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5. Social value
5. Socia a ue
The second building block of the B Corp standard asks you the following questions: • Does your organisation actively ensure the personal development of its employees? • Does your organisation measure employee satisfaction and do you systematically improve it?
Based on the theoretical perspectives as provided by research firm Gallup and the “Bathtub metaphor” published by Mark de Lat in 2008, we concretise the theme of social value. This is in line with the statement of Grandma De Lat. In respect of this perspective, she is claimed to have said:
Theoretical perspectives
The insights provided by the Gallup research firm are used to make the connection between the social and economic value of a company. Based on the research of lecturer Stephan Corporaal and the principles of “bathtub management”, we then look at how an organisation realises social value.
Realising economic value through social value
In the publication "The Next Discipline: Applying Behavioral Economics to Drive Growth and Profitability” (Gallup), US research and consulting firm Gallup demonstrates the connection between creating social and economic value of a company. The research described in the previous article is based on behavioural economics. The principles of behavioural economics are shown in the figure below and concern an adaptation of the so-called “The Gallup Path”.
Source : Adapted from Gallup, The Next Discipline
In essence, it boils down to the fact that by putting the employee first, you put the customer first. With that, behavioural economics subscribes to the pyramid of organisational awareness described in chapter 6. To measure employee engagement, Gallup has developed an applied question set for employees, the so-called Gallup 12: 1. I know what is expected of me at work 2. I have the materials and equipment I need to do my work right 3. At work, I have the opportunity to do what I do best every day 4. In the last seven days, I have received recognition or praise for doing good work 5. My supervisor, or someone at work, seems to care about me as a person 6. At work, my opinions seem to count 7. There is someone at work who encourages my development 8. The mission or purpose of my organisation makes me feel my job is important 9. My associates or fellow employees are committed to doing quality work 10. I have a best friend at work 11. In the last six months, someone at work has talked to me about my progress 12. This last year, I have had opportunities at work to learn and grow
Social value
How do you get and keep your employees moving and developing? That's the key question at the heart of increasing social value. On the one hand, it’s so that employees are able to contribute to the organisation's strategic goals. On the other hand, it’s so that employees can continue to make a valuable contribution to your organisation and the rapidly changing labour market. Getting employees to act is therefore in the interest of both the organisation and the employee.
Your employees in learning mode There are various “buttons” you can push to get your employees in a learning mode and to encourage them to be more proactive and less wait-and-see. These insights are crucial: employees are the most important factor to successfully initiate desired changes, but - as the figures below show - employees feel that they are not always given the opportunity to be mobile.
Facts & Figures: employees are not mobile by definition • 82% of employees feel they do not need new skills to do their job properly; • 52% of the employees experience too little autonomy in their work. As a result, they are less able to solve problems, to work productively and, what's more, they remain with the same employer less often; • Research shows that these are important for boosting employees' mobility, but they are severely prevented from doing so because of pressure related to performance and efficiency.
Dr. Stephan Corporaal, Professor of Applied Science in Human Resources
Based on the research of Stephan Corporaal and his colleagues, there are several key factors for increasing the social value in an organisation. Below, we will discuss these factors one by one, as they have been provided by Stephan for the purpose of this book.
Do you offer jobs that challenge people to be mobile and develop? Employees learn and develop as part of their work, which is certain, and it happens naturally. In particular, when new technology is introduced into the company, every employer makes sure that employees learn how to use it. Often, this is done during work, among colleagues, or by having an employee follow a course at the supplier. These forms of learning are important, but very reactive. They are also ad hoc, random and often oneoff in nature.
Need for continuous development To achieve significantly better performance and to realise innovations, continuous development of employees in the company is essential. To do this, learning in the company must be more thought-out, structural and tailored to the target group, and often even to the individual employee. This will lead to much better, repeatable and reasonably predictable results. There is much to gain for entrepreneurs if they approach training and development of employees in a well-considered and systematic way. This does not only relate to the question of what needs to be learnt, but also of how to best learn this on the shop floor.
Development and mobility as an integrated part of work There are currently many barriers that prevent employees from undertaking formal training. People work hard, have a family life and often care responsibilities as well. And in their free time, there should be room for things other than work and courses. Many people weren’t too excited about school and were happy to leave that period behind. That's why we do not consider formal education or training all that important, but rather look at how you can make development part of the culture and daily work of the organisation. The result is that learning and workflow naturally into one another and employees practically learn “without realising it”, but nevertheless in a sensible and systematic way.
This approach suits SME companies that are relatively small, where production is paramount and there are usually no large training budgets. Work-based learning provides a solution in this situation. Moreover, in many smaller companies the owner tends to know his people well. He personally knows the people (what they can do and what they are good at, but also what does not work well) and he is usually also familiar with their home situations. So, he also knows for whom the extra burden of an education is not a good idea. Insight into the personal situation and needs of your employees is a prerequisite for adequate development at work. Match the possibilities and wishes of your employees. Every person is different. One person likes variety and challenge, another needs something different. Try to find out what motivates that employee who is less willing. Who knows, this employee might surprise you if you were to better meet his individual needs and qualities. Research shows that investing in employee training and development contributes to job satisfaction and also pays off economically.
Promoting mobility
Research by Alan Coetzer and colleagues (2017, Distinctive Characteristics of Small Businesses as Sites for Informal Learning) shows that there are six characteristics to promote employee mobility and development: 1. Job content: jobs that keep challenging to further develop; 2. Collaboration and team development; 3. Leadership focused on learning; 4. Space and security to develop; 5. Organisational characteristics that promote learning and development; 6. Work that connects with the outside world.
The following checklist shows the “dials” you can turn that are effective in promoting employee mobility.
Area of interest Check questions
Job content We make sure our employees' jobs remain varied and challenging. We offer meaningful work with a clear outcome. We offer freedom of work and of choice. We offer a job that gives direct and clear information about the effectiveness of job performance. We offer time and opportunity for (reflection on) learning. We offer challenging tasks that call for different knowledge and skills.
Promoting collaboration and team development We offer a working relationship characterised by mutual trust, respect, openness and accessibility.
Leadership focused on learning We have mentors and role models. We offer diverse and changing team compositions. Our managers set challenging goals.
Our managers actively provide feedback. Our managers provide support when problems arise. Our managers encourage development as part of the daily work. Our managers create a shared vision. Our managers ensure that knowledge is shared.
Space and security for development We encourage experimentation and risk-taking.
Does your company have leaders who inspire mobility and development? The manager is crucial in realising employee mobility. A survey of managers in SMEs shows a clear theme among companies that are successful in developing their employees. These companies actively and continuously optimise, improve and develop their processes, products and services. They also translate this into regular adjustments to the day-to-day work. In doing so, employees are challenged - often with a prominent role for their immediate supervisor - to continuously develop. Four conditions are important in this respect: 1. For employees, the need for development is clear due to regular adjustments to their day-to-day work. For example, because they are regularly involved in new customer requests/product changes or through direct contact with customers and suppliers. 2. Managers balance cleverly between (production) targets and responding to the development needs of individuals or teams. They do not overwhelm employees with changes but challenge them step-by-step to contribute ideas and encourage them to continuously develop within their work and their team. 3. Companies offer jobs that (continue to) challenge people to develop in the long term as well. 4. Knowledge exchange, security and rewarding initiative to develop are part of the company culture.
It is clear from the above that managers have an important role to play. In order to support the manager and thus the employees in realising social value, the following steps are relevant.
Step 1: Getting started with a forward-looking vision of learning and development
An SME entrepreneur is better informed than anyone about relevant developments in his sector. Make use of that profound knowledge and develop a concrete vision of learning and development in line with your business strategy:
a. What are the relevant (market) developments that will influence your business processes and products/services? And what innovations would you like to realise in the coming years? b. What does it mean for the work of your employees and therefore their required competences? c. What steps can you currently take in your daily work to prepare or involve your employees in the innovations that are in the pipeline?
Step 2: Bring the outside world in
An important prerequisite for development is to make the need for development concrete and tangible for employees: a. Share relevant business and sector developments regularly with employees, allowing them to see the bigger picture and understand where the business is heading. b. Ensure that employees are regularly exposed to (feedback from) internal and external customers. This encourages teams of employees to contribute their thoughts and to continuously optimise (work) processes, and thus to develop. c. Bring employees of different departments together to push (technical) boundaries and jointly work on innovations of products and services.
Step 3: Identify and utilise development potential
SME managers know their employees personally. Use that knowledge and invest time and effort to identify and utilise employee development potential. a. Do not wait for requests for development from individual employees. Proactively enter into dialogue with individual employees to identify their development needs. b. Offer employees a concrete outlook: make clear where they could be a few years down the road. This gives them clarity about the desired development and encourages development as a continuous process rather than on an ad hoc and incidental basis. c. Offer a number of specific opportunities to start development gradually. Challenge employees to temporarily shadow a different job; or offer a small project that allows them to work together with other departments or disciplines. d. Make teams of employees jointly responsible for the continuous optimisation of (sub) processes and regularly organise short team sessions to discuss bottlenecks, ideas and wishes within the team. Challenge teams to take up and monitor actions themselves: this promotes self-management and team development. e. Ensure that senior staff coach young employees. Make smart use of the differences in experience, background or education by mixing teams.
Step 4: Offer work that continues to challenge development
a. Balance clarity and freedom: starters usually benefit from clarity and structure. It makes sense to offer more responsibility and control after a while. This challenges them to optimise work (processes) and take on more different tasks. For instance, by offering more independence, more customer contact or by involving employees in a larger part of the (sub)process. b. Build up work challenges gradually by adding more difficult tasks to the job, by setting challenging goals and by giving people responsibility for small innovations or changes. c. Broaden tasks or rotate people regularly to shape development step-by-step and ensure broad employability. d. Make teams responsible for continuous improvement of processes or products/services and give them room to experiment.
Step 5: Reinforce continuous development by making it an integral part of the company
a. Make development a permanent component of the performance review cycle; don't just regularly review your employees' performance, but also challenge them to take advantage of development opportunities. b. Encourage (department-transcending) knowledge sharing and set up an accessible company Intranet or internal social media to promote collaboration and knowledge sharing. The smart design of the physical working environment, in which different departments can easily find each other, also promotes knowledge sharing. c. Train managers in conducting a regular dialogue on development. Giving regular feedback, converting mistakes into learning experiences and specifying a development path and development opportunities are particularly important in this respect. d. Step by step, assign increasingly more responsibilities to teams and train them in continuous optimisation. e. Make sure that mistakes are converted into learning experiences and guide teams in recognising and utilising each other's qualities. Make sure they feel sufficiently secure to learn from each other.
How does the Human Resource Management (HRM) value chain function in your organisation?
Human Resource Management (HRM), especially training and development, is an important pillar for the realisation of social value. It makes sense to examine the functioning of this important pillar if you truly intend to create social value. As with Gallup, here we look at the H M value chain, or popularly put: “How do you give substance to bathtub management?” (Lat, Burdorf, & Evers, 2008).
A strategy is only a strategy when employees understand it and act on it. Imagine this. You want to divide a bag of peas among a number of containers. To make pea soup, for example. You take a funnel in one hand and a bag of peas in the other. Then you throw all the peas at the same time into the funnel. What happens? The funnel instantly clogs up. We see the same effect in organisations. Management determines the strategy during the well-known pile-driving sessions (the bag of peas is full). Then they return to the workplace and pour out the new course all over the employees (emptying the bag of peas). A few weeks later, management is genuinely surprised that employees are not acting in line with the new strategy. A classic case of pea management.
This blockage is prevented by paying specific attention to the behaviour within and the identity of your organisation (see next chapter). Professional literature (freely adapted from (Nishii, Lepak, & Schneider, 2007)) says the following about different phases of HRM strategy: • Intentional HRM strategy. These are the strategic thoughts and ideas of the policymakers. • Implemented HRM strategy. This refers to the HRM activities actually implemented by line management.
Good communication and training are essential in this respect. • Observed HRM strategy. This is the implementation of the HRM policy as perceived by employees. And more importantly, it encourages employees to behave as desired. • Realised HRM strategy. Only when the pea falls through the funnel into the desired container is there a realised HRM strategy. A strategy is only a strategy if the employees understand it and (can) act on it.
Once you have realised the intended HRM strategy, you realise social value.
The bathtub metaphor
The bathtub metaphor shows the difference between intentional and realised strategy. Generally, the aim is to translate the organisational strategy into an HRM strategy and to give it a practical form using HRM instruments. HR trains and coaches the line manager in the effective use of these instruments. This effort subsequently leads to influencing employee behaviour, which impacts on organisational performance.
r anisa ona strate y
H M strate y
r anisa on e e r anisa ona perfor ance
H M instru ents
Interac on between ana er and e p oyee Indi idua e e H M outco es
tude and beha iour of e p oyees
Follow this diagram from top left via the bottom to top right. Where in your organisation can you identify potential leakage in the bathtub?
The distinction between the intended (intentional) strategy and the actually experienced strategy is of great importance. A great deal of professional literature and course providers would have us believe that organisational success can be equated with the ability to design a strategy and then plan and monitor its implementation. The reality is different. Strategy development and its implementation is not nearly as effective as is commonly assumed. Managers will increasingly have to admit that the daily behaviour of employees is not so much influenced by strategic intentions. Covey concludes, for example: "only 37% of employees understand company objectives and 20% are enthusiastic about them". In other words: strategy is a verb!
B Corp: what does the standard require?
If we look at how the B Corp standard implements the concept of social value, the following building blocks form the basis: • Offering financial security; • Involvement of all employees; • Attention to health and safety; • Lifelong learning; • Promoting involvement and enthusiasm.
As in the previous chapters, we will address these elements one by one, each time by means of an activating statement and brief explanation.
Offer employees financial security
This may seem obvious, especially in the Western world . This aspect particularly applies to countries where employees do not have a minimum wage and collective labour agreements are still in their infancy. Still, the question for you is how to offer your employees financial security. Are the wages and working conditions clear and transparent from the employees' perspective? Moreover, this relates to extra allowances, bonuses and pension schemes. We look at whether permanent and temporary employees are offered an appropriate salary and employment benefits policy.
In many countries this has been regulated to a large extent. Nevertheless, as an employer there is room for additional arrangements that contribute to the well-being of employees. For example, additional arrangements with respect to health and well-being, such as promoting exercise and sport, fair remuneration and tailored leave arrangements that go beyond the statutory obligations. Research shows that these kinds of additional personalised arrangements are profitable investments.
Consider all employees!
You might think that in creating social value, you only consider employees on fixed-term or open-ended contracts. According to B Corp, this is too narrow a view. It is about all the people who - together with you ensure that the ambitions of the organisation are realised. So, include temporary staff and volunteers if you want to increase the social value of your business.
Be mindful of health and safety
International influences of the B Corp standard are also evident here. It specifically inquires about the extent to which the employer provides (additional) health and safety benefits. There is an additional step, namely how your organisation actively pays attention to the health and safety of the people working within the organisation. For example, in addition to active absenteeism support, do you have activities that focus on preventive health and/or do you actively measure air quality?
Ensure lifelong learning
The opportunities for personal development your organisation offer are a relevant point of attention in the B Corp standard. How have you implemented employee training and development? This goes a few steps beyond offering the typical standard course, because B Corp wants to know details about, for example, any existing process for evaluating employee development. Additional questions include whether your managers are properly trained, whether the use and supervision of trainees is properly regulated and whether there are internal career paths. But also, whether there is a clear dismissal procedure.
It is worth emphasising once again that training and development goes beyond the conventional course mentioned above. Also consider in particular the development of employees in the form of coaching, workplace learning, giving presentations, but also offering training in literacy and financial planning. According to B Corp, paying attention to employee well-being clearly goes well beyond training employees to do their jobs.
Encourage engagement, passion and safety
The Corp standard starts with the hygiene factors such as the benefits package you offer as the employer. You are expected to set out the options you offer in a clear, unambiguous and accessible way in a staff manual. It is also important to consider the safety of the workplace and to comply with international standards such as ISO 45001. Make safety a major theme and enable employees to report safety risks and incidents anonymously.
The trick is to go beyond merely working on the hygiene factors referred to above. Also work on promoting engagement and enthusiasm among employees and ensure an open culture where employees feel comfortable to talk. Measure engagement and enthusiasm, monitor and research staff turnover and absenteeism, and take visible action to improve scores.
Create employee ownership
We see that in organisations where employee engagement and enthusiasm is high, this leads by definition to a sense of ownership, as the Gallup study cited in the previous chapter also shows. Furthermore, B Corp points to the possibility of employees literally becoming (co-)owners of the company. These measures contribute to employee engagement and earn points in the B Corp assessment.
Continuously develop your workforce (and yourself!)
To achieve a true impact business model, continued development of employees and yourself is an important lever. So make sure you actively encourage the development of all employees. For example, start working actively with the theme “succession planning” by asking yourself the following questions for each employee/position: • Who is able to succeed this employee holding position X within one year? • Who in one to three years? • Who after three years?
