In a time when shareholders expect quick turnarounds on their investments, it can be difficult for CEOs to feel empowered to favor their many other constituents. Panera Bread founder Ron Shaich spoke to the New Yorker’s Sheelah Kolhatkar about what it’s like to deal with those pressures, and why we need to build a business culture that promotes long-term investment.
Kolhatkar explained the short-term pressures today’s CEO’s face:
Wall Street has embraced the idea that companies exist solely to serve the holders of their stock. Under this way of thinking, managers of companies should focus their actions on driving short-term value for their shareholders, and should pay far less (or no) regard to other constituents who may have a stake in the business, such as employees, customers, or members of the community.
Shaich went on to explain some of the reasons why that type of thinking can be dangerous for companies and communities:
Stock owners have no public accountability for what the company does, and no responsibility, as executives do, to place the company’s interests above their own. The costs of prioritizing shareholders’ interests are borne by the company, and by society as a whole, which is robbed of innovations, jobs, and tax revenue.
After Panera encountered pressure to expedite return on investment (ROI), Shaich took the company private 2017 to protect its constituents, values, and vision. Shaich also stepped down as CEO at that time to focus on promoting long-term investment and value-building in the business world.
In order to move forward in business and society, long-term thinking and commitment are essential, Shaich said:
We say we want GDP growth, but GDP doesn’t come simply from a sugar high of tax cuts. GDP growth only comes from innovation and productivity increases. And innovation and productivity increases occur because people make commitments and they make transformative events.
With the recent stream of investor and employee letters demanding that companies start putting purpose and profit on equal footing, Techonomy’s Jeff Pundyk dove into the central question behind corporate responsibility in his article: “Can Companies be ‘Good’?”
The story provides data showing that customers and companies alike see the need for values in business, not only for social good but for employee satisfaction and financial success. But when doing good is good for business, can a company’s good work be taken at face value? For Pundyk, authenticity is key.
Corporate authenticity becomes clearer when a company takes a real risk. In March 2018, Citigroup stepped into one of the most contentious issues in American politics: gun control. The bank said it would not do business with retailers that did not restrict the sale of guns to those under 21, with those that sold bump stocks and high-capacity magazines or that did not perform background checks. It was a measured step, yet it had dramatic impact. Citi was a rare corporate brand willing to enter a societal debate fraught with strong opinion.
AirBnb’s pledge to house 100,000 refugees and Apple’s opposition to the Trump administration’s immigration policy and data privacy advocacy stand as additional examples of companies taking authentic steps in areas in which they are qualified to speak.
Earlier this year, Laurence Fink, the CEO of BlackRock, the world’s biggest investment manager, laid down a warning to the world’s CEOs: Make societal progress part of your strategic plan or suffer the consequences.
According to business leaders like Fink, there is increasing need for companies to pick up slack left by failing governmental and political institutions. Their failures have left people turning to companies to solve the world’s biggest challenges. The good news is those expectations are relatively clear and easy to rank.
According to an annual survey of American attitudes about corporate behavior conducted by Goldman Sachs and JUST Capital,” Techonomy reported, the No. 1 value is how a company treats its workers, followed by how it treats its customers, including its position on privacy issues. Those are followed by, in descending order of importance: how much it builds its products to benefit society; the way it affects the environment; the degree it supports local communities; whether it is creating good jobs; and whether it’s well managed and pays its fair share of taxes.
When the companies fail to adhere to their stated values, employees are known to publicly hold their leadership accountable, as when 1,400 Google employees signed a letter that brought to light a secret project to build a censored search engine for China. Employee call-outs and public demand create checks and balances within this new corporate governance that seem to leave Pundyk hopeful.
What makes a company good? Employees who demand it. Customers who expect it. Society that requires it.
Communication is vital to success in business, but not everybody is great at it. According to LinkedIn’s 2018 Workplace Learning Report, it’s among the most in-demand soft skills in today’s business climate. General wisdom has it that technology is eroding this essential skill, making it harder and harder for people to understand each other, but CorpU CEO Alan Todd believes that it has the power to do just the opposite.
Todd, founder of a Philadelphia-based company that has developed a digital leadership-development platform, writes in Entrepreneur.com that companies can—and should—leverage data produced by natural language processing technology to better understand their employees.
The process is rooted in the advent of natural language processing technology, also referred to as ‘discourse analysis,’ which is the study of relationships between naturally occurring connected sentences, spoken or written.
By assessing patterns in digital traces of peer-to-peer interactions or structured dialogue, executives can spot unintended consequences of new initiatives, gauge employee sentiment, understand leadership dynamics and company culture, and more.
This isn’t about listening in on private conversations or identifying individuals by name, but over time, patterns emerge, helping executives to spot unintended consequence, and make more informed decisions. It can help executives to unearth sentiment that shows how their communications are perceived by cohorts (e.g., segmented anonymously by role or geography) within their company. And with over 84 percent of companies embracing the importance of ‘people analytics,’ it’s more important than ever to understand natural language processing and how it works.
One of the key features of natural language process technology is that it mines data from interactions that employees are already having, meaning that it does not absorb valuable employee time. Its use of AI also fosters transparency; the technology creates a transparent feedback loop that gleans information from everyone, including introverts who may otherwise go overlooked in promotion processes. Perhaps more importantly than anything, it eliminates bias.
Communications within and across organizations often reflect implicit and structural bias, resulting in processes that are more subjective than they are meritocratic. Leaders often pick who they want to promote based on unconscious biases. By implementing tools that derive insight from the interactions of employees using natural language processing, leaders can generate a blind view of who is contributing the most creative ideas, who casts the largest net of network influence and who has the ability to inspire their teams. The insights gleaned can help them engage and retain the best employees, regardless of gender, race or culture, to avoid lousy morale and expensive turnover
Corporate social responsibility isn’t just a trendy idea or a way to boost company PR; it has become a cornerstone of good business. Responsible and ethical practices foster goodwill and higher profits. And those effects are redoubled when employees adopt what were once C-suite values.
While the idea of getting everyone from board members to executives to middle managers and workers on the same page can be daunting, there’s a business case for taking on the challenge. Writing on Entrepreneur.com, Robert Glazer, CEO of the marketing firm Acceleration Partners, makes that case and proposes some simple ideas for how to build values into the core of your company at every level.
Getting employees involved can decrease turnover. A study by Benevity has shown that churn can drop by up to 57% when volunteerism and donations are part of the corporate mission. What could be better than a healthy population of engaged employees?
One way to get everyone onboard with initiatives that tap hot-button issues is by grounding them in universal ideas. This technique allows companies to take steps in controversial areas without causing undue friction. For example, Jelmar President and CEO Alison Gutterman says she avoids explicitly talking about gun control by focusing on the fact that everyone can agree that children should be safe at school. Rooting work in common ground keeps everyone focused on goals that make sense to them.
Glazer also says that sustainability should be as much of a goal as sales.
Certainly, it makes sense to strive for profitably as a company. However, it’s critical for businesses to make firm commitments to doing good, which will add meaning for customers who sympathize with your cause.
At 2920 Sleep, a direct-to-consumer mattress business, the company donates test products to local shelters to build goodwill within the community and reduce waste, as these products would otherwise end up in the landfill. Karim O’Driscoll, head of product development and operations, notes that the 2920 Sleep team also donates 1% of its revenues to green causes. “It boils down to making the commitment real for your employees and your customers,” O’Driscoll says.”
Broadening your approach to include volunteer work through local non-profits helps can help strengthen employee commitment as well, Glazer wrote.
A survey from Korngold Consulting reveals how much participants get from the experience. Volunteers reported that serving with people from a variety of backgrounds improved their empathy by 76 percent and their respect for these individuals’ perspectives even more. For a corporation seeking workforce buy-in for its ethical measures, this finding illustrates how important service can be.
Remote work has been on the rise for the past several years: it saves money, boosts productivity, and provides flexibility for employees. But what does it do for employee engagement and job satisfaction? Writing for the Harvard Business Review, WorkplaceTrends.com founder Dan Schwabel says that what it does is a lot of harm.
According to a study by Schwabel’s firm and Virginia Pulse, a third of employees globally work remote most, if not all of the time. While this cohort praises the flexibility and lack of commute, they also suffer from a sense of isolation and indifference.
“After interviewing over 2,000 employees and managers globally, our study discovered two-thirds of remote workers aren’t engaged and over a third never get any face-time with their team — yet over 40% said it would help build deeper relationships.
The study also found that remote workers are much less likely to stay at their company long-term. Only 5% always or very often see themselves working at their company for their entire career, compared to almost a third that never work remotely. When you don’t see or hear your colleagues over a long period of time, you can become less committed to your team and organization.”
Companies like Yahoo!, Best Buy, HP, Reddit, IBM, and Honeywell have responded to growing remote worker malaise and the communication issues implicit in organizing a remote workforce by rolling back remote work programs. These companies are instead requiring employees to come into the office every day, without exception.
Many companies—like Apple, Amazon, and Zurich North America—are taking things one step further. Rather than saving money through remote work policies, they’re investing in well-planned office spaces designed to promote collaboration.
“These companies understand that employees’ proximity to each other matters. The closer we sit to our colleagues, the more likely we will interact with them and form the relationships that lead to long-term team commitment. Back in 1977, MIT Professor Thomas J. Allen studied the communication patterns among both scientists and engineers and found that the further apart their desks were, the less likely they were to communicate. If they were 30 meters or further from each other, the likelihood of regular communication was zero.”
While extreme measures, like Yahoo! and company’s exception-less on-site policy work for some, Schwabel advocates for a practical mixture of remote and office work.
“Give them the flexibility at the office, while an option to work remote part-time based on their position and needs. They need face-time even if they won’t admit it, and companies need an engaged workforce in order to retain talent and compete in the global economy.”