Stakeholder Perceptions and the Corporate Philanthropy Index

1
Stakeholder Perceptions
and the
Corporate Philanthropy Index
Council on Foundations Corporate Grantmakers
Summit June 12, 2003
Presented by Frank D.Walker
Chairman
2
Presentation Outline

• Introduction to/Reason for Corporate Strategic
  Philanthropy
• Understanding how/why Corporate Strategic
  Philanthropy works
• Measurement processwhat it is/How it works
• Understanding stakeholder loyalty segments
• Corporate philanthropy Index (CPI)
  Findings/Results
• Executive Philanthropy Index (EPI)
  Findings/Results
• Safeco Case Study
• Summary and Suggestions

3

• Corporate Philanthropy
• vs.
• Corporate Strategic Philanthropy

4
How PR Pros See It

• corporations need to do more than simply give
  away dollars. They need to act in ways that are
  meaningful to their stakeholders that genuinely
  demonstrate their core corporate value.

Hill Knowlton National Corporate Citizenship
Survey
5
Corporate Strategic Philanthropy

• Driven by Company
• Mission
• Goals and objectives
• Not by Doing Social Good/Solving Social or
  Community Problems.

6
Corporate Strategic Philanthropy

• Business of Business is Business
• Business Now Includes Being
• Good Corporate Citizen
• Socially Responsible
• Ethical
• Stakeholders Will Reward Those Companies That Do
  Social Good

7
Who Can Affect Your Business Results?
Shareholders
Stakeholders can!!!
8
Defining Stakeholder Groups

• Stakeholder is a term for any group or
  individuals who have a connection to or an
  association with your organization. They have a
  stake, claim, or vested interest in the
  day-to-day operation of the business. The
  relationship is nearly always reciprocal, where
  the business has some stake in the individuals or
  groups as well, needing their resources or their
  influence in running the business.

9
Stakeholders -

• Make the products provide the service
• Buy the products use the service
• Provide the investment dollars
• Help build/or destroy our reputations
• Regulate us make the rules
• And lots more

10
Loyalty/Success is More Than Having a Great
Product and Good Service
PLUS

Totals
Successful Business
Walker Information Multiple Corporate Study
Results
11
Corporate Philanthropy for this Measurement
Program is Defined as

• Those Activities That Companies Voluntarily
  Undertake to Have Positive Impact on Society
  Including
• Cash Contribution
• Volunteerism
• In-Kind
• Non-commercial Sponsorships

12
Companies Can Manage Perceptions of
PhilanthropyProven Model
How Corporate Philanthropy Leads to Business
Success
Company Attitude
Giving Programs Aware Effective Fit
Business Success
Overall Perception of Corporate Philanthropy

• Giving Types
• Cash
• Volunteer
• In-Kind
• Sponsorships

Behavior (Intentional)

• Higher Customer Retention
• More Referrals
• Buy More
• Buy More Product Types
• Bigger Share of Wallet

Loyalty

Company
Performance
Perceptions
Overall Giving
Walker Information multiple study results
13
Think of it This Way -

• Stakeholders become aware of philanthropy efforts
• Based upon awarenessstakeholders form
  opinionsmake judgmentdetermine attitudes
• The more aware stakeholders becomethe more they
  believe initiatives and activities are effective
  and fit with the companythe more favorable will
  be their perceptions of the four types of giving
  and in turn their overall impressions of the
  corporations philanthropy program.
• This helps lead to positive attitudes by
  stakeholders causing them to be loyal and
  committed and leads to doing things that support
  the corporations.
• Actual behavior is then based, in large part, on
  what stakeholders intend to do.

14
Council on FoundationsAsks Walker
InformationCompelling Research Questions

• Can we demonstrate a link between giving
  initiatives and business results for an
  individual company?
• Can we develop a measurement tool to provide
  empirical data showing the link?
• Who should be measured?
• What should be measured?
• What methodology should be used?

Corporate Services Division of the COF
15
Process Assuring Reliability and Validity

• Review published academic literature
• Initial model to explain link between giving
  business results
• Design research process
• Develop/test survey instruments
• Conduct/report beta test
• Refine model
• Create toolkit workbook
• National study conducted
• Build normative database
• Make available to all companies via Council on
  Foundations and Walker Information

16
Model-Driven Surveys

• Tested
• Standardized
• Stakeholder customized
• Two versions long short
• Self administered
• Web-friendly

17
A Choice of Focus
18
3 Questions Create an Index-Empirically Derived-
18
19
Creating the Index From 3 Questions

• Compared to other companies, ltCOMPANY NAMEgt does
  its fair share to help community and society.
• Overall, ltCOMPANY NAMEgt is the kind of company
  that helps the community and society by
  contributing things like time, volunteers, money,
  and sponsorship of nonprofit events and causes.
• ltCOMPANY NAMEgt really seems to care about giving
  and making contributions to help the community
  and society.

20
Does CPI Make a Difference?

• First Understand Loyalty Segments

21
Walkers Approach to Measuring Stakeholder
Loyalty -
Measurement Segments

• Truly Loyal
• Accessible
• Trapped
• High Risk

22
Truly Loyal Like you Committed Stay with you

• Employees
• Sense of commitment
• Plan to stay with company
• Customers
• Positive/favorable attitude/opinion
• Plan to continue to buy
• Shareholders
• Positive feeling - image
• Plan to continue/keep investment

23
Accessible Like you Committed Not in for
long haul because something keeps them from
staying

• Employees
• Sense of commitment
• Will not stay but for good reason
• Customers
• Positive attitude/opinion
• May not continue to buy
• Shareholders
• Positive feeling image
• May not continue relationship

24
Trapped Not Committed But Not Leaving

• Employees
• Not committed
• Staying because of pay/benefits no transferable
  skills
• Customers
• Not committed
• Will keep doing business only choice
  currently no options
• Shareholders
• Not committed
• Will hold investment current good return
  believe they cannot sell

25
High Risk Not committed almost out the door

• Employees
• Not committed
• Not planning to stay with company
• Looking for other opportunities
• Customers
• Not committed
• Do not plan to continue relationship
• Looking for options
• Shareholders
• Not committed
• Do not intend to hold investment

26
National Study Results
27
National Study Results
Want to Purchase Will Continue to Purchase
Positive Feelings May Not Purchase
Will Continue to Purchase Dont Want to Purchase
Dont Want to Purchase Probably Wont
28
Monitoring Corporations Philanthropy Health
-CPI- (Customers)
2001 National Customer Study Results
All Participants
39
61
Truly Loyal
66
34
Accessible





Trapped
35
65
High Risk
11
89
0
20
40
60
80
100
High CPI
1,339 Self-administered surveys returned 78
response rate
Low CPI
29
CPI Differences by Industry
High/Low CPI Customers




Department Store/Clothing
45
55
Store
41
Banking/Insurance
59
33
Telephone/Utilities
67
0
20
40
60
80
100
30
Location Does Make a Difference- CPI Index-
High/Low CPI Customers
49
Headquarters
51
39
Local
61




28
No Presence
72
0
20
40
60
80
100
31
Questions to Measure CustomersFeelings About
the Company
2001 National Customer Study Results
Strongly Agree/Agree
90
Excellent Overall Reputation
59
93
Good Corporate Citizen
23
74
Committed to Products and Services
34
78
Sense of Goodwill
28
70
Help Improve Life in the Community
18
55
Matter a Lot if No Longer Purchase
29
61


Choose Because of Giving Record


19
55
I am Very Committed to this Company
23
58
Generosity Makes Them Different
6
55
Admiration for Good Deeds
7
0
20
40
60
80
100
1,339 Self-administered surveys returned 78
response rate
32
Behavior Intentions
Extremely Likely/Very Likely
95
Continue to Do Business
73


88


Recommend Products or
Services
51
0
20
40
60
80
100
33
Whats next in Philanthropy Stakeholder
Measurement

• The importance of the CEO and Senior Leaders in
  driving favorable perceptions.

34
Perceptions Opinions Measured

• The CEO and Senior Leaders --
• Get involved in deciding policies regarding
  philanthropy
• Communicate to stakeholders the importance
• Visibly support corporate giving initiatives
• Demand results showing gifts truly help
  recipients
• Believe that philanthropy generates
  goodwill/value to enterprise
• Donate personal time and resources to worthy
  causes

35
Working to Refine the

• Executive Philanthropy Index
• EPI

36
National Study Results
37

• Measurement Works
• For
• All Stakeholder Segments

38
National Study Results
39
National Study Results
40
Companies Can Manage Perceptions of
PhilanthropyProven Model
How Corporate Philanthropy Leads to Business
Success
Company Attitude
Giving Programs Aware Effective Fit
Business Success
Overall Perception of Corporate Philanthropy

• Giving Types
• Cash
• Volunteer
• In-Kind
• Sponsorships

Behavior (Intentional)

• Higher Customer Retention
• More Referrals
• Buy More
• Buy More Product Types
• Bigger Share of Wallet

Loyalty

Company
Performance
Perceptions
Overall Giving
Walker Information multiple study results
41
Summary to this Point

• Based on research that
• Quantifies relative impact of corporate
  philanthropy on loyalty
• Demonstrates link between corporate
  contributions and business success
• Validated, model-based tool
• Measures company-level linkage
• Focus on strategic value and long range return
• Multiple stakeholder groups
• Offers DIY tool kit
• User friendly
• Scaleable services
• Long or short versions
• Web-based with other options available
• Comparative data
• National study
• Normative database
• Strategic and tactical
• Actionability of results

42
(No Transcript)
43
Safeco

• Seattle based
• One of the leading companies selling insurance
  and financial products through independent
  insurance agents and financial advisors
  nationwide.
• 7 billion annual revenue
• 2 of pre-tax profits annually contributed back
  to the communities where they do business
• 11,500 employees located across the country in 17
  locations

44
Philanthropy at Safeco

• Formal giving program for 35 years
• Originally broad in scope but became more focused
  on insurance industry-related issues during past
  15 years
• In 2000, Safeco distributed approx. 6 million to
  communities throughout the U.S.
• 2 years ago, the program was re-designed to be
  more focused and strategic

45
Situation Financial Health

• In 2000 Safeco in dire straits earnings
  plunged to 9 cents per share and stock price fell
  to 22 from a high of 56
• Misguided acquisition and ventures into non-core
  businesses
• Antiquated underwriting process
• Poor market conditions
• Up for grabs

46
Situation New CEO Enters

• CEO Mike McGavick
• Cut workforce by 10, slashed 1,200 jobs
• Dropped non-core businesses
• Engaged new, superior management team
• By 2002 back on track!!

47
How Will These Business Conditions Affect
Safecos Corporate Philanthropy?

• Leadership change required a self assessment
  .outgoing CEO was strongly influential on
  philanthropy program, but what about the new
  CEO???
• Seized opportunity to demonstrate the business
  value of companys giving practices
• Become more strategic
• Potential impact of low employee morale

48
First Steps Spring 2001

• Rose Lincoln, Assistant Vice President, Public
  Relations contacts Council on Foundations for
  Tool Kit and contracts with Walker Information
  for measurement results evaluation and norms
• Particularly interested in previous findings that
  linked positive employee attitudes and behaviors
  with a companys philanthropy
• Gained immediate buy-in from the Senior Vice
  President of Human Resources
• Hypothesis Increasing employees awareness and
  involvement in company volunteer program would
  have a positive impact on employee morale and,
  ultimately, employee retention
• Chose to measure employees

49
Measurement Goals

• Identify employee knowledge of Safecos community
  involvement programs and opportunities
• Collect opinions on the effectiveness and
  importance of community involvement
• Collect ideas on how to enhance and add value to
  the programs
• Collect baseline data on amount of time employees
  spend volunteering in the community
• Determine the benefits employees perceive gained
  from volunteering
• IDENTIFY THE BUSINESS VALUE AND REDUCE EMPLOYEE
  MORALE/ATTRITION

50
Research Process

• Employee Survey
• Online version
• Random sample of Safecos 11,500 employees
• E-mail alert letter sent in advance directed
  respondents to Walker Information web site
  containing the survey two weeks to respond
• 56 response rate
• Information gathered by
• Years of service
• Position in company
• Gender
• Office location
• Walker Information collected and analyzed
  responses and delivered results to Safeco.

51
Selected Key Findings

• Results consistent with national study findings
  employees with High CPI score were more likely to
  have attitudes and engage in behaviors
  beneficial to the company.
• Hi CPI Low CPI
• Recommend the company as a 84 63
• good place to work
• Expect to be working for the 75 67
• company in 2 years
• Volunteerism proved an important leadership
  development tool.
• 90 said volunteerism builds leadership skills
• 50 said they would like to use volunteerism to
  build those skills
• As feared, most Safeco employees dont know what
  the company was doing in Philanthropy.

52
Comparing to Other Companies Helps Safeco Assess
Its Strengths and Weaknesses
53
Safeco Corporate Philanthropy
Index
Safecos CPI is Higher Than Norm.
54
Percent High CPI Employees

55
Comparing Safecos High
vs. Low CPI Groups
88 Believe Safeco is a Good Corporate Citizen.
56
Comparing Safecos High CPI Group to Normative
Data

Safeco is head to head with other companies as
far as CPIs effect on Attitudes Behavior.
57
Safeco Program Initiatives Assessment
Some Programs Are More Successful!
Revisit Program
Act Fast
Improve Program Implementation

• Action Steps
• Leverage
• Educate/ Communicate
• Revisit Program
• Rethink Involvement

Leverage Programs
Improve Program Effectiveness

Improve Program Awareness
Lower Scores
Higher Scores
58
Employee Benefits of Volunteerism
59
Key Learnings

• Employees work for a good company, but dont know
  what specifically makes the company good
• If employees dont know what we do, most likely
  existing and potential customers dont know
  either
• Affirmed that employees believe they can build
  skills through volunteerism
• Safecos CPI overall is above other companies in
  line with other companies when broken down by
  question

60
Leaderships Response

• Supported this new strategy for Philanthropy and
  allowed program to flourish
• Worked with Human Resources to use the volunteer
  program as a leadership development tool,
  developing a matrix of skills needed to be
  successful at Safeco, and describing how to
  acquire the skills through volunteer
  opportunities
• Communicated more deliberately with employees
  about the companys community involvement
• Developed plans for field office volunteer
  committees, including goals for increasing
  volunteerism and communication.
• Enhanced corporate communication to employees
  about volunteerism.

61
Actions Taken

• Shared survey results with Senior Leadership to
  demonstrate value of Corporate Philanthropy
• Created Building Business Skills through
  Volunteerism
• Strategic Communications Plan
• Branded newsletter to employees
• Enhanced intranet
• Internal email messages to all employees
• Targeted press releases announcing newsworthy
  pieces of community relations program
• Miscellaneous print pieces that promote Safecos
  support of the community and employee giving

62
What Safeco Would Do Differently

• Communicate findings to employees
• Formal presentation of findings to Senior
  Leadership
• Ask more open ended questions in survey how
  they learn about companys efforts and what
  employees value in terms of corporate
  citizenship.

63
Recommendations to Other Corporate
Philanthropy Leaders

• Use report of results as a benchmark and
  springboard for planning
• Implement a communications plan of results and of
  philanthropy initiatives
• Formalize volunteerism throughout your company
• The business case for corporate philanthropy
  strengthens the case for others too..can lead to
  sustainability and growth within this field!!

64
Acknowledgments
Thank you to Safeco for allowing this inside look
at its measurement process, results, decisions,
and actions taken. Special thanks to Rose
Lincoln, assistant vice president, and Wendy
Lothspeich, community relations manager, for
their candor, time, and assistance.
65
Measurement Can

• Create excitement and support
• Illustrate benefit of programs
• Show effectiveness of programs
• Prove programs are workingbuilding enthusiasm
• Offer opportunity for feedback from stakeholders
• Source Inside Corporate Philanthropy, April 25,
  2003

66
Who Can Affect Your Business Results?
Shareholders
Stakeholders can!!!
67
Companies Can Manage Perceptions of
PhilanthropyProven Model
How Corporate Philanthropy Leads to Business
Success
Company Attitude
Giving Programs Aware Effective Fit
Business Success
Overall Perception of Corporate Philanthropy

• Giving Types
• Cash
• Volunteer
• In-Kind
• Sponsorships

Behavior (Intentional)

• Higher Customer Retention
• More Referrals
• Buy More
• Buy More Product Types
• Bigger Share of Wallet

Loyalty

Company
Performance
Perceptions
Overall Giving
Walker Information multiple study results
68
Changing Corporate Philanthropy Mindset
Traditional
Future

• Always have supported
• Peer/community pressure to give
• Lots of grants to lots of organizations
• No strategic analysis
• Company generosity measured by what is given,
  not what is achieved (David Logan, London
  Benchmarking Group)
• Expense

• Strategic with well-defined objectives
• Provides sound resource distribution
• Accountability
• Consistent message/theme
• Mutual benefit
• Business-wise investment

69
What CEOs Say About Corporate Philanthropy

• Is to reflect a more business-like approach
• Giving to the community should be more strategic,
  relevant, focused and accountable for results
• Proactive, with clear goals, objectives and
  outcomes
• Engage employees at all levels, leverages all
  resources
• Communicated to internal and external audiences
• Measurable, achieve results, based on business
  plan
• Help meet strategic long-term interests of company

Committee to Encourage Corporate Philanthropy
70
Corporate Strategic Philanthropy

• Driven by company missiongoals and objectives
• Coordinated with other functions
• Proactive to cause positive business outcomes
• Doing good while insuring that the company grows
  and prospers

71
Its Time for Philanthropy Function and the Chief
Philanthropy Officer To Be

• A forceful/contributing part of the corporate
  business team
• An agent of change
• To talk about and show the positive business
  outcomes they help to create

72
Get With Itor You Will be Out of It

• Quit feeling sorry for yourself and the
  philanthropy function
• On targeton time

Committee to Encourage Corporate Philanthropy
73
Minding Your Own Business

• Human Resource Executive Magazine, May 16, 2003
• COO wants real business person to lead
  revitalized HR Department
• 80 of HR function at the Container
  Storeperformed by line managers
• Survey-HR Magazine 20 of HR functions run by
  persons with no HR background
• May be easier to train a business person about HR
  than to get HR types to understand business

74
CFO vs. CIOs

• Business Finance Magazine, May 2003
• Hay days over for IT function to get all capital
  requested
• CIOs challenged to show ROI for their function
• Most CFOs see IT as cost centernot a direct
  measurable impact on corporate earnings
• Few CIOs able to justify show impact
• CIOs urged
• Learn/speak financial lingo
• Qualify and quantify IT spending
• Create partnerships with other functions/business
  units

75
Corporate Strategic Philanthropy

• Serves significant role
• Needed/wanted/desired
• Can contribute to overall business success
• A potentially powerful force for brand/company
  differentiation

76
Q A
- Now or Future - www.measuringphilanthropy.co
m