Social impact: talent magnet, virtue signalling or value creator?

Social impact is no longer a corporate add-on but a strategic pillar diving growth, trust and talent retention, writes Alan Tyrrell

We’ve all come across employee engagement and team-building days where helpful corporate hands set out to do some good—by painting a local community centre or clearing up some waste ground, for example.

We also often see more strategic corporate initiatives, such as attempts to address major social issues such as access to education or mental health services.

But when taking steps, large or small, to support society, some companies have been accused of ‘greenwashing’, ‘virtue signalling’ or ‘chequebook charity’.

As a result, questions abound as to whether or not it is advisable for companies to get involved in social impact initiatives.

Is it just a ‘nice to do’, or is it about business strategy? Is it a corporate responsibility or just a marketing ploy?  What is the ‘business’ of business, and why should businesses care about society?

Social impact strategy: the benefits

The impact of business in society, or the ‘S’ in environmental, social and governance, is subject to renewed focus.

We are in an era of rising living costs, structural challenges in housing, transport, education and healthcare. Combined with a widening socioeconomic divide that could lead to social unrest, this poses challenges for business and society.

In Ireland, these pressures are further compounded by intense competition for talent in a full employment market facing supply chain and digital disruption.

More than anything, these factors are reshaping strategic decision-making in a world in which business leaders are grappling with geopolitical uncertainty.

The Social Dividend, a new research paper from Teneo and Business in the Community Ireland, shows that embedding purpose and social impact into core decision-making isn’t just a nice-to-have; rather, it is a proven driver of medium- to long-term value creation.

Time and time again, we see a clear, measurable link between high performance in business and high performance in social impact.

The companies we interviewed for the report, representing a cross-section of the Irish economy, demonstrated that social impact strategies can help both society and business.

These companies tend to score higher on procurement benchmarks, enjoy increased customer loyalty, attract the best talent and gain numerous other advantages, creating benefits for the business and the community.

One participant highlighted a threefold increase in talent retention, directly linked with its implementation of a social impact strategy.

A continual rebalancing

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 the integration of social impact with corporate purpose—fusing the ‘how’ of business with the ‘why’’.

Aligning business goals with those of a better society can move strategies forward and support employees in navigating the current headwinds buffeting the global economy.

This translates into day-to-day collaboration with communities and markets served by the business, creating pathways for innovation as well as growth opportunities.

Authentic communication

How best to go about communicating their social impact can sometimes present challenges for companies.

We advise focusing on communication strategies that build trust and ensure stakeholders understand the rationale, focus and desired outcomes for both social and business impact.

By deploying an honest and authentic narrative, businesses can dispel concerns regarding virtue signalling and instead reinforce a credible, long-term commitment to making a difference.

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

Our research found that one in three firms have no clear strategy for social impact. In today’s world of unprecedented change, social impact is a key component in strategies deployed to address macro challenges, overcome market headwinds and create value.

Among the companies we spoke to, the evidence is clear: far from being an afterthought, they view social impact as a strategic pillar in its own right.

The return on investment in business terms is a competitive advantage through improved innovation, new opportunities, employee engagement, cost reduction and business growth.

Alan Tyrrell is a Senior Managing Director with Teneo