Coro’s Blog: On Purpose
Living Wage: Key to maximizing morale and driving financial value
Published on October 2, 2015
The world’s most innovative leaders know that social businesses are more profitable businesses
Around the world there is a growing consensus that a company’s social role goes beyond meeting legal requirements, complying with ethical standards, creating jobs and paying taxes. People everywhere now expect companies to act as social leaders, using their business expertise to lead social change.
In response to people’s changing expectations, the world’s most innovative companies are building social value right into their core business strategies, not only to address poverty and other problems in their communities, but also to improve workplace relations, gain market advantages and grow profits faster.
In my previous post we saw how transformational companies are hiring people with employment barriers to demonstrate their values, increase productivity and connect more closely with the customers who buy their products. This time I focus on the importance of the Living Wage, the second of four core corporate strategies that I explore in detail in my Social Value Business Guide. Learn why social businesses are more profitable businesses, and how your company can become a change agent in the local community and a leader in the global marketplace. Companies that do will be playing their part to accelerate the Global Goals – a universal, integrated and transformative vision for a sustainable world – adopted by the 193 member countries of the UN last week.
Conventional wisdom holds that businesses need to keep wages low to increase profits, but the world’s most innovative companies know that this wisdom is flawed. Transformational and innovative companies understand that their workforce is not a cost to be minimized but a strategic asset that can be leveraged to drive business value. These companies realize that their financial health depends on the health of the communities where they operate. Supporting vibrant, healthy and resilient communities enables them to build their future workforces and improve productivity, reducing production costs and increasing revenues and profits.
A job does not always enable people to escape financial hardship. Low-income earners need a living wage to lift their families out of poverty, reduce their financial stress and foster healthy child development. A living wage is higher than the legal minimum wage, allowing earners in a family to meet their basic needs such as food, clothing, shelter, transportation and childcare – the actual costs of living and working in their community. People who earn a living wage have greater financial security, which enables them to invest in their family’s future, and reduces the need for parents to work long hours at multiple part-time jobs away from their children. Families supported by a living wage are therefore able to spend more time together and participate more often in community activities – benefits that promote social inclusion and directly profit local businesses.
Increasing the income of low-wage earners helps stabilize the economy and stimulate consumer spending, enabling companies to hire the skilled and reliable workers needed to make and purchase their products. Living-wage employers not only benefit from higher brand recognition and increased customer satisfaction, but also report superior work performance. Research shows that living-wage employers enjoy lower staff turnovers and lower hiring and training costs, as well as reduced absenteeism, increased employee engagement and morale, fewer disciplinary issues, and higher productivity levels.
The world’s most innovative and transformational businesses understand that their role in society has evolved. I encourage Chief People Officers seeking to create and sustain a dynamic workforce to read my Living Wage Guide which outlines the steps necessary to design and implement an effective and profitable Living Wage strategy that benefits employers and the workers and customers who live in their local communities.
Today’s leading companies are harnessing the power of social value business practices to create lasting benefits for their investors, their customers and the people living in their communities. In the weeks ahead, I will describe how transformational companies around the world are creating social and financial value by adopting community benefit procurement processes and pursuing social innovation strategies.