This has been the year of the “human workforce,” “human companies,” “human work environments,” and even “human brands.”
These and similar phrases always make me chuckle. After all, humans have been involved in work since the beginning of time. But, the point behind the phrases is important: the wellbeing of employees and the social impact of a business are just as important as profit, growth and shareholder value.
We, as HR leaders, share responsibility for making work more human. We help craft workforce policies and ensure leaders are acting in the best interests of employees, as well as the business. What else can we do? Following are some concrete, measurable actions to which we should hold ourselves and senior leaders.
Invest in people during good times and bad.
Wages and benefits should be viewed as investments, not expenses. People are one of the only appreciating assets we have in business, and when we continually think about minimizing labor costs, we think the wrong way.
Nearly every senior leader is worried about skills and learning right now, yet the average company spends around $1,300 a year on employee development. (Spending ranges from approximately $200 per year in retail to $4,000 per year in professional services.) That is a tiny fraction of wages—around 1 to 1.5 percent. Make employee development a steady investment and protect it even during bad times.
In every recession, I’ve received a barrage of calls asking me advice on cost-justifying learning and development (L&D) investments. In down times, many companies essentially shut down or starve employee development. This is not the approach of a “human company.” Every employee needs continuous development. I would like to see companies lock L&D budgets and see them included as investments in the balance sheet and income statement.
Make fairness and inclusion a business imperative.
HR professionals understand you have to hold yourself accountable to such fairness and inclusion standards every day. We need to make sure it’s part of the DNA of leaders at all levels.
Think about your company as a “society” in itself. If people are left out, underpaid or discriminated against, your society is unhealthy. People are not giving you their best, your meritocracy isn’t working and employee grumbling is holding you back.
This is not an easy thing to do. Doing it right takes ongoing inspection, reporting and training. For instance, Chevron, a company that prides itself on inclusion, holds diversity councils that inspect all the people decisions any manager can make.
Which reminds me of the CEO pay ratio. Today, thanks to new disclosure laws in the U.S., we know that the average CEO makes 144 times the pay of the average worker. CEO pay went up by 7 percent last year, while average wages increased by only about 2.9 percent. Is this fair?
Stop penalizing employees for being in the wrong place at the wrong time.
Restructuring, downsizing or other major business transformations are highly disruptive to workforces.
In many cases, employees are let go, with short notice and little or no support. Well-run companies carefully help employees move or reskill to another location, and forward-thinking companies encourage employees to reskill themselves.
An even better and more interesting option is to create internal talent marketplaces. Companies such as Schneider Electric tear down organizational siloes and make internal mobility an essential part of their business strategies. A recent study found almost two-thirds of employees believe it’s easier to find a new job outside the company than it is inside the company. This has to change.
Make serious efforts to support the community.
I have to mention the Amazon HQ2 fiasco here. Somehow Amazon managed to convince dozens of cities—many of which have enormous financial problems—to promise lavish tax breaks in hopes of enticing Amazon to build its HQ2 in their cities. Obviously, this is not a strategy to support local communities.
I believe one of the best things CEOs could do would be to pay more taxes. Taxes, as bad as they sound, are the only way we can truly contribute to our communities through a public process. Of course, the political process is messy, ugly and hard to manage. But when companies do everything to avoid or reduce their taxes, I have to wonder if they care about the country and their communities.
Beyond paying taxes, companies can help local communities by giving employees time to contribute to local causes, moving work to locations that reduce commuting, and trying to solve issues of housing prices, water and other environmental problems.
Be more generous with wages.
In 1913, Henry Ford decided to double hourly wages for all company employees. He did this not only to increase buying power among his employees (who were also potential customers), but also to reduce labor costs. He realized that underpaying people increased turnover, training expenses and manufacturing errors.
My guess is that pay practices in your company are pretty standard. Among all the talent and HR practices I’ve studied over the years, compensation practices are perhaps the most difficult to change. In our last study of this area, only 12 percent of respondents said their companies’ compensation and pay practices align with business strategies.
Why? Because most companies simply try to pay at market rates. So wages go up very slowly, and the biggest increases we see are roughly 2-3 percent.
Interestingly, while wages have been stagnant in many industries, benefits are going through the roof. The average spending on healthcare, well-being, insurance and other benefits has gone from 28 percent to almost 35 percent of wages in the last 20 years.
When you pay people well, the company benefits in many ways. You can hire more skilled and ambitious people; your retention and engagement go up; people are more willing to pitch in when things go bad; and your employment brand is uplifted.
Just look at Costco. The company pays its employees almost 25 percent more than its competitors and its margins and customer service are among the highest in the retail segment. This is a perfect example of good pay turning into good business.
Teach leaders how to be good citizens.
The final point I’ll make is that you must have the support of line managers and business leaders. In today’s world, every supervisor, manager and leader is a sponsor of the company mission and we need to provide the tools and support to help them do this well.
Do you have a strong first-line leadership development program? Do you regularly communicate with leaders about ethical issues and strategies for trade-offs at work? Do you tell stories about how to make the right choice when confronted with business problems that push against social issues? Do leaders know how to listen to complaints and deal with fairness and diversity?
These are all non-business topics that have to be part of the leadership culture, and it’s up to us and senior leaders to hold people accountable.
We Are in the Era of Trust
The paradigm for corporate leadership has changed. Businesses are the most trusted entities in our lives today (almost 50 percent more trusted than political institutions), so employees and customers are expecting us to do more. Yes, we have to make a profit, but over the long run, we must do more.