Six forces repairing business - Kathy Varol

Six forces repairing business

change is here

Change is here. It’s not stopping, it’s accelerating.

The days of organizations not being responsible for the impact of their business are over.

The days of humanity serving capital, instead of capital serving humanity, are coming to a close.

This change is coming from many directions. Here are six forces repairing the heart of business.

Entire companies. The leadership in this movement started with private companies that had the courage to approach business differently and their example has proven the business case for doing good. Chobani is a great example. They set a gold star example for treating all employees as true partners, instead of faceless “resources”. Their employees own 10% of the company. At the same time, Chobani has taken action to help solve the refugee crisis by hiring refugees and immigrants, which now account for 30% of the Chobani workforce. Hamdi Ulukaya, the founder and CEO of Chobani is a leader in the truest sense of the word. Hamdi started a nonprofit, called, to start a private-sector movement by helping other companies follow their lead in hiring refugees.

Individual brands, like Dove, that had the courage to challenge the way things have always been done. Dove started a conversation around real beauty and created a movement celebrating that beauty comes in all shapes, sizes, and colors. Dove has consistently pushed the conversation forward through new emotional approaches that cut to the heart of the issue and disrupt the status quo of a one-size-fits-all airbrushed standard of beauty. Now, 15+ years later, we can see the ripple effect Dove created with more representation showing up across all media (thank you Dove!).

Organizations and movements like Conscious Capitalism, B Corp and B Team that are actively promoting ideas like the triple bottom as an alternative approach to the shareholder primacy model.

Governments enacting policy reform. We have seen landmarks in the policy response to climate change. In 2020, the EU, China, Japan, and South Korea all made historic commitments to achieve net-zero emissions. With the U.S. committing to rejoin the Paris Agreement, 127 governments—responsible for more than 60% of global emissions—are considering or already implementing commitments to net zero. Momentum continues to accelerate—with dramatic implications for the global economy.

Employees, as seen by the Great Resignation of 2020 and 2021. We experienced the largest quit rate in the United States we’ve ever had. The global pandemic put a lot into perspective—after years (even decades) of high workloads, rising mental health challenges, and never-ending uncertainty, people started asking themselves important questions, like:
Does my company really care about me?
What impact does my company have on society and the environment?
What does fulfillment look like personally and professionally?
The answers led millions to leave their jobs in search of a workplace that aligns with their values (or decided to build it on their own!).

The war for talent is real. Moving forward, it will be very difficult—or impossible—for companies that don’t offer meaning beyond a paycheck to attract and retain a skilled workforce.

Even Financial institutions like BlackRock, the largest money management firm in the world, with $8.7 trillion under management. Pressure from financial institutions is particularly interesting, considering their job is to represent shareholders.

But, as Larry Fink the CEO of BlackRock stated, “There is no question in our evidence of research that the companies who focus the most on their stakeholders have more resilient, more durable long-term profitability. Stakeholder capitalism is the essence of what drives a company. It is a culture of an organization moving forward, building connectivity with their clients, their employees and their communities, and these are the companies that you want to invest in.”

When the world’s largest investment management firm announces that stakeholder capitalism is a precondition for consideration in its portfolio…that’s headline-worthy. After all, with their size, the way BlackRock invests can shift markets.

Change is here. It’s not stopping, it’s accelerating.

Great companies and great leaders are the ones who know it’s not about the next quarter, it’s about the next generation.

Great leaders set up their organizations to succeed beyond their own lifetimes, and when they do, the benefits for all stakeholders are extraordinary.

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