What Good Business looks like in 2017
As business leaders gather in Davos for the annual capitalist pilgrimage debate swirls around issues of better capitalism and good companies.There’s a lot of debate as to what a good company profiting from better capitalism looks like. Here are my two cents.
Companies should:
- Get serious about being responsible
Integrate social responsibility into your business model. I’m not talking about outdated 1990s style CSR initiatives that had nothing to do with the business. I’m thinking of Unilever’s recent decision to make sustainability a core business goal to save the planet and operational product manufacturing costs. Think about the skilled workers flooding into Germany from Syria and other war torn places. Assess how your company could help them rebuild their lives and make your company more successful.
2. Be open on tax
Don’t wait for a tax PR disaster to hit you over the head like Google or Apple. Pay your fair share in line with local laws and jurisdictions. Be open with the public on how your tax is calculated and paid. Be willing to debate whether you should be paying more or voluntarily topping up national coffers. If you operate across multiple territories and jurisdictions consider showing a consolidated tax report. Remember tax shouldn’t be negotiable or optional. It isn’t for the rest of us.
3. Rid yourself of aggressive union relationships
Adopt workers councils that bring unions inside. Help them understand business decisions and involve them in driving change. Give them space to maintain independence but at all costs avoid the fractious and costly model adopted by most companies and industrialised economies. Get away from the worker vs the management way of thinking.
4. Don’t be afraid to automate
We’re in the 4th industrial revolution and it will be more disruptive than all before it. It will impact both skilled and unskilled labour. Bankers organising trades will be replaced by artificial intelligence and machine learning. Factory workers will be replaced by robots. Work with government and workers to prepare new jobs in advanced technical economies. Look back to how Japan and South Korea embraced automation and still managed to maintain healthy human workforces. This new revolution will still need skilled and unskilled workers. Avoid at all costs promising workers you can wind the clock back or that you’re doing your best to keep old drudgery jobs in play. If all you want for your workforce is boring, unfulfilling work then continue as you are.
5. Think long term, report medium term
Get away from reporting in quarters. It pushes negative behaviours and encourages short term thinking. When developing strategy think 10–15 years out. When investing consider a fall in commodity prices isn’t going to last forever.
6. Reward achievements wth reasonable financial rewards
If delivering real value to shareholders then reward management fairly and well. Be mindful to consider multiplier effect between lowest and highest paid. Do not reward failure and never design remuneration that forces you to pay for poor performance that misses the mark. Stay on top of CEOs who seem to be reporting growth through slash and burn or buy, buy, buy behaviour. You know the ones. They aren’t creating real sustainable value.
Make sure you also put in place rewards linked to longer timelines. It’ll make departing management think very carefully about making decisions they know to be harmful.
7. Empower whistleblowers
Remember Olympus in Japan. Ignore whistleblowers at your peril. Embrace workers who challenge wrongdoing. Give them an outlet to independently report bad behaviour. Celebrate those heroes who risk everything to do the right thing.
8. Don’t throw your weight around
You might get to the size of Google but that comes with responsibilities. You need to protect your business yes but not at the expense of killing off healthy completion. Acquiring companies just to dissolve them is dishonest.
9. Aim for a feather footprint
Go easy on how you consume the planet’s resources. Fossils fuels aren’t running out anytime soon but that doesn’t mean digging them up and burning them is the right thing to do. Keep it in the ground. Put up windmills, tap hydro power or steal sunlight to power your factories.
10. Get aggressive on diversity
Reflect the customers and markets in which you operate. If you have a board constituting only white men in their 50s reform it. Push women to the top and put quotas in place until the norm no longer requires them. Get rid of low bar targets like having 30% women on the board by 2025. Get serious.
11. Design codes of conduct for your operation
Independent auditors that are changed ever four years, tax reporting that is transparent and easy to understand. Remuneration that listens to workers and society’s concerns. Codes of conduct are easy to measure. They’ll help keep you honest.
12. Stand for something, stand with someone
Don’t be a company breaking sanctions. Don’t invest in markets where the rule of law is flouted or ignored.
Don’t ignore humanitarian suffering in countries where you’re manufacturing.
If you disagree with political decision making say so. You’ll only regret lying down in front of a bully.
Governments should:
13. Prepare their populations for the 4th industrial revolution.
They should abandon educational styles and formats that were built for Victorian and Edwardian economies. They should re train employees and want more for their people. They should openly celebrate handing dull and monotonous work to robots.
14. They should make the case for globalisation
It’s here to stay whether people like it or not. Whether protectionism returns in some form or not you can’t turn the clock back. Globalisation has always been with us from the East India Company to the Googles of today. The difference is air travel and the fact that global business is now longer the preserve of large corporates. Governments should spell out the benefits of globalisation. In China alone millions have been lifted out of poverty. Imagine what a manufacturer in Britain could achieve buying components made in East Africa.
15. They should call out bad companies
Zero hour contracts aren’t all bad. Some workers prefer them. How they’re used, is a different matter as we saw with Sports Direct in the UK. Governments should be willing to call out bad business behaviour and punish accordingly.
2016 was a tumultuous year and 2017 feels very different already. Here’s hoping the business leaders huddling in Davos are sharing this same thinking.
