There is a direct link between employers’ profitability and investing in issues such as the health and wellbeing of staff and ethical corporate behaviour.
These are the findings of research published by Business in the Community (BITC), a membership organisation with the remit of promoting corporate social responsibility (CSR).
A study undertaken for BITC by Ipsos Mori among 100 FTSE 100 companies found that those firms that actively worked to improve staff wellbeing and enforce workplace health policies saw a 10% boost to their financial performance. This was because they reaped the benefits of higher employee engagement, reduced absentee and attrition rates as well as enhanced corporate reputation.
Moreover, workplace presenteeism – or staff coming to work when they were sick – was estimated to cost UK employers £15 billion a year in lost productivity, or one and a half times more than absenteeism.
As a result, a ‘best practice’ group of 37 companies, which provided quantitative measures in relation to at least two of the four principles defined in BITC’s Workwell Model reported an increased shareholder return of 61% last year. The rest averaged about 51%.
Louise Aston, national director of BITC’s Business Action on Health campaign told Personnel Today that, although it was tempting to cut back on health and wel-being initiatives in a difficult economic climate, in reality, it did not make financial sense.
“For every £1 you invest, you get £3 back. It’s a false economy to cut back on investment,” she said, but added that to be effective, responsible business practices needed to be embedded into corporate culture and become part of core business objectives.
A second study, meanwhile, also revealed a statistically important link between corporate financial performance and the effective management and governance of environmental and social issues.
The research, which was likewise undertaken by Ipsos Mori and sponsored by financial services firm Legal & General, showed that those companies which actively managed and measured their CSR activities outperformed the FTSE 350 in total shareholder return terms by between 3.3-7.7% during 2002 and 2007.
The findings also indicated that the more organisations measure their environmental and social impact, the less volatile their stock price is.