A New Year’s Resolution for CEOs: Give Every Worker a Good Job

January 23, 2018
  • Susan Winterberg

    Former Associate Director, Inclusive Economy, BSR

Last month, JUST Capital released its annual rankings of America's Most Just Companies and its Roadmap for Corporate America. Rather than relying solely on technical analysis of materiality and reputation risks to develop corporate performance criteria, JUST Capital asked the American public. What makes a corporation just?

For the last three years, one issue has ranked first: worker treatment, or providing employees with good jobs. This includes issues like whether the company pays a living wage, pays a wage that is fair for a specific industry and job role, provides a safe workplace, and guards against all forms of discrimination. Improving worker treatment is Americans' top priority for corporate America, across all genders, ages, income levels, and political affiliations. 

Several trends have led to the public's prioritization of this issue, including almost four decades of flat wages, the slow whittling away of jobs through offshoring and automation, and a shift toward the gig economy and independent work in the last decade. While business has made bold commitments, including in support of the Paris Climate Agreement and the UN Guiding Principles on Business and Human Rights, the issue of creating good jobs for direct frontline workers and contractors in the U.S. and other advanced economies has received short shrift on the sustainable business agenda. Anxieties around economic security have fueled the Brexit vote, the outcome of the recent U.S. presidential election, and nationalist movements across the world. It should come as no surprise that good jobs top this referendum on corporate behavior. 

Here are three steps your company can take in 2018 to treat your workers well and provide good jobs:

1.  Align company values, commitments, and actions across functions

One of the central challenges to advancing better worker treatment is breaking down the silos where pertinent decisions are made and ensuring consistent application of company values and commitments across worker types.

In the 2017 BSR Globe Scan State of Sustainable Business survey, when asked which functions the sustainability team needed to work with most closely to make "substantial progress" on sustainability in their companies, more than 50 percent of respondents cited procurement/supply chains, while only 12 percent identified engaging human resources, the department that develops the corporate employment and contractor policies that most directly affect how workers are treated. Clearly this suggests there is opportunity for increased internal collaboration on this issue.

It's also important to align your company policy agenda with your values. In 2017, the U.S. government rolled back protections to U.S. workers on overtime, workplace safety, and joint-liability protection to contractors and franchise workers. Many of these regulatory initiatives were supported by corporate-backed industry associations. Good jobs can become a norm across the economy if companies ensure that the public policy issues being promoted by their industry associations are aligned with their values.  Companies also can communicate directly with policymakers, such as by participating in the High Road Workplace Campaign to support federal, state, and local initiatives to improve workforce standards.

2. Factor job quality into company strategy and financial valuations

In sustainable investing circles, it is well known that good jobs are the one of clearest 'win-wins' for shareholders and society. A study by Alex Edmans at London Business School found that firms with high employee satisfaction outperformed their peers by 2.3 percent to 3.8 percent per year in long-run stock returns over a 28-year period.  

Many on Wall Street have not heard this message. As an example, when American Airlines announced they were raising frontline worker pay to be competitive with industry standards, Wall Street downgraded the stock, and the company lost about US$1.9 billion in market value in 48 hours, with one industry analyst lamenting: "Labor is being paid first again. Shareholders get leftovers."

You can integrate good jobs into your strategy through a new toolkit developed by the Good Jobs Institute at MIT Sloan, which offers a diagnostic and scorecard that can be used identify actions that will both improve worker treatment and business performance. 

You can communicate with investors on the importance of good jobs by framing them as long-term investments. As an example, when Walmart invested approximately US$2.7 billion into higher levels of pay, benefits, training and store operating improvements, U.S. CEO Greg Foran explained: "We went to Wall Street and said, 'If you give us a breather on the bottom line, we'll deliver an improved top line. But it won't happen in a year; it's going to take three years.'"

3. Be transparent about and report on workforce issues

The greatest barrier for integration of job quality into investor valuations and decisions is the lack of reliable and comparable data. Data are currently available only through employee-reported websites like Glassdoor. In 2017, a coalition of investors, ratings agencies, and civil society began the Workforce Disclosure Initiative to improve transparency and data comparability on workforce issues in direct operations and supply chain. Your company can sign up to the initiative and commit to transparency of your workforce data. 

Through integrating good jobs into company values, strategy, policy agendas, and investor communications, you can help make 2018 the year that everyone has a good job. 

Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.

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