The “S” in ESG: Are we ready to take it seriously?

February 08, 2023
By iQ Staff
people hugging in a circle

As corporations work to embrace ESG (environmental, social, and governance concerns), they have been slowest to prioritize the “S.” ESG gained momentum primarily thanks to urgent concerns about climate change, and specific, measurable outputs like carbon footprint and emissions. The “S” entails equally dire concerns, but historically less structure for measuring and grading organizations on a universal scale. The “S” in ESG encompasses a broad range of issues relating to race, class, human rights, inequity in all forms, and much more.

Corporations have struggled to authentically and consistently act in ways that reflect their chosen social values and purported cultures of empathy and inclusion. Take the recent tech layoffs for example. The job cuts produced countless stories about how poorly those decisions were communicated to individuals. Across the board, management behavior was not aligned with purported values, and the terminated employees — once enthusiastically loyal — have not been shy about sharing their stories.

It’s also worth noting that Gen Z, who already shows less “corporate loyalty” than previous generations, is more likely to become disenchanted after seeing the iconic companies they grew up with — Google, Facebook, Nike, Salesforce, Amazon, Microsoft, etc. — conducting layoffs.

All the CEOs seemed to use the same playbook, saying, “I accept responsibility for over-hiring.” There was seemingly little to no follow up with individuals, and many were blind-sided by the news and the cold approach to its delivery. Despite the acknowledged realities of the circumstances, namely the scale and urgency, the approach seemed pro-forma to many, and has been criticized for lacking in humanity.

All of this begs the question: Were these companies ever serious about 1. living according to their purported values and 2. fostering corporate culture through representative actions?

Free meals, unlimited PTO, and other perks were provided when times were good, ostensibly to demonstrate care and to help cultivate a certain culture in the workplace that could attract workers, especially when they were in scarce supply. Given the lavish treatment the tech companies once provided, the cold, formulaic and curt treatment exhibited during the layoffs indicates the companies were not being authentic.

How much damage was done to the corporate culture of these companies, and how will that impact the behavior of the employees that remain? For those employees looking for new jobs, how much will culture factor into their decision making? And isn’t it possible that other kinds of workers, many of whom are well aware of the high pay and pampered treatment “high-value” tech workers have received for over a decade, are taking note of the layoffs and thinking “if they’re not safe, how vulnerable am I?”

Amazon’s head of devices and Alexa, Dave Limp, during better times in 2019.

Credit: Vox

What we do know is that positive and impactful organizational culture is worth protecting. The topic of organizational culture, and its relevance as a meaningful factor in the success of an organization and an organization’s ability to live its values, is increasingly taking center stage.

Where corporate accreditations used to focus primarily on environmental factors, new standards are gaining popularity that focus more on people. For example, in the UK, The Good Business Charter (GBC) measures corporate behavior over 10 components: (1) real living wage, (2) fairer hours and contracts, (3) employee well-being, (4) employee representation, (5) diversity and inclusion, (6) environmental responsibility, (7) paying fair tax, (8) commitment to customers, (9) ethical sourcing, and (10) prompt payment.

When addressing workplace challenges and performance issues, organizational consultants increasingly point to culture, specifically characteristics such as empathy and inclusion. The very elements so starkly absent from the recent round of job cuts in Silicon Valley.

 

“Building a culture of love in the workplace means emphasizing warmth over sternness for high results.”

 

Consultant Lisa Caprelli explained it this way, “Building a culture of love in the workplace means emphasizing warmth over sternness for high results. Having this sort of dynamic in a company is important because it can keep people connected, and in my experience, a community that feels connected also tends to be more committed to one another, in both good times and bad.”

In the coming months, as we all weather the ups and downs of a fragile economy and a fraught geo-political climate, workers will be paying attention to corporate culture, watching for signs of authenticity. Business leaders would be wise to start taking the social aspects of their ESG programs seriously; there will come a time when they need to ramp up hiring again.