04 Sep. 2014 | Comments (0)
This week, The Conference Board released From Not Enough Jobs to Not Enough Workers, a new report that finds serious labor shortages in the world’s most advanced economies will create unprecedented challenges for business leaders and policymakers over the next 15 years and beyond. It’s interesting to consider how the findings from this new report could impact corporate philanthropy.
“Mature economies are facing a historical turning point: for the first time since World War II, working-age populations are declining,” said Gad Levanon, Director of Macroeconomic Research at The Conference Board and a co-author of the report. “The global financial crisis and its aftermath—stubbornly high unemployment in many countries—have postponed the onset of this demographic transformation, but will not prevent it from taking hold. Companies in the U.S., Europe, and elsewhere must begin planning now for an environment in which difficulties recruiting and retaining workers will make it significantly harder to control labor costs without losing labor quality.”
I see three main areas that corporate philanthropy should consider with regard to this issue:
- Donations and disrupted business performance
- Education support
- Attracting and retaining talented employees
Business performance is a critical driver of corporate donations, as reported in the early findings from the 2014 Giving in Numbers survey on 2013 contributions, the leading corporate philanthropy benchmark, conducted by CECP in association with The Conference Board. So, the question is: Will companies maintain giving levels as labor costs become harder to control and business performance no doubt becomes disrupted?
Whether or not companies maintain a corporate foundation might provide an answer. Giving in Numbers found that in 2013 79 percent of companies had a foundation, a decrease from 81 percent in 2012, and 82 percent in 2011. Why is this important? Companies surveyed in Giving in Numbers cite a desire to maintain giving levels during difficult business periods as a reason for maintaining a foundation. If this downward trend continues in the lead up to labor shortages, corporate philanthropy might lack the insulation needed to maintain a consistent level of giving as businesses enter yet another turbulent time.
Companies have already responded to a need for education support to increase the talent pipeline: in the past two years, education has become the most funded issue area by companies, according to Giving in Numbers.
But From Not Enough Jobs to Not Enough Workers finds that certain industries are more vulnerable than others. The report identifies health-related occupations, skilled labor occupations, and certain STEM (science, technology, engineering and mathematics) fields as facing more significant shortages than others.
As education will no doubt continue to increase its share of corporate giving budgets, companies operating in these vulnerable industries will need to sharpen their focus on directing contributions toward partners that can help them build a better pool of candidates.
Attracting and retaining talented employees
It seems the global battle for talent is about to get a lot tougher, so it’s important for companies to differentiate themselves from their competitors to attract the best employees. For the next generation, this often means building a robust culture of CSR in which employees can participate through programs such as employee volunteering or matching gift donations. Research from Cone Millennial Cause Group found that 80 percent of a sample of 1,800 13-25 year olds want to work for a company that cares about how it impacts and contributes to society.
And a recent article in the Wall Street Journal confirmed this trend. The article quoted several corporate executives, including Giving Thoughts contributor Wendy Hawkins, Executive Director of the Intel Foundation, who said: “The younger generation is self-organizing around things they care about…They are coming together not simply to go out and clean up a beach, which was much more the thing 20 to 25 years ago. They are coming together to study issues, like water use, energy and education, and they are thinking about what kind of active role they can take.”
There’s nothing new about any of these points, but in the face of a tightening labor market it could be prudent for companies to remind themselves of their strategic imperatives and the role that corporate philanthropy could play in helping them navigate looming challenges.