The situation: Employees have been taken for granted for too long. Rampant and widening pay inequality between those at the top and those in the ranks is just one measure of an unequal world spiralling out of balance. CEO compensation rose 1,322% between 1978 and 2020. Typical worker pay? 18% (Source: The Economic Policy Institute (EPI). The pandemic – and the resulting Great Resignation - coupled with the rapidly emerging business paradigm of HFS OneEcosystem, is creating a perfect storm ready to sweep talent and partnerships away from those who focus only on shareholder value and towards those prepared to align themselves with a wider group of stakeholder needs; employees, partners, society, and our planet, among them.
Employees have become mercenary – moving from gig to gig for money and perks. The only weapon leaders have to resist with is more money and more perks. That’s a sticking plaster of a solution that lasts only until the next better offer. It does not resolve the worst attrition rates many have seen in our lifetimes – and it never will while you make the cost to change so low.
Stand for something to believe in to earn loyalty beyond the paycheck
To prove worthy of loyalty beyond the paycheck, you must set out a purpose that partners and employees can believe in. Fail to deliver on that purpose and your rivals will scoop up your best talent with nothing more than a bag of gold and flexible working.
Nine in 10 leaders realize the need to reposition their organization to unleash people in the post-Covid world (with 50% boosting talent development spend, and 48% retraining managers and leaders (source, HFS Research, 2021, sample 400 Global 2000 enterprises). Just as critical is the realization that in OneEcosystem, the impact we make reaches way beyond the boundaries of our own organization. In 2021 HFS Research found that among 158 C-level executives in Global 2000 enterprises, 9 out of 10 predicted ecosystems would be even more critical in the post-COVID-19 world.
Establishing a purpose will prove the difference between success and failure in the emerging HFS OneEcosystem. Here success relies on businesses building long-term relationships of trust and mutual benefit in networks of stakeholders.
Purpose attracts customers and builds stakeholder networks of trust
Purpose is just as important in attracting and retaining customers. Accenture found 62% of consumers want companies to take a stand on issues that they are passionate about, (Source: Accenture).
Fortune found 64% of consumers say a company’s primary purpose should be to make the world a better place (Fortune, 2019). Not only does doing the right thing attract consumers, employees, and partners, it also convinces them to put their money where their hearts are. US consumers are more likely to be loyal (83%) to brands that lead with purpose. And 72% say they feel it is more important than ever to buy from companies that reflect their values. (Cone/Porter Novelli 2019)
Grow talent pools, and your market – by standing up to tackle inequality
Of course, stakeholders want more than just your alignment with them on inequality. Sustainability, inclusion, diversity, and philanthropy all matter just as much. So think of this as a start. And since Inequality limits access to education and therefore the size of the talent pool you can draw on – as well as constraining market size, it would seem a worthy win-win place from which to start.
Brutal inequality got worse during the pandemic
The pandemic has thrown the reality of brutal inequality into sharp relief. During the first two years of the pandemic, Charity Oxfam found (January 2022) that the world’s ten richest men (note, all men) more than doubled their nest eggs from $700 billion to $1.5 trillion. Between them, they have six times more than the poorest 3.1 billion people have between them (the global population is currently estimated at 7.9 billion).
In 2020, CEOs of the top 350 firms in the U.S. made $24.2 million, on average. They earn a ratio of 351:1 versus a typical worker. In 1965 that figure was 20:1. This isn’t just a problem of Jeff and Elon’s making. You get to own it, too.
Crazy, and rising pay gaps are not the only route to success
And when revenues fell 50% almost overnight in the early part of the Covid crisis, staff volunteered to take a pay cut to keep the business afloat. By July 2020 the company was back on an even keel. And boss Dan Price paid back everyone who had sacrificed part of their pay in the interim.
Inequality kills someone every four seconds – and locks out millions more from opportunity, and out of our demand-ravaged talent pools
Globally the impact of inequality is real, and it is harsh – particularly among the poorest 3.1 billion. Oxfam says (in its report, Inequality Kills) that while a new billionaire was created every 26 hours since the start of the pandemic, one person every four seconds dies as a result of inequality – lack of access to healthcare, hunger, gender-based violence, and climate breakdown. Many millions more are shut out of opportunities – limiting the talent pool just as the world’s economic recovery faces growth-crippling skills shortages.
Bottom Line: Start to set things right with measures and rewards that prove you care, to reap the benefit of the networks of trust your purpose attracts
Leaders must now make a stand, demonstrating what they and their company stand for, through their actions and through how their performance is both measured and rewarded.
We have to stop rewarding pure bottom-line outcomes as if they come guilt-free. Instead identify measures that better reflect our business’s role in creating a safe and just space for humanity. In doing so you will show the world the purpose you prioritize, attracting those customers, employees, and partners who will form the networks of trust your success in HFS OneEcosystem depends on.
Start with what you can control. To reduce basic wealth inequality within your organization take a lead from the UN Sustainable Development Goals. These suggest that by 2030 income growth of the bottom 40% of the population should be at a higher rate than the ‘national’ average. Substitute ‘company’ for national and make a start today.