Sept. 18 (Bloomberg) -- When Brad Fogg did volunteer work in India, the adventure came with unwelcome insects and other discomforts, as well as a chance to benefit the country and find opportunities for his employer, Dow Corning Corp.
“It was not easy putting up with cold-water showers, bugs, unreliable electricity and stomach problems from the different foods,” said Fogg, a commercial manager in Michigan who went to Ujire in southern India to design a peeling machine for a nut important to the local economy. “But that was all part of the adventure of getting to know India’s society and culture and the opportunities bottom-of-the-pyramid markets offer.”
Dow Corning, a silicone supplier whose materials are used in products from cars to parachutes, is among a wave of companies, including SAP AG and International Business Machines Corp., sending employees on volunteer assignments to developing countries. In return, the businesses anticipate greater loyalty from workers, improved skills, insight into growth markets and more sales.
“Our volunteering program is an incredibly rich source of business ideas and an inexpensive source of market research,” said Laura Asiala, director of corporate citizenship at Dow Corning. Two volunteer teams sent to India in the last two years have come up with almost 30 business ideas in renewable energy and affordable housing, Asiala said.
Dow Corning, based in Midland, Michigan, is a joint venture of Dow Chemical Co. and Corning Inc., and pushes volunteers to research markets and identify business opportunities during their missions.
“Products that have reached the end of their life cycle in developed markets may still have some great potential when selling them at a lower price” in other countries, Fogg said. Dow Corning’s business-development unit identifies the most promising ideas from volunteers and helps to realize them, Fogg said.
Dow Corning declined to provide more information on individual projects as they concern proprietary information.
Companies may also find it easier to attract and retain talented workers by offering volunteer programs.
“The benefits of our international volunteer program for the company are undeniable,” said Stanley Litow, president of the IBM International Foundation in New York. “The program improves employee retention, helps people decide to come work for IBM and allows the next generation of IBM leaders to build capabilities and understanding about the growth markets.”
IBM, the largest computer-services provider, has sent 2,000 employees on one-month missions since beginning its program in 2008. Projects range from helping a Romanian furniture manufacturer become as paperless as possible to conducting a study of the Sri Lankan government’s IT infrastructure needs. If IBM charged for the work of its 500 volunteers each year, the bill would be about $15 million.
A Deloitte survey of 350 employees at large companies worldwide in 2011 found that about one-third of workers younger than 31 were considering other career options. It also found that corporate sustainability and volunteering were nearly three times as important for this age group than for baby boomers in their job choices.
“Providing unique benefits to star-type talents, such as international volunteering, has huge financial benefits,” said Chris Marquis, an associate professor at Harvard Business School who has analyzed IBM’s program. “It makes a company attractive in the job market and helps improve employees’ company loyalty.”
Workers participating in IBM’s program are less likely to leave, according to a study commissioned by the Armonk, New York-based company. It found former volunteers have a higher commitment to IBM and “an improved perspective” of their employer.
This explains why companies have an increasing interest in the volunteering model pioneered by IBM and drugmaker Pfizer Inc., according to Deirdre White, chief executive officer of CDC Development Solutions, a nonprofit organization that plans volunteering missions for 12 Fortune 500 companies. “Many companies have piloted projects with us in 2011 and 2012, and all of them say that they want to expand,” White said.
Such programs may also provide another payoff.
“Improving the volunteers’ leadership skills” was cited as the most common reason for creating the missions, in a 2012 survey of 22 companies.
Volunteers dealing with non-governmental organizations and governments in developing countries may gain a better understanding of future business opportunities.
“Many companies believe that the international corporate volunteering experience can stimulate new insights and learning for their top employees in a way that traditional leadership development programs cannot,” according to a 2012 George Washington University study.
A 28-day volunteering mission costs about $12,100, while universities may charge $14,000 for a traditional 5-day executive leadership program, according to the study.
Volunteering missions may also yield business deals as employees get to know potential clients while staying in developing countries.
Such missions in Nigeria and other nations led to the expansion of IBM’s business operations and the permanent transfer of employees initially sent as volunteers, Litow said. IBM has increased its headcount in Nigeria from 17 to more than 100 since the first mission in 2009.
In Nigeria, IBM has collaborated on volunteer projects with departments of the Cross River State government, including the Finance Ministry and the Information, Communication and Technology Development Department.
“Some companies have found such volunteering programs extremely helpful in getting access to top policy makers,” said Marquis of Harvard Business School. “This is important from a business perspective, considering that governments are the potential clients of multinationals selling large services in developing countries.”
SAP, the world’s biggest maker of business-management software, set up its first international volunteering program this year, with missions in Brazil, India and South Africa. The German company is betting on emerging markets to drive future growth and hired 698 people in Brazil, Latin America’s biggest economy, from the start of 2011 through March 2012, bringing its headcount in the country to 1,533.
“Getting out of my comfort zone was a tremendously valuable opportunity for me,” said Jan Seger, a training program developer at SAP in Vancouver who volunteered for a month in Brazil, working with a non-governmental organization for waste collection. “The whole project says to me: SAP is providing an opportunity to help people grow, including me.”
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