|Inequality: If business doesn’t act, everyone else will, eventually|
Income inequality is everywhere.
There’s not a newspaper on the planet, online and hardcopy, that is not debating it.
We’ve all seen the numbers. I won’t present them here.
At Davos as I write, it is top of the agenda. As it was last year.
Revolutions are brewing because of it.
Our Politicians talk about jobs as the solution.
But for many, the jobs being created don’t solve the problem.
In fact many of them, low paid and low skilled, exacerbate the problem.
So what’s a responsibly-minded company do in the face of all this?
A few thoughts:
- Basic skills investment. If universities and many schools are not cutting it for corporates, as many complain, on even basic numeracy and literacy, corporate education and training programmes are vital. Many are basic level, as needed. But how about a bigger, wider plan in collaboration with sectoral peers (as happens in UK retail) to scale this up?
- Beyond basic skills. Can companies justify investing further in people beyond basic skills? Of course, many do this already. They have to. But is there increasingly a more strategic reason to do this? If expectations are that companies must demonstrate they can and will do more in society, investing in education beyond basic levels has to rise, across the board. Corporate universities and training centres are already in place all around the world. Perhaps now there is a greater reason to raise their profile and push more funding towards them. As someone who has taught at a University at Master’s level for five years, I would love to see a company approach my institution at attach a more advanced and practical skills programme to the management school or elsewhere (I teach at the Birkbeck, University of London, contact me if interested in this idea!)
- The tax debate. As turkeys don’t vote for Christmas, so companies will never lobby for higher taxes, generally speaking. Governments waste a lot of tax money and it is better spent by business, goes the argument. Sometimes this is true, sometimes definitely not. In the latter case, is there a role for business to support independent (and I mean independent) public debate around how Government money (our money) gets spent? We clearly need to reform the tax systems of most countries. How about some non-partisan financial support for research on ways to do that? Why is it just rich individuals who get to fund their own think-tanks? We’ve already seen corporate cash help in specific areas, such as with climate change or improved governance. Why not on other issues? Companies could create a fund that fuels public debate, fairly and openly.
- SME support. This is a major issue for large companies already. Many do excellent work supporting small farmers and providing general small to medium enterprise support around the world. But a lot more is going to be needed. We all know how 90%+ of most countries employment comes from SMEs, and the banks don’t like to lend to them without assets on the line, so how can we expand financial and other support? Is there a role for business associations?
- Entrepreneur empowerment. Again, lots of this already happens. Tech firms are desperate for the next killer app, Governments want more James Dysons or Richard Bransons. All this is well known. But when you start a small business, and I have started a few, prioritisation is a major challenge, alongside cashflow, marketing, business development and people management etc. There are decent books out there, and some good web resources. But companies could do a lot more to fund free online centres (or low cost ones, perhaps better) where genuine entrepreneurs mentor others, or provide free training courses. Can massive online open courses play a role here? Here’s an example of a paid course that could be made more available by sponsorship and marketing. I am taking it at the moment myself.
- Lead by example. Some argue that CEO pay caps, like female quotas for boards, are the only way to go. In the UK that idea became discredited in the 1970’s. It’s too much of a blunt instrument for me. But companies, and groups of companies in particular, perhaps at places such as Davos, need to show some class and decorum when it comes to pay. Your CEO earning 100+ times more than the least well paid employee is at the very least, poor taste in troubled times. CEO incentives are changing, and becoming more long term. This is a good thing. Anyone going too far needs to be reined in by CEO peer pressure. This is not easy, but CEOs can take leadership here by talking about what constitutes fair pay, and not hiding behind contract secrecy or closed doors.
Income inequality is now strategic, and there’s something your company can do about it.
(FYI: Joe Nocera in the NYTimes suggests Brazil has found ways to tackle the challenge. He goes over fairly well-trodden ground, but this is worth a read.