Notes on social value: people, place or both?

Over the past few years, many businesses have jumped on the sustainability bandwagon in a bid to appear more environment-conscious than they actually are; whether to attract new customers or to be seen as progressive among peers and investors.

‘Social value’ is another trendy term that invites bountiful interpretation, which some companies eagerly adopt. Earlier this year I attended a webinar where a well-known real estate company used flexible working and changes in office design as an example of social value creation, which, as a comms person, I immediately picked up on and was taken aback by. Surely there’s more to social value than that… not to mention the fact that office arrangements have more to do with strategic business planning and staff retention/attraction than giving back to the community, which goes beyond the confines of a corporate office.

The various definitions of ‘social value’ that I’ve come across online all boil down to the following idea: the contribution that a business/organisation creates for the economy, communities, society, and the planet however, the means to achieving that are open to interpretation.

Promising examples of social value initiatives that have been widely discussed in the public domain include Landsec’s plans to invest £20m into four programmes aimed at promoting diversity within the property sector; as part of that, the company is also planning to fund at least five bursaries for students who undertake property-related studies. In this case, diversity refers to better representation of workers from a wider range of socio-economic backgrounds, which is much-needed. According to The Times, some 45% of employees within the property industry went to an independent or selective state school, while more than 30% of senior real estate executives attended an independent school, and half come from a higher socio-economic background.

The above serves as a good example of a people-based approach to social value, whereby an organisation chooses to invest in people rather than a specific place to achieve certain objectives.

This topic was the focus of a recent Freakonomics podcast ‘A radically simple way to boost a neighbourhood’ (more on that below), and here is what Nathan Hendren, a professor of economics at Harvard University and co-founder of Opportunity Insights said about the merits of another approach to social value creation – a place-based one:

“Place-based policy is focusing on investments in places, things that would maybe provide incentives for companies to move into a particular neighbourhood. Perhaps, you know, put a call centre in an abandoned Target on the South Side of Chicago. These types of policies are providing incentives for locating economic activity in particular areas.”

That’s precisely what Discover Financial Services[1] profiled in the podcast episode when choosing to locate its new call centre in Chatham, US (100% of its call centres are located within the US which, according to the CEO, results in an excellent return on investment).

Chatham would have been an unlikely choice for most corporations - the median income there is low, unemployment is high, with 95% of the community being Black Americans. However, Discover saw this initiative as an experiment, the main idea of which was to make a real difference to the lives of local people and was on the lookout for an area where such an experiment would yield maximum impact.

Discover identified an existing employee with links to the local community and relevant experience and tasked them with opening the new customer experience centre, and following months of preparation and $40m in renovation expenses, the new call centre finally opened. It performs just as well as Discover’s other call centres across the US, albeit with a lower attrition rate.

The new hub now includes an onsite, full-time counsellor, a community centre and employees are offered free lunches. All of this, according to Discover’s employee in charge of launching the new facility, has instilled a strong sense of pride in the local employees and helped fill their work with purpose.

This case study would have likely been consistent with the views of Legal & General Capital’s head of sustainability on social value, which he shared in a recent Property Week article. According to him, social impact initiatives necessitate an analysis of place-specific needs, high-quality community engagement and a strategy to meet these needs.

It will take a while for us to be able to tell with certainty which one of the two approaches yields better results but the fact that we’re having this conversation is rather encouraging.

[1] A US-based business, best known for its online bank – Discover Bank – with more than 17,000 employees and billion-dollar annual revues.