What happens when you combine a tight labor market, an ongoing global pandemic, rising inflation, and widening wealth inequality? You get record numbers of workers quitting their jobs – a sign that many are frustrated with the status quo. This primal scream from workers is also evidenced by recent strikes in many industries across the country, in addition to the uptick in union-organizing efforts.
The number of job openings remains significantly high by historical standards, leaving employers scrambling to entice workers by offering perks like sign-on bonuses or remote work flexibility. While base wages have also grown, rising inflation has mostly off-set those gains.
These events have sparked discourse around human capital management (HCM) and how employers are investing in their workers’ well-being, specifically around the social aspect of a company’s environmental, social, and governance (ESG) standards. These conversations can be useful in helping companies think about their role in society and how best to care for a range of stakeholders.
I have always been somewhat uncomfortable with the terms “human capital management” and “environmental, social, and governance,” however. Not because the projects themselves are flawed, but because they seem to reflect and, at times, unintentionally reinforce a perspective that workers are either a risk to be managed or an economic input into an investor-centric framework, rather than flesh-and-blood humans who deserve respect and dignity.
This is not to say that hiring workers comes entirely without risk. As a recovering labor and employment lawyer, I am well-versed in the myriad laws employers must navigate, such as the Employee Retirement Income Security Act of 1974 (ERISA) and the Occupational Safety and Health Administration (OSHA) regulations. Getting more shareholders to focus on the company’s social impact is important, and having a framework that aligns with how investors think about their roles is necessary. But with all this specialized language and acronyms, I worry the humanity and dignity of workers becomes obscured. Relying solely on specialized frameworks and lingo, like HCM or ESG, can reduce the diversity and multidimensional aspects of the people making up the workforce, transforming their collective humanity into a faceless, uniform category on an annual report.
Taking the ESG and HCM framework and making the benefits tangible and real to workers is important. But it can be successful only if companies actually listen to their workers. What workers seem to want is their employer’s help in making their lives materially better. Workers are feeling the weight of responsibility. Over time, companies have shrunk their benefits – such as defined-benefit pension plans and retiree medical benefits – and disproportionately shifted obligations onto the shoulders of workers, many of whom have faced years of stagnant wages and job losses.
It’s time for companies to rebalance the bargain they make with workers. To listen deeply to what workers say they need. To bring more humanity into how they view, treat, and engage with their workforce. To take their public statements about workers being the “most important asset” and actually demonstrating the tangible actions they have taken to fulfill that commitment.
In the coming months, we will outline additional ideas on how employers can strike a new accord with their workers, one that advances HCM and ESG goals while keeping human dignity and respect at the center. From focusing on improving workers’ daily lives to bringing more workers into the shareholder model and prioritizing benefits that recognize workers as human beings, there is tremendous opportunity for businesses to chart a new path toward more universal prosperity.
The Financial Health Network will explore the challenges facing workers and employers today, including how employers can help workers meet their daily needs, how workers can have more opportunities to participate in profit-sharing and capital alignment, and the difficulty for workers of living paycheck to paycheck vs. having the access to benefits and systems to manage their lives. To read more about our research, tools, and solutions for employers to better understand, evaluate, and test financial health solutions for all, visit our Workplace resources or email Matt Bahl at email@example.com discuss ways to advance your organization’s financial health approach.