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Navigating economic turbulence is a core skill that many executives must master in 2023. As you examine budgets for next year, it may be tempting to slice line items such as employee wellness and engagement, diversity, equity, and inclusion (DEI), and sustainability initiatives.
However, experts warn that reducing social impact funding from your budget is a risky move in any financial landscape. “I believe that maintaining a steady DEI budget in both good times and bad is a best practice for all companies, across industries,” writes Shelley Willingham, VP of business strategy for The Diversity Movement in Forbes. Plus, as Erin Reilly, Twilio’s chief social impact officer explains in Fast Company, the need for social impact skyrockets during tough economies, making CSR programs even more valuable.
From recession resilience to maintaining a productive work culture, here’s why reinvesting in social impact will help your business safely maneuver through a slow economy.
Boost productivity with meaningful employee engagement initiatives
Visit.org defines employee engagement as the levels of enthusiasm and connection employees have with their organization and how motivated they are to put in extra effort. Engaged employees are 57% more likely to exceed their job requirements, have lower turnover, and can bring in 43% more revenue than their less-engaged counterparts.
Engaging your workforce is a powerful way to boost your company’s productivity and revenue, and place you in an optimal position to weather an uncertain economy.
But here’s the bad news: According to a 2022 study, only 32% of employees in the United States are engaged. Worse, 17% of employees are actively disengaged, meaning they frequently express workplace frustrations, and are apathetic about their work and performance.
Try supercharging employee engagement in your workplace by introducing purpose through meaningful social impact experiences that benefit worthy causes and inspiring nonprofits. When employees bond over a shared impact experience, they deepen connection to their colleagues and company mission.
Diverse teams are more innovative and profitable
One way to measure the effectiveness of business strategy during financial instability is to examine the last time the U.S. contended with a slowdown: the Great Recession of 2007-2009.
Research suggests that maintaining a diverse workplace can help companies not just survive during a recession, but also thrive. According to a 2020 study by Great Place to Work, when the S&P 500 suffered 35.5% declines in stock performance, highly inclusive businesses grew a remarkable 14.4%. Such outperformance continued years after the recession ended.
Companies that act on workplace diversity, equity, and inclusion gain an edge over their competitors, possibly because they are more likely to develop innovative solutions and products. “The most diverse companies are now more likely than ever to outperform less diverse peers on profitability,” confirms McKinsey in a 2020 study.
Continuing to invest in DEI social impact initiatives is a core way to enhance resiliency in the face of a looming economic downturn.
Compete for customers and investors with ESG initiatives
Climate change threatens us all. And companies that commit to environmental, social, and governance (ESG) or corporate social responsibility (CSR) initiatives can garner favor with investors and customers alike. 80% of investors say that ESG is an important factor in their investment decision-making process and half of investors would consider divesting from companies that didn’t take sufficient action on ESG, according to a PWC report. Not reporting on your company’s ESG, CSR, or carbon footprint can be a liability.
But in a post-Paris Agreement landscape, investors, shareholders, and customers are highly knowledgeable when it comes to sustainability. They are hypersensitive to any claims that hint of greenwashing — when a company embellishes its sustainable accountability for positive press. Environmental claims without meaningful impact can off-put customers and spook investors.
In 2023, the competition for investment dollars will be fierce. The companies that pair profit with meaningful commitment to people and planet will be the ones who secure funding, please shareholders, and showcase authenticity to their customers.
Scale your social impact commitment
The idea of an economic downturn can spark business leaders to instinctively whittle social impact budgets.
But the companies that maintain funding for employee engagement, diversity, equity, and inclusion, and environmental initiatives will ultimately fare better during and after a recession. Not only will companies have increased innovation and profitability, they’ll also enjoy more productive employees and a greater chance of appealing to customers.
Learn how you can scale your social impact and employee engagement initiatives with Visit.org. Reach out to us at impact@visit.org.