Why Profits Over People Is Destined to Fail
We talk about it a lot. Corporate social responsibility (CSR), company culture, giving back. It feels almost like a fad based on buzzwords. Some companies have built their reputations on doing the right thing -- and others appear to be bandwagon jumpers, only recently realizing that the transparency fostered by social media means their business might depend on how they behave towards their employees, the community and the world.
With so many U.S. corporations racing to the bottom -- moving manufacturing to foreign countries for cheap labor and no environmental responsibility, taking advantage of the H1-B Visa program to bring cheap workers in, lowering benefits and eliminating pension plans -- it's refreshing to learn that some companies are taking the exact opposite approach.
Let's take a look at a company with stellar CSR baked right into the culture.
1. All about employees
It may not be a household name in the U.S., but South American based Leonisa is one of the biggest swimwear and lingerie manufacturers in the world. But as impressive as their garments are, the real beauty lies in their corporate culture.
Along with expected benefits like health and life insurance, employees enjoy three free meals every day during their shift and no-interest student loans for employees, their spouses and children -- which the company forgives if the student does well in school.
Sound great? That's not all. Leonisa supports their employees with financial assistance and time off for maternity, illness, marriage and housing loans with low interest that most employees can pay off within seven years. Due to the loan program, most employees own their own homes.
The company hands out various bonuses throughout the year, and even matches the amount employees save for vacation. Every five years, their bonuses get bigger and better. Employees are encouraged to save for the future through an employee investment mutual fund the company also contributes to.
To round out the definition of incredible company culture, Leonisa supports breast cancer victims and offers free education for their catalog sales representatives through The Urrea Arbelaez Corporation project, Embarking with Happiness. Their product line includes post-surgery and back support bras, scientifically designed solutions for women who need it most.
Leonisa is far more than just a company. Its mission is built around empowering employees through finance, education and encouragement. If you were impressed by their commitment to employees and to social issues, join the club.
2. Why offer so much?
If you're looking to attract and retain top talent, CSR is the way to go. Millennials have a much different worldview than baby boomers, and oldschool ways simply don't work. They want flexibility, autonomy and opportunity. It's important to today's young people to work for a company they can be proud of -- one that shares their values and concerns.
It's not just employees, either. The 2015 Nielson Global Sustainability Report found that retail brands with a commitment to sustainability, environmental concerns and social responsibility experienced 4-percent growth, while companies that did not grew only 1 percent. The report also stated that socially responsible companies “outperform others when it comes to attracting top talent, investors, community partners, and, most importantly, consumers.”
3. “Spend more to make more.”
When I was young, that was common wisdom. In the last few decades, the saying changed to “Spend as little as you can get away with and funnel maximum profits to investors.” The result of this greedy philosophy is evident. Shared prosperity became a thing of the past. Income inequality is shocking, and 28 percent of all Americans over 55 have no money set aside for retirement.
The most interesting effect of growing public awareness may be the success of companies heralded on social media for their CSR efforts. Employee-friendly companies like Google/Alphabet, Publix, Wegmans and Costco enjoy a lot of volunteer goodwill from people eager to reward “doing the right thing.” On the other side of the coin, companies with poor track records, including Walmart and Papa John's have suffered the slings and arrows of social misfortune.
The best news is that the biggest brands in the U.S. have taken notice -- and taken action. In 2015, a coalition of leading companies formed 100,000 Opportunities, a joint initiative to hire and train 100,000 young people between the ages of 16 and 24 who face systemic barriers to jobs and education. It's a start.
Change is inevitable in the age of social media, as many companies who cheat employees have discovered. As more company's shady dealings become public, they face the option of closing stores or raising wages. Or, in the case of major retailers, both.
Head's up, business owners: Neglect corporate social responsibility at your own peril. The public has already spoken.