CHAPTER FOUR

The Voice of the Employee

RULE #4
Employees Give Voice to Risk and Competitive Advantage

A human management will demand that we incorporate a concern for the freedom and well-being of those we manage as much as for their productivity; that we consider the environmental as well as the economic consequences of strategic choices. . . . That we hear and amplify a broader set of voices, not only those that fit a narrow view of management and of its concerns, but also those that defy it, and in so doing, enliven it.
—GIANPIERO PETRIGLIERI, “ARE OUR MANAGEMENT THEORIES OUTDATED?,” HARVARD BUSINESS REVIEW

DAN BROSS moved from Washington, DC, to Seattle to join the governmental affairs department of Microsoft in 1998. We were first introduced in 2005, shortly after Dan had been tapped to build out the company’s global corporate social responsibility program, a job that included responding to a growing array of increasingly noisy stakeholders with a range of interests and demands.

At that time, Dan was wrestling with the threat of a boycott over the company’s position on a controversial bill introduced in the Washington legislature. Microsoft and the Aspen Institute shared a board member in common, Ann McLaughlin Korologos, who had served as labor secretary under President Reagan. She thought a conversation between the two of us might be helpful.

At issue was whether to add sexual orientation to the protected classes listed in the state’s equal opportunity statute. The proposed amendment was offensive to a charismatic religious leader in Microsoft’s hometown. Dan was seeking a way to anchor Microsoft’s support for the bill in broad policy.

I suggested that Dan look into a relatively new business network, the UN Global Compact, an affiliation of companies aligned with the United Nations and its member states on human rights, labor, and environmental protocols. The UN Global Compact framework proved helpful to Dan. As a member of the Compact, Microsoft could support an expansion of the state’s equal opportunity law in furtherance of the principles of human rights established at the founding of the UN.

Yet, what really enabled Microsoft to move from passive to active support for the bill was hearing from the company’s own employees. The turning point came when an affinity group known by the acronym GLEAM—Gay and Lesbian Employees at Microsoft—began to express strong support for the bill. The group was an acknowledged network within the company, one of its many employee resource centers that link up employees who share common concerns. The network represented highly valued employees; their opinions mattered to Dan and the leadership.

The new era of employee voice and influence had only begun.

In February 2017, a newly elected President Trump declared the United States off-limits to the citizens of seven countries with Muslim majorities. When 160 chief executives of biotech companies published a letter condemning the president’s decision, their apprehension crossed the line from professional to personal. Each of these executives had a story to tell; many were immigrants themselves.

But it was the effect of the travel ban on thousands of engineers and other professionals and valued employees who were now at risk that turned antipathy toward Trump’s stance into a call to action.

This was not the first time that CEOs were moved to speak out publicly on social policy. In 2015, in the run-up to the 2016 election, Salesforce CEO Marc Benioff created a media storm in a showdown with then-Governor Mike Pence of Indiana over a law that permitted business owners to refuse service to the LGBT community.

“We can’t bring our customers or our employees into a situation where they might be discriminated against,” Benioff said. “We have a large number of employees and customers who would be impacted dramatically by this legislation . . . I’m really just advocating on their behalf.”¹

In the weeks and months that followed the Muslim ban, more CEOs began to speak out about concerns that their predecessors had eschewed as too risky or outside the bounds of commerce. Merck CEO Ken Frazier resigned from Trump’s manufacturing council over the president’s tacit approval of white supremacists marching in Charlotte, South Carolina, while a growing epidemic of gun violence caused a chorus of CEOs in retail, consumer brands, and local communities to advocate for gun control. Ed Bastian, CEO of Delta, canceled a group discount proffered to members of the National Rifle Association, and the Georgia legislature retaliated by initially withdrawing a beneficial tax credit. In response to employee concerns, Mark Hoplamazian, CEO of Hyatt, disallowed hate groups listed on a federal watch list from renting meeting space in Hyatt hotels.

Hearing from CEOs on issues even more highly charged than immigration became a common occurrence as chief executives gave voice to workplace and societal norms around tolerance, identity, and equity. And employees, for the most part, responded with enthusiasm. They had been given a voice on issues that they cared about through the words of their own leaders.

It is a short walk from activism in the C-suite to employees speaking for themselves. Unions have been in decline for decades, but the voice of the employees is getting stronger—and they are speaking out not just on issues related to their own well-being but on social issues that affect the company’s well-being. There is no dialing back.

ACCOUNTABILITY FROM THE CAFETERIA

The media are steeped in examples of investors and consumers holding companies to account. It’s possible to forget that it’s the workers who know the company and products best.

Enter a new and powerful accountability mechanism.

Employees are the front lines of customer interface and user experience, and they have a direct understanding of risks in the supply chain. When the firm’s culture enables it, employees work to improve efficiency and quality, and speak up on innovation and investment to support future growth. They are the first to know when protocols are ignored and when the enterprise—and its customers or workers—are at risk.

They also have sight lines into the working conditions and financial security of hourly workers, including the contractor in the next cubicle or aisle.

Employees expect their leaders to step up on issues that command our attention in the public square, from inequality to climate change. These grand challenges can be by-products of the business model, and both threaten our economic system and eventually rebound to the health of the business itself. The issues that command the attention of employees today connect business decisions to broad social trends and environmental demands.

Open communication with the workforce is important for all of these reasons, but concern for employees is about more than competitive advantage.

Employees are the business—they are not just so-called stakeholders who feel the effects of business decisions or have a legitimate point of view from downstream or outside the gates. The sacrifices made by workers in the COVID-19 pandemic bring this reality home. In an era of instability and economic upheaval, the health and safety of the workforce and financial security of individual contributors, and the complicated balancing act between public welfare and private incentives, are front and center.

The question of who sets the rules of business is an important one. Practically speaking, business interests and their trade groups have won the war against unions, as well as many battles for lower taxes and less government regulation. Yet the accountability mechanisms to make sure that the norms and decision rules work for business and work for society are being reexamined. As my Aspen Institute colleague Maureen Conway, head of the Institute’s Economic Opportunities Program, asks, “Is this business victory really best for business in the long term?”

The employees’ role in holding business to account derives from critical engagement in the purpose of the enterprise—the delivery of goods and services. Under the new rules of engagement, employees are no longer viewed as a cost of doing business. In fact, the value of committed employees defies measurement. Unquestionably, today, and hopefully for a long time into the future, the conversation is now about the workers’ humanity.

Gianpiero Petriglieri teaches management at INSEAD in Fontainebleau, France. He is also a medical doctor and psychiatrist by training and a provocative contributor to leadership thinking and practice. In a 2020 article in Harvard Business Review titled, “Are Our Management Theories Outdated?” he describes a “mid-life crisis” in management—caused by existential questions about capitalism itself. Petriglieri writes, “The worldview that most management theories and tools have long been drafted to sustain and advance—is at an existential juncture. We are no longer just asking how to make it work. Many now wonder why (and for whom) it exists. Some are even asking if it is viable any more.”²

Petriglieri sees changes already underway and is hopeful that they will result in a form of management that is more human, that encourages both curiosity and compassion, and therefore is much better at both innovation and inclusion:

One can see glimpses of such a human view of management already. You can see them in the CEOs who talk about caring about purpose as much as about profit. You can see them in people’s longing for meaning and community at work. But for those claims not to ring hollow and those longings not to go unmet, management as we know it, really, it has to die. There is no other way. Because, in truth, it does not have a problem. It is the problem.

He continues,

We do not need new theories of management. We need a broader purpose for it. And we need that purpose to emerge not in bold pronouncements but in ongoing conversations, with ourselves and others, that challenge instrumental theories. Those conversations are far more useful at existential junctures like this. They are a far better means to free us up and join us in bringing about a human turn in management—and ultimately in our relationships with each other, with technology, and with the planet in the workplace.³

The change Petriglieri calls for is already fully engaged.

The trends we are seeing in worker activism and worker voice may seem like a sudden reversal, or maybe a counterpoint, to the steady decline of unions, yet a closer look at the culture of the workplace reveals a different picture. As boomers have exited the workplace over the last decade and made room for younger generations, companies have invested in research to understand the attitudes, motivations, and expectations of those who will move into management roles.

Clay Christensen, the management guru renowned for his observations about “disruptive innovation” and author of the best-selling book The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail, opened a new chapter in his life after receiving a cancer diagnosis. In his final book, How Will You Measure Your Life? Christensen writes about life choices that no longer divide up easily between office and home. “It’s easier to hold your principles 100 percent of the time than it is to hold them 98 percent of the time,” he says, talking about values and priorities that contribute to a life of meaning—and cannot, should not, be put aside just this once.⁴ He could also be speaking about the power of the workplace as a platform for our commitments to the commons.

The extended social isolation period of the COVID-19 pandemic further erased the boundaries between work and home. The term work-life balance may no longer be useful.

THE #METOO MOMENT

The networking tools of an efficient and connected workforce and social media conspired to open a new era of employee activism at precisely 11 a.m. on November 1, 2018. More than 20,000 Google employees and contractors worldwide walked off the job. The trigger was how the company handled claims of sexual harassment against a respected and powerful executive.

The company investigated the claims and reportedly found them “credible.” The executive in question, Andy Rubin, the so-called Father of the Android, was asked to leave and did, returning to the venture capital firm he had created before his tenure at Google. Years later, when the company confirmed that Rubin had negotiated an exit package of $90 million, the Internet exploded.

Even a careful watch over employee engagement scores failed to anticipate the abrupt changes that would come about through the #MeToo movement and the end of decades of silence by women about harassment in the workplace. The change in power dynamics was felt across institutions, from college campuses to movie studios, in politics and media, and from Wall Street to Silicon Valley.

#GoogleWalkout captured the media by storm, and the company acquiesced to some of the employees’ public demands. Google agreed to change its policy that kept claims of harassment out of the courts. Many companies quickly followed suit, and within a year, the California legislature passed a bill to outlaw forced arbitration altogether. The company’s response to a highly visible case of sexual harassment was a powerful trigger, but employee activism quickly grew to embrace other issues and concerns.

Googlers take the company founders’ ethic of “don’t do evil” to heart. Employees began speaking out on business arrangements— perceived acquiescence to censorship in China, contracts with the military, and the treatment of contract workers. By the close of 2019, the company was blocking use of the calendar for organizing large-scale meetings and had begun to rethink all-hands meetings. The media reported that the company even consulted with a firm known for fighting unionization.

The #MeToo movement and #GoogleWalkout offer compelling case examples of the impact of social media and growth in employee social networks. The ease of direct employee-to-employee communication enabled by Slack channels, Google Docs, and Zoom meetings enables teamwork but also has democratized the workforce. Employees schooled in a culture of “move fast and break things” have greater agency, and social networks can also offer anonymity and safety in numbers.

Google employees, led by a small cohort of women, were the first to organize, but segments of the workforce at Microsoft, Amazon, and Wayfair followed suit, challenging specific contracts and actions—or the lack thereof.

Amazon employees first questioned the sale of facial recognition technology to law enforcement and immigration and customs officials. Amazon heard again from employees on working conditions in a Minnesota warehouse and on unpopular elements of a new compensation system. In 2019, when a network called Amazon Employees for Climate Justice challenged CEO JeffBezos and the Board of Directors to take aggressive action on climate, they used their own shares to put the issue before the shareholders and make their cause more visible. A six-point plan was signed by more than 8,000 employees.

The company cofounded the Climate Pledge to meet the Paris targets a decade earlier, but employees upped the ante, tying @AMZNforClimate to the issues of the day, racial equity, and climate justice, and employing every media tool available. In June 2020, the company took further action, creating a $2 billion fund to support the development of technologies and services to reduce carbon emissions. The give and take is likely to continue.

These examples, and many more like them, validate employees as a force to reckon with on an array of concerns that span work, community, and planet.

The issues on the table raise questions about the human condition. The choices that business makes in each case are instrumental. Employees simply, directly, mirror public opinion; on a host of issues— climate change, immigration, human rights, and the challenge of rethinking the business model to embed the environmental principles of the circular economy—the employees are warning shots on complex problems that put corporate reputation and the license to operate at risk.

For Boeing, Wells Fargo, Facebook, and VW, among others, the license to operate was already questioned or revoked. The path back is a long and painful one. If it’s a bridge too far for companies to count the activist employees as a blessing, at least they might welcome this window into risks that, if ignored, rebound to the firm.

WHEN EMPLOYEES ASK THE MOST PROVOCATIVE QUESTIONS

One of the demands of the organizers of #GoogleWalkout was to add an employee to the Board of Directors. While Google executives acceded to several demands of the protesters, it did not agree to this one. At least not yet.

US governance norms reject breaking down the walls between management and labor or find doing so impractical in execution. To offer one or more employees a seat on the board defies conventions about director independence and shareholder power and may make some board conversations more difficult.

Of course, creating a seat or two for employees on the board is a lot like requiring at least one woman or a person of color; it does little to change culture and often reinforces stereotypes when that sole voice is expected to represent a segment of the population or way of thinking.

Yet, employee representation on boards is commonplace in highly successful European economies. In both Germany and throughout Scandinavia, corporations are expected to serve the public interest, and the concept of codetermination—making room for voices besides those of the shareholders, specifically employees—has survived several rounds of reform of German corporate governance practices. Employee representation on boards is backed by both research and public opinion.

In Germany, the role of employees in governance is a fact of life, even if it is not embraced by everyone. In large companies, half of the seats on the supervisory or oversight board are reserved for employees. The supervisory board in turn appoints the Vorstand or managing board. John Bowman, a political scientist who writes about different models of governance in his book Capitalisms Compared: Welfare, Work, and Business, reports that in Germany, employee representation is understood as a healthy counterbalance to the short-term interests of shareholders and is considered good for long-term planning and labor relations.⁵

The resistance in the United States to employees’ playing a role in governance and policy setting may be a holdover from the contentious culture of labor versus management that defined rapid growth in industrialization in the early 1900s, the trust-busting era of Teddy Roosevelt. It may be time to take a fresh look at the potential of engaging employees in new ways.

Employees have an affinity for the complex relationship between the company and its ecosystem of dependent relationships. They break down the walls between business and society and identify with issues that put the enterprise at risk. When the health of the commons lies in the balance, is there much risk putting your best ally next to you in the driver’s seat? Business as usual is not an option. What is possible now?

RESTORING TRUST IN BUSINESS

In October 2019, 250 Facebook employees publicly posted a message to CEO Mark Zuckerberg. The letter challenged the assumption that the company was right to protect political advertising as “free speech” and called for tougher standards—a radical change in business as usual.

The communication from the employees opened another chapter in a story that may play out for years as the social media giant tests the limits of how it utilizes, and sells, personal data. The story is a demoralizing tale of how Facebook executives ignored, tried to hide, and then misrepresented Russia’s use of the popular social media site to influence the 2016 US presidential election. With the revenue model of paid advertising at risk, everyone but a few whistleblowers remained silent. It was employees who eventually challenged the leadership to stop taking political ads until protocols to determine veracity could be established.

If anyone in the disheartening story can be called heroes, it’s not the executives with the most influence, access, and power. It’s the employees who witnessed malfeasance and bypassed protocols to bring it to the highest levels of the company but were ignored or told to look the other way. The proposal to drop all political ads was considered a critical step forward in a complicated give and take between business profits and societal well-being. It was the employees who identified protocols to restore trust—and morale.

As Boeing’s fiasco with the 737 Max makes clear, sometimes embracing rather than rejecting superior knowledge of employees can be a matter of life and death.

No one has a better or more consistent view of both immediate and long-term effects of management decisions, inside and outside the gate. Employees are now wired for action, have the relevant social networks to amplify their voice, and, as recent examples demonstrate, will no longer stay silent.

The rules and protocols for a new era of employee engagement have not yet emerged. But clear alignment between the workers’ desire for economic security and the financial health and long-term reputation of the employer is ripe with opportunity. It’s what makes workers so powerful.

Who cares more about the reputation of the company than its employees? No one. Who knows more about the conduct of bad actors who can bring harm? Who is the most trusted agent when it comes to assessing the efficiency of the machinery, where to tighten the pipe to reduce emissions, or how to structure work to facilitate childcare and other demands that enable employees to show up ready to work? The employees. Employees are in a unique position to connect the inside and the outside—business and the health of the commons.

Real value is created when employees are encouraged to identify and act on long-term risks to the enterprise. We are all better off when employees are productively engaged in what business does at its best: create useful products and services that respect the constraints of nature and individual and community welfare, and secure the brand by ensuring that the company aligns its intentions and actions.

An example of a company that supports the value creators on the front lines of the business is Levi Strauss. CEO Chip Bergh and his team employ a formula that keeps the company on the cutting edge of innovation: values stated must connect firmly with values employed. It’s not the cheapest way to operate, but the rewards of doing so are clear. And when you define and design your product with the health of workers and the planet in mind, talent will beat a path to your door.

INNOVATION AND THE QUEST FOR TALENT

The First Movers Fellowship is the brainchild of my longtime colleague Nancy McGaw. It supports innovators working at the intersection of business and society across a swath of industries: intrapreneurs working on protocols to support data privacy at MasterCard, growing toxin-free strawberries at Danone, the separation of organic waste from the landfill at Waste Management, ensuring that customers of AT&T have the know-how to keep their kids safe when they acquire their first cell phone.

At Levi Strauss, internal change agents have been free to tackle a host of complex problems—like eliminating toxins from the process of treating denim, creating the “waterless” jean, rewarding best-in-class practices in factories from Mexico to Asia, and leading an industry campaign for sustainable practices in growing cotton. The company also demonstrated first-mover instincts when it chose to publicize the locations of its factories, inviting outside-in accountability.

Chip Bergh joined the company in 2011; he led the turnaround of Levi’s and burnished the brand. He has also leaned in on issues like gun control that lie outside the day-to-day concerns of building the business but loom large in the public sphere. This is the kind of company that young people dream about joining—one where your aspirations connect to your paycheck.

For three decades, Levi Strauss was a private company, able to invest in product research, brand building, and efficiency. The company went public in 2019. The founding family still has a controlling interest, and Levi’s has been at this rodeo before—it was a public company from 1971 to 1985. The future will tell what demands emerge in a public market that still values return to shareholders over long-term investments, labor, and environmental risks. The decision to furlough workers while continuing to pay a dividend to shareholders in 2020 in the middle of the COVID-19 business meltdown could suggest strong pressure to support the stock price.

Everyone has a role to play; consumers and investors who align their money and their values are critical actors in a system that still rewards short-term thinking and amplifies shareholder pressure. Yet the role of employees is unique. Employees demonstrate a keen understanding of real value creation. It’s the employees who have the best line of sight and command of the most useful tools to support the company when conflicts arise.

And why do we give so much power to shareholders? In the next chapter, we will examine the conundrum of high returns to shareholders in an era of low demands for capital.

 OLD RULE 
Capital is king; shareholders rule.

Financial capital is the scarce resource in a hard-asset world; the company is accountable to the shareholders, who “own” the company.