Investing in the community

EXTENT OF COMMUNITY INVOLVEMENT

Despite the evidence that organisations are moving away from straight cash donations, these remain the most common form of community assistance provided by respondents to Management Review's survey (see figure 3.2), provided by more than three-quarters of all participants. Event or project sponsorship is undertaken by a similar proportion of organisations.

Figure 3.2: Type of charitable/community involvement

n = 39

ScottishPower, for example, sponsors several education and youth schemes including the Scottish Qualification Awards, Young Enterprise Scotland and the Scottish Youth Business Trust.

Donations in kind are also a common form of help, made by two-thirds of the survey participants. Examples include a donation to charity of obsolete photocopiers by Xerox, and of disinfectants to victims of natural disasters by Reckitt and Colman.

Forms of assistance that require more substantial commitment are inevitably less frequently undertaken, but more than half the respondents have employee volunteering or secondment schemes and a third provide help with project management for charitable causes. ScottishPower is closely involved with the Amateur Swimming Association's Learn to Swim campaign, for example, and many of its employees act as volunteer coordinators for the scheme which aims to teach more than 200,000 children to be safe in the water.

WHY DO IT?

There are several important business benefits to be derived from community involvement programmes, the most notable of which are corporate reputation, employee development and business promotion.

Enhancing the corporate image

More than 90% of organisations in our survey are involved in community or charity projects, and figure 3.3 gives details of the support they provide and the priorities that they set.

Figure 3.3: Community involvement programmes in 21 organisations

Key: CD = Cash donations; DiK = Donations in kind; MG = Matched giving; PM = Project management; S = Event/project sponsorship; V/S = Employee volunteers/secondment.

Management Review investigated the motives behind organisations' involvement and found that while a sense of moral obligation motivates many businesses, the most common driving force is to improve the image and reputation of the organisation (see figure 3.4).

Figure 3.4: Reasons for corporate community involvement

n = 37

Corporate image has become increasingly important to business success and companies have begun to accept that the positive image created by community involvement can have a good impact on the bottom line.

This is reflected in the increasingly common tendency for companies to expand on the usually brief resumé of corporate charitable donations in their annual reports and accounts into a more comprehensive account of the organisations' activities. Legal and General, for example, is a member of the Per Cent Club of companies that donate at least 0.5% of UK profits to charities and non-profit groups. It devotes three pages of its annual report to an account of its charitable activities - outlining its priorities, and the extent of its involvement ranging from the Prince's Youth Business Trust to its partnership with Age Concern.

Other organisations, including Rio Tinto and BAA, have combined community reporting with their environmental information in a joint annual publication, while Boots and BP have expanded this reporting even further and now produce completely separate community reports.

Employee development

Apart from the public relations advantages provided by corporate community involvement, one of the main business benefits of such programmes is their impact on employees. Six out of 10 of our survey respondents said that they provide community assistance as a way of improving the motivation and job satisfaction of their staff, while just over half agree that it assists with employee development.

In our survey, more than half (56%) the respondents are involved in employee volunteering or secondments to charities and community groups, including cable telecommunications company Comcast Teesside, Anglian Water and British Airways. These schemes can provide opportunities for employees to undertake personal development in a broader field than the workplace. Staff gain valuable experience in areas such as project management and teamworking which can help their career development and contribute to job satisfaction.

A further example is provided by Boots, which notes that nearly all business units are now developing corporate community involvement programmes "not least because of the opportunities they provide for managers' personal development. Managers are contributing their skills - and learning new ones - not only in charities but also in civic activities such as town centre management." Our case study of employee secondment at Marks & Spencer illustrates how such schemes can work in practice.

A study conducted by IRS Employment Trends in 1998 of employer-supported volunteering schemes reported very positive views of the benefits to the organisation of having employees involved in community work:⁷

Financial services organisation Halifax is one that has promoted community secondments and volunteering to provide development benefits for its staff. It has several schemes, including a transitional secondment programme that offers selected employees - often those approaching retirement or redundancy - temporary assignments with community organisations. This scheme can help employees ease their way out of the organisation and allows the company to demonstrate a commitment to the long-term interests of employees. Halifax also allows volunteers to act as mentors to local head teachers, providing employees with the opportunity to learn about current educational methods and experience strategic management of a whole organisation.

Practical benefits such as these are one of the reasons why organisations have moved from merely making charitable donations to more complex involvement with community organisations and charitable groups.

The IRS survey also examined the reasons why, despite the enthusiasm of those companies that do have volunteering and secondment schemes, most organisations are not involved in this way. There were two main reasons: most commonly, that the issue had never arisen and that no requests had been received from either employees or community groups; and in a quarter of cases, the organisation felt that they did not have adequate resources to support volunteering or secondment, or that staffing was too tight to allow employees to be spared. The survey also found that volunteering and secondment schemes were most commonly found in larger organisations.

IRS's research also found that volunteering and secondment programmes are not without their problems, with difficulties reported in sustaining initial enthusiasm, particularly when workloads are heavy. The study offered the following tips for designing and maintaining a successful volunteering programme:

Another study of employee volunteering schemes in a group of seven large companies including BT, IBM UK and Whitbread found "firm evidence from both companies and individual employees that community involvement can have a positive impact on business issues."⁸ However, it warned that companies are not using sufficiently rigorous evaluation techniques to ensure that they are getting good value from their schemes. The report proposed a range of additional techniques that could be used by organisations to evaluate the benefits of secondment and volunteering schemes, particularly with respect to employee development. These include:

PROMOTING THE BUSINESS

Almost half of our survey respondents engage in community and charity activities to promote their organisations' business activities, although few make a direct link to the bottom line - only one in six cites improved profitability as a motive for getting involved in community work.

An increasingly common means of promoting business activities while assisting community organisations is cause-related marketing (CRM). CRM is a partnership between a business and a non-profit organisation which increases the company's sales while raising money and promoting the cause. A CRM campaign is paid for by the sponsoring company and may use advertising, public relations and other marketing tools. The sponsoring company benefits through increased public awareness, improved corporate image, greater customer loyalty and higher employee morale and commitment.

Business in the Community, which has been heavily promoting the CRM concept, claims that well-implemented and communicated CRM programmes have the potential to bring enormous rewards to those involved in the partnership. But, it warns, a poorly executed CRM campaign can backfire and damage the reputation of the partner organisations and can harm the work of the charity or cause involved. To help avoid these pitfalls, BitC has launched its own guidelines for successful CRM partnerships. These emphasise that the key principles that must underlie any programme are integrity, transparency, sincerity, mutual respect, partnership and mutual benefit.

Some of the fundraising activities for the Diana, Princess of Wales Memorial Fund provide useful illustrations of how CRM can be successful and also how it can go badly wrong. Many companies became involved in CRM for the memorial fund. Ladybird Books, for example, published a hugely successful children's book on the life of the Princess that raised £64,000 for the fund - a fact that Pearson (Ladybird's parent company) proudly notes in its annual report and accounts.⁹ This project was of clear benefit to both partners in the CRM project.

A separate project, by Van den Bergh Foods, makers of Flora margarine, marketed special tubs of the product that displayed the memorial fund's logo. This campaign also raised a substantial sum for the fund, but the media reaction to the promotion was hostile, viewing it as an inappropriate fundraising vehicle. The backlash that followed this CRM campaign led to calls for the whole memorial fund to be wound up, and had a long-term, detrimental impact on its credibility.¹⁰

The Flora experience emphasises the importance of matching partners and projects very carefully.

DETERMINING PRIORITIES

Making a careful choice of project is a principle that applies more widely in community involvement than just CRM. One of the changes in the relationship between business and charity over the last few years has been the more focused nature of donations and other involvement. However, our survey suggests that most organisations still make decisions about their community involvement on an ad hoc basis.

Only a third (36%) of our respondents report that they always make decisions about charitable donations or other community support according to a firm written policy, while 41% of organisations do not have a written policy at all. A further 10% have a written policy but can also make decisions on an ad hoc basis outside this policy. Some larger organisations, including J Sainsbury, have set up charitable trusts to direct their community assistance programmes. In these cases, decisions about projects are usually made by trustees or board members.

Where written policies exist, the criteria for involvement in community projects are generally very clear. The examples from our survey given in figure 3.3 show that where organisations have developed formal policies, their involvement often focuses on projects that are linked in some way to the business or brand objectives.

So, for example, Anglian Water Services targets its community involvement at projects linked with water or the environment, whereas Boots supports health initiatives. Many organisations give priority to charity or community projects that are local to their offices - Xerox, for example, gives priority to projects that will be implemented within 10 miles of the company's offices, and Comcast Teesside only donates to organisations within its franchise area.

Larger companies are more likely to have clear policies on community investment and figure 3.1 gives details from the annual reports of FTSE 100 finance and retail companies of the priorities that they set for their community initiatives.

PRINCIPLES OF CORPORATE COMMUNITY INVESTMENT

BitC is a vocal advocate of formalising policies and procedures for community involvement. It has published a set of principles of corporate community investment, which provide a good starting point for establishing a programme that achieves the dual aims of assisting the community while benefiting the company.¹¹ The purpose of the principles, which are aligned to the European Foundation for Quality Management model (see IRS Management Review 1 for details) for business excellence, is to provide a framework for managing a corporate community investment programme, and to provide a benchmarking tool to assess current performance. The nine principles are summarised below:

EVALUATING THE INVESTMENT

As the BitC principles make clear, adopting a more strategic approach to community involvement means becoming more rigorous in evaluation.

Projects need to be assessed to see whether they meet the goals set for them, whether they meet the needs and expectations of the community partner and whether they are achieving the desired benefits for the company.

Our survey suggests that few organisations have yet developed thorough ways of evaluating their community programmes. Only half of our respondents evaluate the benefits of their community activities in any way at all.

The evaluation that does occur usually reflects the purpose of the community initiative. For example, those organisations that undertake community programmes to enhance the organisations' corporate image, such as Sun Valley Foods and BAA, undertake customer surveys to assess whether the community programmes are succeeding in improving the perception of the company within the community. Organisations involved in employee volunteering, and those that use their programmes for employee development, evaluate success through appraisals and discussions with the employees concerned.

Some larger organisations undertake more extensive auditing of their community activities. British Airways, for example, annually audits its community giving and has developed an evaluation methodology and J Sainsbury is planning to build on an evaluation process initiated in 1998.

Case Study 2
M&S gives the community a helping hand

Marks & Spencer (M&S) has always shown a high degree of social responsibility, with a tradition of giving to the community that goes back over 100 years. Since the 1950s, the company has developed its stance in a more systematic way with policies covering areas such as the environment, consumer rights, the supply of safe and healthy goods and services, and the quality of working life for employee.

Its community involvement programme is well-established and includes a number of different strands. During the 1997/98 financial year, M&S contributed more than £10 million to the communities in which the company operates. Figure 3.5 shows a detailed breakdown of its donations and sponsorship for this period.

Figure 3.5: Community involvement expenditure by M&S in 1997/98

Source: Marks & Spencer

A GOOD CORPORATE CITIZEN

The company believes that it should be a good corporate citizen. As Tina Mitchell, assistant manager (communications) explains, Marks & Spencer aims to "assist charities and community organisations through the commitment of employee skills and time, as well as through cash donations". Its community involvement policy pledges to:

"share our success with the communities in which we operate to enhance quality of life through contributing to health and care and the creation of community and cultural opportunities."

Marks & Spencer encourages its employees and their families to be active in their local communities and "in so doing, help to create a more prosperous and self-sufficient environment for all concerned". The company believes that this commitment should start "at the top", with board members actively involved in a wide range of projects.

The M&S "programme of support" provides help through cash donations, sponsorship and secondments. It prefers not to support third-party fund-raising projects, endowment funds, sports (except those involving people with disabilities or projects which create a diversion from crime), individuals or major disasters (until it has assessed the real needs and staff responses). The main criterion for support is the need of the community and the organisation - and the company frequently provides "seed-corn" funding which allows deserving projects to get started or to widen their influence for the benefit of others. M&S operates a well-established secondment programme and during 1997/98, some 260 employees took part (for details of the company's secondment programme, see figure 3.6).

The company operates three community involvement committees, which meet regularly to discuss policy and to consider individual appeals. All three committees are chaired by board members, with memberships which include staff drawn from across the business. The top-level community involvement committee includes six main board directors and is responsible for overall policy and budget. There is also a health and care committee and a community and cultural opportunities committee, representing the two banners under which the company's community involvement projects are supported.

Health and care

The focus of Marks & Spencer's health and care programme is on helping those affected by disability, ill-health and the breakdown of conventional support structures. Preference is given to projects that are likely to have direct benefit to M&S employees and retired staff.

The priority areas for support are:

A wide range of projects are assisted within this programme but examples of organisations supported in 1997/98 include:

Community and cultural opportunities

Marks & Spencer's main criteria for its community and cultural opportunities programme is to support projects which enhance community life, such as those addressing employment opportunities and crime reduction, and which extend participation in the arts and cultural opportunities. The company assists environmental and heritage projects in both rural and urban areas "which encourage people to care for, and make improvements to, their own surroundings".

The priority areas for support within the community are:

There are six main areas of support within the cultural arena:

Examples of organisations supported in 1997/98 under the company's community and cultural opportunities programme include:

THE CHILDREN'S PROMISE: A MILLENNIUM MISSION

In addition to, but complementing, its community involvement programme, Marks & Spencer has recently set up "The Children's Promise", a major nation-wide fund-raising initiative. Working in partnership with five leading children's charities (Barnardo's, Childline, The Children's Society, NCH Action for Children and the NSPCC) and two umbrella organisations (Comic Relief and BBC Children in Need), the Children's Promise aims to encourage everyone in the country to donate their final hour's earnings of this millennium. The goal is to raise more than £100 million to "help create a better future for the children of the next millennium".

M&S developed the scheme with the New Millennium Experience Company and made an initial donation of £1 million, as well as a total investment of £12 million to get the scheme up and running. The inspiration for the initiative, however, came from staff who were consulted on how they would like to mark the millennium and who felt that the company should use the opportunity to help children. As the scheme gains impetus, staff will also be encouraged to actively support it in their local communities.

The company's commitment to the campaign is reinforced in the autumn issue of its store magazine, along with the latest fashions and newest recipes, where a two-page spread espouses the values behind launching The Children's Promise. The feature emphasises the need for such an initiative, quoting hard-hitting homelessness and poverty figures to get the message across. That such an article is included in the company's commercial literature shows not only how high-profile the scheme is (Prime Minister Tony Blair spoke at its launch and has already pledged his final hour's earnings), but also indicates how integrated M&S's social responsibility programme is within its business operations.

APPEALS FOR HELP

During a typical year, the community involvement department can expect to receive over 20,000 letters, of which 10,000 are appeals. The company is able to directly support about 1,500 of these charitable causes or organisations.

The top-level committee works closely with the community involvement department, comprising a team of nine specialist staff, who handle appeals from charities and community organisations and seek out projects for priority help. This is achieved by visiting projects and meeting with members of the local community, voluntary sector organisations and government bodies. The department also assists many organisations with guidance, fund-raising and management techniques.

Each application, if seriously considered for assistance, is subject to a rigorous evaluation system. The first stage is to assess whether the application meets the detailed criteria set down in the comprehensive policy statements for the company's health and care, and community and cultural opportunities programmes. An on-site visit is undertaken where possible, particularly if the donation represents a significant amount, and interviews are conducted in all cases. If the organisation applies for funding for a second year, a full report is required.

HELPING HANDS

As well as promoting an ethos of community involvement by encouraging staff to take on roles such as management committee members of local voluntary organisations, school governors and so on, M&S employees are encouraged to help their communities in a practical way through the company's "Helping Hands Award" scheme.

The scheme is designed to "help the helpers", those M&S employees who are already involved in their community. As "a helping hand", the company will donate up to £250 per year to the charity or organisation for which staff volunteer to work. The criteria for support stipulates that the donation must be used to directly benefit the organisation's work in the local community and that organisations will be considered only if they fall in line with M&S's overall community involvement policy. The guidelines further state that to qualify for support from the scheme:

"Helping Hands" was initially implemented as a pilot scheme by the company in Scotland and, following a considerable level of enthusiasm on the part of staff, the scheme was refined and is now available to M&S staff throughout the UK.

MATCHING FUNDS

As a further means of encouraging employee involvement in the company's community involvement programme, M&S matches, on a pound-for-pound basis, the money raised by staff in stores, head office departments and distribution centres. The money must be raised for specific projects and has a ceiling of £15,000 per fund-raising group. Only one "match" per store or head office group can be made in one financial year; this can be for one project or for a group of projects. Applications are made on behalf of the company group and not by an individual.

The "best practices" for the scheme include the following conditions:

Marks & Spencer also operates a payroll giving scheme, allowing employees to "give as you earn". However, this form of staff community involvement has not experienced anything close to the popularity of the matching funds scheme, which, according to Mitchell, has "snowballed". In her view, this is largely explained by the fact that the scheme, by its very nature, involves groups of staff helping their local communities, usually in a very real and concrete way. This financial year (1998/99) the company has set aside £400,000 to match the funds raised by its employees, meaning that an estimated £800,000 will be donated to charitable causes and community organisations.

THE FUTURE

Just as the company is continually developing its commercial activities, so Marks & Spencer views its community involvement policy as an area that needs to evolve alongside its business operations. The company is currently reviewing how the programme is implemented, although the underlying philosophy of being a good corporate citizen and sharing its success with charities and community organisations remains the same.

Figure 3.6: M&S' Secondment programme

SECONDMENT - ADDING VALUE

Marks & Spencer's secondment programme is well established and is regarded by the company as an integral way of implementing its community involvement policy. During 1997/98, more than 260 staff took part - either on part-time projects or longer-term assignments. The secondment policy "covers the transfer of staff for an agreed period to specific projects which will be of value to local communities and charitable organisations, the individual and the company".

The simple but critical criteria for secondment, according to Tina Mitchell (assistant manager, communications), is whether the placement is "right for the individual, right for the organisation, and right for the company". The secondment programme is supported by a detailed code of practice which includes the perceived benefits of a secondment for each of these three parties. The objectives for the individual include the opportunity to learn alternative business methods and make a direct contribution to the local community while the receiving organisation benefits from "management skills which bring a fresh, creative approach to problem-solving". The company has the advantage of the enhanced capabilities of the returning secondee as well as an increased knowledge of the local community.

The company operates both full-time and part-time programmes under the scheme:

Full-time secondment

Under the full-time secondment scheme, two programmes are offered:

This programme is limited to managers and is designed "to identify new and develop dormant skills" and to broaden the secondee's view of the company. It is considered that the experience of secondment to a different organisation can also encourage adaptability to change. The short-term assignments are geared towards managers who it is considered have development potential that will be fully exploited during their secondment. As Mitchell explains, they are particularly useful for those employees who do not wish to be away from the commercial environment for a long period.

Part-time personal development programme

The company's part-time secondment programme is designed to meet the development needs of individuals and assignments are short and flexible. Secondment falls into one of two categories:

A window of opportunity

Marks & Spencer believes that, for staff, its secondment programme provides a development opportunity for younger members of staff, a mid-career stimulus or a bridge into retirement. Projects considered suitable for secondment fall into five categories:

The 35 full-time secondments cover a wide spectrum across the country, including two-year placements with:

As Marks & Spencer expands its global operations, it is also extending its secondment programme overseas "as a powerful way to export the values that are important to us". For example, as well as supporting the Special Olympics World Games, which brings together 8,000 athletes with mental disabilities, the manager of M&S's Valencia store is currently seconded as vice-president of the Spanish arm of that organisation. On another front, the company's food merchandise manager for Germany and Belguim is very appropriately seconded in Paris to "Les Restaurants du Coeur", an organisation which provides a basic meal to people in need.

Support for secondees

Marks & Spencer's secondment programme is carefully implemented and rigorously monitored. An interview process is operated and the same recruitment procedures followed as for any vacancy within the company. During the period of secondment, the secondee continues to be a member of Marks & Spencer's staff and is supported by the company. The secondee is also subject to a performance development review which reflects on past performance and sets objectives for the future. Within six weeks of starting the placement, the precise purpose and objective of the secondment should be agreed and key tasks set to include both the technical and managerial aspects of the secondee's role. This review is carried out by the host organisation and is linked to remuneration.

There is regular contact with the secondee during the placement, who is initially invited to an induction day. This is followed up by on-site visits from senior managers and representatives of BiTC as part of the "Seeing is Believing" initiative, whereby company representatives are encouraged to view projects at first hand. The secondee is encouraged during such visits to present a report on the project and provide feedback on the placement. Informal networking between secondees and other staff is encouraged and a special conference is organised once a year by the company. This is a two-day event where senior members of staff provide a business update and secondees are given the opportunity to catch up on company developments as well as socialise. After the secondment, a report must be prepared by the secondee and is used as a basis for an evaluation of the contribution that was made to the organisation.

Vacancies for secondment are advertised in the company's management vacancy lists for store staff, although employees can express an interest in secondment prior to a vacancy becoming available. Interestingly, all four managers within the community involvement department have themselves been seconded at one time or another.

¹     Reported in the Business in the Community annual report 1996.

²     IRS (1998), "Young people's employment: the annual IRS survey", Employee Development Bulletin 102, June, pp.5-16.

³     BT plc annual report and accounts 1998.

⁴     IRS (1998), The evolving HR function, IRS Management Review 10, July, p.45.

⁵     McIntosh M, Leipziger D, Jones K and Coleman G (1998), Corporate citizenship: successful strategies for responsible companies (Financial Times/Pitman, London), p.210.

⁶     Alperson M (1995), Giving strategies that add business value, The Conference Board (New York).

⁷     IRS (1998), "Any volunteers?", IRS Employment Trends 657, June, pp.7-16.

⁸     Tuffrey M (1995), Employees and the community: How successful companies meet human resource needs through community involvement (PRIMA Europe, London).

⁹     Pearson plc annual report and accounts 1998.

¹⁰    The Sunday Telegraph, 17 May 1998.

¹¹    See www.bitc.org.uk/principl.htm