Social Impact – talent magnet, virtue signalling or value creator?

By Alan Tyrrell:

Social impact in business is not new.

But in today’s world of unprecedented change and turmoil — where corporate social good can be met with accusations of virtue signalling — what is the right approach for maximising business success? And how is success defined in today’s business reality? Looking at the interplay between purpose, profit and society, a new research report conducted by Teneo’s Strategy & Communications team in Ireland, and in partnership with Business in the Community Ireland (BITCI), brings together insights from many of Ireland’s most senior business leaders.

For centuries, business leaders have been debating whether they can, or should, contribute to the society in which they operate. The Cadbury brothers’ establishment of Bournville — the model town rather than the chocolate bar — from the 1870s onwards, is an elegant example of leaders taking their duty to all stakeholders seriously. In an unprecedented move at the time, they went beyond the profit motive and invested in employee housing and facilities — much of which still stands — to support business growth while simultaneously creating better lives for their employees.

Today the impact of business in society, or the ‘S’ in ESG, is subject to renewed focus.  Rises in the cost-of-living and structural logjams in housing, transport, education and healthcare, and a widening socioeconomic divide that can give rise to social unrest all bring business and societal challenges. In Ireland, these pressures are further compounded by intense competition for talent in a full employment economy facing supply chain and digital disruption. More than anything, these factors are reshaping strategic decision-making in a world where business leaders are grappling with geopolitical uncertainty.

Against this backdrop, a reasonable inference might be that business leaders today have little time for social impact.  But inferences, like appearances, can be mistaken. Our report, titled ‘The Social Dividend’, shows that embedding purpose and social impact into core decision-making isn’t just a nice-to-have in the eyes of business leaders, it is a proven driver of medium- to long-term value creation.  Time and time again there is a clear, measurable link between high performance in business and high performance in social impact.

Companies we spoke with for the report – a cross-cut of the Irish economy, consistently evidenced that, as well as delivering for society, social impact strategy delivers for business. These companies achieve higher scores on procurement benchmarks, greater customer loyalty, attract the best talent and much more – yielding dividends for both business and society.  One participant was able to point directly to a threefold improvement in talent retention – with the improvement attributed to its implementation of a social impact strategy.

Our conversations confirm that effective social impact strategies are the very heartbeat of success in progressive, purpose-driven businesses. However social impact strategy is not without challenges and requires continual rebalancing in boardrooms, strategy labs and frontline implementation. Getting it right means starting with integration of social impact with corporate purpose – fusing the how of business with the why of business.

The study highlights several common themes present in successful social impact strategies. While not every organisation demonstrates all of these traits, the key takeaways, when combined, form a golden thread that weaves together business success and social impact.

Calibrating the goals of business with goals for a better society moves from strategy design to implementation. Calibration of goals also aids employees in their navigation of the headwinds currently buffeting the global economy. Social impact then translates into day-to-day collaboration with communities and markets served by the business to create pathways for innovation as well as growth opportunities.

The true power of an effective social impact strategy lies in its ability to generate measurable benefits for both business and society. That means validating the outcomes to ensure win:win results, not a zero-sum game.

And finally, there is communication of social impact – a hoary topic that can present challenges.  In our advice to clients we focus on communication strategies that build trust and ensure that stakeholders know the rationale, focus and desired outcomes for both the social and business impact.  By deploying an honest and authentic narrative, businesses can dispel concerns of virtue signalling and instead reinforce a credible, long-term commitment to making a difference.

In today’s world of unprecedented change, social impact is a key component of strategy to address macro challenges, overcome market headwinds and create value. For companies we spoke with the evidence is clear –far from being an afterthought, social impact is a strategic pillar in its own right.

Our research also showed that one in three firms has no clear strategy for social impact.  If you are one of them, maybe it’s time to join those who do.  Investing to create a thriving society has many returns.  In business terms the return is competitive advantage through improved innovation, new opportunities, employee engagement, cost reduction and business growth –the  dividend as well as being one that is good for society is clearly good for business.

The Social Dividend is a new report from Teneo and Business in the Community Ireland.  The report can be  found at Teneo.com: http://bit.ly/3Eq8luj or in PDF: https://bit.ly/4kapJ5x For more information on the report and social impact strategy, contract Alan Tyrrell on alan.tyrrell@teneo.com

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Alan Tyrrell is a Senior Managing Director at Teneo where he helps clients with corporate purpose, culture, and communication strategy.

Written by: Editor