Chapter 25
Own Operations—Workplace
The next three chapters address the social responsibility portion of the Scorecard. As mentioned in Chapter 8 (Social Responsibility: The “S” in ESG) the Scorecard (and these three chapters) are organized around the value chain in three broad buckets: workplace, supply chain social impacts, and community. We start with workplace.
Marriott International achieved recognition as a Fortune 100 Best Company to Work® For every year since 1998 when the list was launched. But that’s not all. Marriott has received numerous awards for being a best place to work for parents, for diversity, and for women. The company invests heavily in a workplace culture that is based on trust, fair treatment for all, authentic leadership, and personal connections.
The overarching strategic question that senior executives and board members should be asking with respect to the workplace environment is:
Key Question: How does our workplace environment and supporting programs, incentives, and initiatives engage our employees and others in sustainability issues?
To help answer this key question, the Scorecard analyzes how companies manage and perform in three areas:
–The general workplace environment
–Core workplace programs, related to recruitment and retention, compensation and benefits, safety, and health and wellness
–Capability building initiatives with employees
Within each of these areas, executives evaluate their company performance on several key sustainability indicators (KSIs).
General Workplace Environment
The Scorecard addresses how companies manage the general workplace environment with two KSIs: one dealing with the workplace environment and a second focused on diversity and inclusion.
KSI 15.1: Workplace Environment. In Chapter 15 (Culture and Organization), one of the KSIs (KSI 5.5) measures the “Unwritten Rules of the Game”—which in many ways captures the workplace culture. With respect to the workplace environment more broadly, the range of company approaches is as follows.
Entire books, journals, and websites address the actions leading companies take to attract and retain employees. Fortune magazine has issued the Best Companies to Work For since 1998. Here are a few examples of leading benefits that have an important sustainability angle.
–Cisco: The company states that “Our people are part of a global community that values inclusion and diversity.”i
–Costco: Full insurance benefits are offered to part-time employees after 180 days.ii
In each of these examples, the company has been investing seriously to win the war for talent.
KSI 15.2: Diversity and Inclusion. Diversity and inclusion activities represent one of the key governance topics that financial and investor groups analyze. The reason is simple: there is good data for many companies on their diversity and inclusion programs and performance. As a result, many companies are years into deliberate efforts to systematically improve diversity and inclusion. The range of approaches is depicted below.
A few examples of leading companies include:
–H&M: The Swedish fashion retailer focused on affordable, sustainable and good quality fashion, is a leader in diversity. Fifty-eight percent of management board and 41 percent of top leadership are held by women.iii
–Marriott: The largest of the conventional hotel groups has one of the most diverse and inclusive workforces and has been named one of the World’s Best Multinational workplaces by Great Place to Work—the world’s largest annual study of workplace excellence.iv
–Sodexo: The leading provider of integrated food, facilities management and other services, has been consistently recognized as a best place to work, including one of the Top Companies for Diversity.v
In each of these examples, investing in diversity and inclusion is not simply done to improve standings in external ratings (though that can help attract talent); it is a core strategic priority of the company.
Core Workplace Programs
The Scorecard addresses the core workplace programs companies have (vis-à-vis environmental, social, and governance [ESG]) with four KSIs: focused on recruitment and retention; compensation and benefits; safety; and health and wellness.
KSI 15.3: Role of Sustainability in Recruitment and Retention. The “war for talent” is very real. In The Conference Board’s annual C-suite Challenge Survey (previously called the CEO Challenge Survey), human capital has been the number one challenge for CEOs globally for the past six years. Increasingly, having a robust story to tell about ESG and sustainability is a key way companies attract talent.
–Kaiser Permanente: One of the largest not-for-profit health plans in the U.S. has a strong commitment to supplier diversity and was recognized by DiversityInc’s 2017 as a top company for diversity, recruitment, supplier diversity, mentoring.vi
–Salesforce: The company building the tallest building in San Francisco (Salesforce Tower) considers the environment to be a key stakeholder. This message is part of the company’s talent recruitment efforts.
KSI 15.4: Linkage of Sustainability to Compensation and Benefits. With human capital rating as the number one CEO challenge for the past years in The Conference Board’s annual C-suite survey, it follows that companies are increasingly rethinking their compensation and benefits packages. The range of ways these programs include ESG issues is as follows:
Prospective employees often hear about Google and Facebook offering unique employee benefits, ranging from free transport to and from work to free bike use and repair and locally sourced foods in company cafes. But they are not the only ones. Here are some other leading companies:
–Adobe: The company provides educational assistance, sabbatical programs, home/auto, and pet insurance.vii
–Aetna: The insurance company claims that 47 percent of its workforce telecommutes, saving ~$78 million a year.viii
–Clif Bar: The food supplier offers child care on-site for employees at their headquarters in Emeryville, CA. The company also incentivizes employees to buy fuel-efficient cars and make eco improvements.ix
–Chesapeake Energy Corp: The company offers on-site child care at their Oklahoma City headquarters.x
–Dell: The company aims for 50 percent of its global workforce to be telecommuting by 2020. xi
–Salesforce.com: The company offers career coaching and mentoring; paid volunteer time, customized training; matching donations; education reimbursement; and more.xii
These are some of the companies linking ESG to compensation and benefits.
KSI 15.5: Safety Programs and Performance. Most large companies—especially those in “heavy industry” (extractive industries, industrials, materials sectors such as chemicals, metals, and forest products) and others have had a corporate officer overseeing environment, health, and safety for the better part of a generation. Virtually every one of these individuals (and their executive leadership) is passionately focused on worker safety.
I am not going to list individual companies here, since many hundreds or more are outstanding in their management of safety. One company has stood out over the decades: Dupont’s “best in class” safety record ultimately led to the company developing its own training service which is essentially a consultancy available to assist other companies.xiii
KSI 15.6: Health, Wellness, and Promotion of Sustainable Lifestyles. The statistics on the obesity epidemic—both in the United States and globally, are staggering. Obesity is one of the biggest drivers of preventable chronic diseases and healthcare costs in the United States. Currently, estimates for obesity range from $147 billion to $210 billion per year in the United States—in the same range as tobacco.
One recent study highlighted seven companies with epic wellness programs:xiv Among those companies highlighted, Accenture has a wide variety of programs—tailored to the rigorous lifestyle associated with consulting. Asana pays employees to take a nap and offers daily yoga programs as well as unlimited paid time off to help employees achieve work-life balance. Draper, a manufacturing company, holds a ten-week weight loss challenges with cash prizes. Intuit has a well-known Fit for Life program.
A few other examples:
–Badger: The family-owned small company producing natural and certified organic body care products provides free organic lunch to their employees every day of the week.xv
–Cisco: The company unveiled a LEED Gold health center in 2008 called the Life-Connections Center, providing an array of services to enhance employees’ life balance.xvi
Sustainability Capability-Building Initiatives
The Scorecard addresses programs and initiatives companies have to build capability around sustainability in the workplace with two KSIs: one dealing with training and staff development; and a second that looks at employee engagement.
KSI 15.7: Sustainability Training and Staff Development. Companies adopt a range of approaches to training the workforce on social issues. Virtually all companies offer (or require) some type of safety training, but beyond that companies vary widely as depicted below.
A few examples of leading sustainability training programs include:
–Accenture: The professional service company’s Sustainability Academy is a flexible, online learning environment designed to improve the skills and performance of professionals who support their organization’s sustainability agenda.xvii
–Adidas: The athletic apparel company offers several levels of development programs for managers under the company’s Functional Trainee Program. One of the core subject areas is sustainability.xviii
These companies invest heavily in training and staff development—and work hard to fully integrate sustainability/ESG issues into the core curriculum.
KSI 15.8: Employee Engagement with Sustainability. Employees can be an incredible source of ideas, energy, talent, and innovation. For many companies, the workforce is an untapped (certainly not fully-tapped) resource. The range of current approaches is depicted below.
One of the best examples of a successful employee engagement program is Walmart. The company engages their 2.1 million employees through My Sustainability Plan, a platform whose simple interface allowed employees to state where they wanted to have an impact, and how—and then showed them their impact. The platform uses a gaming experience that spurs individual pride while encouraging communication among people around the world in a personal, authentic way. Twenty thousand U.S. associates quit smoking and shed a collective 184,000 pounds.xix
In another example, NextEra Energy, the world’s largest utility company based in Florida that generates more wind and solar energy than any other company in the world, has a deliberate and continuous focus on employee engagement. In the company’s sixth engagement survey in 2016, 90 percent of employees participated, up from 62 percent in 2014.xx
In both of these examples, the company sees employee engagement as a powerful tool to attract and retain talent—and to further the company’s reputation.
How Do Companies Stack Up?
Starting in 2018, we are capturing data from a group of founding participants—invited to use the Scorecard for a company self-assessment and to provide feedback. As we assess the data about social responsibility in the workplace from the first sixty companies (all Fortune 500 or equivalent), we not surprisingly find that many companies are very strong in safety programs and performance. Likewise, diversity and inclusion is a growing strength across industry sectors. However, three key messages stand out:
–In recruitment and retention (KSI 15.3: Role of Sustainability in Recruitment and Retention), ratings are spread around, with highest numbers at Stage 2.5 (32 percent) and Stage 1.5 (21 percent). One third rated their company at Stage 3 or higher.
–On the subject of employee engagement with sustainability (KSI 15.8), nearly half (42 percent) rated their company at Stage 1.5. The balance were spread between Stage 2 and Stage 4, with nearly a third (32 percent) rating their company at Stage 3 or higher.
–A key opportunity for companies is in the area of sustainability training and staff development (KSI 15.8). Nearly two thirds (65 percent) rated their company at Stage 1.5, offering some sustainability training and career opportunities, but falling short of robust programs promoting career mobility around ESG. Only four companies were at Stage 3 or higher (see Figure 25.1).
With the global “war for talent” continuing and growing, we can expect companies to increasingly position their companies as ESG leaders in order to attract the best and brightest of the Gen Y (millennial) and Gen Z (centennial) generations.
i https://www.cisco.com/c/en/us/about/csr/impact/our-people.html
ii https://www.costco.com/benefits.html
iii https://www.huffingtonpost.com/entry/gender-equality-fashion-equality_us_57604b13e4b0e4fe5143e857
iv https://www.marriott.com/diversity/corporate-diversity.mi
v https://www.sodexousa.com/home/media/news-releases/newsListArea/news-releases/sodexo-recognized-as-top-company.html
vi https://www.kaiserpermanentejobs.org/diversity-and-inclusion/
vii https://benefits.adobe.com/
viii https://www.reuters.com/article/us-yahoo-telecommuting-aetna/in-telecommuting-debate-aetna-sticks-by-big-at-home-workforce-idUSBRE92006820130301
ix https://www.bizjournals.com/sanfrancisco/blog/real-estate/2012/08/companies-bring-childcare-onsite.html?page=all
xi http://austin.culturemap.com/news/innovation/11-24-13-dell-austin-region-largest-employer-telecommuting/
xii https://www.salesforce.com/company/careers/
xiii http://www.dupont.com/content/dam/dupont/products-and-services/consulting-services-and-process-technologies/consulting-services-and-process-technologies-landing/documents/DnA_USA_Brochure_06192012.pdf
xiv https://www.monster.com/career-advice/article/companies-good-wellness-programs
xv http://www.bcorporation.net/community/ws-badger-co-inc
xvi https://newsroom.cisco.com/press-release-content?type=webcontent&articleId=4592347
xvii https://www.youtube.com/watch?v=PYFsvtAQO4I
xviii https://careers.adidas-group.com/teams/future-talents/functional-trainee-program
xix http://www.sustainablebrands.com/news_and_views/organizational_change/carol_cone/stop_engaging_%E2%80%93_start_fulfilling_new_era_employee_en
xx http://www.nexteraenergy.com/sustainability/employees/engagement.html