Start of quote: Investors’ attention turned to human capital issues in 2020 as COVID-19 took hold – including the treatment of staff and other stakeholders, as well as dividend policy and executive pay in cases where companies have received taxpayer support.
In some ways, this amplified an increasing focus on social and stakeholder issues – relating to employees, supply chains and communities – in other words, the ‘s’ in ESG.
No fewer than 181 CEOs committed to the new pledge to “deliver value to all stakeholders”.
It seems absurd today for an investor to restrict herself or her investment model by relying on just one set of financial metrics, just as it seems absurd for shareholders to restrict CEOs to a focus purely on increasing quarterly earnings per share without an eye to the longer-term success of the business and everything that entails – including stakeholder interests where they are material.
New perspectives are opening in human capital and related social issues, with evidence of better financial performance for companies that score higher on some human capital or stakeholder metrics.
Prof Alex Edmans of the London Business School substantiates the case in his 2020 book Grow the Pie that US companies which take account of a wide set of stakeholder interests are demonstrably more financially successful than those that do not. As evidence, he states that companies with high employee-satisfaction levels outperformed their peers by 2.3%-3.8% per year over a 28-year period. End of quote
So ESG is becoming more and more important. For investors, but also for employees as stakeholders! As a shareholder with a long-term interest in EM, I would ask from the ESG point of view:
- What effect does an HR management have on the motivation of the employees with decimation of the workforce and in many cases senseless destruction of knowledge and potential?
- What impact does this management behaviour have on the company's culture and productivity? Does EM even want a corporate culture that goes beyond loveless lip service?
- What does the management want? Critical and thoughtful employees who can think outside of routine and thus trigger innovation? Or just willless and soulless gossip bunnies who work through processes in copy/paste mode without ever understanding them?
- What happens if the destruction of jobs is not enough? Does the cannibalmus begin among the GBC's who are so excited today?
How EM deals with employees, especially in a tense situation, will influence our employee satisfaction level, our productivity performance and finally our image outside! Nobody likes our industry by nature! But if it also becomes transparent how much we are kicking the feet of people who have generally worked hard for their money, our reputation will continue to decline.
And therefore:Dear CEO, Dear Shareholders of large funds with influence,
I would ask you to review the strategic direction of the EM also from an ESG point of view. The current recovery in oil prices and stock prices should provide the necessary breathing space until the Chinese hunt the next virus around the globe.
Please check whether the HR-supported situation of permanent fear (losing the job) and humiliation (through the rigged ranking system) in 2021 is an appropriate leadership tool? Please check whether blind confidence in the performance of the GBC's while destroying the human factor with all the expertise in the affiliates is the only response of management to the crisis? I maintain that with five good people with traditional education in the so-called high-cost countries, I do the same work with better quality and less process effort, like 15 people in the GBC's, who also often change jobs faster than other people change socks!
But I don't study great dances for that when high attendance swells in from the US. And I don't make colorful anime pictures with cuddly eyes! And don't take a great picture for Yammer! I prefer to work real!
But if this is the only HR strategy of the EM, I propose that all global executive positions also be migrated to China, India or North Korea – because we are all in this crisis together or not? It can't be cheaper, so it secures the dividend for the poor grandma at the campfire in Kansas. Until everything is broken anyway.
We can do better! We need new and real management for HR, not dictatorial emotion-free executors! We need real inspiring leaders, not submissive figures who have just swayed the dividend – incentive bone and have stopped thinking for fear of their own well-being! In short, we need real people! And a strategy adapted to change for our business model!
Otherwise, the tsunami of changes from ESG, social change in values and changing employee expectations will simply overwhelm us. And even more good colleagues will lose their jobs! We should do better!