Why leading companies put people at the center of their business
There’s been a lot of talk recently about the role and responsibilities of businesses in today’s society. It is a topic former President Obama spoke about in his final State of the Union address, and something former Labor Secretary Perez was passionate about. It’s not a new concept. Just ask Henry Ford.
At the Department of Labor, we believe that the best companies view their employees as an asset to help the business thrive, not as a cost to be mitigated. We spend a lot of time talking to business leaders who invest in their workforce, as well as thought leaders who have shown in their research that in the long term, companies have a competitive advantage when they approach the well-being of their workforce as a key consideration in their business strategy.
Danny Meyer has been a leader in this area, first as the founder of Shake Shack and now at Union Square Hospitality Group. So we were excited to work with Danny and his team recently to help identify the common threads for business leaders working to build high-road jobs.
Building “high road” jobs
In 2016, 15 companies and organizations came together to share what works, what they want to change, and the bumps they see − even along the high-road − in business culture, government and academia. The companies represented hospitality, retail, manufacturing, health care, consulting and more, including well-known brands like Union Square Hospitality Group, The Container Store, PwC, KIND Snacks, Shake Shack, Root Inc., Boloco and others. They are all at different points in their journey, but what was exciting was their shared interest in participating in this exploration and learning from one another.
With the help of trained facilitators from Root, the group tackled a fundamental question: What if we could demonstrate that being values-driven and empowering workers does not come at the expense of profit, but rather can drive growth?
The group began with a working definition for “people-centered business”: “an organization that puts its people first based on a shared understanding that people drive business forward.” They observed that in the current state “people-centered business is rare and considered an alternative to mainstream corporate America,” but they committed to the goal to create an environment in which, “people-centered businesses are the norm and drive the U.S. economy.”
Creating good jobs makes business sense
Research shows that there’s unequivocally a business case for this approach. MIT Sloan Professor Zeynep Ton’s book “The Good Jobs Strategy” clearly shows that creating good jobs makes business sense, even in retail – a sector known for its high-turnover and low wages. She demonstrates that there is a roadmap for companies to create good jobs, maintain low prices and provide excellent customer service while seeing significant financial returns.
This approach isn’t easy. It goes against some serious headwinds. Yet, the participants believed all businesses, from small to multinational, from traditionally low-wage retail to high-wage consulting, have a reason to pay well and empower people on the job.
The next question is obviously how we can encourage more businesses to take this kind of approach. The businesses involved in this conversation understand that it’s crucial to demonstrate that they are not succeeding at the expense of their employees and customers but rather because they’re investing in all their stakeholders. We look forward to continuing that conversation with them.