Smart businesses work to be nice to the planet

BY ROMY UDANGA
Last updated 05:00 19/07/2010

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Firms that do not behave as good corporate citizens could lose most of their employees and end up spending thousands to replace them, says the 2010 Fairfax Media-Shape NZ survey.

In the second of the annual sustainable business practice surveys supporting the 2010 Sustainable60 Awards, results show 59 per cent of New Zealanders were likely to walk away from their jobs if they perceived their employer to be socially irresponsible.

The threat was even higher – 67 per cent – among decision makers employed by businesses to manage their day-to-day operations.

In the 35 to 54 age group, which includes most middle and senior managers, 61 per cent said they would consider leaving.

New Zealand Business Council for Sustainable Development chief executive Peter Neilson said the survey highlighted the immense power sustainable practice provides for organisations.

"Sustainability performance matters in recruiting and retaining staff, and any temptation to pull back in this area is likely to make your staff retention issues major as soon as the economic recovery comes and your staff have more options to leave," said Mr Neilson.

"Across the economy doing the right thing could be worth hundreds of millions to businesses."

Employment relationship problems alone were costing hundreds of millions of dollars, he said.

"According to Department of Labour-funded research, the total direct costs for all employers would be about $146 million a year. Adding in lost management and staff time and productivity during the course of an employment problem increases the total cost to employers to about $214 million a year."

Napier-based recruitment firm People Central director Steve Evans said the cost of replacing staff is about 40 per cent of the starting annual salary for jobs paying up to $50,000 a year and as high as 60 per cent for jobs paying more than $50,000.

But for key staff, the cost can go as high as 80 per cent to 140 per cent of the starting annual salary depending on the content of the job.

"It's not just the cost of paying off the leaving staff and all the recruitment cost, it's getting people up to speed," said Mr Evans. "It takes three to six months to get somebody up to speed in most jobs. If you are looking at more complex jobs, it can take up to a year, that's when the replacement bill hits the ceiling.

"If you lose key people in sales, for example, that will even affect your market."

Word-of-mouth endorsements would also be affected as 52 per cent of decision makers and 46 per cent of all respondents would not recommend their organisation to others if it were irresponsible.

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PriceWaterhouseCoopers director James Spencer said that based on previous surveys "some 74 per cent of the public would believe the word of an employee over that of a company advert regarding a company's contribution to society and the environment".

Such public attitudes limit the pool from which socially irresponsible firms can source their talent.

As economic growth resumes, maintaining a sustainability focus will be even more important to businesses that are waging a global war for talent, as in the IT area where Mr Evans said "specialist roles can be difficult to replace".

The survey indicates a big jump in businesses – 55 per cent compared to 34 per cent in 2009 – making IT a significant aspect of their sustainability strategy.

Another 25 per cent, compared to 8 per cent in 2009, are planning to make it a key part.

In the 18 to 34 age bracket, where a high proportion of employees are IT-savvy, 57 per cent would consider leaving a socially irresponsible company.

Mr Neilson said many young, particularly tertiary-educated, people judge employers on their sustainability performance.

"These people will drop you from their potential employer list if they cannot see evidence that you take these matters seriously," Mr Neilson said.

Mr Evans said that "businesses that can't acquire the expertise in more complex IT jobs lose".

Accountancy services firm and 2009 Sustainable60 finalist Hayes Knight (NZ) business improvement manager Mike Atkinson said an increasing number of businesses are looking to new business models to differentiate themselves, including a greater focus on employee engagement.

"These business owners recognise that often the best ideas come from the shop floor," Mr Atkinson said.

"As such, they have a strong philosophy of getting staff involved and engaged to come up with new ideas."

He said the challenge for many businesses is keeping staff engaged.

Mr Neilson said that sustainability programmes were known to engage employees, "particularly when they produce win-win-win outcomes for profits, the planet and people".

The nationwide ShapeNZ online poll commissioned by Fairfax Media and the New Zealand Business Council for Sustainable Development opened on June 17 and is scheduled to close on September 30. The ShapeNZ panel is built from purchased email lists to represent New Zealand's population at the 2006 census.

- BusinessDay.co.nz

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