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Companies are starting to introduce happiness-monitoring departments

 

Director of Happiness, anyone? How the integration of progressive roles and departments are transforming today’s top companies from the inside out. 

Written by Nicholas Mizera

Illustration by Jon S. Godfrey

 
 

The role of companies in society is changing at a breakneck pace. No longer is it a question of producer and consumer—these days, customers see brands as extensions of their identity and prefer those that closely reflect their personal values and convictions. This is particularly prevalent among the millennial cohort, according to Horizon Media's 2016 Finger on the Pulse study, which finds that as many as 80 percent prioritize patronizing good corporate citizens—on top of that, a 2015 Cone Communications CSR (corporate social responsibility) study shows that more than 90 percent are willing to jump ship for a brand that represents a cause. Inside the corporate fold the story’s much the same. A 2012 Net Impact survey suggests that 58 percent of employees would take a 15 percent pay cut to work for an organization with values aligned with their own, and another 45 percent would give up the same part of their salary for a job that seeks to create a social or environmental impact on the world. Making a difference clearly makes a difference.

 

With social media now in the mix, companies face an even greater impetus when it comes to tackling social issues. Online channels give them the opportunity to create a brand voice consistent with the values they choose to champion and engage with social issues in the public sphere, where today’s most important conversations are increasingly taking shape. (It’s not a half-bad public-relations boost, either.) Directly engaging with stakeholders also creates instant accountability as customers leverage their social media channels to gently (or not so gently) remind a company when it isn’t walking the talk or, conversely, when it overextends—just look at the backlash to Kendall Jenner and Pepsi’s possibly well-intentioned but definitely ill-fated homage to Black Lives Matter and civil rights movements. This transparent two-way conversation keeps companies innovating and rising to their customers’ ever-changing expectations, developing an evolving strategy that runs parallel to a company’s more traditional R&D. Indeed, the change a company affects can be considered as important as the actual products it sells.

It’s possible this shift in thinking began with the model of a triple bottom line, first introduced by British sustainability consultant John Elkington in 1994. His sustainability model adds new measures of success to a company’s bottom line, traditionally defined solely by profit or loss: “people,” governing social impacts, and “planet,” concerning a company’s environmental performance. The idea has since been widely adopted, expanded and tweaked by many organizations. Now, 64 percent of companies have opted to take their social responsibility programs off the sidelines and make them a central part of the operation, according to PwC’s 2016 Annual Global CEO Survey. From C-suite appointments to entire departments dedicated to social good, companies are going to increasingly unconventional lengths to tackle challenges including climate change, poverty and diversity.

Foundations

Those who want to change the world often realize they first much change themselves. Taking this to heart are several companies who have rebuilt their corporate structures from the top down to reflect their social mission. An example of making social impact a part of company culture is Salesforce’s Chief Philanthropy Officer position. Their first, Suzanne DiBianca, had been in charge of bringing to life the company’s philanthropy model since 2000—pioneering a “1-1-1” model that directs at least one percent of the company’s technology, people and resources toward social impacts (more than 700 other companies have since pledged to do the same). Allowing employees to tackle social issues with the full support of the company and its resources, instead forcing them to take issues on as side projects, has ingrained the philosophy of giving into everyday work.

In 2016, DiBianca’s position has been used to diversify the company’s workforce, oppose discrimination, fund public school programs and make traditional giving a mandatory part of company life that doesn’t fluctuate with profits. Environmentally, this year the company achieved net-zero greenhouse gas emissions as part of two 12-year renewable energy agreements announced last year. And it pays off in more ways than one. "By embracing sustainability across every aspect of our business, Salesforce is cutting costs and reaching new levels of efficiency,” said Mark Hawkins, Salesforce executive vice president and chief financial officer, in a statement.

Other organizations look within, knowing that they can create value for society by investing in their employees. Enter the role of Chief Happiness Officer, a title tailor-made for the LinkedIn age. Probably the most famous example is Google’s CHO, Chade-Meng Tan, who arguably laid the groundwork for the trend (though his official title is technically Jolly Good Fellow). His mission? To “enlighten minds, open hearts, create world peace,” according to his website. Now ubiquitous across startups, industry giants and governments alike—the United Arab Emirates’ Minister of State for Happiness (yes, that’s a thing) signed on 60 CHOs at federal and local levels last year—executives like Tan are charged with changing practices to positively affect a company’s emotional culture.

Lululemon employs a Director of Mindful Performance, Danielle Mika Nagel, to fulfill a similar role with a focus on building resilience and increasing focus among their team through mindfulness and meditation practices. Incorporating mindfulness into an office setting results in a holistic approach to developing talent and helps employees deal with today’s overwhelming work climate. “There’s an energy of gratitude flowing throughout our workspace,” says Nagel. “When we internally check in with ourselves, we embrace life and begin to look at challenges as opportunities of growth.” The retailer passes the benefits of mindfulness onto its customers by hosting programs in stores.

Sigal G. Barsade and Donald E. Gibson, associate professors of management at Wharton and Dolan Business Schools, respectively, confirm Nagel’s findings. They found that employee happiness is responsible for a decrease in burnout, depression, stress, absenteeism and turnover, all while increasing emotional intelligence, which results in better problem-solving and decision-making skills.

University of Warwick economists tested a similar premise in a study published in the Journal of Labor Economics. They too associated happiness with increased productivity, and even quantified the boost—happiness made people 12 percent more productive in scientifically controlled conditions. An author of the study notes that Google’s example is a frontrunner for the concept, with the company’s employees experiencing a staggering 37 percent boost. For companies whose bottom lines includes social consciousness, harder workers translates into an even bigger impact.

People

Tackling issues of diversity and equality have some of the most immediate benefits for a company, both financially and socially—enter the Chief Diversity Officer and other positions which oversee gender, racial or LGBTQ issues. There exist scores, but the concept is still fairly new. Bank of America hired its first CDO in 2016, and so did Ebay. Tech giants Google and Facebook hired theirs in 2010 and 2013, respectively. Some put their own twists on the formula—Salesforce’s Chief Equality Officer underscores the importance of going beyond simple numbers by empowering minority communities, while Airbnb’s Head of Diversity and Belonging highlights inclusiveness.

Now that more women are entering the workforce (not to mention graduating in greater numbers than men), building a gender-diverse workforce is a priority for many organizations. A 2011 Catalyst study found that companies with the most women on their boards (particularly those with three or more) outperformed their least-diverse competitors by 16 percent in return on sales and another 26 percent in return on invested capital. McKinsey & Company research analyzing 366 public companies found in 2015 that gender-diverse companies are 15 percent more likely to have financial returns above their respective national industry medians, as well.

Diversity programs that empower women within a workforce, like Morgan Stanley’s Return to Work program that gives women a 12-week internship to improve their work skills, help redefine women’s gender norms in greater society, relieving some of the unfair pressure on women to put their careers on hold—sometimes indefinitely—to raise children or care for family members. Men’s-only gender equality clubs like those formed at Wharton, Duke, Stanford and dozens more business schools have given men–long privileged in the workplace–the opportunity to learn about diversity issues and dispel myths that gender equality empowers women at the cost of men. Indeed, diversity issues impact men as well—for example, men who take flex time for parenting duties are more likely to be penalized in terms of career advancement, according to a 2013 report on flexibility stigma published in the Journal of Social Issues. Changing workplace attitudes about gender diversity helps normalize men taking a more active role in fatherhood.

The same 2016 McKinsey & Company study also found that companies in the top quartile for racial and ethnic diversity were a whopping 35 percent more likely to see returns above the national median for their industry. For every 10 percent increase in racial diversity in the senior executive and C-suite teams, company earnings rose 0.8 percent. Moreover, according to a 2016 Deloitte inclusion survey, representation is particularly important to the millennials who will form 75 percent of the workforce by 2025—the generation already identifying as non-white 25 percent more than boomers, according to the U.S. Census Bureau. “[When compared to boomers,] millennials are more likely to define diversity as pertaining to the individual mix of unique experiences, identities, ideas, and opinions,” it notes.

Customers also want to feel represented, suggests a diversity best practices paper by Sodexo, based in Burlington. "We have the responsibility to reflect the interests of our diverse workforce and the communities that we serve as well as the interests of our diverse clients, customers and partners," shared company president Barry Telford after winning Canada's Best Diversity Employers for the second year in a row in 2015.

Environment

Contrary to popular sentiment, sustainability is profitable. According to Harvard Business Review, DuPont’s Linda Fisher became the first Chief Sustainability Officer (CSO) hired by a publicly traded U.S. company in 2004, setting in motion a trend of environmental innovation. A renewed focus on the environment can take steps toward renewing a company’s social license with customers, as seen in industries from oil to agriculture. Tyson Foods—which has come under fire by activists for “factory farming” practices—hired its first Chief Sustainability Officer earlier this year, and oil giant Enbridge filled its first CSO position in 2013, three years after a pipeline spill in Kalamazoo, Michigan.

Companies that make safeguarding the environment a priority for their business are also often the first to innovate and create more efficient, cost-effective practices that can significantly reduce their operating costs—and help them stay in business. Just look at PepsiCo, which in 2015 reported that sustainability practices that reduced water usage, packaging and waste saved the company more than $375 million since the company established environmental goals in five years earlier.

Outdoor equipment retailer Mountain Equipment Co-op (MEC) is another prominent example, with an entire department devoted to sustainability. According to a 2016 briefing by Bullfrog Power—Canada’s leading green energy provider, and MEC’s primary supplier—MEC facilities have displaced 11,000 tonnes of greenhouse gas emissions (the same as taking 2,400 cars off the road for a year) since 2009. Energy audits of MEC buildings have made some locations up to 50 percent more efficient, according to the company’s website. Reducing packaging and improving recycling has allowed MEC to cut waste by 91 percent, according to a 2001 SmartSteps case study, saving the company $115 on every tonne diverted from the landfill. It pays to go green and, in MEC’s case, paying attention to climate serves the double purpose of securing a vibrant environment for its customers to enjoy, keeping the culture of outdoor recreation alive.

And that’s the ultimate payoff. No resources are wasted when a company devotes itself to the well-being of society—it mutually assures the healthy continuation of both. As more companies realize this and make tackling important issues business as usual, society is in good company.

 
BusinessNicholas Mizera