Featured in today's briefing:
- How to track the ‘S’ in ESG.
- Predictions from readers for 2023.
- Focusing on miscalculations rather than failures in job interviews.
The Macro Context
- Public-health officials are concerned about rising rates of XBB.1.5, a subvariant of the Omicron strain of Covid that’s spreading rapidly through parts of the US.
- Despite the economic downturn, some 92% of employers surveyed by job-search site Monster said they intend to hire new staff this year, either to fill vacant roles or to support company growth.
- A separate Manpower Group report last week found that the Net Economic Outlook—a metric that counts the percentage of organizations that plan to add staff minus the percentage planning reductions in force—was 29% in the US for Q1 of this year, a 4% drop from Q4 2022. Companies with fewer than 50 employees are far less optimistic than those with 250 or more.
- Consumer prices fell slightly in December from the month earlier, but were still up 6.5% from December 2021.
Focus on How to Measure the ‘S’ in ESG
Last year in Davos, Shamina Singh, founder and president of the Mastercard Center for Inclusive Growth, shared a helpful framework with other business leaders for thinking about the ‘S’ in ESG, the acronym for environmental, social, and governance practices.
As they measure their environmental impact, many organizations track Scope One, Scope Two, and Scope Three emissions—this is a way of accounting for both the direct and indirect carbon produced, from the business itself, its employees, suppliers, and its customers.
Could—and should—you do the same thing for the social impact of a business? That was an idea that Singh proposed last year, and the top business leaders she was addressing said they thought it was worth building on.
Ahead of the World Economic Forum’s next annual meeting in Davos this week, we caught up with Singh to hear more. Here are excerpts of our conversation, edited for space and clarity:
What's the connection between ESG efforts and workplace challenges that organizations are dealing with?
The entry point of the conversation is that all of us are thinking about how to recruit and retain our talent. It is such an enormous priority area for all of us. If you're thinking about that, then you have to be also thinking about purpose-driven work and the role of purpose and connection to work.
Those things connect with the ESG conversation that's happening. The thread that runs through all of this is that if you are thinking about the workplace, if you're thinking about the role of companies in society, then it makes sense that you would try to understand how environmental, social, and governance impact purpose, recruiting and retention, people practices—how they all fit together.
The social pillar of ESG is really expansive and varied, which is part of what makes standardized measurement difficult and important. Generally speaking, that ‘S’ category covers how a company is engaging with its employees and communities and society at large. But the thing that gets measured—at least in the context of ESG right now—is a very limited set of characteristics of a company that really revolves around the worker component. So the starting point for the ‘S’ in ESG is really around workplaces and what are the things that are uniform across companies that relate to work and workers.
What you're proposing is a more expansive assessment of the ‘S’ in ESG and measuring of it. Can you explain that?
The ‘S’ doesn't stop there—certainly not for us, but I don't think for many companies who are actually thinking about how to recruit and retain quality talent and compete for quality talent in this competitive environment. Also for companies who are in a place to bring a positive difference in the world. For us—and for companies like that—the conversation is a more expansive view of the ‘S’ in terms of, how are we using our assets as a company for impact? That's the shortest way to think about it. As Mastercard, we look at our assets like our network, our people, philanthropic capital, R&D, products, technology, things like that. Thinking about how you use those things in service of people on the planet, one way of doing it is through the ‘E.’ And we've constructed that framework and followed that framework. And what we're doing is expanding the ‘S’ to capture all of the work that we're doing.
For the environmental side of things, there's this concept of Scope One, Scope Two, and Scope Three impact. Scope One is directly controlled, and then Two and Three are less directly controlled, but they're influenced by the company. What could a similar framework that would make sense for the ‘S’ side of things look like?
Right now, Scope One would look like what many of us measure with ‘S’, which is things like representation of different ethnic minorities across the organization, gender parity, human rights. If you added a Scope Two to that, it might look like your investments in ‘S’. It could be your philanthropic investments, it could be your research investments, it could be how you invest in products and services that also have an impact on society. At Mastercard, part of Scope Two might be what are the things that we're doing as a business that impact and expand financial inclusion and inclusive growth across not only the philanthropic side but also the business side.
And then Scope Three would be, at least in our case, what's the impact of those investments? For us, that might mean how many people have benefited from being financially included or what has been the benefit of being financially included, or what has been the impact of our work around constructing data science principles or AI responsibility principles, and what have been the impact of those investments and that perspective on our products and services. So Scope One is what you can control, Scope Two would be what your investments might be both from a philanthropic perspective and from a business perspective. And then Scope Three might be the impact of those investments on humanity or on the world.
Even while we are capturing all of these things in our sustainability reports and our corporate responsibility papers and our ratings and rankings and things like that, this approach gives us a way to talk about it and think about it.
For the ‘E’ in ESG, companies have made “net zero” emissions commitments. Is the idea that you could do something similar with this?
Exactly. So for us, it might be our financial inclusion commitment. We made a commitment pre-Covid to bring 500 million people into the financial system. At the height of Covid, we doubled down and said we want to bring a billion people into the digital economy. We also have a set of metrics around gender that we're looking at. We also have a metric around racial equity that we're looking at. Those, combined with our net zero commitment and the other work we're doing in our environmental initiatives, help us actually create a framework that allows us to link this to compensation for everybody across the company. We started out with the executive vice presidents in year one, and then in the next year expanded that to include everybody at the company. We have worked pretty hard to try to get some standardized metrics that we could actually talk about and measure and link to compensation.
Read a full transcript of our conversation, including Singh’s response to the criticism of ESG as “woke capitalism.”
What Else You Need to Know
Your predictions are in for the coming year. Last month, we partnered with Nonrival, a newsletter where readers make weekly forecasts about work, business, and the economy, to predict how business leaders’ priorities will change in the year ahead. With thanks to all who responded with predictions, here are the results:
- In Charter’s survey of business leaders in fall 2022, only one-third expected their employer’s workplace arrangements to remain the same over the next year. In our Nonrival poll, two-thirds of respondents said they think it is likely or very likely that that number will grow, and that more executives will be confident in the staying power of their hybrid or remote policies or lack thereof.
- We also asked you to predict the state of childcare and mentoring benefits—a question that yielded far more uncertainty, with most people offering roughly 50/50 odds that these benefits would become more common over the next year. (Our business leaders survey found that they’re already quite rare: In the fall, some 11% of respondents said they offered sponsored or subsidized childcare, 8% offered backup childcare, and 27% offered professional development coaching.)
- Read Nonrival’s in-depth writeup of the prediction results.
Increased worker empowerment means work is moving away from the rigid construct of ‘jobs,’ a new Deloitte survey finds. The Deloitte 2023 Global human capital trends report found that the majority of both workers and employers don’t believe that work is best structured through jobs.
- Instead of formal titles, job descriptions, and career ladders, employees are looking for opportunities with a skills-based approach to talent management. In such workplaces, roles are filled based on key competencies rather than degrees and previous roles, work is assigned based on the skills necessary to complete a project rather than job titles or descriptions, and individual workers have ample opportunities to develop new skills.
- The survey data suggest that a skills-based approach may benefit employers, too. Researchers found that companies with a focus on skills tend to be more innovative and agile while retaining workers more effectively.
The Supreme Court may soon rule on a case that could change when workers are allowed to strike. The court will soon hear oral arguments for Glacier Northwest v. International Brotherhood of Teamsters, a case that challenges a long-established process for determining when unions are liable for damages that result from the timing of a strike.
- The rule in question, decided in San Diego Trades Council v. Garmon (1959), protects the rights of workers to strike even when the timing may result in damage to company product or property, such as milk truck drivers who strike even though it may cause milk to spoil.
- In the case of Glacier Northwest, the Garmon rule protects Teamsters who went on strike while Glacier Northwest’s trucks were filled with concrete—timing that the company alleges could have damaged the trucks, even though the company was able to remove the concrete before it could harden.
- With a conservative majority that has been hostile to organized labor in the past, labor advocates are worried that the upcoming decision may weaken the position of unions and their ability to strike.
West coast companies are taking up pay transparency slowly. As we’ve previously covered, California and Washington are the latest states to introduce pay transparency laws, but halfway into January, compliance is lagging.
- One report from Jan. 6 found that just 39% percent of California tech companies complied with new pay transparency legislation in their job postings, and just 63% of New York City companies complied with legislation that went into effect earlier this fall.
- Even among companies that have added salary ranges to postings, some ranges are too broad to be helpful to potential employees. Tesla, for example, posted a software engineer position with a range of $83,200 to $417,600, and Netflix posted a position with a pay range of $90,000 to $900,000.
- For guidance on implementing pay transparency in line with company values of transparency and fairness, check out Charter’s Get Your Organization Ready for Pay Transparency: A step-by-step guide.
Return to workplace speed round:
- Disney CEO Bob Iger has instructed corporate employees to return to the company’s offices four days a week beginning March 1.
- Recruiters are caught between companies and workers they’re wooing, trying to coax more flexibility from employers while attempting to win over candidates who may be skeptical of non-remote roles.
- News Corp. CEO Robert Thomson sent a staff memo urging employees to come to the office more, saying that “subtleties of body language and the nuances of knowing glances” were missing when they worked from home..
- New York City mayor Eric Adams is pushing for zoning changes that would enable the city to more easily turn unused office space into as many as 20,000 housing units.
- A drop in daily commuters—and the revenue their fares provided—has left public-transit systems in several major cities scrambling to find new funding sources.
- In four years, over 2,000 people have moved to Tulsa under its Tulsa Remote program that pays remote workers $10,000 to relocate to the Oklahoma city. Participants have higher real incomes (after living costs) than before moving, and researchers estimate that every dollar spent by the program generates $13 for the local economy.
Here are some of the best tips and insights from the past week for managing yourself and your team:
- Crowdsource the ground rules for your post-mortems. Before a debrief, gather input from your colleagues on how they’d like to approach it, which helps keep the discussion both psychologically safe and productive. Authoring this list as a group also ensures that everyone feels accountable for adhering to the rules you come up with. (Post the rules somewhere visible during your session as a reminder.)
- When asked about failures, focus on miscalculations. The savviest way to answer the classic job-interview question “tell me about a time you failed” is to describe a time when something didn’t go according to plan. That offers you space to reflect and demonstrate learning without highlighting any glaring flaws.
- Implement a daily blackout period. As a team, agree on a window each day to stay off Slack, email, and other electronic forms of communication, giving people that time to focus without feeling the pull of distraction or the need to multitask.
- Make an “if-then” plan for personal growth. If there’s something you’d like to change about yourself—say, for example, that you want to become better at staying in touch with former colleagues—make a nebulous goal feel more manageable by giving yourself action items for specific scenarios. For example: “If I see someone I used to work with share news on LinkedIn, I’ll reach out to them to catch up.”
- Check listed salary ranges against your own research. Think of the pay band in a job listing as one data point of many—along with numbers on sites like Glassdoor, information from your network, and your own knowledge of industry market rates—to help understand what you should make and prepare a convincing argument for it.
There might be a new reason to wear a mask at work. Startup company Skyted is developing a face mask that blocks 80% of voice vibrations, potentially freeing workers up to take a call next to a deskmate instead of running to a phone booth. At $400, the mask will set you back more than your typical KN95.
Help wanted: New York City’s next top foodie. The online restaurant reviewing website The Infatuation is searching for its next editor to eat their way across NYC. In addition to standard benefits like health insurance coverage, childcare support, and a retirement savings plan, the position also comes with a more unique perk: a $30,000 annual budget to spend at NYC restaurants.
The handbook for this new era of business doesn’t exist. We’re all drafting our own as we go along—and now we’d like to start doing so together. You can sign up here to receive this briefing by email.