Prioritising staff wellbeing is key to sustainable business
In early-2018 Larry Fink, founder, chairman and chief executive of BlackRock, wrote a game-changing letter. His Annual Letter to CEOs: A Sense of Purpose calls on corporate leaders to re-examine their business’s sense of purpose in order to be sustainable in the long term.
I was delighted to read it. The current business emphasis on short-term profits and quick returns have driven us to a world where a tiny minority have reaped rich rewards, while the majority face low wage growth, inadequate retirement systems and job insecurity.
Mr Fink lays it out clearly: not looking after society, the environment and employees is bad news for asset managers looking for long-term, sustainable growth investments to match the requirements of owners of the capital invested, primarily pension funds wanting decades of stable growth.
I was constantly drawn to his references on the treatment of employees. “Without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose the licence to operate from key stakeholders. It will succumb to short-term pressures to distribute earnings and, in the process, sacrifice investments in employee development, innovation and capital expenditure that are necessary for long-term growth,” he says.
Money talks but real value lies with workers
Of course, Mr Fink is not the first, or only, person to say this. Many across the asset management world are starting to raise the alarm that the current system of investing is not sustainable.
Organisations such as the Coalition of Inclusive Capitalism and the United Nation’s principles for responsible investment are also pushing for responsible and sustainable investing that takes into account how companies treat societies, the environment and workers. Attending meetings at both organisations over the past year, I can see pressure gathering to get “the money” – trillions of dollars under management – to change behaviours at a corporate level.
While this money could talk loudly, there is common business sense to ensuring your service or product is sustainable, way past your next quarterly or annual reporting season. Inevitably, your product or service is dependent on workers; the value of a typical 2018 corporation is now largely tied up in its brand and its employees. A minority still own enough physical assets for these to be their core value.
Investing in engagement tools is key to creating sustainable value
As businesses continue to go digital and traditional businesses transform or risk vanishing in an online world, the mental, and therefore physical, impact on the leaders and workers within those organisations is huge. Where management has been able to draw breath and put in programmes to help staff develop the necessary new skills, and aligned these programmes with change and resilience coaching, we have seen success stories. These companies have been able to transition, keep talent while largely maintaining good brand values.
Earlier this year I interviewed chief executives of organisations – Anglian Water, Aviva, Cisco, Swiss Re and Virgin Holidays – which understand the importance of employee wellbeing to the value of the business. At the time of the interviews Mr Fink’s letter had not been published, yet each of these CEOs echoed the business imperative of looking after the wellbeing of staff.
Published in Employee Wellbeing Research 2018, these interviews describe the practical ways in which each business cares for its workers, including flexible working, resilience coaching, non-screen time, fitness programmes, health clinics and financial health education.
These chief executives are not paying for these benefits and engagement tools to be nice, they are looking after the mental, physical and financial wellbeing of workers because it ensures their businesses are a valuable, sustainable asset to investors.