The Parallel Parliament

by Glen Pearson

Tag: business

It’s 2016: Ideas on Implementing Equal Pay

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SPEAKING AT A BUSINESS BREAKFAST LAST WEEK, I fielded a few inquiries in a Q & A session regarding my last week’s blog posts on the issue of equal pay for equal work. Nothing really surprising there; the corporate community increasingly explores evolving issues like social good, living wage, environmental upgrades, and wage parity between the genders. One medium-sized business manager asked how best would a business go about implementing an equal pay strategy.

Obviously I’m no expert (30-year firefighter), but some lessons gleaned from the equal pay movement have a clear and pressing sense to them.

The first thing to remember if you’re thinking of evolving a business into an equal pay employer is that there a clear business case for it. Three important studies came out in the U.S. recently – McKinsey and Company, Ernst & Young, and PriceWaterhouseCoopers – confirming that companies with greater board diversity consistently outperformed competitors who hadn’t made that progression. Initial research has determined that achieving gender parity in the U.S. would initially boost the economy by $4.3 billion annually. These three reports derive from companies that are hardly slackers and their findings deserve some weight.

Secondly, do some of your own internal research. An internal gender pay audit would reveal to more businesses than we can imagine that discrepancies exist between men and women tasked with the same work. Government audits in Canada, the U.S. and in the European Union, revealed cumulative gender biases that will eventually need to be dealt with. Understanding pay disparity is ultimately about learning and knowledge and the best way to move forward is take a deeper look within your own company.

Third, speak with other leaders within your organization about their sense and the possibilities of implementation. It’s likely you’re not alone in wondering as to the responsibilities regarding equal pay for equal work. Put the concept on the table. Assess the likely costs, the ultimate financial benefits, and the place of your company within the community when it comes to leadership.

Fourth, map out a possible map for implementation. It’s not urgent to accomplish something so significant overnight, but it is important to move forward in a timely fashion. The gender equality movement in Canada and elsewhere has taken on more importance in the public, private, and political consciousness – everyone is “in process” on issues of this magnitude and time should be taken to do it effectively.

This last point is crucial in the operation of any business. The corporate world is clearly changing and being challenged by social movements that are increasingly based upon inclusion and law. Governments are progressively responding to citizen pressure and eventually laws will be passed guaranteeing equal pay for equal work between the genders. It’s best to get out ahead of that, or as the CEO of one of the most successful brands in the world put it recently:

“It is not good enough to do what the law says. We need to be in the forefront of those social responsibility issues” … Anders Dahlvig of IKEA

It’s not just about law but democracy, and the need for a better integration between business and citizenship. It’s coming and market share will slowly erode from those companies that refuse to undertake what the rest of the world is pressing for. It’s about leadership, community responsibility, and progress, and, ultimately for many, it is about better business. Or as Peter Robinson, SEO of Mountain Equipment Co-op plainly put it: “Ethics is the new competitive environment.” It is 2016, and time to catch up to consumers and the change they seek.

Repackaging the Food Story

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TALK OF IT IS EVERYWHERE these days: why do we throw out so much good food when families are going hungry? Answers abound, but in recent months increased attention has been directed towards grocery stores and some actions that are, and can be, taken to cut into all that waste.

Key to much of recent efforts to divert some of the billions of dollars of food from being tossed out is that businesses themselves are coming to terms with the cost savings they could accrue through more efficient methods. Maximizing profits while cutting costs has been a mantra for businesses since the birth of capitalism and food companies and stores are now applying that method to food waste.

For decades the practice of “stack ‘em high and watch ‘em fly” witnessed food stores pile an over-abundance of fresh product on their shelves in the belief that customers felt more inclined to select more than they required. But research is revealing that such stacks created more spoiled product than necessary and extra staff time was required to clean up the mess. Some stores then began makes the piles lower only to discover that customers like their shopping experience better because the produce on display was roughly three days fresher than previous. The end result was that sales rose, less produce was tossed out, and customer satisfaction rose. It also turns out that that better packaging also absorbs food odours that would otherwise prompt consumers to think their food was spoiling when it wasn’t.

In Canada, $27 billion in food waste should be telling us that we are not only wasteful but that there are significant opportunities to save the landfills, the pocketbooks, and business costs. Recent research by food expert Martin Gooch titled, Developing an Industry Led Approach to Addressing Food Waste in Canada, suggests that perhaps it’s time for business to take the lead in this country.

He suggests Canadian grocers can play a big role in helping to reduce those losses, and boost their bottom lines in the process. His partnership with London, Ontario’s Ivey School of Business to research food waste in Canada’s agri-food industry was revealing, causing Gooch to note: “There are significant opportunities for businesses to streamline their operations, reduce food waste, and increase profits.”

All of these efforts couldn’t come soon enough. Not only is there great hunger enduring in the world, but climate change, and our ongoing pattern of wasting our natural environment, means the time has come to treat such problems realistically. Business and food companies, along with consumers, must begin the process of leading the way.

We are living in a world where lemonade is made artificially and furniture polish is made from real lemons. Something’s clearly wrong, and dealing with how we waste food is a beginning stage in repurposing our entire food system.

Innovation Agents

 

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ONE OF THE GREAT CRITICISMS THAT HAS that always confronted the World Economic Summit in Davos each and every year is that its pronouncements sounds so grandiose and global when in fact little, if anything, concrete seems to come from all that talk and collaboration. We need evidence, the kind that is supposed to emerge when connected minds and collaborative intelligence get together and map out a way forward. Proof of what is possible is far more important to the billions in this world than mere projections of what could be.

In numerous and provocative dimensions this is what billionaire and elite rebel Nick Hanauer has been prodding his peers to do: get real. Yet he understands that financial reform will prove impossible without political renewal. As long as the political spectrum remains as rigid and ideologically fixed as it has shown in recent decades, any sense of change in world finance won’t find a willing partner in transformation politics.

Hanauer points out that many of the greatest democratic movements occurred far away from the apex of power, in regional areas where citizens successfully mobilized on issues ranging from pensions to affordable health care. Often the reason is not merely due to the dynamic resources of those pressing for change, but the demoralizing inflexibility coming from party central – all parties.

“The politicians just don’t get it, and haven’t for years,” he observes. “The Right screams for growth and the Left keeps calling for fairness – and they both just keep losing legitimacy.”

It’s really not in the nature of government to innovate, except on rare occasions. Governments have historically been viewed as providing stability, maintaining the status quo, but that has become precisely the problem in the modern era. Political parties remain entrenched, making renewal all but impossible. In such a setting, how will they take risks, thinking radically outside the box, or even take the lead from outside forces. It’s true that governments around the world became far too easily influenced by free market ideologies, but that has now left both politics and capitalism as appearing unable to solve our greatest problems. While political leaders in places like Davos acknowledge that financial inequality has become one of our greatest challenges, they see no desire for change from the financial order and so remain mired in their redundancy. The status quo no longer works because far too many people are being left out of the wealth being generated.

Not even a year ago, the Coordination of National Digital Strategy of Mexico launched a program called “Innovation Agent.” They invited leaders from within both government and capitalism and asked them to think of the great global challenges in the way average people would see them. Over the course of time the organizers easily spotted the true innovators from both sectors and were amazed at how they worked together to formulate solutions.

Yet the success of the exercise wasn’t so much predicated upon the ability of the participants to start thinking like average people as it was the freedom the innovators felt once removed from the stifling orthodoxies and ideologies of both politics and business. The business innovators showed remarkable dexterity, not only in admitting corporate failures but of the need for governments to take on a more equitable leadership role. And the politicians? Once they were freed from partisan constraints, they were far more effective in designing collaborate solutions that showed promise.

Participants in the exercise acknowledged that in order to build governments and businesses that truly apply themselves to the challenges before the world they must get out of being isolated from citizens in general. Innovation didn’t come for the participants until they were willing to entertain the possibility of destroying the old paradigms and partisan leanings.

To succeed in reforming both politics and business we must find some way to get them outside of their comfortable confines and into communities where the greatest kinds of innovations play out. The governing and corporate sectors have come to be exclusively defined by three general terms – size, money, and power. Until they both work together to change that perception, it will only be a matter of time, as Hanauer repeatedly claims, until everything collapses due to irrelevance.

Mayors: Against the Wind

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ONE OF THE INSIGHTS YOU DISCOVER IN RESEARCHING how successful mayors around the world operate is that virtually none of them claim to run their respective cities like a business. In other words, accomplishment is found in something else than a mere corporate model. This isn’t to downplay the importance of sound economic management or the claim that good business leaders can’t be good mayors. It’s just that their success is found in a more expansive and complex view.

To claim that a city is just like a business and should follow the same disciplines does a great disservice to both cities and businesses. Good businesses provide goods and services, and hopefully research and development, only insofar as it is profitable to do so. It’s how they function. It’s a highly competitive model. We understand the concept and appreciate the choices it provides for the consumer.

But civic governments are required to deliver public goods and services, and in order to be successful they must provide them often in ways that are sometimes unprofitable. No civilization is worth anything that cuts out the frail, elderly, infants, those suffering mental illness, the natural environment, or the jobless. There have been governments like that in history and they aren’t what we’d like to emulate.

Cities shouldn’t just provide choices, but one clear choice: the right to live life as fully as possible whatever a person’s status, and the opportunity to do so in community. For this to work there must be wheelchair ramps and not just sidewalks, daycare and not just babysitting, meaningful work and not just servitude, sustainability and not just abundance, health and not mere healthcare, compassionate wealth and not just money, citizens and not just consumers. The list goes on and on.

At their very essence, cities aren’t businesses, but a public good designed to serve the entire citizenry, not just those that can compete or who can afford it. A CEO might very well sack people in order to achieve some kind of efficiency, but a mayor has to find ways to get people back to work. There is a difference and to confuse the two is to bring havoc among citizens. To do so would be to harm the broad public collaboration that made cities work in the first place. Successful communities are those that mobilize the most citizens possible.

The very best mayors are those who operate as though a city is an ethical and human enterprise aimed at promoting the success and well-being of everyone. And if that doesn’t happen, then we get the ironic situation where governments can actually suffer the same fate as poorly run businesses. Citizens are getting fed up with the mere financial model of many governments and explore other alternatives (products, if you will). Paradoxically, as with business, citizens and voters desire to take their democratic shares and invest them in people and programs that bring them the highest public good. So those who claim cities should be run like a business had best be careful what they wish, because the result could be a takeover or a loss of citizen market share.

To be truly successful, a mayor must comprehend that a city’s greatest asset is it’s human capital and that its bottom line the welfare of all citizens. To say that running a city is like running a business is as shortsighted and foolish as saying a family should be run like a corporation. This is something all the mayors in these posts have agreed upon, and that’s why they’re different.

For too many years cities were told to go along to get along by more senior levels of government, private industry, and special interests, and mayors historically played to that tune. The sand is now running out of that hourglass and it is a new breed of mayors who fight for the uniqueness of their respective communities, as found in their human potential, that are succeeding. Those kites that fly the highest are the ones that fight against the wind. Cities are where democracy is being reborn and where citizens are finding an identity – collective and individual.  Citizens are investors and not just taxpayers, and they wish to be part of creating their own future.  Businesses can be effective, but a city run along the same corporate lines? It’s so much more, and it requires someone who understands that reality to take our communities to new elevations. Mayors only matter as they are able to rise to the height of citizens’ potential.

 

Each Requires the Other

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U.S. HOUSE BUDGET CHAIRMAN PAUL RYAN is attempting to have it both ways and he just can’t. His footwork is fancy, his rhetoric lofty, but in the end he can’t reward the rich and help the poor at the same time. It’s a lesson that has broader ramifications for capitalism.

The former Vice Presidential nominee has been pretty serious and occasionally sincere in his reflections that those struggling in low-income situations should get more targeted help. He has frequented many drop-in centres, shelters, even food banks, and concluded the some serious problems are afoot that require an equally serious approach. At times he calls for an enhanced social safety net as a response.

Ryan’s difficulty is that, as House Budget Chair, he is calling for balanced budgets within ten years to be accomplished by annual cuts and no increased taxes. He is calling for increased military spending at the same time as he wishes to freeze spending on Medicare and Social Security. He is also calling for a steadily declining tax rate for corporations and the wealthy.

In other words, Ryan’s budget would undercut the very things the poor require, especially over the long haul. This is ever the dilemma every modern government faces: by pandering to the rich it undercuts the poor. The longer that practice continues, the wider becomes the gap between the two.

And it’s not just a political problem. For modern capitalism itself the rationale is much the same and overall result has been a growing resentment towards both politics and the world of finance. It’s labeled “compassionate conservatism” in politics and can be just as easily called “compassionate capitalism” in modern finance. Both continue to slip in public confidence towards near record levels. 

In recent decades, larger businesses have rarely approached societal issues from a true value perspective, but have preferred to treat such things as peripheral and primarily the responsibility of community alone. It’s a rationale that is tearing apart communities as they come to terms with the reality that profits are increasingly coming at the expense of the very places in which companies operate. Reports that companies are once again benefitting from larger profits since the Great Recession hardly console the average citizen who is forced to face high unemployment, declining public investment, and an overall drop in expectations as a matter of course. The knowledge that community services are under increased pressure only causes deeper frustration.

By attempting to satisfy shareholders and targeting only a select group of customers, businesses have overlooked other opportunities that could both expand their rewards and rebuild communities at the same time. The corporate vision has been overly focused and the result has been too narrow a vision for the future of capitalism and communities both.

With all the emphasis on profits, shares, or in the limited field in which companies compete, one essential element has been overlooked: location. Communities themselves have far more to offer modern companies that profits and labour. Some forward thinking companies and their leaders are beginning to reason that improved company value can only be discovered by enhancing the communities that surround their businesses and the citizens whose loyalty they seek. By better linking their companies with community improvement, they reason that it opens up new opportunities to serve broader needs, gain profits, distinguish themselves from their competitors, and expand markets.

Modern societies in both the developed and developing worlds have created huge spectrums of problems and needs – better health and housing, improved nutrition, assistance for an aging population, greater financial security, less environmental damage, and improved opportunities for the younger generation. These don’t just represent problems for any society, but also an opportunity for business to make a concrete difference and the capturing of citizen loyalty at the same time. In other words, such challenges aren’t just problems, but opportunities for those companies to not only do the right thing but to also expand into new fields of vision.

Companies have lost sight of that one great question every business should ask itself: Are our products actually good for our customers on a societal level? They likely would have never stopped asking that question had they continued to place their priority upon community life and the ultimate measure of their customer base. But overall they haven’t because they forgot the fundamental lesson of location, location, location.

Business guru, Peter Drucker, loved to say that, “the purpose of a business is to create a customer.” That was in the days before rampant globalization. Now a new truth is emerging and it can be just as profitable: a company’s purpose should be to empower the community in which it operates. Like Paul Ryan, it must learn that it can’t become rich by impoverishing communities. Each requires the other. Those that understand it will find their reward. The success of capitalism in the future will be determined by how quickly this lesson is learned and if there is enough time to implement it.

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