The ROI of Human Economics

This is a continuation of (pssst….Don’t Tell Anyone) We’re PEOPLE! Human economics, the new Business Hip

I’ve proposed in The Greater Good that organizations have a huge, largely untapped influencer potential over the overall strength of our social fabric: not just standard of living but also quality of life (QoL). The potential for QoL impact stems from well-aligned entities that have a clear purpose, sense of community, values…all contributors to the spiritual well-being of their employees.

I’m not delusional enough to think the heavy hitters are jumping on my little band wagon, but significant validations have recently come into play, or they’ve been in the wings or some time.

Gallup and others have researched the economic impacts of higher levels of engagement. It’s well documented that focusing on the warm fuzzies of engagement is a solid bottom line-driven business strategy. And Michael Porter added his .02c worth, in the context of shared value:
“There are numerous ways in which addressing societal concerns can yield productivity benefits to a firm. Consider, for example, what happens when a firm invests in a wellness program. Society benefits because employee and their families become healthier, and the firm minimizes employee absences and lost productivity.”

Springing from Porter’s shared value, Triple Pundit’s core philosophy is that the economy, environment and society are inseparably related, and understanding all three is critical to short-term profit and long term sustainability.

Here are a few excerpts from Business and Society in the Coming Decades by WalMart execs Kathleen McLaughlin and Doug McMillon, published by McKinsey and Company in April 2015:
There are compelling reasons companies should seize the initiative to drive social and business benefits. First, in an interconnected world facing unprecedented environmental and social challenges, society will demand it…Second, adding these other forms of positive return and improving systems will make the business more sustainable in the long term….By collaborating with other members of their networks and pursuing initiatives that draw on their particular capabilities, they can make society stronger in ways that also fortify their business….Leading businesses are actively using their scale and their particular assets to accelerate progress on tough social and environmental issues.

Walmart has five “screens” that define their contribution to making society stronger. See the article for WalMart’s systemic initiatives aimed at making a global social and economic impact, with this caveat from the authors: “The commitment to address social and environmental issues should be a “whole company” undertaking, woven into day-to-day business activities; it’s not just a matter of corporate philanthropy.”

Capitalists…With Hearts!
Denis Pageau is the founder and driving force behind Citizens and Societies,  “…a professional association of citizens that is ideologically neutral (politically and religiously) whose primary objective to help citizens improve their civic and societal competencies.” In 2012 Denis published a study titled Capitalists With Hearts that illustrates the ROI of increasing disposable income for select groups.

His conclusion: “….giving money to the working poor would earn a hefty 400% return on investment (ROI).” Here’s a little of how Denis got there:
In the “2010 World Wealth Report” a mere 90K individuals (.001% of the world population),
each possessing at least 30M$, owns together 14 trillion dollars. They are called the Ultra
High Net Worth Individual or UHNWI. There are another 10M individuals (.143% of the population) who possess between 1 million and 30 million, for a total of 25 trillion dollars. They are called the High Net Worth Individual or HNWI. Together these two groups represent one fifteenth of one percent of the world population, but own more than 39 trillion dollars.
      Should these HNWI and UHNWI invest in people instead of business opportunities? Not
everybody of course, only those who work. And, of those workers, not all workers, but those who do not make enough money to consume much: the working poor.

Pageau uses a very realistic and achievable level of “people investment” to come to this conclusion:
At the end of the year, a total of 10 million WPF would have received collectively 250
billion dollars affecting directly 46M US citizens. If the Keynesian multiplier effect is true, with a Marginal Propensity to Save (MPS) of 10 and a Marginal Propensity to Consume (MPC) of 90, this injection of funds would be multiplied by 10. The total impact would come to 2.5 trillion dollars (on an investment of $250b)

For neophytes to hardcore economics, Denis provided a link for the Keynesian Multiplier Effect. As I plan on staying a plebe, I’ll trust Denis’ considerable analytic prowess…he’s a beast. Read Mr. Pageau’s Capitalists With Hearts!

Does this mean that die-hard wealth-hoarding capitalists will line up with their millions in hand, hell-bent on making a real economic and social difference? Except for some very noteworthy exceptions, it’s doubtful…just sayin’.

Back to the WalMart piece for a final word:
In the long term, a company’s business interests and the interests of society converge. Companies, communities, individuals, and governments: we are all interdependent. Every healthy, high-performing company has an obligation to use its strengths to help society, and each can do so in ways that enhance the viability of the business, too….Large-scale change does not happen overnight, but the stakes and potential benefits are immense.

All this certainly puts a new spin on our worn-out thinking on Corporate Social Responsibility, doesn’t it?

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