The current COVID-19 crisis, and the likely economic downturn to follow, will prove to be a huge test of corporate responsibility towards the community. Those companies that do the right thing by their employees, customers, suppliers and the wider community in these difficult times will contrast vividly with those that don’t—those that put their own short-term interests first.
This big test brings sharply into focus an argument I lay out in my new book Humane Capital—that there is a clear correlation between companies that do well and companies that are good. There are companies that promote goodwill internally and externally, put people first, and work proactively with all of their stakeholders to achieve their goals—and too few companies have yet made the major management shift needed to join them—the good.
In the current crisis situation, companies of all types and sizes in all sectors are under unprecedented, often existential pressure. How they react now, and the genuine social responsibility they demonstrate will live long in the memory and will fundamentally affect how they are viewed by employees, customers, channel partners, investors and society at large—and consequently their future success and sustainability.
It’s been my belief, supported by my many years of research, that many companies focus more on numbers—share price rises, and short-term quarterly profits—than on the people in their organization, its culture, and the way people learn and develop—and that this damages their long-term prospects.
People are everything for an organization committed to value creation, and delivering value to its customers and other stakeholders. If those people are disengaged, unfulfilled, burnt-out, or not listened to—they will underperform and the organization’s performance will stagnate.
When companies nurture people and put in place processes and incentives that unleash their creativity, and foster collaboration and engagement, improved performance and better financial results will follow. The incentive that underpins everything is ‘purpose’. Ultimately, motivation and engagement stems from people seeing and connecting to an organization’s higher purpose. This is how being good can profoundly affect doing well—and be the prime source of sustainability. Conversely, a 'bad' company, on the other hand, may do well but its success is unlikely to be sustainable.
As I demonstrate in Humane Capital, a major shift in management approach from traditional management models to humanized, people-first models is what is needed for companies to join the good—and increase the likelihood of sustainable success. Organizations with a traditional procrustean approach to management—fitting people into systems, fine-tuning structures and reporting lines, and enforcing uniformity without regard to natural variation or individuality—need urgently to shift to dynamic ways of operating, that empower their workforce by putting people first.
Businesses rely on teams of people and organizational structures, so they ought to support them, rather than the other way round.
I have developed 8 pillars of leveraging ‘humane capital’—to help organizations deliver this support and achieve the required management shift:
The management shift starts with leaders being willing to explore who they are, and explore their own mindsets. Any change in organizational culture is bound to be a reflection of the leaders’ mindset.
Motivation derives from mindset. Where leaders still retain a ‘command and control’ view of their role, they will be unable to truly engage and motivate their employees to better performance.
To feel engaged in and fulfilled by their work, people need to sense they are a part of a wider purpose than merely meeting deadlines and earning a wage. Unilever’s CEO Paul Polman offers this advice:
i) Create an audacious purpose.
ii) Quantify that purpose and align it with the core business.
iii) Re-organize the structure, processes and systems through the lens of the new sense of purpose.
iv) Develop leaders with a purpose who can make an impact at an organizational level.
Having a clear set of values and guiding principles encourages people to do the right thing in the right way even in complex, ambiguous circumstances—as opposed to taking shortcuts or side-stepping regulations. People need to know that by holding with agreed corporate values they will always be supported.
It is important to use intelligent organizational design to ensure people, systems and technology are aligned to enhance collaboration, communication and a sense across the organization of working to the same purpose.
Organizations whose people are empowered and held together by strong values and a sense of purpose do not rely on strict control from above to operate effectively. In a humanized organization decision-making is devolved and teams are trusted to organize themselves.
7. A caring ethos
The humanized organization is one that is a safe, creative place to work—where in return for an expected high level of performance, people are treated with dignity and respect, where there is a high level of trust, and where people at all levels of the organization are cared for.
8. Organizational learning
In our fast-changing world, a commitment to continual ongoing learning is essential. A learning organization is one with healthy communication across, and up and down the organization—and an openness to questioning, experimentation and innovation. There should be a tendency towards better questions and more interesting ideas and away from conformity and excessive control.
In his inspiring Foreword to Humane Capital, The Dalai Lama succinctly supports the case for humanized business: “Those in the world of business play an important role in our society; it is essential they assume that role responsibly, especially towards those with whom they engage daily, whose lives depend upon them and on whom they are dependent on as well.”
Companies that do good by their employees, customers and other stakeholders now, during this time of crisis, at a time when they are grappling with issues of survival, will reap long-term benefits. As times return to normal the lesson of humanizing business will be one that all leaders should recall and carry forward.