The B Corporation model advocates for a triple bottom line that calculates effects on people, the planet and profits. In this case study on Rhino Foods, the B Corp model also has lasting impacts on culture, talent management and diversity and inclusion; all topics of significant contemporary relevance.
Founded in 1981, Rhino Foods began as Chessy’s Frozen Custard—an ice cream shop run by Ted and Anne Castle in Burlington, Vermont. Ted Castle grew up in Rochester, NY, and fondly remembers his childhood visits to Abbott’s Frozen Custard stores. After college and marriage, he and his wife decided to bring frozen custard to Vermont. Chessy’s eventually became a manufacturer of cookie dough and baked pieces for use in ice cream as well as a co-packer of ice cream sandwiches for several national and international brands.
From its first day, the Castles wanted their business to have a positive impact on the world in multiple ways, starting with their employees. Castle’s workers call him “the Big Cheese.” A fun-loving CEO, he strives to do what’s best for his employees, even if that means literally giving them his car when theirs has broken down.
Rhino Foods prides itself on Castle’s desire to run a company that “develops its employees, has a positive impact on the community and shares innovative workplace practices.” For instance, during Rhino’s early days, Burlington experienced a boom in refugees. Castle, with input from his staff, made the company-altering decision to open its hiring pool to them. He admits that when the first wave of Bosnian refugees arrived in Burlington back in 1990, he was reluctant to hire them because they weren’t proficient in English. Rhino Foods has an open-book management policy that links decision-making to the performance of the business, essentially allowing employees to act like owners. Financials are shared, as are long-term plans and goals. If the refugees couldn’t speak English, thought Castle, how could they participate in this core component of the company’s operations?
Fortunately, his team pushed him past his reservations, and he quickly discovered that many refugee workers have an incredible work ethic and are loyal, stable employees. Rhino doesn’t just offer refugees temporary jobs; it makes them permanent employees and has developed a set of programs to help them settle into life in America. At first, the company brought translators in to aid communication among employees. This slowly shifted to at-home language software courses, which eventually led to the development of on-site English-as-a-second-language classes as well as diversity and inclusion training for the whole company. As of 2020, Rhino Foods had about 180 employees, 30 percent of them refugees from Vietnam, Bosnia, Nepal, Bangladesh, Somalia, Congo, Ghana or Kenya.
This is clearly at the opposite end of the spectrum from other “innovative” ideas about employees more typical in today’s world, such as the gig economy, whereby companies externalize their human resources. Rhino is a B Corp, having achieved a certification of its social and environmental performace from non-profit B Lab. B Corp employees are excited to come to work because they believe their jobs have real value. Not only do certified B Corporation’s attract passionate, socially driven employees, they hold on to them for much longer—there is a strong positive correlation between the strength of a company’s social mission and its employee retention rates. In addition to specific examples, numerous studies have shown that treating employees as interdependencies as opposed to externalities creates significant value. Such practices are especially important today as we recover from the pandemic and search for ways to address systemic racial injustice.
Beneﬁts of an Employee-Centric Culture
B Corps offer employee benefits that go above and beyond the typical health insurance packages and HR policies offered by traditional corporations. They are integrated into the everyday culture of the company with a main goal of increasing performance. Not only do employees feel valued when their workplace is focused on their well-being and happiness, they are also eager to be at work. Many B Corps also offer benefits that have an impact on employees’ lifestyles.
Rhino Foods’ Director of People and Culture Caitlin Goss says the company’s workplace culture and commitment to being a B Corp has influenced every aspect of its decision-making. Thanks to B Lab’s Inclusive Economy Challenge—an annual call to action encouraging certified B Corporations to improve their impact on issues of equity, diversity and inclusion by committing to a minimum of three different and measurable improvements—Rhino Foods began to think about its hiring process above and beyond what it had already been doing. “We kind of stepped back and said, ‘Let’s challenge that bias. Do we have people here that have barriers to employment? And could we create more of a runway to create opportunity for people?’” Internal hiring happens more often than not at Rhino Foods now, and employees are encouraged to move up the ladder, which leads to economic benefit through better employee retention.
Social Mission and Employee Retention
Setting aside their obvious social benefits, evidence shows that employee-driven strategies have several economic benefits. For instance, a 2015 article in Organization Science emphasized the strength of the relationship between a corporation’s social initiatives and its employee retention.
This has clearly been seen at Rhino. Another of its innovations is the Income Advance Program that provides grants for emergency situations, so employees don’t have to resort to payday or other high-interest loans. In its first 10 years, the program provided $380,040 to 379 employees, helping them salvage their credit histories and establish banking relationships. Rhino benefited financially from the program via reduced absenteeism, higher morale and more focused employees—in fact, it has seen a 36 percent increase in employee retention since the program began. Rhino partnered with B Lab to create a guide for other companies to implement this program.
When a new employee enters a B Corp and is immediately encouraged to participate in the company’s mission and uphold the company’s values, that person becomes invested in the company’s continued success. When it also offers a positive workplace environment and cultivates a strong employee culture, retention is even higher.
Attracting the Best Employees
B Corp certification provides a signal to potential job seekers that a company will be committed to its employees, and candidates’ familiarity with a company’s brand and social mission has a direct impact on their decision to apply. Even if a job applicant knows little else about the company, studies have shown that a strong social mission and a positive employee culture can attract potential employees, especially those who understand corporate social responsibility and social mission. This means that employers should promote their social missions when recruiting. B Corp certification is one way to do so.
Studies show that when an employer’s brand performs well on the market and in the public consciousness, interest from potential job applicants increases. It’s particularly important for a brand to perform well in local communities. The positive effects of this don’t end when applicants begin work, however. A favorable reputation also increases an employee’s engagement within the workplace. It’s important to think about the employer’s reputation as an aspect of the relationship between the employer and the employee—a positive, impact-driven one encourages communication and relationship building, allowing employees to truly feel like stakeholders. In some ways, they can feel like “corporate partners” rather than “just employees.” Their connection to the business runs much deeper than in traditional corporations and this, in the long run, makes all the difference in terms of its success.
Diversity and Inclusion Drive Value Creation
With growing attention on systemic racism, many companies have begun implementing new diversity and inclusion policies and programs. Beyond issues of justice, such programs also make economic sense. Longstanding research has shown that workplace diversity and inclusion can promote employees’ performance, attachment and engagement while improving their perceptions of their own careers and of the organization. Effective workplace diversity management is also positively associated with civility in the workplace, increased employee retention rates, innovation, organizational voice and enhanced sales performance.
B Corps have been pioneering new ways of drawing attention to, and implementing corporate diversity programs. For instance, “more than 250 companies have embarked on the journey of taking B Lab’s Inclusive Economy Challenge—one they knew would be challenging, sensitive, slow-going and last multiple years,” according to B Lab co-founder Jay Coen Gilbert. “These companies set a collective goal to improve the practices at their individual companies so that they could begin to shift cultural expectations about the purpose of business and how our economy can operate to increase security and prosperity for all.”
The businesses that embraced the challenge have made measurable progress on issues such as equitable pay across race and gender, equitable benefits for part-time and contract workers, shared ownership, workforce and board diversity, and renewable energy (because climate change has an outsized impact on the most vulnerable populations and future generations). Although diversity plays a big role in this challenge, inclusion is equally important and includes goals regarding parental leave as well as the creation of income and wealth-building opportunities for low-income or underrepresented populations. For example, companies will be asked what percentage of their management team is made up of women or people of color, but they might also be asked about their parental leave policies, what percentage of their suppliers are located in low-income communities, and what percentage of ownership is held by nonexecutive team members.
Adapted from Better Business: How the B Corp Movement Is Remaking Capitalism © 2020 by Christopher Marquis (Excerpt run with permission from Yale University Press. All rights reserved).