Increasingly, consumers have been basing their buying decisions on the mission and behavior of companies. As you will see below, a substantial portion of consumers rate social responsibility as a primary reason for choosing to do business with one company over another. Because these buying decisions ultimately impact profitability and valuation, business owners should take a close look on how they can implement social responsibility programs in their companies.
While large corporations have more resources to devote to social responsibility initiatives, businesses of any size can implement programs that support their local communities.
What is Social Responsibility?
From a commercial viewpoint, social responsibility is a general term describing a business philosophy that incorporates “social good” into the company’s core mission statement. This can include sponsoring a local community organization or initiative, promoting volunteerism among the workforce, adopting environmentally friendly practices, philanthropy, ethical labor practices, or any other program that involves giving back or supporting social or community interests. While profitability is still the main focus of the business, companies that practice social responsibility also include social good as a top priority.
If you are considering a give-back initiative in your company, the options are practically limitless. Select a cause or organization that resonates with your core values and makes sense for your company to support.
What’s in it for You? Social Responsibility Influences Buying Choices
Social responsibility initiatives cost money and require time and resources to implement. So, is it worth it? Will you see a positive ROI for your efforts? The evidence is clear: Consumers want to spend their money with businesses that support communities and causes.
According to a 2017 Cone Communications Survey, 87% of respondents indicated they “will purchase a product because a company advocated for an issue they cared about.”
In another survey, 75% of respondents said that they “are likely to start shopping at a company that supports an issue they agree with.” The same survey found that 68% of participants say the most important attribute of a company is social responsibility and giving back to the local community.
Community Initiatives Help Build a Dedicated Workforce
It’s not only consumers who support companies that give back. More and more, employees want to work for an organization that supports their local communities. When businesses incorporate giving back into their core mission, recruitment improves and employee retention increases.
According to a survey by Glassdoor, “75 percent of U.S. workers expect their employer to support groups and individuals in need in their respective communities, either through donations and/or volunteer efforts.”
When social responsibility is part of the company’s mission, it strengthens the organizations’ culture, which leads to improved employee engagement and retention. In a 2019 global Glassdoor Survey, 89% of participants “believe it is important for an employer to have a clear mission and purpose,” 79% of those surveyed “would consider a company’s mission before applying for a job there, and 64% of respondents say that “their company’s mission is one of the main reasons they stay in their job.”
Adding It Up
So, how does social responsibility translate to financial gain? Consider your support of community initiatives a part of your overall marketing and public relations budget. In the long run, the goodwill generated by your social responsibility programs will boost your company’s profitability and overall valuation. Consumers, employees, partners, and the industry as a whole will look upon your company as a responsible, caring company that values people as much as it does profits.
There are many paths you can take to boost your company’s valuation. At Peek Advisory Group, we work with business owners to help them identify business gaps and opportunities to increase value, and prepare them for the next stage of business valuation – from growth to varied exit strategies.