Roberta Lepre

Dr Roberta Lepre is a warranted advocate and CSR consultant at

How Strategic CSR Can Be Used As A Cost-Saving Measure

Thursday 22nd March 2018

Various studies hail the benefits of implementing a well-planned and strategically developed CSR programme. These range from enhancing innovation, to positive brand image, to employee attraction and retention. Out of all these, perhaps the last one resonates most with the local business community.

A recent article, which reported the findings of the GRTU SME’s end of year Business Performance Survey, highlights the fact that despite positive economic developments, labour shortage was ‘once again’ found to be the main concern for business owners, ‘with the direct result of slowing down business growth, fuelling higher labour costs and leading to high levels of staff turnover’.

An article published by recruitment agency Konnekt last November claims that the average rate of employee turnover in Malta in 2016 stood at 36 per cent. The rate was well-beyond the average in some key sectors of our economy, most notably accommodation and food service, where the employee turnover rate cited was above 70 per cent. Now, I am not an economist, however, I have come across various studies which attempted to measure the cost of employee turnover. It is estimated that losing and replacing a good employee can cost a company between 70 per cent and 200 per cent of an employee’s annual salary.

Therefore, in an ‘average’ scenario, in which a company would employ 10 employees at the average wage, currently standing in the region of €17,000, and applying the average employee turnover rate of 36 per cent, the annual cost of employee turnover for such a company would range between €42,820 and €122,400. For many companies, this figure could make the difference between profitability or otherwise.

Another hypothetical scenario would be that of an accommodation and food and beverage operation which employs 200 persons at the minimum wage, currently standing in the region of €9,000 per annum. Applying the employee turnover rate of 70 per cent which was reported in the Konnekt study, this would result into an annual cost of employee turnover ranging between €882,000 and €2,520,000.

When translated into figures, the situation becomes exceedingly worrying for business owners and investors.

It is therefore clear that the premise that CSR is a luxury afforded only to very large companies is a fallacy. Indeed, small and medium-sized companies cannot afford not to engage in CSR.

Why? Because CSR, if implemented properly, can substantially reduce your employee turnover rate, and hence create savings for your company, which you can otherwise spend in growing your company and increasing the bottom line. A well-designed and properly implemented CSR strategy can go a long way in making employees connected to the workplace, create a sense of purpose and belonging, make them feel valued and ultimately reduce resignations. In fact, a study conducted by the Corporate Executive Board states that employees who are the most committed to their jobs are 87 per cent less likely to resign. A CSR strategy can therefore create this sense of purpose and commitment that can transform the company culture in a manner that entices valuable employees to stay on.

So, is your business ready to invest in a strategically developed CSR programme, or will you keep throwing your money down the drain?