Environmental, Social & Governance Briefs

The Role of Philanthropy in Developing Human Capital

February 06, 2018

In its 2018 Trends to Watch report, MSCI says “investors will increasingly seek to invest in talent quality,” even to the point of evaluating companies by “sifting out winners and losers in the race for human capital.” The focus on human capital is driven by the growth in artificial intelligence—with many routinized tasks becoming automated, people will be required to use “higher level cognitive, creative and social skills in their evolving role.”

CSR and corporate philanthropy have powerful tools at hand to develop human capital, particularly in the context of MSCI’s five metrics that distinguish leading companies from those that are followers or laggards in talent enhancement practices:

• Workforce engagement surveys
• Leadership training programs
• Workforce diversity,
• Training hours
• Support for degree programs.

Evidence shows that companies can succeed in this critical area by investing their philanthropic dollars strategically to encourage and support volunteer service, including pro bono (domestically and internationally), and nonprofit board service.

Fostering leadership, diversity sensitivity, and problem-solving

GSK is a good example of how global pro bono experiences can foster the above skills. GSK’s PULSE Volunteer Partnership provides skills-based volunteer opportunities, matching eligible employees with nonprofits for three or six months full-time. Since 2009, 705 PULSE volunteers from 63 countries have teamed up to provide pro bono services to 120 nonprofits in 68 countries. Their contributions totaled £22 million (~$30.5 million) worth of skilled services to nonprofits worldwide. PULSE volunteers’ work supports the UN Sustainable Development Goals, particularly good health and quality education.

Tracking the experiences of PULSE volunteers, GSK says that they return to GSK “re-energized, with fresh insights or ideas, and with a renewed connection to our mission to help people ‘do more, feel better, live longer.’” In fact, 94 percent of GSK colleagues believe that PULSE helped volunteers to develop their interpersonal skills and learning agility. Ninety-one percent of the volunteers agree that they brought new ideas and fresh ways of working into GSK after PULSE. In a post I wrote after interviewing returning volunteers from GSK, as well as IBM, EY, and Intel, I observed that “teamwork, communications, listening and body language, diversity sensitivity, and problem-solving are key skills described as areas of personal and professional growth by volunteers returning from international pro bono deployments. 

Nonprofit board service develops human capital for innovation

As shown in the Better World Leadership Study, published in November, board service is an effective pathway for companies to grow shareholder value in three ways:

• Advancing workplace diversity and inclusion Business people who serve on boards gain appreciation and understanding of people from backgrounds that are different from their own. This benefits companies since studies indicate that diversity and inclusion increase profitability. Additionally, companies have a significant reservoir of people from diverse backgrounds who would like to serve on boards, thus providing opportunities for leadership development.
• Developing human capital for innovation Business people who serve on boards confront challenges that stimulate their leadership, creativity, and innovation. Additionally, they improve skills that enhance their performance at work, including strategic planning, decision-making, listening, collaborating, and partnerships. This experience and expertise will help their companies grow value.
• Fostering economic development and achieving the U.N. Sustainable Development GoalsBusiness people who serve on boards strengthen communities where their company’s employees and customers live and work. Board engagement also helps to advance U.N. SDGs, including addressing hunger, good health and well-being, quality education, gender inequality, decent work and economic growth, reduced inequalities, sustainable cities and communities, climate action, and peace, justice, and strong institutions.

The study was conducted by Korngold Consulting with the support and participation of American Express, Dow Chemical, HP, Johnson Controls, PIMCO, Symantec, Datamaran, and the World Environment Center. Results of this study, as well as the PYXERA Global Pro Bono study also show that employees are more inclined to work for and stay with companies that offer these meaningful and productive service opportunities. While the evidence shows the value and impact of pro bono and board service, these programs are still only featured by a small group of companies: leaders rather than followers or laggards to use MSCI’s taxonomy. With investors zeroing in on talent quality in 2018—The Year of the Human—now is the time for companies to invest in high impact employee engagement and development programs.