When corporate leaders think of sustainability, the first issue that often comes to mind is the environment – and how a company can better manage its supply chain, packaging, waste disposal or carbon footprint. Now more than ever, a commitment to environmental sustainability is critical given the premium that customers are placing on this issue.
However, sustainability also involves another key resource: a company’s workforce. Being a good steward of natural resources and human resources isn’t just the right thing to do, but it can significantly enhance an organization’s brand and ultimately its bottom line.
When it comes to workforce issues, there’s a convenient narrative that companies and employees are locked in a pitched battle against one another, with the drive for more profits necessarily meaning less concern for workers. According to this narrative, what’s good for one side must be bad for the other.
The reality is far more complex, dynamic and positive. To be sure, there are still too many companies that provide poor wages and benefits, engage in scheduling practices that impede work-life balance, and deprioritize employee health and safety. The “Me Too” movement has also shined a harsh spotlight on the toxic cultures of too many organizations.
Fortunately, a larger number of companies recognize that “high-road” practices can help them attract and retain employees, distinguish themselves to customers, improve the world around them, and generate higher revenues and profits. These companies understand that the high road is also the smart road.
Last August, a potentially seismic shift occurred when Business Roundtable released a statement on behalf of 181 of its CEO members. This statement of corporate governance principles committed the CEOs to lead their companies to benefit not just the bottom line but all stakeholders, including their employees and the environment.
With regard to their workforce, the CEO members of the Business Roundtable pledged to “invest” in their employees:
This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
“The American dream is alive, but fraying,” explained Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co. and Chairman of Business Roundtable. “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”
Value statements, like the one issued by Business Roundtable, are an important first step, but the real challenge will be translating these ambitious, but amorphous, values into practical policies.
To do this, companies will need to move from reactive to strategic.
When it comes to hiring, this will mean re-examining outdated hiring practices and looking for candidates from non-traditional backgrounds. It will mean designing working arrangements (like telework) and providing benefits (like paid family leave) that allow this new pool of employees to thrive.
When it comes to fostering diversity and inclusion, this will mean engaging in tough conversations and changing internal cultures that produce conscious and unconscious bias. It will mean enhanced linkages with external stakeholders, including advocacy groups that are pushing for broader, societal changes.
When it comes to compensation, companies will need to move away from short-term thinking that views better employee pay and benefits as an unfortunate “cost,” instead of as a critical “investment.” And it will mean a commitment to developing career pathways that allow entry-level employees to grow, even if that means working for another employer.
A great example of how employee-friendly policies can produce a positive return on investment is paid family and medical leave. A recent study commissioned by the American Sustainable Business Council found that companies with paid leave programs averaged increases of 4.6% in revenue and 6.8% in profit on a full-time equivalent (FTE) basis. In the technology sector, the return on investment from a paid leave program is a 25.8% profit increase per FTE.
Making changes to prioritize employees will not be easy for many organizations. But those that are able to do so will find themselves winners in the fierce competition to attract and retain good talent.