At Sustainable Brands ’11, there’s much talk about, well, brands. But what powers those brands? Employees. People. In the pursuit of innovation, competitive edge and profits, many companies lose sight of the real force behind their brands. Similarly, companies striving for sustainability often focus on their environmental impacts to the neglect of the social side.
According to Paul Herman of HIP Investor, this mentality is partly a byproduct of our financial statements. Where do you find people, our most important asset, on a balance sheet? Under expenses. People are seen as a cost on an income statement which is why when a company tries to maximize profits by cutting costs, employees are often the casualties. If we were to rethink our balance sheets and consider people assets, what would make them appreciate? Experience, knowledge, purpose, relationships and innovation. Interestingly, “training” is also listed as an expense on the balance sheet. As Herman notes, we constantly talk about declining resources but people are our only increasing resource and our financial statements don’t recognize it. Why is there such a disconnect here? When the best companies to work for financially outperform others, at what expense are we expensing people?
As Jeffrey Hollender said, referring to his removal from Seventh Generation, the company he founded, “we’ve lost sight of the cost of the impact of squeezing extra revenue or value out of a business.” During more than two decades as CEO, the highest paid employee never made more than 17 times the salary of the lowest paid employee. Hollender is now so interested in valuing people that he is promoting the worker-owner cooperative model and cites Evergreen Cooperatives in Cleveland, OH as a model U.S. cooperative. By establishing business services that appealed to Cleveland’s anchor institutions — who had historically sought vendors beyond the city — Evergreen was able to keep money circulating in the local economy while simultaneously creating jobs.
Chip Conley, founder of sustainable boutique hotel chain Joie de Vivre, also believes that employees are a company’s greatest asset. That’s why his company performs annual interviews with the cleaning staff at all of its hotel properties to find out from the people on the ground what the organization can be doing better. For Conley, CEO stands for Chief Emotional Officer who serve as the “emotional thermostats” for their companies — happy leaders can lead to happy employees.
If we want to maximize innovation, our competitive edge and our profits, we need to remember that businesses begin and end with humans.
Ali Hart is a sustainable communications and engagement strategist with a passion for life’s essentials: food, water and storytelling. Her background in the Entertainment industry, penchant for humor and MBA in Sustainable Management from Presidio Graduate School are Ali’s secret weapons in her quest to master the art of behavior change and to make sustainability inconveniently fun.