failure to be responsible could become a real liability in recruitment or you could be a magnet for that 20%.

Clearly this is where the “puck is going” as hockey players like to say. Companies should also be attentive to the fact that employee perceptions of social responsibility are fairly robust, so it takes years to build a reputation. Starbucks has a reputation for being responsible, whereas McDonald’s has a mixed image among both consumers and potential employees, even though an objective assessment might show both companies have much merit as good citizens. My former teenaged baby sitter got a job at Starbucks and the first thing she said to me was “do you know all the good things Starbucks is doing in the world?”

One final factor to consider is this: For years I have conducted focus groups inside companies of employees to find out what drives them to want to stay and work hard. Again and again, employees have told me it matters to them if their company treats customers well and if they believe in the company’s product. I have heard employees say things like “we really care about customers” and “I know we treat people right.” We need to remember, for many employees, CSR is not just about a high-level scoreboard on things like sustainability or corporate giving, it is about whether day to day people feel like the company wants to do the right thing for those they serve.

For now, we can say with certainty that CSR is on the radar screen for employees. They say it matters to them, but it is still not the prime driver. We must continue to push for it to be a prime driver. We are seeing the growing importance of this element, especially for younger workers, and that means a seismic shift may be yet ahead. Since reputations for CSR are quite robust in either direction, it may be quite foolish to wait until it becomes a primary driver before you move in this direction.

It may be helpful to remember the words of Warren Buffett: “It takes years to build a reputation and only five minutes to lose it.” If you doubt that, think of all those millions on advertising BP spent to convince us how responsible they were, all wasted away in a several minute explosion.

About Dr. John Izzo

Dr. John Izzo has more than 20 years experience working in a wide variety of corporate settings. He is the co-author of Awakening Corporate Soul and author of Values Shift and the forthcoming book, Stepping Up (Berrett-Koehler).

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