A page in the business sector’s history feels as if it’s turning. I received an email from Gallup’s chairman, Jim Clifton, who celebrated the massive strides in recent years with the environmental, social, and governmental (ESG) movement. Clifton says, “Think of ESG as a Big Four audit of your company’s overall impact on the world.”
Clifton announced that Gallup will support this movement by mapping its research to the three areas ESG addresses. Now executives have the weight of Gallup behind them—a workplace data pool of more than 100 million employees throughout 140 countries.
Gallup scientists identified a handful of metrics that are rooted in the employee experience, giving leaders a way to measure how they stack up against ESG standards that will improve their bottom line. I’ve excerpted a few from Clifton’s full list to give you a glimpse of how they connect employees, their leaders, and ESG:
(E) Environment – “My organization makes a positive impact on people and the planet.” Clifton says that employees know better than anyone if their company makes the world a better place. When organizations face ethics issues or scandals, employees are the first to learn about them.
(S) Social – “At work, I am treated with respect.” Disrespect in the workplace is toxic. According to Clifton, 90 percent of those who say they are not treated with respect report they have experienced discrimination or harassment at work. While Gallup’s focus on the human element of this social standard is critical, my experience has been that companies have broadened this benchmark to include an organization’s commitment to giving back and good corporate citizenship.
(G) Governance – “If I raised a concern about ethics and integrity, I am confident my employer would do what is right.” Clifton acknowledges that employees know what the board and investors don’t. Employees know when there is widespread malfeasance and cheating of customers, and they know when there is a culture of discrimination and unfairness.
This is a win for thought leaders, boards, and executives who for years have argued that a leader’s relationship with employees is at the root of these and other purpose-driven priorities. What’s more, these relationships have—not ripple but tsunami—effects on a company’s bottom line. Human-centered leadership is good business.
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For instance, while thousands of global leaders, business forums, and think tanks are driving the ESG movement, conscientious investors are the engine behind the momentum. Investors want breakneck profits, but they want them from companies that make the world a better place. Clifton says that if there are two companies with equal shareholder returns but one hurts people and the planet while the other heals, investors will pick the latter.
Many of you are familiar with Milton Friedman’s belief that the sole mission of a corporation is to maximize shareholder value. In fact, the title of an article he wrote in 1970 underscores his philosophy: “The Social Responsibility of Business Is to Increase Its Profits.” Yet based on the latest research, one wonders if Friedman would also have embraced ESG as a means for increasing shareholder value. Berkshire Hathaway’s survey of 475 institutions found that 68 percent of respondents said the ESG criteria helped improve returns. And 77 percent of respondents said they invested in ESG due to its positive impact on the company’s financial performance.
So, where do you begin? Gallup recommends that you start with what you can measure, keep it simple, and benchmark employees first. That will give you a baseline from which you can work.
Human-centered leadership is good business.
If your public-facing communications share one story and your employees know or say differently, that gap is your first clue that you need corrective measures.
The good news is that the tide is changing. Every time a stakeholder like Gallup holds a mirror to the link between human leadership and the bottom line, leaders will find it easier to allocate time and resources aimed at building trust and focusing on a higher purpose. When you give leaders the freedom to make choices that lean into their humanity, and you back them up with the data that prove their actions are profitable, great things are possible.
