Strengthening Surrounding Communities Enhances Business Success

In the wake of the Covid-19 pandemic, businesses worldwide are reevaluating their resource allocation strategies to safeguard profits. Unfortunately, community engagement programs often bear the brunt of budget cuts due to their non-profitable nature. However, it is time to shift our perspective and recognize that investing in community development can drive business performance to new heights.

It is understandable that businesses primarily focus on profit-driven strategies, relying on numbers to drive success. However, the value of community building extends far beyond measurable metrics. The financial benefits derived from investing in community initiatives should not be underestimated.

Establishing a strong presence in the community can have a profound impact on brand awareness and customer loyalty. Today's consumers prioritize businesses that align with their values and causes. According to a study conducted by Cone Communications, 91% of Millennials would switch brands to support those associated with a mission or cause, and 88% of them would stop buying products from a company with bad business practices. Research in the US during the pandemic showed firms with high environmental and social ratings earned an additional daily return of 0.45% over firms with low ratings. By actively supporting and investing in their surrounding communities, businesses instill confidence in customers that their money is being put back into society, fostering brand loyalty and positive perception.

Investing in the well-being and education of the local community indirectly benefits workforce productivity. While factors such as a healthy workforce, robust infrastructure, and natural resources are crucial for productivity, efforts to optimize these conditions can be achieved through community investments. According to Submittable, businesses endorsing such programs saw 13% increase in workforce productivity; and 53% of interviewed employees said having a job where they can make an impact contributed a lot to their happiness. Therefore, supporting education and community development, businesses contribute to a skilled and empowered workforce, stimulating increased productivity and long-term sustainability.

In this time of the new normal, it is essential to understand that social and economic goals are not conflicting but inherently linked. This enables enterprises to grasp the true value of investing in their surrounding communities – raising customer retention and increasing workforce productivity – and realize that it is not merely a social responsibility but a strategic move that can enhance business performance, fostering a stronger, lengthier commitment to this endeavor.

<div class="story_highlight">Research is based on studies conducted by Cone Communications, afaanz’s Accounting & Finance, and Submittable. </div>