Case Study: The Results of iContact’s Initial Foray Into Social Responsibility
September 2, 2010 · Print This Article
Here is a case study sharing the initial results of of iContact’s efforts around social responsibility.
The post was first published earlier today on Change.org.
Wanting to Experience More Meaning at Work
In October 2009, I went through some challenging experiences that caused me to realize that life can be very short. Out of these experiences, I came to the conclusion that I wanted to align my values with my work at iContact to the extent possible. I wanted to see a direct connection between the work that iContact was doing and making a positive impact in our community and the world.
As Chip Conley writes in Peak, I wanted to be able to experience and see “meaning” at work and in my work. The humanity within me was dissatisfied with the comm only-held belief that the sole purpose of business is to maximize short-term profits, regardless of the impact on the world as long as one stays within the law.
I saw the purpose of business as creating value for humanity and profits a result of successfully pursuing this purpose but not the purpose itself. This extreme dissatisfaction with the Milton Friedmanesque view of the world could be a Gen-Y or Millennial phenomenon as our generation has grown up learning we cannot build a prosperous, stable, and secure world by externalizing environmental costs and exploiting other parts of the world.
While our generation may be particularly attuned to social and environmental issues, I think seeking meaning at work is a higher-order, but universal need. It is simply reality for the large majority of workers (particularly the smartest and most driven talent) that they want to be able to be part of something meaningful–in their contribution to the company, in what the company achieves with its business, as well as the ways in which their business goes about creating that value for society.
Helping small and mid-sized companies communicate more easily with their customers and reducing paper usage from direct mail had a positive value to society, but could we create meaning in other ways, perhaps in how we went about building our business, the culture we created, and how we gave back?
I could no longer compartmentalize my life between the for-profit financially-focused work I did and the not-for-profit charity-focused work I did.
And so, going into 2010 I made it one of my priorities to substantially expand our Corporate Social Responsibility (CSR) efforts at iContact.
Case Study: Social Responsibility at iContact
Since 2007, iContact has been giving away 1% of it’s payroll to 501(c)(3) non-profit organizations in our communities locally and globally, but just giving away money was the easiest thing to do–and not nearly enough. We also had an annual Habitat for Humanity company house building day each July and and we adopted a handful of foster children each winter to provide gifts for them. But again, this is the basics of what every company does–almost as a check-the-box whitewashing effort to just be able to say “well, we do something.”
These initial efforts were a start, but not enough. If we were going to make CSR a key differentiator for our company for attracting and retaining A+ talent and attracting customers who care about the world, we needed to do so much more. If our culture was going to be centered around creating a tangible direct connection between the work our employees did and true-meaning and value creation for the world, we needed an integrated CSR program.
iContact’s Corporate Social Responsibility Program
And so, taking a page from the playbook of Marc Benioff, we created the 4-1s CSR Program, modeled in part after the 1/1/1 Integrated CSR Program that Salesforce.com has so successfully implemented after Marc’s experiences at Oracle in the late 90s left something to be desired for corporate service.
The 4-1s CSR Program added giving 1% of product, 1% of time, and 1% of equity to our original program of giving 1% of payroll.
On January 8th, 2010 we rolled out the 4-1s program to our employees at our annual kickoff meeting. We explained that each team member would receive 2.5 extra days of Paid Time Off per year to volunteer in the local community which we would track via an AppExchange add-on called VolunteerForce, that we were taking 1% of the shares of the company and pledging them to the iContact Foundation, that we would give iContact away from free to any non-profit in North Carolina, and that we would continue our program of giving 1% of payroll away and matching employee contributions up to $300.
I was thrilled to have a formal CSR program in place. When Entrepreneur Magazine wrote an article about the 4-1s program in April giving us our first major press about the effort, I was careful to share that this was just the beginning for us. We have so much to learn about CSR.
Who knew if this was the right or best structure for integrate corporate philanthropy. What mattered is that we had something formal and significant in place and could learn and improve as we went.
Becoming a B Corporation
In May, we took our next major leap in our effort to turn iContact into a leader in social responsibility for venture-backed companies. After speaking with Drew Tulchin at Social Enterprise Associates, I knew if we really were going to be a Triple Bottom Line company, we had to have some type of external help putting in place a tracking system for our social and environmental impact. The next weekend I serendipitously met Matt Kopac at at Sunday brunch with a group of Durham friends. Matt had just finished up an MBA at Yale and was looking for work in the area with a non-profit or socially responsible enterprise. He had done work with VisionSpring and had been in the Peace Corps in Benin. We brought Matt on, initially as a half-time consultant.
Matt’s assignment was simple–put in place a measurement system for social and environmental impact, manage our 4-1s CSR program, and help us put in place the changes necessary to become a B Corp. B Corps are are a new type of corporation that use the power of business to create public benefit.
When we first took the B Corp assessment, we scored 67 points. The assessment graded us within five categories: accountability, consumers, environment, employees, and community.
We then underwent an eight week process that Matt led to conduct an environmental/energy audit and supplier audit and put in place some needed changes to policies and sustainable supplies.
On June 30th, we finally passed the 80 point threshold needed. B Lab officially certified iContact as a B Corp! We had reached the next milestone for our process of becoming a leader in social responsibility and creating company culture that tied the work each employee did every day with meaningful impact, and we received a signed Declaration of Interdependence.
Tracking our Social & Environmental Impact
Once we became a B Corp, we needed a way to be able to track our social and environmental impact. Matt Kopac worked with our internal Salesforce.com administrator to install PULSE into Salesforce AppExchange, which is free for B Corps.
Below is a screen shot of PULSE showing a few of the environmental metrics tracked within PULSE for iContact.
In Salesforce PULSE we track the following social and environmental metrics in beautiful graph format in a location that is accessible to every iContact Employee. You can imagine how much easier this system makes it to track and view our triple bottom line metrics.
Current PULSE Social Impact Metrics Tracked
- Total Energy Consumed
- Energy Consumption Per Employee
- Total Water Use (Liters)
- Total Water Use Per Employee
- Total Irrigation Liters Used
- Sheets of Paper Used
- Recycled Paper Used as % of Total
Current PULSE Environmental Impact Metrics Tracked
- Dollars Contributed to Non-Profits
- Number of Non-Profits Contributed To
- Value of In-Kind Contributions
- % of Sales of Giving
- Number of Jobs Created
- Staff Turnover Rate
- Number of Non-Profits Given Free Product
- % of 4-1s Non-Profits as Customers
- New 4-1s Non-Profits Per Month
- 4-1s Non-Profits Emails Sent
- Number of Non-Profits Trained
- Number of B Corps as Customers
- Monthly Employee volunteer Hours
- Cumulative Volunteer Hours
Building Employee Engagement With Changemakers
To further our connection to employee-driven change we created an employee-led group called Changemakers. We now have a Social Changemakers Committee and an Environmental Changemakers Committee that meet monthly and come together once per quarter to make their recommendations to the company.
While putting in place the structure initially needed coordination and buy-in at the highest levels of the organization, to expand our efforts and integrate the values and ethos of our company permanently into our culture we need the energy, support, and word of mouth of individuals at every level of the organization.
Making the Connection to Meaning at Work
Back in November 2009 I was speaking to an iContact employee who told me, “If you can connect the work I do at iContact to making an impact in the world I would be so much more passionate about coming to work everyday.” This was a key moment for me in making the immediate connection between ‘meaning’ at work and the incremental discretionary effort employees are willing to put into their jobs.
As Chip Conley wrote in Peak, If you can tie in “meaning” into the workplace you will get orders of magnitude more productivity our of your team. Too often companies are meaningful lifeless entities that are focused on short-term profit maximization rather than maximizing sustainable value creation for human beings, what actually maximizes long-term profits.
Meaning has three components to it–
- Personal Meaning – how the job ties into to the individual’s life goals.
- Work Meaning – the significance of what the individual is enabling the company to achieve and the understood connection between their work and company success.
- Organizational Meaning – the significance of what the organization succeeding means for human society.
So in the “Employee Hierarchy of Needs” money is at the bottom which creates base motivation, recognition is in the middle which creates loyalty, and meaning is at the top which creates inspiration.
What iContact Employees Think About Social Responsibility
So, has the social responsibility initiatives we’ve undertaken so far created added meaning for our team members, and can it for yours?
Here are a few examples of the comments we received from our employees so far either via Salesforce Chatter (shown above) or via the Culture Committee Meetings…
- “It makes me more excited about the company I work for.”
- “It’s a rare opportunity to be a participant in a company such as iContact.”
- “iContact is a diverse group of individuals from all walks of life that come together as a team to both achieve and help others succeed.”
- “iContact is a dynamic team-centric company that effectively balances customers, employees, and the world.”
- “We have a holistic approach to business in terms of our impact on all stakeholders”
- “We do business differently, our employees are empowered, we work hard and play hard, and we are actively committed to helping others.”
But the impact is not only in increasing employee engagement, but also increasing customers and partners that expressly seek out wanting to work with socially responsible companies.
Here is an unsolicited email we received from one of our partners to illustrate this…
“I was impressed by the iContact’s commitment to reaching beyond themselves to serve their community. to work toward making a positive impact on our community. It made my decision easier knowing I had found a company to work with that was like minded. As I work with my customers I make sure they know that we chose a company as a partner that would extend their reach.”
What We’ve Accomplished So Far
In the first eight months since we’ve expanded our efforts:
- We’ve launched the 4-1s program (1% product, 1% payroll, 1% time, 1% equity)
- Our employees have participated in 75 community service events logging 1,100 service hours tracked via VolunteerForce
- We’ve installed Salesforce PULSE to track our environmental and social metrics
- We were approved as a B Corporation
- We conducted and published an environmental audit
- We’ve hosted a non-profit workshop at our office
- We’ve launched the Changemakers Group
- We’ve launched the iContact Culture Committee
The Beneficial Economic Impact of Social Responsibility
So the hard-to-measure long term impact of improved employee retention and recruitment and customer growth and retention are no doubt positive factors in our long-term financial return models for our social responsibility program–but what about the hard-nosed measurable short-term economic analysis? Certainly this effort has to have cost us more money than it saved us, right?
In fact, this effort toward becoming a socially and environmentally responsible company will actually save us money, not cost us money.
SOCIAL RESPONSIBILITY = COST SAVINGS
One of the ways this has been possible is because B Labs has a network of over 300 B Corps and companies that want to access the economic buying power of B Corporations. Once our current contracts expire and we’re able to move to the discounted solutions, we expect to realize about $40,000 per month in savings from being a B Corporation while we are spending a total of $21,000 per month of all of 4-1s Program. Significant credit goes to Salesforce.com for offering a 75% discount off list price to B Corps.
In fact, in our five year financial analysis model of our social responsibility efforts, we came out with a five-year IRR of 54% for the conservative case model and 132% for the expected case model.
So we’ve gained a quadruple benefit from social responsibility efforts of:
- Mid-term existing vendor cost reductions of $40,000 driving estimated net savings of $19,000 per month ($228,000 per year).
- Increased employee engagement and excitement to be working at our company (which we believe will lead to greater passion in people’s work, additional discretionary effort from team members, increased productivity, lower regret employee turnover, and an increased ability to attract the best and the brightest).
- Increased customer acquisition and customer retention from customers who are coming to us and sticking with us because of our social responsibility programs.
- Additional press coverage from Entrepreneur, INC, and the Raleigh News & Observer that is helping us recruit the best and brightest and gain additional customers and partners.
We’ve got a long way to go still in working toward becoming an example for how other venture backed companies can invest in social responsibility. We’ve still got a lot to learn. It’s been a great start and we look forward to much learning to come.
I’d love your thoughts and comments. How has your company implement Corporate Social Responsibility? What other programs have you seen that have been responsible? Do you wish your company were more socially responsible? What impact would that have on your desire to put in full effort at work?