Why CEOs should review pay and career policies - Sustainability -

Business leaders need to ask hard questions and be part of the solution.

serafeimGeorge

The recent US elections proved what many people have long known: the country is deeply divided, with people holding vastly different beliefs about the road forward. What does this mean for US business leaders? What should they do as the world continues to move toward a corporate purpose and governance that considers broader societal impacts?

A useful direction is re-examining their own organisation’s employment impact. Many citizens feel a strong sense of insecurity and fear about the future as they sense their jobs and livelihoods have been under threat from globalisation, technology, and policy changes – even before they were hit by Covid-19.

As a result, they are attracted to a message that promises to protect them from those changes. Addressing this insecurity and fear is key to bringing again unity in the country.

Policymakers and the new administration will have a profound role to play in setting labour market institutions, such as incentives for skilling and training, hiring and firing regulations and a level of minimum wage that are fit for purpose. But business leaders too can ask hard questions and be part of the solution.

First, every organisation can review the quality of the wages paid with an emphasis on identifying how it can help the most vulnerable employees that might be paid below living wage.

Second, it can create an environment where career advancement and personal growth is emphasised so employees do not feel their careers are stagnant.

Third, identify the potential for job creation in locations that have been left behind experiencing a scarcity of jobs and high unemployment.

Fourth, move beyond just hiring racial minorities and women to create opportunities for them to be promoted thereby moving from diversity to inclusion and belonging.

Fifth, set benefits that allow workers to be truly healthy and bring their best at the workplace: paid sick leave and childcare support as key focus points.

All dimensions can be measured in dollar terms to create impact weighted performance metrics now allowing us to compare and benchmark how different companies impact employees.

Time is of essence and the role of business leaders will be immediately relevant in the two months ahead, before the inauguration of president-elect Joe Biden.

Focusing on the ‘S’ of environmental, social and governance factors is becoming increasingly important not only for organisational performance or human progress but also for the health of the system which supports trillions of dollars of economic activity every year.

George Serafeim is Charles M Williams professor of business administration at Harvard Business School and president of the Impact-Weighted Accounts Initiative.

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