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11 May. 2020 | Comments (0)
Nothing can compensate for the human suffering, lives lost, and economic devastation resulting from the COVID-19 pandemic. Yet in the face of these challenging times, we are seeing the acceleration of two trends that could leave a positive mark on business and its role in society.
As business leaders throughout the world think about recovery, many are returning to their mission statements, those lofty sentiments that so many put aside in their relentless pursuit of growth. Forced now to prioritize resilience over efficiency and cash over debt, purpose may finally be moving from a marketing slogan to an essential operating principle.
There are two emerging imperatives for business recovery that directly draw on the purpose movement:
- Ensuring the well-being of employees
- Taking a long-term perspective that broadens the definition of stakeholders well beyond shareholders
While the movement toward accountability beyond shareholder earnings was already starting to take root, the devastation wrought by the virus will accelerate its take-up.
The crisis made plain that an organization’s resilience is a direct result of how well it takes care of its employees in uneventful times. The companies that regularly put their employees’ welfare first are the most agile, the most flexible, and the most prepared to innovate. In fact, a recent survey of global executives by Harvard Business Review found that organizations that prioritize employee experience are more resilient than their peers, and were better prepared to respond to the coronavirus crisis.
While job one for returning to work is to design a recovery plan around the well-being of the workforce, equally important will be ensuring that a safe and flexible employee experience is an ongoing priority. Those who get it right have a chance at building a sustainable recovery.
We’ve seen example after example of what happens when poor work conditions in “normal” times are put under extreme duress: In just that past several weeks, employees at Amazon warehouses staged walkouts over paid sick leave and safety protections. Workers at Instacart held a walkout demanding hazard pay and more protective material. Drivers for Uber and Lyft have complained that the companies have not kept their promises to provide paid sick leave. Meat processing plants have been virtually shut down by infection. And countless knowledge workers were unprepared to work remotely.
While Wall Street has continued to reward some of the most notable corporate offenders, the crisis has exposed the imbalance to the public, leading to a backlash in the press and on social media against organizations that do not seem to value their employees.
That employee experience is growing as a priority should not be a surprise. Since 2015 JUST Capital, a not-for-profit organization, has surveyed more than 96,000 Americans on attitudes about corporate behavior. The results have been consistent: the number one value Americans admire is how a company treats its employees. Still, many public companies have put short-term returns over investment in their workforce – and have been rewarded for it by the investment community.
Americans rank how companies support local communities and international supply chains as their second priority, followed by their impact on the environment and how well they serves their shareholders through strong governance, according to the JUST Capital poll. These priorities have long pointed to the need to ensure a longer-term vision than one that has shareholders squeezing every drop of immediate value out of a company. The current crisis has brought the issue to life as consumers applaud those companies that widen their stakeholders to include employees, suppliers and customers, local communities, and the broader world.
Before the crisis, there was no shortage of talk about corporate purpose and the benefits that can accrue from it, but most companies hadn’t managed to balance purpose with the tactics of fast growth. In a recent McKinsey survey of more than 1,000 U.S. companies, 82 percent affirmed the importance of purpose, but only 42 percent said that their company’s stated purpose had much effect. Similarly, a study conducted by the Harvard Business Review found that although there was near-unanimity in the business community about the value of purpose in driving performance, less than half of companies surveyed had articulated a strong sense of purpose and used it to make decisions.
No wonder that last August’s Business Roundtable statement expanding the purpose of a corporation to create value for all stakeholders rather than just to maximize value for shareholders set off such a debate among the business elite.
All over the world, business leaders are returning to their missions to guide them as they grapple with the human and organizational costs of layoffs and furloughs while trying to re-imagine their businesses for the post-virus world. The crisis is forcing many finally to see just how deeply their commercial fate is tied to a set of stakeholders that goes well beyond their investors. It’s not easy to balance the interests of employees, communities, customers, and shareholders, but now there simply may be no choice.
Related research by The Conference Board: