Employees are willing
to invest themselves in the corporations for which they work and to put various
aspects of their lives at risk. In certain industries this means risking their
health and safety, in others it means investing time that they could otherwise
share with their family, and in others it means investing intellectual capital
and developing company-specific skills. By treating employees fairly, by
investing in their personal health, safety, skills, and sense of self-worth, as
well as by assuring a living wage and comfortable retirement, companies can go
beyond their mere contractual relations with employees to create a positive
work environment. We believe that corporations that treat their employees well
should, in the long run, attain high levels of employee loyalty, high levels of
productivity, and low levels of turnover — all potentially substantial
contributors to profitability.
Themes
The following are the
five major themes by which we assess the strength of corporations’ relationships
with their employee partners:
While
other issues are also important in this regard, these five are those which we
believe we can most meaningfully and consistently assess.
Continuous Improvement in Health and Safety
The
health and safety of employees are among the primary obligations of employers.
Commitments to perfection in workplace safety, proactive programs to improve
physical fitness, and assistance to employees in dealing with personal or
family problems are all investments that corporations can make in their
workforce that are not only the right thing to do, but will increase worker
productivity and loyalty. Cost cutting in these areas, we believe, can be a
shortsighted approach to management and impose on society costs that companies
have a legal and moral obligation to bear.
We therefore seek companies that
have made substantial investments in health and safety programs that produce
strong results. Conversely, we
view with concern those that have a pattern of neglect, particularly those
where neglect has resulted in fatalities or regulatory sanctions.
Fair and Just Compensation and Benefit Programs
Appropriate
levels of compensation and benefits are a foundation upon which the
relationship between corporate management and the average employee is built.
Abuses of this relationship damage not only executives’ credibility with
workers, but undermine stockowners’ trust in management and, more broadly, the
public’s trust in business itself. By contrast, companies that take steps to
assure gender equity in pay, appropriate commitments to the financial
well-being of their retirees, and a management bonus system that rewards
implementation of social and environmental policies as well as financial goals
build their credibility with their stakeholders and align their companies’
reward systems with larger societal goals.
We
understand that numerous complications can arise in these areas and focus our
evaluations on the cases of most extreme abuse or notable success. On both the positive and negative sides we
consider how a company handles these issues as a strong indicator — and indeed
determinant — of corporate culture.
Commitments to Diversity in the Workplace
We
believe that in a global economy diversity in the workforce is one of the
hallmarks of a well-managed corporation. Definitions of diversity can include
diversity related to gender, ethnicity or race, age, sexual orientation, disability,
economic or class background, religion, and political opinion. Corporations
benefit from a diverse workforce because they can better capitalize on the
capabilities of the full spectrum of their employees; can better understand the
needs and desires of the full range of their current and prospective customers;
can better anticipate new societal trends and emerging issues; can better
foster understanding, mutual respect, and cooperation among their workforce;
and can better recruit from the widest possible pool of talent. A diverse
workforce, particularly among positions of authority, can indicate a corporate
culture based on merit and open to new ideas and perspectives.
We therefore look for companies
that have substantial representation of women and minorities among
management-level positions, in particular among their senior line executives;
companies that have created a notably open work environment for minority groups
— for example, for gay and lesbian employees; and companies with strong
programs for training on sexual harassment and respect for diversity. Conversely, we view with concern companies that have a
record of diversity-related controversies and regulatory sanctions, including
those related to sexual harassment and discrimination.
Empowerment and Investments in Training
In
addition to the compensation and benefits employees are entitled to through
employment contracts, companies can, and should, commit to investing in their
workforce through employee involvement programs, skills training, support for
general education, sharing in the financial success of the firm, and other
programs that enrich employees’ lives and empower them in the workforce. A
company where employees work only to the letter of their legal obligations,
without passion, commitment, or creativity, is a company that will struggle in
the marketplace. It is through such investments that companies align employees’
sense of personal growth and satisfaction with the growth and success of the
firm, in a relationship equally beneficial to both parties.
In this regard, we look for
companies that share their financial success through profit sharing, stock
option plans, employee stock ownership, employee suggestion plans, or other
forms of employee involvement and empowerment. In addition, we look for firms
that invest substantially in employee training and skills development, provide
substantial tuition reimbursement for education, and generally foster a culture
of self-realization and growth.
Solidarity
with Unionized Workforce
The
acceptance of unions as a positive force in the workplace and the government
protection for their activities that emerged through a series of hard-fought
battles throughout the 20th century have made a major contribution to the
stability of the capitalist system and addressed many of its worst abuses. The
rights to freely associate and form or join a union of one’s choice and to
bargain collectively for the terms of one’s employment are among the core
conventions of the International Labor Organization and are recognized as
fundamental human rights. Healthy and vital unions play a crucial role in
addressing the imbalances in power that often arise between corporate
management and workers in their struggle for fair working conditions. Without
unions, the possibilities for long-term equal partnerships between management
and labor would be vastly diminished.
Managing
union relations, however, is a difficult task. Antagonistic relations between
unions and management can spiral downward out of control to the detriment of both
parties, whereas independent but tough relations can be useful in confronting
many of the challenges that businesses inevitably face. Moreover, overly
aggressive efforts by management to stop drives to unionize non-union employees
can lead to protracted battles that cause more harm than good for all
parties.
We therefore seek to identify
companies where management and unions work respectfully with each other in
balancing the appropriate needs of both constituencies. We understand that negotiations between management and
unions must necessarily be hard-fought at times, but view with great concern
situations where relationships have deteriorated into fundamental mistrust and
disrespect.
