There is a loud and escalating cry for businesses to create jobs in order to put people to work—and an equally strong debate about why businesses aren’t doing it and what their responsibility is in periods of high unemployment. This week’s post looks at what businesses can do and what they should take responsibility for.
No one thinks (I hope) that businesses should hire people just for the sake of putting them to work. The size and shape of a workforce should be a strategic decision, although it’s too often a reactive one, made “after the horse is out of the barn.” The fear is that hiring too many people burdens a business with an inflexible line item. And then there’s the pain that many managers feel when they are forced to lay off employees due to having misread their markets.
It’s not surprising to me that businesses are not quickly “bringing people back on board.” I have yet to meet a manager who thought they could forecast the future. What they are certain of is that their own and sometimes hundreds of other jobs are on the line if they miscalculate. I think people have no idea how much fear accompanies the decision to add jobs. It’s not all about tax breaks and government intervention.
But there are a few things that businesses can do about jobs that would benefit their investors, other employees, and communities, and would also demonstrate how flexible and creative capitalism can be. The first is to make a shift away from a traditional attitude that makes no sense. Most companies perceive their people as a cost of doing business rather than a resource for innovation. As HIP Investor Advisor and author Paul Herman often says, “People are the most important asset are only on the balance sheet as a liability.”
I, myself, have witnessed the power of shifting the view from employees to co-creators. In the most fearful time in South Africa, when the nation was preparing for its first free elections, Colgate Palmolive transformed their employees into innovators. This effort to build the business created so much market growth that new people were needed. Rather than make them all employees, many were set up as entrepreneurs in sales, market education, and customer service. These individuals lived in the townships and knew Colgate’s consumers personally. They helped grow the business by 40 percent every three months for three years.
Here in the U.S., Kingsford Charcoal created suppliers for itself by helping employees it was preparing to lay off set up small businesses of their own. These enterprising new owners developed a strong sense of “personal agency” and their businesses strengthened local economies.
A second shift builds from the Colgate and Kingsford examples. Businesses can easily take on building entrepreneurial ability in their local communities. Unfortunately, under the current economic model, development is all about jobs, not about creative contributions based on abilities and initiative. Local economies would be much stronger if they supported small business entrepreneurship. This is a partnership role in which larger businesses can be particularly effective.
A third way businesses can help create jobs is by supporting the establishment of Innovation Producing Co-ops. Throughout most of our recent economic history people have worked for “the man,” not for themselves. In the two shifts described above, people move to working for the consumer or the customer, rather than for the company. This creates more job stability because the focus and the yardstick for success are on the right outcomes. Working for the customer always has the effect of improving innovation and performance, stabilizing existing jobs, and creating opportunities for more people to succeed in their own businesses. Focus on the customer rather than on the business ownership stabilizes communities, which is another way for businesses to be responsible. Hierarchical employment structures stand in the way of such responsibility.
Rather than first thinking in terms of layoffs and hiring and only later in terms of structuring work and sourcing, Responsible Businesses know they are better off when everyone connected with them understands their responsibility to the customers and the communities who rely on their offerings. Those who advocate for the complete independence of businesses to do what they think best should also take into consideration that any business is better served when it aligns itself with its own systemic interests. A business can only be responsible and maximize its successes when every person connected with it is filled with a sense of opportunity and ability to make a unique contribution to the world.
Steve Denning, author of The Leaders Guide to Radical Management blogged about similar ideas all last week in his Forbes Rethink Blog.