This week, La República, one of Colombia’s most important economic and financial newspapers, published the latest article by the president of ATREVIA, Núria Vilanova, titled “Better employees, better companies”. In the past, the primary purpose of a company was to generate profits. This tendency has started to shift a few decades ago. The first advancement was giving some of the company’s earnings to society through Corporate Social Responsibility (CSR); a concept that continues to evolve. Today, it is no longer possible to do business with one’s back to the planet and society.
“The result is the ESG (Environmental, Social, and Governance) criteria. In addition to the economic dividend, there is the reputational dividend, in which our stakeholders, including investors, increasingly place greater value. Today, corporate CEOs must be as concerned about ESG compliance as they are about financial performance. They are an inseparable bundle.
However, the ESG drive has been more outward-looking than inward-looking. The pandemic has forced us to change our approach. From now on, how we treat our employees will weigh heavily in the reputational dividend.
Employees are the main allies in achieving a company’s objectives. They must be the primary stakeholder. They must be given their own identity. It is not enough to include them in the S for social. As proposed by Leo Strine and Alfonso Jiménez, renowned corporate consultants, we must add another E. Moreover, we must add another E at the beginning. In this way, we will move from ESG to EESG, positioning employees first.
These four letters are not an acronym: they are a commitment. Companies indeed generate social impact by redistributing wealth through wages, but this is not enough. In addition to asking how companies make money and the economic, social, and environmental impact of their activities, employees must also be included in the equation.
After all, a company that helps change the world has to start by improving its employees’ expectations. Otherwise, that Competitive Social Transformation mentioned over and over in 2021 will never be complete.
There are several additional reasons for investing more in employees. In order to optimize financial results, reducing staff numbers is often the strategy. Especially in a context where digital transformation appears as a solution to all company challenges. Counterposing reason to intuition is the key to counterintuitive leadership. In this case, I think entirely relying on technological solutions is a big mistake.
After all, talent is unique to people. The same applies to those feelings that have gained prominence during the Covid crisis. These two intangible assets give value to organizations. It is time to embrace diversity more than ever in the face of risk, and, as I have been warning lately, this means not leaving Generation Z and the sliver generation out of the workforce, as this clearly impoverishes companies.
People management will be the key to making a difference and will determine the future of companies. If decision-making is already conditioned by ESG criteria, from now on, it must also be conditioned by the E for employees, including their well-being, commitment, and motivation. This means promoting responsible and sustainable people management, accompanied by indicators that make it possible to assess these policies’ results, as is the case with the other ESG.
Let’s be smart. Proper human resource management in companies provides a competitive advantage, stimulates talent, increases productivity, and enhances the company’s reputation. Undoubtedly, these are more than enough reasons for adding the E.”
Click here to read the full article originally published in La República.