In increasing numbers, business leaders understand that corporate volunteer and giving programs are an essential part of their organization’s overall CSR efforts. But many don’t fully grasp the significant bottom line benefits of these programs.
Got your attention?
In a report titled The Business Case for Employee Volunteer and Skills Giving Programs, America’s Charities - a Causecast partner - points out that the average employee turnover rate of all U.S. industries is 15.1%, which is a real problem when you’re losing high-performing employees. For top-level employees, turnover costs average 150% of an employee’s salary; some experts estimate this cost at six to nine months’ salary, or up to twice the person’s annual salary. Nine in ten U.S. workers earn $75,000 or less, and for this sector the typical cost of turnover is 20% of an employee’s salary, or about $15,000.
Sarah Ford, who pulled together the research for the America’s Charities piece, notes that the most successful corporate volunteer programs invest an average of $179 per employee per year in employee engagement, according to data from VolunteerMatch, another Causecast partner. The range for investment by excellent programs stretches from $18 to $800 per employee per year.
If you look at a small 50-employee company and presume the business has a below-average 10% turnover rate, that means the organization is losing five employees per year. Now think about whether it’s a worthwhile investment to allocate $18 per employee in a corporate volunteer program, which can serve as a tool for employee engagement and skills development. Consider how much this same company spends on skills and leadership training costs - probably a lot more than $179 per year.
“For the company with 50 employees, it would cost a total of $900 to $8,950 a year to implement an employee volunteer program for all employees combined,” Ford notes. “That’s a pretty low cost to absorb when you consider that it would cost the company roughly $15,000 to replace just one of those employees ($75,000 to replace five).”
Retention starts with engagement
Improving the employee experience is essential to increasing employee retention. As the America’s Charities piece points out, Gallup research shows that companies with engaged workforces have higher earnings per share - 147% higher in organizations with an average of 9.3 engaged employees for every actively disengaged employee. And a PwC study found that “Employees most committed to their organizations put in 57 percent more effort on the job—and are 87 percent less likely to resign—than employees who consider themselves disengaged.”
But Gallup’s latest State of the American Workplace report shows that employee engagement is stubbornly low. Only 33% of U.S. employees are engaged, 16% are actively disengaged and 51% are neither engaged or disengaged - they’re just showing up and muddling along. Active disengagement doesn’t just create a toxic work environment, it costs companies money - between $450 billion to $550 billion each year in lost productivity, according to Gallup.
Employee engagement doesn’t come from just one source, but volunteer and giving programs have proven to be a powerful tool in corporate arsenals to improve the employee experience. Ford cites data showing the 10 critical reasons why people quit their jobs:
- Bad or nonexistent relationship with boss
- Lack of relationships/friendship with co-workers
- Bored and unchallenged by the work itself
- Opportunities to use skills and abilities
- Contribution of work to the organization’s business goals
- Autonomy and independence
- Meaningfulness of work
- Organization’s financial stability
- Overall corporate culture
- Management’s recognition of employee job performance
Ford then connects the dots for how volunteer programs address each one of these retention risks:
- As shown in UnitedHealth Group’s 2013 Health and Volunteering Study, strengthening the ability for employees to get to know their coworkers and managers improves relationships, camaraderie, and the ability to work together successfully.
- According to Cone Research and the Deloitte Volunteer IMPACT Survey, creating a culture of giving back offers opportunities for meaningful work that connects employees to their company and community, while offering valuable skills development and leadership training.
- Data from UnitedHealth Group’s 2013 Health and Volunteering Study helps make the case for how volunteering sets off a positive chain reaction of employee performance, improving the mental, emotional and physical health of employees that improves their productivity and satisfaction. Higher performing employees tend to get recognized by management, which further increases their motivation and success at the company. Recognition then becomes one of the reasons for retention.
Bottom line: the key to combating costly employee turnover is through improving the employee experience at work. And employee volunteer and giving programs are an ideal foundation to enrich the employee experience in a host of unexpected ways.
As we see, not taking action to implement an employee volunteer program or improve the one you already have has hard associated costs. So if you’re thinking about investing in an employee volunteer and giving platform that will take your program to a whole new level, check out Causecast’s guide on how to evaluate your options: