Why Empowering Employees To Give Back At Work Improves Retention

It’s time to replace top-down corporate philanthropy with employee-driven giving programs. Here’s why.

Despite the persistent fears of a recession, talent remains tight—and a major constraint for any business with dreams of growing into the future. The War for Talent continues all over the globe.

That has put more emphasis than ever on employee retention. A few progressive companies seem to have uncovered a secret weapon of sorts: purpose-driven giving. This simply means giving their employees the opportunity to support causes they are passionate about, beyond any philanthropy the company itself supports.

This strategy is especially effective among recently hired employees from the Millennial and Gen Z generations. Recent survey data collected by Benevity finds 52% lower turnover among newer employees with less than three years of experience with an employer when they participate in purpose programs.

“Participation in this new form of corporate purpose programs, where employees are leading the charge in causes they want to support and employers are supporting them, is now playing a major role in shaping employees’ early experiences with a company and is linked to reduced employee churn,” says Sona Khosla, Benevity’s Chief Impact Officer.

Beyond corporate social responsibility

For decades, companies have embraced giving back in different forms. One approach, corporate social responsibility (CSR) or social impact programs, often include engaging employees in charitable giving, volunteering and other pro-social activities.

But these CSR programs have traditionally been tied to the goals of the company itself. While these remain important components of corporate philanthropy, more and more companies recognize the need to go beyond that to truly connect and engage with their employees’ personal purpose.

“Instead of starting with the company’s purpose, it needs to start with engaging stakeholders, notably employees,” says Khosla. “This new approach not only drives greater social impact, but it also brings meaning to the work that all stakeholders do, boosts engagement and brings a sense of connection and belonging to stakeholders.

“A corporate purpose program designed with this in mind allows employees to bring their passion for the causes they want to support to their companies.”

Members of the Z and Millennial generations (arguably the most socially conscious workforce demographic to date) are driving these changes because they really care about finding purpose, meaning and impact at work.

According to McKinsey, 31% of employees quit their previous jobs due to a lack of meaningful work. “They may be the very people who left their jobs during the Great Resignation as they wanted to ensure their work allowed them to live their values and have a positive impact on the world,” says Khosla. “It’s clear that employers who engage them from day one by providing an outlet through which they can give back and support the causes they care most about will be more likely to yield better retention.”

Ultimately, although every industry has some benefit to gain from purpose programs, it’s likely to be more valuable for higher turnover fields and those with a bigger proportion of Gen Z and Millennial workers.

Changing the social contract

Over the past several years, the social contract between employees and employers has fundamentally—and maybe irreversibly—changed.

“No longer can companies dictate what should matter to their people,” says Khosla. “Instead, they need to meet their people where they are and allow them to express and engage others in what they care about. Employees, especially young people, want to work for companies that will support their passions and purpose while providing them with the opportunity to have a positive impact—not just the other way around.”

Rather than asking employees to support the cause chosen by company’s leadership, for example, companies must enable employees to support any cause they care about. This can be anything from their church, sports club, a local animal shelter, a grassroots organization in their local community or even halfway around the world, or a large organization doing important humanitarian or justice work like UNICEF, Doctors without Borders or Amnesty International.

“Companies must allow employees to show up with their passions, letting them talk about it and rally their colleagues in it, even if it’s not what your company stands for,” says Khosla. “In fact, even more so if it’s not! The reality is that culture is formed not by executives, but by all of the people in a company. And it’s their collective passion for action that makes purpose programs authentic.”

But a word of warning: if an employee-driven corporate purpose program doesn’t have a genuine commitment and resources put against it, the program will likely fail. “It requires investment in leadership, people and technology to build the culture and communications strategy around it,” says Khosla.

These programs also won’t work well if they aren’t able to scale globally or offer the causes that people care about no matter where they are based. “Even if your program is for people in the U.S., they may want to support a cause somewhere else, so making sure those options are made available is crucial,” says Khosla. “Every employee seeks meaning, impact and purpose from their work and lives—it’s a universal need.

“Companies should seek to deliver an equitable experience and access to these benefits for all of their people no matter where they live or what roles they are in.”

Engaging employees with purpose from day one

Companies see reduced turnover among newer employees who participate in purpose programs compared to those who have been at the company for longer. But newer employees generally participate in such programs at a third of the rate compared to their longer-tenured peers.

In other words, companies need to be intentional about connecting newer employees to purpose programs. Khosla offered the following suggestions for how to do that from an employee’s first day—and beyond.

1. Incorporate purpose into onboarding: HR leaders and managers can provide new hires with donation “currency” on their first day to use for the cause of their choice. Or they can organize a volunteer opportunity for new cohorts of hires—as both a team-builder and community-builder.

2. Communicate the company’s contributions and commitment: How leadership and middle management engage in communicating about programs is one of the biggest predictors of participation and program success.

3. Leverage ERGs: Employee resource groups (ERGs) are a powerful driver for connection and are often the first place new employees turn to find new friends at work.

4. Encourage giving year-round: Business leaders can and should use awareness dates like Martin Luther King Jr. Day, Black History Month, International Women’s Day, Earth Day, National Volunteer Week, et cetera as opportunities to get involved. Also, providing employees with the opportunity to quickly respond to crises (social, natural or political) lets them know they have a way to act on the issues that matter to them in the moment.

The value of giving back

While there are many leaders who already understand the connection between purpose and retention, using purpose programs to drive retention rates is another proof point to rationalize the value of these programs. It’s more than just doing the right thing—especially as businesses tighten up their spending in the face of a potential recession.

With Millennial and Gen Z now comprising almost 50% of the workforce, employee-driven philanthropy programs are now table stakes. “Failure to make the right investments in these programs will make it increasingly difficult to compete for up-and-coming talent and leadership,” says Khosla. “This is not a risk any business should take, especially in high turnover or highly competitive industries.”