Economy & Industry: Positively Participate in Society

If you ask a business person about their responsibility to drive results, you’ll often get the canned response, “I have to deliver for my shareholders.” Yet, are financial shareholders really the only constituents that need to be considered? Certainly, I’m not the first to ask this and to suggest that there are more bottom lines than simply financial. But what seems to have been forgotten by many companies is their role and responsibility in caring for employees, economic development, and participating in communities within which they operate.

Since the Great Recession, many companies, and thus investor portfolios, have rebounded. Yet, workers bore the brunt of this turnaround. As we well know, many blue-collar workers have been shut out of the workforce with job options limited, and white-collar workers have been impacted, as well, working longer hours and having to be always on. Companies need to treat workers better, from programs to improve work-life balance to increased pay to training and development to providing career paths.

Even though companies have become more global and some U.S.-based companies are now foreign owned (such as the iconic American brand, Anheuser-Busch), they still operate in and are a part of our communities. Because of changes such as Citizens United and the establishment of Super PACs, some th­ink that business shouldn’t be engaged in politics. Perhaps in some ways they shouldn’t. But there is evidence that communities and economies benefit and thrive when businesses work together with government and civic associations.

We need to demand that companies operating in the U.S. be a part of the solution. Established companies can withstand a two or four-year political cycle, demonstrating the resilience to take on broader responsibilities for economic success within our communities.

Here are a few ways that some companies are starting to act on these fronts.

Pay more.

In early 2016, Costco announced an hourly pay raise from $11.50 to $13 per hour after nine years of no pay increases. While this may still seem low, Costco pays its workers more than its competitors and as a result has had better employee retention and business results.

Walmart finally picked up on the fact that better pay and treatment of workers could lead to better productivity and work outcomes. Cost cutting and pinching workers is not a sure path to positive business outcomes. After decades of depressing employee pay for the benefit of low prices and profits, the short-sighted employment practices took a toll, resulting in lower store performance. Neil Irwin of The New York Times reported on the efforts Walmart is making to turn around its business through workforce initiatives. Read more on the New York Times >

For example, imagine paying people more to attract better workers and incent stronger performance. Consider the impact on the workforce of creating a clear career path for entry level employees to move up into management positions and possibly to work at the Corporate headquarters, giving them hope of a better future for themselves. What if more companies were to invest in training its staff to drive business results? Properly caring for a company’s workers across many dimensions can have a more positive impact on business outcomes rather than just cutting their pay and making them work more. Economists provide evidence that treating employees well through higher pay and with other benefits increases performance. For Walmart, store performance is up, but profits have not yet rebounded. Time will tell if they find this strategy to be a core driver of turning the business around. Regardless, we side with the economists, believing that treating employees well and giving them a reason to care about their work is a better strategy for success.

Invest in education.

Sir James Dyson, the founder of the company that bears his name, has started an engineering school at his company, the Dyson Institute of Technology. Dyson’s motivation was the expected engineering gap in the U.K., which is expected to reach 1 million by 2020. While Dyson’s efforts will initially graduate just a few engineers, it’s a great example of an employer investing in education to fulfill its own needs and to benefit its workers. Read more at The Guardian >

AT&T has been investing in re-training and education efforts. Like Dyson, the company has partnered with universities to create programs that will benefit its workers. While not all the classes are free and can be taken on company time, it’s still a great model for the company to provide the programs and subsidize costs.

Starbucks College Achievement Plan was launched in 2014 in partnership with Arizona State University (ASU) for both part-time and full-time employees. The company created the program knowing the importance of a college education and that it was becoming out of reach for many young people. While some have criticized how the program is structured, the company made adjustments over the last few years to optimize how it is administered. Regardless of some of the criticisms, at least a company is supportive of providing financial support to employees to better themselves. While some companies have followed suit, many could get inspired by Starbucks philosophy to help workers from its healthcare offering to this education program.

Build careers.

Taco Bell at the end of last year announced its “Start with Us, Stay with Us” platform that includes commitments to hire about 1.5 million young workers, provide leadership development opportunities, and offer education options for high school, a GED, and college.

  • As stated in the company’s press release, Frank Tucker, Chief People Officer at Taco Bell said, “We understand that Taco Bell is a first job for a lot of people…. Whether they want to start with us for a year or stay with us for life, we feel it’s our responsibility to make sure we’re offering benefits and programs that create innovators and leaders for our communities inside and out of our restaurants.”
  • While I might not love Taco Bell as a food establishment, this commitment is encouraging. Let’s hope it isn’t just lip service, but a real effort to provide young people with an option to find their footing and make a career for themselves.

Chili’s has a similar program as reported by Daniel Riley in GQ and covered last year. The article suggests that Chili’s is a company that knows how to care for and manage its employees, offering a variety of career opportunities for those who want to succeed and build a career at the company.

Partner with communities.

In Thomas Friedman’s latest book, “Thank You for Being Late,” he speaks to how the Minneapolis business community has since the mid-1970s taken a role and responsibility in the economic and social wellbeing of the city. At that time, the business community formed the Five Percent Club through which participating companies pledged five percent of their pre-tax profits to philanthropy. Businesses were also active participants in the economic solutions for the region, having an active voice with politicians to keep them from engaging in partisan bickering and ensure work was getting done in the legislature. Today in the region, the Itasca Project is serving this type of function. Friedman writes that it was formed in 2003, made up of members from small and large businesses, education, philanthropy, and civic associations. The organization has focused on economic development, but recently has also taken on diversity and racial discrimination in the community. This organization seems to go beyond the traditional Chamber of Commerce or business associations and have taken a more active role to ensure the region was participating in economic progress. There are many other examples across the U.S. of such partnerships, such as Pittsburgh’s arts focus to revive its city center and Malvern, Iowa, which has brought new life to the town. These types of successes need to continue, progressing us forward on a local level and with businesses being part of the solution for society, not just their bottom line and shareholders.


The Economy & Industry Forecast: Help me be relevant to today’s workers and consumers by taking the high road and accepting companies’ role and responsibility to society and our culture.


 

 

Categories: Economy, Industry

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