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The economic fallout of COVID-19 and other societal events of the past year have exacerbated and shed light on severe inequities across the U.S. workforce. About half of Americans have little to no savings, and millions have faced financial devastation as unemployment and hunger rates have spiked throughout the crisis. Minority workers have been disproportionately affected by what is being called the most “unequal recession in modern U.S. history.”
Yet, despite the economic downturn, the stock market has soared. It’s clear that there is a profound disconnect here; the measurements used to gauge a corporation’s financial health largely ignore the people who keep that corporation afloat. In short, today’s business environment is not human-centric.
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In a sense, 2020 served as the ultimate test of a promise made by Business Roundtable CEOs in August 2019. In the widely publicized announcement, the chief executives of many of the world’s largest companies emphasized the need to move away from shareholder supremacy. The purpose of a corporation, they vowed, would now be to serve all stakeholders, including employees, customers, and communities. But in September 2020 — after months of pandemic-induced shutdowns and protests for racial justice — a study found that corporations were failing to fulfill this promise of stakeholder capitalism.
Having spent years serving on boards and as investment partners at venture capital firms in Silicon Valley, we’ve often heard terms like human-centered used by entrepreneurs. Many leaders point out that the most important element in building a company is the people who work there. They also emphasize how much they want to help customers and give back to communities. But often, the pressures of building a business quickly get in the way. Many of these companies become obsessed with short-term profits at the expense of their missions and at the expense of retaining satisfied, engaged employees.
We’ve also seen that when entrepreneurs take the right steps to develop human-centric businesses, they achieve greater, more lasting success. They become much more adept at managing teams, as well as at attracting and retaining a diverse network of employees who are innovative and creative. These companies become more agile and are able to adapt to change while keeping their missions and their people front and center.
To move organizations in this direction, the first step is to clarify what a human-centered business looks like.
Defining Human-Centered Businesses
There’s no single set of criteria for what makes a business human-centric. The Organisation for Economic Co-operation and Development asserts that the human-centric business model “combines — on an equal level of importance — profit-seeking with the social and environmental sustainability.” It includes the concepts of “decent work,” integrity, environmental sustainability, and more. Accenture, in a 2020 research, described the human-centered approach as necessary for leaders to add “a crucial empathetic lens to strategy to help understand the wants and needs of individuals,” specifically those experiencing and creating the product or service.
While these descriptions offer helpful guidance, clearer parameters are needed in order to help businesses take the right steps. We believe there are three key pillars to being a human-centric organization. All three must be central in an organization’s daily functions.
Build purpose around improving society. Whether a business is B2B or B2C, the central goal must be to meet a need people have — not just to make money (such as by getting people addicted to yet another app). For example, one company we’re supporting is focused on helping underrepresented populations and unemployed people in rural and Middle America develop technical skills and discover job opportunities in manufacturing.
Build jobs of the future. In the coming years, millions of people are expected to lose their current jobs to new technologies — as many as 36 million, by one estimate. The COVID-19 pandemic has sped up that process, with AI replacing unemployed people at a faster rate than ever. A human-centered business will build jobs that can’t be taken over by robots, AI, or machine learning in the foreseeable future. This means creating roles in the organization for people to employ uniquely human skills, like creativity, communication, and empathy. A business we’re invested in, for example, is all about hiring people to help customers awaken their human potential by developing these skills. This startup will need real people to serve as guides and teachers for customers in the years and decades ahead.
Manage a human-centered culture. To attract and retain employees and drive maximum productivity, companies need to support psychological safety, foster a diverse array of backgrounds and perspectives, and create opportunities for employees to feel engaged and heard. Some of the businesses we’re working with, for example, are providing all of their employees with individual coaching, training, and feedback to help them set and achieve their own career goals. These businesses are also encouraging employees to speak up when they wish to challenge norms or report problems.
When all of these elements are in place, rewards follow. People-centric workplaces see many benefits: higher organizational growth and profits, committed and engaged employees, and more satisfied customers. But it takes daily effort to maintain focus on putting people first. Even leaders with the best intentions can let these efforts to be human-centric fall to the wayside as other pressures mount.
This is why investors can play an especially crucial role. Rather than stepping back and waiting for quarterly financial reports to come in, investors should be working to promote human-centric practices. By setting clear expectations and having direct communication with employees at all levels of an organization they’re supporting, investors can go a long way toward ensuring that businesses stay on a human-centered track.