Stuart Graham examines how compassion impacts on the bottom line.
More than a century ago the Russian author, Leo Tolstoy, said: “If you don’t like people, do something else.”
Tolstoy’s words are a call for compassion and could hold meaning for anyone. But they are especially pertinent for business which is often in a position to show compassion.
For years businesses have donated fortunes to goodwill projects. A classic case was earlier this year when Warren Buffet, the world’s second wealthiest man, said that he would give two thirds of his 40 billion dollar fortune to charity. His gesture was hailed as the single largest act of corporate philanthropy in history.
In the past decade South African companies have had to deal with unique issues such as the spread of Aids and tuberculosis, an enormous crime rate, poverty and cultural diversity in the workplace.
These issues, which businesses in developed countries do not usually have to face, have required enormous understanding and compassion. Most South African corporations have stood up to the challenge.
Millions have been given to social investment projects. Companies now compete with each other for the top spot on the stock exchange’s social investment index.
Brand Pretorius, the chief executive officer of McCarthy Motor Holdings, says leadership “is in a new paradigm”, where ideals and humanity are playing more of a role.
“In the new world, the soft issues are really the hard issues,” Pretorius says.
“In terms of the new paradigm of leadership, influence comes from something deeper and more enduring than hard power. It comes from the power of your ideals, the strength of your spirit, your humanity and ability to capture the hearts and minds of people.”
But managers say compassion in business should extend beyond philanthropy and social investment projects.
Ashley Leibowitz, a director in the human resources department at Standard Bank, says corporations have to respond to the social needs of the country not only because it is the right thing to do, but because social investment will result in a more sustainable and profitable business environment.
“No organisation exists in a vacuum,” he says. “Companies have to respond to the needs of the country. It is healthy people and healthy societies that ultimately drive a healthy economy.”
Leibowitz says a company has to understand customers in order to satisfy their needs. Individuals in the organisation need to have compassion and empathy to help develop this understanding.
“Organisations have changed dramatically in recent years. They can no longer function successfully as command-and-control machines, and people cannot be thought of as replaceable cogs.
“People in an organisation are a major source of competitive advantage. Standard Bank, for instance, could buy a computer system to improve its processes, but what would stop Absa from going out and getting the same system? It’s the people who make the difference.”
A company has to create a culture where staff feel as though they are doing something that matters.
“A business has to see a person as a whole person. It needs to be genuinely concerned about their welfare, their careers and where they are going.
“If a company is successful in engaging its employees, then employees will be more committed and that will drive profitability.
Even employee expectations and workplace experiences have changed substantially in the past few years.
“People want to work for a company with a heart,” First National Bank’s chief executive Michael Jordaan says.
His sentiments are evident in Deloitte and Touche’s “Best Company to Work For” survey which is published annually. The most recent survey found that Aids, the importance of striking a work/life balance, corporate social upliftment, corporate culture and values, and transformation had all increased in significance for employees.
“Recognition of the HIV/Aids problem and addressing it with appropriate policies and education programmes have now become a prerequisite for being an employer of choice,” says David Conradie, the senior manager of human capital at Deloitte.
“Employees need to feel that they will be cared for in the event of a positive diagnosis and also that they will not have to experience discrimination in the workplace.”
Corporate social investment (CSI) and social upliftment have also become a key issue for employers.
“Employees need to feel they are part of a bigger community, so it is no longer sufficient to donate money to a good cause. We have noticed a trend towards employees engaging with the people they help, becoming involved in CSI projects on a personal level,” Conradie says.
The culture and values of the organisation have become increasingly important to employees. The more they identify with the culture and values and live by their organisation’s ethics, the more satisfied employees will be.
“These ‘soft’ issues relating to employment have taken on a vital role in assessing whether employees are satisfied in their jobs. Our survey findings show that the top four most important criteria include job satisfaction, leadership, relationships and trust and communication,” Conradie says.
“Naturally, communication underpins all these elements; employees’ perceptions form the basis for their opinions. Our experience also shows that it is the ‘soft’ issues which are the most difficult to get right.”
Some economists argue that a company does enough by providing jobs to society. There is no need for it to be compassionate.
India’s Tata group of companies, however, has proven that compassion can have a very positive effect on the business environment.
Corporate responsibility at Tata, one of the largest companies in India, started long before companies in the western world. Founded by Jamsetji Tata in the 1870s, it introduced the eight-hour shift in 1912 when steel workers in England were working a 12-hour shift.
Ratan Tata, who chairs the group and is also a member of President Thabo Mbeki’s investment council, says Tata’s way of doing business has helped create industrial harmony, something the company describes as capitalistic by definition and socialist by nature.
The company provides universal health coverage, childcare and free schooling, rewards for worker loyalty and various other initiatives. The philosophy is that social responsibility is good for a company’s bottom line.
Since 1977, Tata Motors has been adopting poverty stricken villages, solving basic problems such as water scarcity and unemployment, and contributing to the upliftment of women and the provision of recreation facilities. These efforts are carried out irrespective of losses. Their blue-collar force also takes active interest and their efforts have helped develop 400 acres of barren India into plush recreational environments.
In the past decade, however, steel prices dropped around the world and Tata has had to cut its operating costs to remain profitable. This has meant downsizing its work force and outsourcing many of its non-core services, such as electricity and water provision. Sceptics have questioned Tata’s ability to remain true to its original values.
But when Tata Steel reduced its workforce from 78,000 to 48,800 between 1992 and 2001, it was done without a strike. The company had offered each worker the equivalent of what they were earning at retrenchment until their date of retirement.
Workers remained loyal, even though they were being retrenched. This was an example of industrial harmony, Ratan Tata said.
Compassion is a value that has to be practiced by individuals, says the Nobel laureate economist Milton Friedman. Corporates are not responsible for looking after society. Individuals have that responsibility.
It is the manager who has to decide whether to let a person leave work early so that they can be with their sick child. It is a director in his personal capacity who has to decide whether to allocate money to a charity or whether to sacrifice a bonus in order to contribute towards worker retrenchment packages. Individuals, not companies, have to decide to like people. – Heartlines Features.