The Business Case for Employee Volunteer & Skills Giving Programs
By Sarah Ford on March 16, 2016
What if I told you that having an employee volunteer program could potentially save you money – say $1,000 to $6,000 per employee. Would you start one? Or if you have one, would you take it more seriously?
The average employee turnover rate of all U.S. industries is 15.1%. In some cases, this turnover is healthy for your organization because you’re losing low performers (i.e. problem staff or those not willing to improve) and this can positively impact everything from employee engagement to productivity and profits. But what if the employees leaving your organization are top performers?
Replacing top performers can cause service disruptions for your customers and requires a substantial amount of financing, extensive training, employee workload balancing, and handling cultural shifts. None of that sounds good, but how exactly does it impact your company’s bottom line? Well, for jobs paying $75,000 a year or less (which is about 9 in 10 U.S. workers), the typical cost of turnover is 20% of the employees’ salary. For top-level employees it can cost closer to 150% of the employees’ salary. Some talent experts estimate that the cost to replace an employee range from six to nine months’ salary to twice the person’s annual salary. But let’s focus on employees that make $75,000 or less. For each of those employees leaving your organization, it’s costing you about $15,000.
Increased Employee Engagement Helps Reduce Turnover
A PwC study revealed, “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.” According to Gallup’s research, companies with engaged workforces have higher earnings per share (EPS):
- Work units in the top 25% of Gallup’s Q12 Client Database have significantly higher productivity, profitability, and customer ratings, less turnover and absenteeism, and fewer safety incidents than those in the bottom 25%.
- Organizations with an average of 9.3 engaged employees for every actively disengaged employee in 2010-2011 experienced 147% higher earnings per share (EPS) compared with their competition in 2011-2012. In contrast, those with an average of 2.6 engaged employees for every actively disengaged employee experienced 2% lower EPS compared with their competition during that same time period.
So where do employee volunteer and skills giving programs factor in? It’s an excellent, relatively low-cost way to engage and retain employees.
Keep Employees By Engaging Them Through Volunteerism
Employees quit their jobs for many reasons (salary and benefits topping the list), but the majority of reasons are actually something employers can control. HumanResources.about.com sites the following as 10 critical reasons why employees quit their job (in no special order):
- Bad or nonexistent relationship with boss
- Bored and unchallenged by the work itself
- Lack of relationships/friendship with co-workers
- 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
Instituting an employee volunteer and skills giving program can help your organization address all ten of these.
(addressing #1 and 3 from list above)
Organizing group days of service provide co-workers (and their bosses) an opportunity to work together and get to know each other outside the walls of the workplace. There is no corporate hierarchy when it comes to hands-on volunteer activities like filling afterschool snack bags for low-income children or building a house with Habitat for Humanity. Such activities permit employees from different departments and different levels of seniority the chance to share experiences together and interact on a deeper level, resulting in stronger relationships when they return to the office. In UnitedHealth Group’s 2013 Health and Volunteering Study, “64 percent of employees who currently volunteer said that volunteering with work colleagues strengthened their relationships.”
Corporate Culture & Meaningful Work
(addressing #2, 4, 5, 6, 7, and 9 from list above)
It’s well known that employees want to work for companies that care. In fact, Cone Research found that 79% of people prefer to work for a socially responsible company. When strategically integrated with your company’s business goals and values, involving employees in a mix of volunteer work, skills giving, workplace giving programs, and matching gift opportunities gives employees a sense of purpose, and makes them feel more connected to the community and your company-wide social responsibility efforts.
Additionally, volunteer programs – particularly those with pro bono and skills giving opportunities - provide a meaningful way for employees to put their abilities to use, and give them a chance to grow and develop professional skills. Online giving and volunteer management tools like America's Charities powered by Causecast, make it easy for companies and their employees to connect their skills with nonprofit needs and volunteer opportunities. According to a Deloitte Volunteer IMPACT Survey, “92% of surveyed corporate human resources executives agree that contributing business skills and expertise to a nonprofit can be an effective way to improve employees’ leadership and broader professional skill sets.”
All of this effectively reinforces beliefs and behaviors most valued by your company, empowers employees to grow and do things for which they are most passionate, infuses pride and loyalty in employees, and contributes to a stronger, more skilled workforce. For help creating a culture of social purpose with big impact on employee retention, read our partner Causecast's eBook, The Company You Keep: How Smart Companies Use Philanthropic Engagement To Improve Retention.
Employee Recognition & Financial Stability
(addressing #8 and 10 from list above)
Based on results from the State of the American Workplace report, Gallup estimates that actively disengaged employees (about 70% of American workers) cost the U.S. between $450 billion to $550 billion each year in lost productivity. They are more likely to steal from their companies, negatively influence their coworkers, miss workdays, and drive customers away.
Engaged employees are happier, healthier, and perform at a higher level. UnitedHealth Group’s 2013 Health and Volunteering Study indicates that “People who volunteer report that they feel better emotionally, mentally and physically,” and research from the University of Georgia Terry College of Business shows that employee volunteering is linked to greater workplace productivity and satisfaction. Jessica Rodell, author of the research, says, “Overwhelmingly employees who volunteered gave more time and effort to their jobs, were more willing to help out their colleagues, talked more positively about their companies and were less likely to do detrimental things like cyberloaf or waste time on the job.”
When employees perform well and contribute to business goals, this gives management more reason to recognize those employees’ efforts. In the Millennial Impact Report, “More than half (53%) of respondents said having their passions and talents recognized and addressed is their top reason for remaining at their current company.” When companies recognize employees for good work, it reinforces that behavior and sets the foundation for a pattern of positive performance in the future. A case study of an employee recognition program established by The Walt Disney World Resort showed “a 15% increase in staff satisfaction with their day-to-day recognition by their immediate supervisors. These results correlated highly with high guest-satisfaction scores, which showed a strong intent to return, and therefore directly flowed to increased profitability.”
There are a variety of ways to structure an employee volunteer program and a wide range of volunteer activities to offer, including day of service events, ongoing volunteer opportunities throughout the year, skills giving and pro bono services. Choosing the right mix ultimately depends on what your employee interests and company goals are, as well as what type of support nonprofits need. I won’t delve into that right now, but some good resources to look at are HandsOn Network’s guide, “Developing Excellence in Workplace Volunteer Programs” and LGB Associates’ report, Balancing Pro Bono Supply and Demand: Challenges and Solutions from the Nonprofit Point of View.”
When it comes to measuring employee volunteer and skills giving programs, companies typically track things like the number of hours volunteered, employee participation rates, types of services delivered and to whom, and employee values such as satisfaction and skill development. But did you know volunteer time can be monetized?
Volunteerism is a difficult concept to monetize because the myriad ways volunteers contribute are not always measurable. But in looking at what is quantifiable, Independent Sector estimates, an hour of volunteer time in 2013 was worth $22.55 per hour. Derived from the U.S. Bureau of Labor Statistics’ database of job functions and mean wages, this calculation is a way to assign a monetary value to the time your employees donate. So if 50 of your employees each volunteer 8 hours to a nonprofit throughout the course of a year, instead of reporting that your company volunteered 400 hours, you can share that your company’s volunteerism provided approximately $8,856 worth of volunteer time to that nonprofit. That’s a significant business contribution to the community, and a value your Board and other important stakeholders are more likely to comprehend and appreciate.
Investing in Employee Volunteer & Skills Giving Programs is Good Business Sense
Let’s go back to our example of the company with 50 employees and an average of 5 employees leaving each year (a 10% turnover rate). According to VolunteerMatch, “The most successful Employee Volunteer Programs (EVP’s) invest an average of $179 per employee per year in employee engagement.” VolunteerMatch notes, “That data includes some of the biggest companies in the world. The range for investment by excellent EVPs is actually $18 to $800 per employee per year. Eighteen dollars per year could be doable, even for a small mom-and-pop outfit. Another thing to remember: most companies spend far more than $179 per employee on training costs – this type of engagement both reinforces and supplements employee development.”
This means, 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. 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).
Employee volunteer and skills giving programs have steadily been moving towards the center of many corporations' social responsibility initiatives over the last decade. This surge in interest in volunteerism coincides with the dire need many nonprofits have for support. However, only 59% of companies surveyed in CECP’s 2014 Giving in Numbers report, provided paid-release time volunteer programs in 2013 (up from 51% in 2010), and 50% of companies provided pro bono service programs in 2013 (up from 34% in 2010). While these trends are certainly encouraging, it shows there are still a significant number of companies missing out on the benefits of employee volunteer programs.
More than ever, charities are better positioned and interested in partnering with companies and engaging with corporate employees. However, as a survey respondent stated in America’s Charities 2014 Snapshot Report: Rising Tide of Expectations, “Companies shouldn’t look at their work with nonprofits as transactional events but rather as building a relationship with a trusted ‘go to’ partner that is working to achieve mutual goals.” Through employee volunteer and skills giving programs, companies have the opportunity to help build nonprofit capacity and empower employees to give their time and talent. And all of this is good for the company’s employee retention and bottom line.
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