Measuring Business Impact on Well-being: Utopia or the Only Way to Survive?

February 21st, 2017
Emmanuel Faber, CEO of Danone; Bénédicte Faivre-Tavignot et Rodolphe Durand, HEC Paris Professors of Strategy, SnO Center; and Georges Blanc, HEC Paris Emeritus Professor

How can the business community measure work’s impact on our well-being? The question was at the heart of a major two-day workshop co-organized by the OECD, HEC Paris and Fordham University, culminating on February 24. It was attended by leading researchers and representatives from the business, NGO, higher education and public policy sectors. They flew in to Paris from the five continents to fuel lively debates over work and well-being, hoping the outcome could, in the words of a keynote speaker, “dictate a new narrative for the 21st century”. “At stake,” said HEC Paris professor emeritus Georges Blanc, “is probably the future of the enterprise as a social and economic institution.”

Looking Beyond Facts and Figures

The statistics are stark: 87% of employees worldwide do not feel engaged to their work. In the United States alone, 12.6% of the workforce are actually actively disengaged. And, according to a Gallup study in 2013, their lethargy costs the country $450 billion to $550 billion in lost productivity each year. “Yet major business companies are still taking us in the wrong direction,” hammered Chris Laszlo to the packed auditorium of the OECD Conference Center. “They’re slowing down, but it’s still the wrong direction. And we need to change that.”

The co-founder of Sustainable Value Partners LLC has been trying to “change that” for over a decade, engaging with CEOs from the likes of Cisco, Walmart, and Bayer.“Not by brandishing statistics which show the financial benefits of having an engaged workforce,” he told HEC Paris after his conference, “but by engaging the CEOs in a deeper conversation about what they are committed to in life, who they are intrinsically. In other words, you don’t change what they’re doing, you change what they’re being.” And the author of Sustainable Value points to the turnaround by Clarks Shoes in Chicago as an example of a positive transformation.

Giant Leap Forward

This call for companies to look beyond their balance sheets was echoed throughout last week's OECD Workshop which was co-sponsored by HEC’s SnO Center. “When I meet corporate leaders and tell them what we are doing to change business mentality, I never see them looking at their smartphones in boredom,” noted Jacques Berger, director of the Action Tank Entreprise et Pauvreté. “There is a huge appetite to bring back purpose in company practice,” he added, underlining the word “purpose”. “CEOs want to believe in something else than what they are seeing in their companies.”The business strategist insisted he is optimistic: “What we are doing at the Action Tank - working exclusively with multinationals - would have been inconceivable in 2005. Corporate leaders are more and more open-minded to innovation. Sure,” he pursued in front of an audience of almost 200 people, “many employees in these big companies think what we are doing is madness – you know, creating a more inclusive capitalism and influencing public policy by being ‘embedded'. Some want to shoot us when, for example, we suggest Renault carmakers price products with marginal profit. But we have to take these companies out of their comfort zone, back to the time when financial returns were a measure of efficiency and not the goal, per se.”

Seeking Out New Measurement Tools

Loud applause from a public clearly seeking ways to alert major companies to what impact Tom Beagent termed “living in denial”. The measurement specialist at PwC warned participants of the challenges ahead: “These organizations don't understand the importance of well-being. It's not in their DNA. And that's partly because we are not bringing down data that they feel they can use, there are too many grey zones. And they're not being totally honest about it: 78% of the companies we studied say they are looking at impact on well-being but only 25% have actually done it.”

The plethora of different standards have helped muddy the waters. Professor Emeritus of Strategic Management at HEC Paris Georges Blanc delineated the major objective of the OECD gathering: “It's necessary to take stock of the different well-being measurement systems in use within companies, like CSR, ESG, GRI, and see how they can be harmonized, broadened, completed and better used.” At the outcome of the event, Georges Blanc insisted participants at the workshop are in the process of building an action plan to answer “this huge and urgent challenge.”

Mixed Reactions

Peter Rowan, a former employee of the Deloitte branch in Spain, admitted the business matrix proposed during the workshop was not within the financial cycle of shareholder’s returns, however. “Some representatives from multinationals here talked about wellness, for example, and advised people to eat better. But where are their well-being policies on reducing working hours and alleviating stress, investing in people’s training, changing cradle-to-grave models to more circular ones?” he queried.

HEC Paris student Samuel Jordan also feared the well-being approach would be hard-hit by reality checks. “When you have to report to Wall Street each quarter and have billions of dollars on the line, it’s a little difficult to say we need to look at the long-term prospects.” The graduate from Tennessee said it was only when millions are invested in educating those in high management positions that there will be real impact on well-being directives.

“I’ve come out of this event reinvigorated and optimistic,” countered Emilie Hourlier, a consultant in management through communication, “For years, I myself instigated business projects in a big company which excluded people and made them miserable, using very expensive tools that served no purpose. I felt I no longer wanted to be part of that system and opted out.” Now a Masters student working on improving communications inside enterprises, Emilie Hourlier said she was attending the workshop to pick up operational metrics to drive the world’s economy in the future.

Alternatives to the Classic Measurement Indicators

OECD chief-of-staff Gabriela Ramos had opened proceedings to the workshop with this pithy statement: “We got it wrong,” citing tendencies to work in emergency mode to avoid crises and accepting inequalities between nations. “If this is the case, why do we continue to use the same matrix?” she asked. But by day two, participants were still trying to figure out ways of imposing a well-being framework which would include new ways of measuring business impact on well-being. These, according to the organization's chief statistician, Martine Durand, “would focus on people and not the GDP or the economic system.” “A well-being framework,” she pursued, “would include subjective criteria such as health... It would look at both the averages and the inequalities,” added the Director of Statistics Directorate at the OECD.

Exploiting Hard Data for Well-being

The SnO Center’s founder and Academic Director Rodolphe Durand mapped out pragmatic approaches to changing ways of measuring well-being in business. The founder of the SnO Durand outlined the work his team have been conducting to help some of France's leading multinationals to better evaluate their impact on well-being. “These are difficult but exciting times,” he said, “because there is so much data available. Hard data evidence, coupled with a business sector guided by strong moralistic principles and advanced education programs engineered by business schools, will allow us to create a common tool to measure well-being in the workplace. This is a time,” he concluded, “for convergence. We are hopeful we can build a new narrative that is evidence-based.”

Catching Flies With Honey

Fellow-academic at the SnO Center, Frédéric Dalsace, recalled HEC's decision to focus on France's biggest companies: “We did it because of the huge power they yield and therefore the impact they have.” In a rousing speech, the academic said it would be “criminal” not to take a pragmatic approach to changing business ethics: “Are you aware that 40 of the top economies in the world are held by companies?” he challenged, before describing the five-pronged approach the SnO Center has adopted to suggest alternatives. “You can catch more flies with honey than vinegar,” he explained. “So we've created a motivation mix. These bring extra sales, profit, innovation, motivation and a license to operate. In this way, companies build a positive reputation. And by designing tools to accurately measure business impact we focus on the causality chain.”

New Landmark Legislation in France

Frédéric Dalsace then reminded participants of draft legislation passed last year by the French National Assembly. The November 29 law requires French companies employing over 5,000 employees to implement a “duty of vigilance” to identify risks to human rights and the environment caused by their activities. “These incredible measures focus on the supply chain (wages, work conditions, gender, etc). We are hoping this historic step will next be applied at a European level,” he declared.

Surprise Climax to Workshop

One of France's leading CEO's has not waited for a new law to improve well-being in his company. And he turned out as the surprise guest to end the 14-hour workshop. “I've just flown in directly from Miami where I presented Danone's approach in front of 800 of the most important investors in the US,” said company director Emmanuel Faber. “And I can tell you, well-being was not on people's mind there. They were more concerned about rumors of a Unilever take-over by 3G Capital.”

“Yet, the well-being horizon is critical,” pursued the Danone CEO, before outlining the crucial nature of accurate social indicators in corporate decision-making “at all levels”. “There is an increasing need for consistency,” he insisted. “And for this, we need a common language when talking about long-term goals. In order to change the paradigm we need to create alliances that don't exist nowadays because this common language has yet to be created.”

In his call for a “new vision for society”, Emmanuel Faber made a resounding plea to support business schools. “To redefine the software we need to inspire ourselves from the example set in the past by the US when Wall Street poured money into Harvard. These schools will make future generations aware that finance is a tool and not an objective. We have to take a financial gamble. We have the right, no, the duty to be Utopian.”