2.1 Shared value: Building a prosperous workforce and community

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1 21 / Shared value: Building a prosperous workforce and community #sharedvalue Many companies are recognising that their future success depends on supporting vibrant, healthy and economically resilient communities which provide both their workforce and their customer base. Businesses contribute to their own success by creating jobs and educating people in the communities in which they operate, and by improving standards of health and quality of life. This shared value concept provides a cornerstone for social innovation, and is helping companies recognise that there is a large degree of convergence between their commercial goals and the wider needs of civil society. We aim to use our scale and know-how to support the wider business community and to help unlock the economic potential of women as business owners. Chris Sullivan, Chief Executive, Corporate Banking Division, RBS Group

2 22 / 71 Size of the prize Shared value is an untapped source of opportunity for business. Firstly, securing value for shareholders necessitates that companies reduce risk by demonstrating long-term sustainable growth and returns. One way this can be achieved is through skilling the wider workforce beyond the usual company boundaries, and improving the health and living standards of local communities: employers need a healthy, educated talent pool to ensure the future long-term viability and competitiveness of the company. In East London, outsourcing company MITIE has advocated this approach by developing the Real Apprentice programme. This is a mentoring scheme in partnership with JobCentrePlus that gives unemployed citizens of all ages the crucial experience and skills they need to get into long-term employment 19. The Real Apprentice programme fulfilled both MITIE s business needs for local, sustainable supplies of talent and needs of the local area for economic regeneration 20. The scheme currently has a 75% success rate of getting the graduate apprentices into further employment 21. Business value levers More certain, short-term Revenues Increased revenues from sales of products and services that improve health and well-being Costs Savings from enhanced productivity and improved employee retention Switching to more cost-effective local suppliers Savings from outsourcing Source: Accenture 2013 Maximising the upside Minimising the downside Intangible benefit Stronger and healthier workforce, supply chain and employees Enhanced trust, brand and loyalty by customers Risks Long-term, secured value for shareholders and other stakeholders Protection of license to operate Less certain, long-term

3 23 / 71 Size of the prize Businesses are also working with the public sector to improve social outcomes. For example, in Norwich, Chapelfield shopping centre has developed a work experience programme that employs serving prisoners. Prisoners considered to be safe working within the community have the opportunity to spend eight weeks at the shopping centre, gaining skills ranging from building maintenance, customer service, recycling and painting and decorating 22. Only 5% of the work experience prisoners who have been released have reoffended, whilst nationally, just under 50% of those released are reconvicted within one year 23. Secondly, significant cost savings and productivity improvements can be achieved from engaging employees to take an active role in the community and by encouraging social entrepreneurship. Employees currently in a job where they feel they are contributing to positive environmental or social outcomes are more satisfied compared to those who don t feel they re making an impact, by a 2:1 ratio 24. An estimated 3-29 billion in potential cost savings for UK businesses are possible from reducing hiring costs and developing a more active and engaged workforce 25, corresponding to a potential increase in productivity by 16% and a reduction in employee turnover by 2% 26. You can t create jobs that don t exist, but you can level the playing field for those who don t have the best chance in life. There s a business benefit in broadening access as you may discover people with better talent. Paul Sheffield, Chief Executive, Kier Group plc

4 24 / 71 Size of the prize And finally, by better understanding the needs of society, businesses can focus their products and services to help solve environmental and social challenges, which can lead to revenue enhancement and a greater market share. For example, in developing countries where health challenges are widespread there is real opportunity to improve community health and generate commercial returns by growing the healthcare market. Novo Nordisk s Changing Diabetes programme has trained over 220,000 physicians in China, who each treat about 230 patients annually 27. Through better diagnosis, more patients are screened for diabetes and those diagnosed put on life-saving medication. As a result, people are getting access to the medical help required while Novo Nordisk s insulin market share has jumped from 40% to 63% in China, largely through greater awareness of patient needs 28. 3bn- 29bn Potential productivity gains 29

5 25 / 71 Sustainability benefits The benefits from convergent thinking and shared value creation can be long-lasting and can fundamentally improve socio-economic outcomes for civil society: The health of the workforce and the community can be improved, through better alignment of the commercial goals of the company and the needs of wider society. Jobs can be created in the UK or abroad, contributing to local economic development (for example through smarter use of local suppliers which could help mitigate against potential future supply chain failure). Standards of education and skills can be enhanced through programmes such as apprenticeships, academies and training programmes, developing transferrable skills and bringing people out of unemployment (see Case study 1 for an example). Industry isn t doing enough to employ talented young individuals. Only 12 of the top 32 building contractors in the UK employ apprentices, and 80% of apprenticeships are with companies with less than 10 employees. John Hayes, Chief Executive, Axis

6 26 / 71 Case study 1 Accenture s Skills to Succeed programme 30 Skills to Succeed is Accenture s corporate citizenship initiative which focuses on shared value creation through advancing employment and entrepreneurship opportunities in both mature and emerging markets. Skills to Succeed draws on one of Accenture s core competencies training talent to help address the need for skills that open doors to employment around the world. At the same time, Skills to Succeed harnesses the combination of financial support and the pro bono contributions of time and Accenture employee skills to make a difference in communities. Launched in 2009, the programme aims to equip 500,000 people around the world with the skills to get a job or build a business. Initiatives under the programme include working with Plan International to provide training and career opportunities to young people in Thailand and Indonesia in industries such as information technology and business process outsourcing, and with Youth Business International to provide young people in Brazil with improved tools and mentoring to assist them in becoming entrepreneurs. Accenture s goal through the programme is to respond to the major societal challenge of youth unemployment and inequality, creating shared value that improves both Accenture s brand and builds a future source of talent for the industry.