“The business of business is improving the state of the world,” states Salesforce’s chairman and CEO Marc Benioff.
Benioff’s worldview is shaped by the concept of “stakeholder capitalism” – the idea that companies have an obligation to give back to society and make a positive impact. That worldview has certainly paid off. In August, Salesforce posted a quarterly profit that well exceeded Wall Street’s estimates. But Benioff said he’s “most proud” of the role Salesforce is playing in helping public schools deal with Covid-19.
Indeed, as the world faces its worst health crisis in more than a century, the time has come for us to take a step back and seriously reflect on the role businesses play in society at large. In August 2019, the Business Roundtable, for the first time in 41 years, redefined the purpose of a corporation. Instead of insisting that public corporations exist primarily to serve shareholders, 181 CEOs joined the Roundtable’s statement that corporations exist to benefit all stakeholders – customers, employees, suppliers, communities, and shareholders.
The human enterprise
In order to advance this broader shift in organizational purpose, it’s imperative that companies fundamentally rethink the relationship between employer and employee – to go back to basics, back to our humanity.
In our forthcoming book, “Making Work Human,” co-authored by Derek Irvine, we propose the idea of the human enterprise, a new value proposition between employer and employee far beyond the traditional formula of work-for-pay, a model that only valued the efficiency with which people learned skills. It means companies get the best out of their employees by satisfying more than basic needs like having a safe place to work.
A human enterprise has a culture that enables all employees to feel accepted, recognized, and rewarded – a culture where innovation and creative problem solving thrive because it values continuous learning and growth. Instead of trying to get the best out of employees, human enterprises enable and inspire employees to give their best.
Heart, head or wallet: A false choice
Of course, anyone making the case for this change in business practices faces the question, “Should I appeal to heart, head or wallet?” The thinking is, if you can’t explain the need for a more human workplace in the unsentimental language of balance sheets, your reasoning is weak or merely sentimental.
But in this case, the head, heart and wallet don’t need to be separate. There is ample data that proves a more human workplace is also a more successful workplace. According research from IBM and Workhuman examining data from more than 23,000 employees in 45 countries, organizations that rank in the top 25% of employee experience see returns on their assets that are triple those that score in the bottom 25%.
The greater good and the ROI
Beyond the data, a more human workplace is a good unto itself. As political systems wrestle with the changes that technology and globalization have wrought, societies are looking to business leaders to pass on a better world to future generations.
Wharton’s Adam Grant points out that when you make a business case for a moral purpose, people immediately start to compare it with the business case for everything else they could invest in. Take employee recognition as an example. Recognition is a foundational pillar of working human. It should be social – available for everyone, from anyone. And it should happen frequently, not just happen once a year. By focusing on company values and employee effort rather than waiting on long-term deliverables and deadlines, the person giving recognition makes it part of the human-to-human connection.
The business case for investing a minimum of 1% of payroll in social recognition should compare well to other programs. One way to look at it: One penny out of every dollar, given to the people to give to each other, is a small investment to increase productivity, retention and an organizational culture you can be proud of.
Voluntary turnover is just one powerful piece. Let’s run some math on a sample company with an 11% voluntary turnover rate and bottom-line turnover costs of $41.3 million. Assuming frequent recognition decreases that $41.3 million by half (which our clients have seen), the cost of turnover would come to $20.65 million. Even if the company’s recognition program reduced turnover by just 20%, the savings would more than compensate for the 1% of payroll benchmark number (at a $400 million total payroll cost).
This isn’t theory
For more than 20 years, Workhuman has recorded more than 50 million moments of recognition and gratitude among 5 million employees, and our research team has worked to analyze those interactions and their outcomes. We are learning through data how to connect measurable business outcomes to their causes in the motivation and dedication of employees.
But there’s still another case to be made: the moral case for bringing more humanity to the workplace. At the top of the best workplace rankings, employees uniformly say they are participating in a mission bigger than their own self-interest. Great workplaces are about much more than pay and benefits or promotion opportunities. They are about making the lives of their employees, customers and communities better. Businesses have the potential to influence and then create change for the better. Putting more and more emphasis on serving humans inside and outside the company accelerates that power.