People are still the missing puzzle piece in the pursuit of the triple bottom line
What is your local café without the barista who knows your order and your dog’s name? Or think back to a special holiday memory when a local shared a secret swimming spot, speakeasy or secluded point for sunset which you would have never found from google. Finally, reflect on your favourite job and ask yourself why it stood out. Chances are the common answer to these three questions is people, people, people.
In 1994 a British management consultant, John Elkington coined the term triple bottom line. This idea expanded the purpose and definition of business from solely being focused on the pursuit of profit to include the planet and people. In other words a company should be responsible and accountable to all stakeholders not just shareholders. These three P’s became the triple bottom line which business schools around the world taught to their students over the last three decades. Students leave University with this toolkit, eager to implement and apply this theory in their workplaces. However after a few months of working, these recently excited students, ready to make change, often become deflated when they realise that whilst most companies report on the three P’s, they really only focus on profit and to a lesser extent the planet, leaving people to be an afterthought.
Over the last 100 years profit has increasingly become the main focus of many corporations. Investors often demand unrealistic returns, which leads to Management and the Board having to make decisions which often compromise the planet and people. The rhetoric that above all, growth and therefore profit is good and the ultimate goal of corporations still occupies too much conversation in boardrooms. The concept and construct of a company is entirely manmade. As articulated in Sapiens by Yuval Noah Harari a company is an imaginary construct which we have accepted to be as real as something in the natural world. However a company does not have feelings, a voice or perform specific tasks. Apple doesn’t technically build your latest iPhone and Uber doesn’t technically drive you to the airport. It is the people that work for these companies that perform these tasks. Your experience and ultimately your perception of a company often is the result of the people you interact with.
Over the last decade protecting and preserving the planet has become more important. Consumers are increasingly concerned about the state of the world and are actively supporting brands which align with their values. According to the Economist Intelligence Unit there has been a 71% increase in online searches for sustainable goods globally over the past five years. In the State of Fashion 2020 report by the Business of Fashion and McKinsey 66% of participants said that they consider sustainability when making a purchase. In order to stay relevant and ultimately profitable brands need to be seen to be sustainable and environmentally focused. Almost ironically, trends and industries which have focused on sustainability have provided investors with plenty of profit. Clean energy, electric vehicles and plant based alternatives are some of the highest returning sectors over the last few years, outperforming other traditional sectors. The skeptic in me does wonder whether companies are focusing on the planet because of the profitability? Regardless it is a small step in the right direction.
People are the last point of John Elkington’s puzzle which needs to be perfected. Far too frequently corporations make people redundant, send work offshore and do not pay employees a living wage. These decisions are purely profit driven, pleasing investors but neglecting the impact this has on people’s livelihood and wellbeing. The success of a company is arguably contingent on the people and therefore people should be the focal point of decision making. Bumble recently announced that it would give their employees a week off to combat burnout which employees globally have felt, partially spurred on by the pandemic. Guess what happened with the share price of Bumble? It decreased. This is an example of shareholders signaling to the market that profit is paramount and potentially at the expense of employee’s wellbeing.
The ultimate irony in all of this is people are responsible for both the people and the planet’s problems. Profit should never be superior to the planet or people as without them profit would not be possible. These three P’s are interdependent and should be considered equal. Like all things, to get to a point of equality people need to take the centerstage until equilibrium is met. We want employees (aka the people responsible for turning a company vision or mission into reality) to truly feel engaged, valued and excited about the future.At Pomelo we are trying to tackle one small part of the people problem by engaging, motivating, and retaining talented employees in start-ups and scale ups through the creation and education of equity agreements which are employee centric. Making employees excited about their future and the future of the place they work is good for business (and therefore profit) but more importantly the people.
I leave you with a challenge, next time you are getting a coffee at your local, let them really know how much you appreciate their oat milk flat white, it may just make their day.