Workers of the world, good news! You have been rebranded as “stakeholders” and your bosses have signed public letters saying that you now matter every bit as much to them as the shareholders on whose returns their bonuses are calculated.
If you had any lingering suspicions that the people who have staked more money than you will ever hold might still have the upper hand, let Davos 2020 dispel them. The theme of the World Economic Forum’s 50th annual meeting, taking place in the sparkling Alpine village this week, is “stakeholders for a cohesive and sustainable world”. The executives in suits and snow boots will save all talk of buybacks and tax efficiencies until the next earnings call: this week is about a healthier planet, happier customers — and you.
On conference stages, in hotel meeting rooms and at pop-up hospitality venues on the Promenade, business leaders are busy discussing how to make work more inclusive, soothe politicians’ concerns about the gig economy and “upskill” you for whatever career curveballs the robots and artificial intelligence throw your way.
Five months after the Business Roundtable in Washington threw its weight behind an already-emerging shift in corporate priorities — away from equity holders and towards employees, consumers, suppliers, local communities and the environment — this is one item on the stakeholder capitalism agenda the upper echelons are rapidly embracing.
Two years ago, a Deloitte survey found just 12 per cent of top global executives thought they could play much of a role in educating and training their staff. Sharon Thorne, Deloitte’s global chair, says this year’s poll found more than 80 per cent claim to be creating a culture of life-long learning.
The only problem is that their staff don’t trust them to do so. Another survey, conducted across 28 countries by the PR company Edelman, found that less than one-third of people trust employers to retrain workers — or pay decent wages. Yet 83 per cent are worried about losing their jobs as companies turn to freelancers, automation or cheap foreign competition to boost shareholder returns. “There is a ‘trust but verify’ mood among employees, who are saying ‘show me the training and show me the money’,” says Richard Edelman, the firm’s chief executive.
Showing employees more money sounds like one of the purpose/profit trade-offs that risk getting a CEO fired by the shareholders who still wield that power. Yet at private events in Davos this week, several executives insisted social pressure to pay a living wage and the rising cost of buying in new skills in a tight labour market were changing their calculations about such investments.
Companies including Walmart and JPMorgan Chase have launched splashy reskilling initiatives as more businesses conclude they cannot rely on governments to provide workforces with the training they need. Such investments should generate a more lasting return than any share buyback. But so, too, will more modest investments in listening to what employees say about how companies measure up to their rhetoric.
Dan Schulman, CEO of PayPal, gave an example of what can be done on this front last year. Having participated in previous Davos discussions about financial inclusion, he decided to find out more about the finances of his own hourly workers and call centre employees. He was shocked to discover that 60 per cent were struggling to make ends meet each month. PayPal responded by raising wages, cutting the costs of health insurance, giving shares to all employees and offering them financial education. The moves came at an upfront cost, but Mr Schulman is confident that putting employees first will ultimately benefit his other stakeholders.
As the late Herb Kelleher, founder of Southwest Airlines, once put it: “A motivated employee treats the customer well . . . It’s not one of the enduring green mysteries of all time.”
Numerous studies show few things build consumers’ trust in business like treating employees decently. That should reassure investors that this change of focus can benefit them, too, over time. Business leaders who have been told they must treat a multiplicity of constituents as the equals of shareholders can struggle to set priorities. But employees are the those whose future they can most easily improve. Debates about inclusion and improving social mobility at events such as Davos can feel abstract, but paying your employees a living wage and convincing them that you are listening to them is not.
Yet too many at the top seem incurious about the realities of life for people lower down their org charts. YPO, a global network of 28,000 CEOs, found this month that less than 40 per cent of its members had ever measured employee trust within their businesses.
As they recalibrate their priorities, the executives in Davos need to reflect on whether they are putting as much effort into hearing their employees’ voices as they are into engaging with investors. Then, after setting the world to rights this week, they can start turning their stakeholder pledges into action much closer to home.