In August 2019, the Business Roundtable (BRT), a business-friendly lobby group, redefined the purpose of a corporation. Instead of serving solely the SHAREHOLDERS, the BRT now encourages businesses to serve ALL STAKEHOLDERS.
The second of five commitments the Statement on Purpose of a Corporation as published by the Business Roundtable in August 2019 focuses on the employee.
Here is the commitment from the Purpose of a Corporation statement:
Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
On the topic of employee engagement, one could run down many rabbits. In this discussion, let’s talk about how to leverage the employee relationships you have in a respectful and smart manner.
Here are some of hot topics employers of medium and large-sized businesses MUST consider, but we won’t go into here:
- Diversity, Inclusion & Belonging
- Equal Pay
- Competitive Market Rates
- Clarity in Job Objectives
- Career Progression
- Benefits
Let’s think more about career longevity for the employee with your business. When you are a medium or large-sized business, the likelihood that your employee can grow their career at your business is high. The world has not invented so many specialties that the individuals filling those functions are unable to evolve. However, there could be an appearance that they cannot.
The reasons likely originate from the lack of upskilling provided by you, the employer.
People management — similar to work management for factory lines — requires training. Some individuals have an aptitude that allow them to learn faster or execute smoother. Everyone, however, requires training. How someone manages teams in one company may not work for your company, so at least some training is always required.
Technology also continues to evolve. If you are encouraging your employees to acquire new knowledge and to continuously improve business processes, production quality, and/or customer service, you are digging a hole for your company to struggle with.
Because the social environment and technology evolve naturally, choosing to not support your employees in the evolution for the sake of shareholder profit is essentially killing all long-term planning viability for your business. Examples of this include RadioShack, Forever21, GAP, … and the list goes on.
To be clear, providing employees access to a slew of online training is not sufficient nor addressing the strategic objective. Educating employees about what cloud can or cannot do for your ERP systems and how data security is evolving over the course of time can. Holding discussions — or, intellectual debates — about whether the competitive landscape in our industry will create a break-through moment for your products or not can.
Because the business world spent the 1990s, 2000s, and 2010s cutting cost, everyone left on staff is doing what was two people’s jobs or more. Executives are making more money now than ever while middle management and staff are making less (if adjusted for inflation and cost of living rises). As such, executives are not training middle management except for the select few accounted for in official succession plans. Even then, most are not being properly groomed because there are no required retirement dates, as the remaining four audit firms are required to comply with.
We aren’t recommending governmental regulations to ensure employees are upskilled to compete reasonably with their international — and national — counterparts or that businesses have realistic and aggressive succession plans. We aren’t opposed to it.
What we are recommending is that businesses initiate this on their own. Here are a few other considerations we recommend:
- Term limits for all C-suite roles
- Term limits for all Board of Director roles
- Term limits for all vice presidents, if a publicly-traded business
- Regular work and people management training for all employees responsible for other employees or workflows
Retired (forced or not) executives are encouraged to become advisors for MBA graduates. They should serve as rotating guest speakers at universities — especially those that do not rank in the top 50. Part of an American business job description should be to lead — not only manage. A person is only a leader when others organically follow them. For many people, a person is only worth following when they can teach you things. As such, we encourage executives to consider working with the education system upon retirement.
Termed-out executives create space for those lower on the totem-pole a chance to grow. Termed-out executives also create a lateral momentum across companies that improve all businesses in a way that moves industries forward.
No businesses should worry about losing their businesses to their competition because they treat their employees well and ask their executives to educate the next generation.
The anxiety felt actually derives from the loss of personal shareholder wealth at the expense of growing national and international economies as well as at the expense of widening inequality that will ultimately rid all businesses. Many think they won’t see the worst of these consequences in their lifetimes, but the truth is that it is already happening. If it wasn’t, the BRT wouldn't have published this statement.
So, this long-term play is for everyone — you included.