Feeds:
Posts
Comments

Archive for the ‘compensation’ Category

Something has been bugging me for a while now. It’s not a new issue but something that has been slapping me on the head daily for the last few months more than it has done in the past. Maybe it is the continued economic struggles the world is going through. Maybe it is the Occupy movement. Or maybe it is just me in desperate need of a vacation on my dream island of Kauai. Whatever the reason might be… The question I ask myself is whether we working in sustainability/CSR/Shared Value (or whatever you call it) are dealing with the fundamental challenges the world face today or are we just working on some of the symptoms and applying band-aid to a sickness that needs much more than what we have to offer?

I don’t question that we are doing the right thing for the right reason. We are trying to make this world a little bit more sustainable. We are trying to make companies be more responsible as good citizens of this world. We are trying to prove that good business can be done by doing good. That capitalism with a heart is possible. That money can be made by sharing value with society. That business has a social purpose that it should embrace. Yes, we are doing good work and we are making a difference. But is it enough?

The world is consuming at levels that are unsustainable. We cannot consume the way we have in the past and expect everything to be okay. But the economic system that we live and survive on is based on more consumption. Consumption of products. Consumption of credit. Consumption of energy. More and more of each and everything.

We’ve seen where this has got us so far. The rich are getting richer and the poor are getting poorer. It’s been like a frog being boiled. It’s been a slow squeeze on the middle class and the working class over decades. When the system started running into problems we the people adapted and everyone started to work to pay the bills and buy those things we need – and those things we want. But income didn’t keep up. And slowly the world got into more debt to stay afloat. And then the bubble when kaboom.

The same is true of the environment. We consume so much more crap food, in the West especially, that farming had to change from providing us with food to providing us with GM foods, hormone injected meat, fields of corn for sugar and cereal and everything you can think of, and so much more crap. All because we wanted more and more of this crap food to feed our greed and insecurities. And we manufactured in ways and drove our cars without knowing that slowly but surely we are choking the world and messing with the climate.

And so it goes on. We know how we got here. We got here because we believed we needed things when we really just wanted it. And lines got blurred more and more between need and want. Between necessity and luxury. We consumed and we consumed and we consumed. It worked for a long time. It fed us and made us wealthy – or some of us. And we got addicted to it. Growth, growth, growth. The bigger the better – in what we have and how we looked. We consumed ourselves to a standstill.

But the “system” cannot live any other way. How do we get out of the economic slump? We’re told by consuming more. A key moment for me was when then President  Bush said right after 9/11 that people should go and shop and go on with their daily lives as if nothing happened. Well, something did happen. The same is going on right now. The world is suffering on a societal and environmental perspective. The world is a very different place from 3 or 4 years ago. But we’re told we need to consumer more to get us out this slump.

I always tell my kids and my clients that we can’t expect different outcomes by doing the same thing. The same is so true for us right now. We can’t go on the way we have and expect the outcome to be different. We cannot consume the way we have and expect a different outcome. We cannot do business the way we have and expect a different outcome. We as humans know this when we hit our heads against a wall – we stop doing it and go around the corner. We’re not stupid. Or are we?

So what does this have to do with sustainability? Well, we’re still telling people to consume. Yes, we are telling them “buy this product because it is so much more sustainable”. Energy? We’re not asking people to cut down on their use but rather to use renewable energy. Okay, sometimes we ask them to use less energy but not really to buy less energy using products. Do you really need so many televisions? Do you really need 2-4 cars? Do you really need a house that large? Do you really need spend so much money during Black Friday? No one is advertising asking people to please not buy so much of their products this coming festive season. Very nice of Patagonia to say they want people to buy less but we know they aren’t really saying that they need to grow a little bit less. Or not at all. They still want to grow but hoping that people will buy the slightly more expensive and sustainable product or buy the Patagonia product instead of buying from a competitor.

We in sustainability and CSR are making the world a better place. I don’t doubt that for a moment. If every company does what we in sustainability and CSR want them to do then we will be in a much, much better place. But are we dealing with the underlying weakness of the system or are we delaying the hurt to the next slump? Put it this way. Would the world be in a better economic place if every single product is made in the most responsible way possible? I don’t know – but I think we would’ve been heading to the same problem if we didn’t address the underlying addiction to consumption and growth.

That is really the 3 pillars of sustainability – product, profits and purchase.

Product – how the product is made. Make it as sustainable as possible. Make it by using renewable energy, sustainable sourcing, manufacturing without exploitation etc. Make it the best we can. And make the impact on society and the environment as light as possible.

Profits – do your business to make a profit. No business can live without it. It is at the heart of business. But don’t confuse profits with growth. We’ve become addicted to growth because of the shift in investors from long-term to micr0-term. Not even short-term anymore. That would require a day or a week or two. The majority of investors of today don’t give a damn about the company and what it makes – only about the return they can get in the next 5 minutes, or seconds. And they are holding businesses ransom. We saw this during this recession. Profitable companies laid off workers. How is that for commitment? They didn’t say “we’re struggling on the growth front but still profitable – so we’re going to knuckle down and work, work, work to get out if it but won’t let our people go as long as we are profitable.” No, they let people go because the micro-term investor demanded it. Puh-lease don’t talk to me again about your employees being your greatest asset. Your don’t sell the crown jewels with the first sign of a bit of a struggle.

Purchase – people need to buy your stuff for you to be profitable. But the reality is that we also need to get people to buy less stuff. This is at the heart of the challenge to business. How do you make stuff and sell stuff but make sure people buy less stuff. Guess what… I don’t know.

There is another “P’s” we have to address within the system as well to make the world truly sustainable. Parity…

Parity – we can’t live in a world where so few has so much and so many has so little. It is not sustainable. It. Is. Not. Sustainable. Get it? The gap between the highest earners and the lowest earners are just too wide. The gap between the 1% and the 99% is unacceptable. The gap between the pay of the executive and the lowest paid workers is not good for the company or society. No one is asking for 100% equality in pay. But the gap is just too damn wide. It is greed and nothing more. Any reason given is just snake oil. It is not just and not right. And more importantly, it is not good for business and it is not good for capitalism.

But it goes further than that. The West cannot consume the way they have and allow the rest of the world to slowly die. We live in a global world. The West is the 1% and Africa is the 99%. It is not sustainable. It is capitalism gone bad. It is the dark underbelly of greed. It must stop.

So until then we in sustainability are using band-aid to deal with a much more serious disease – unless we start seriously dealing with all 4 of these P’s – Product, Profits, Purchase and Parity. The challenge is we can’t do this on our own. We need to widen our circle because this means we need to forge new partnerships outside of business to get this right. But that discussion is for another day.

Now I need to get to Kauai to consume some sun.

Read Full Post »

“Sharing is a special way of caring…” That line comes from that purple dinosaur – Barney. It was sound advice for my oldest daughter when she was still a little thing having her first baby crush on Barney. Barney helped us teach her that sharing what you have is a special way of showing people that you care. Unfortunately Barney isn’t that big anymore and we have to do most of this teaching all by ourselves when it comes to my little one. She get’s the message though as we pass along the Barney wisdom from generation to generation. But not everyone remembers this piece of wisdom. Especially not in these times when banks and other financial institutions are hit hard because of how they pay out bonuses.

Bonus payments will always be a tough nut to crack and will always leave someone unhappy. Each business is different and different people play different roles depending on the company in question. Sometimes it is a difficult pill to swallow when a “generic” senior executive receive a bonus that feels less grounded on the broader effort of everyone at the firm. But I have seen enough companies with dynamic leaders who make the difficult decisions, led companies into growth or out of difficult circumstances, and who owned up to their responsibilities to know that not everyone is truly equal in any company. Even though we would love to think everyone plays an equally important role in a company the truth is that some people play a leadership role for a reason and they should be compensated for that.

However, emphasis on compensation. Each person should be paid according to their role and responsibilities. Bonuses tend to be a broader reflection on how a company and specific department performed, the specific role that an individual played in that performance and how long a person has been with a company – performance, effort and loyalty. It should not be about one single thing – “My department did the best” is not a good enough argument for super bonuses if the company as a whole failed. That’s the problem most people have with the bonuses paid at certain financial institutions. Salary as compensation reflects the role and responsibility and bonuses tend to reflect performance, effort and loyalty (of course these three will also have an impact on long-term salary and promotions.)

What is a fair bonus? Like I said, each company and industry is different. And, to tell you the honest truth, the discussion here is really a theoretical one for me personally. I’ve never worked at a company where the bonus structure has been an issue. It’s always been fair and transparent. It’s also not something that has been a key issue for me from a CSR and Sustainability perspective. My questions from this perspective would typically be about transparency, governance, whether CSR/Sustainability goals played a role in establishing bonuses, how it impacts CSR/Sustainability, employee relations etc. Never really about the actual bonus structure. Maybe I should but there are more important things to focus on from a CSR and Sustainability perspective – and I haven’t worked with banks or other financial institutions that often.

But I do know fairness when I see it. And sometimes this fairness blows me away. This line says it all: “all of them – from the chairman … and the managing director … down to shop assistants and shelf-stackers – get the same percentage payout.” Hang on a minute. You mean they share the bonus pot equally? That’s a bit of a shocker. Must be some small little business somewhere or a bunch of trade unionist running a lunch-time cafeteria, right? No. It’s the John Lewis Partnership. For those who don’t live in the UK, they are a large company (just over $11bn in sales) that owns leading UK retail businesses – Waitrose, John Lewis and Greenbee.  And by “they” I mean all 70,000 permanent staff. That’s why they are called the John Lewis PARTNERSHIP. They all own John Lewis. Still, it’s a pretty novel idea to share bonuses equally.

Most people applauded this but some people commented in The Guardian piece that the actual amount each one got paid should have been the same. I think that is missing the point that each one gets compensated according to his or her role and responsibility and the percentage bonus payment is therefore also a reflection of this. We do, after all, still live in a world dominated by a more or less free market.

I am impressed because it shows more than just a Barney culture of caring. It reflects the view that we either fail together or we succeed together. The essence of a partnership and the essence of the John Lewis ownership structure.

I don’t think most companies can do it the John lewis way. Maybe those owned or bailed out by governments should implement such a John Lewis-styled bonus structure. But the majority of companies are not partnerships and have different masters. The John Lewis example is the extreme but more companies can learn from the basic principle and work to ensure that their bonus structure reflects the basic values – all employees work together to make a company succeed (or help get the company through a tough time) and they should therefore be treated equally. Maybe not exactly equal – my rule of performance, effort and seniority should play a differentiating role. But at the very least there should be some level transparency and equality built in to ensure all good work gets rewarded. Of course it also sends a strong message to all John Lewis workers – let’s pull together to get through the tough times as we will all benefit from an upturn. This way everyone feels ownership of their working world and believe that as long as they work hard and do their best they will be treated fairly. And the outside world will judge the company on how they treat their workers – as equals or not? If it’s greed – is it driven by a top-heavy greed or equally shared? If it is truly about equality and everyone having to do their best for the company – is it reflected in the bonus structure? I think that’s the part that many of the banks and financial institutions just don’t get.

Read Full Post »

Follow

Get every new post delivered to your Inbox.

Join 43 other followers