People are pricey. We need paychecks and health care and support to learn new skills. We want to provide for our families and to feel pride in our work and to make it to our kids’ soccer games. Prevailing business theory suggests that companies should think about the price of employees as personnel expenses to be minimized, contained, and trimmed in lean times. But there is a new conversation that creates the business case for considering jobs, employee engagement, and human capital in a different way. Research from Harvard, MIT, and Yale suggests that companies who spend the time and capital to create engaged cultures and human capital practices have the potential for stronger long-term sustainability, increased economic value creation, and better investment returns.
The impact investing space is the perfect place to incubate and amplify this concept because, in addition to driving company performance and potential investment returns, human capital considerations have the opportunity to create new layers of positive impact in our work and our world. This idea isn’t new to IC; in fact, the first company I saw pitch here (nine years ago!) was Social Imprints, a printing company that offers good jobs and upward mobility to workers in recovery. It’s increasingly timely as rising incarceration rates and a global refugee crisis highlight the need – and potential – for #FundedbyIC companies like Wash Cycle Laundry, which employs formerly incarcerated workers in its eco-friendly laundry delivery service, and Knotty Tie, which creates handmade ties and scarves through meaningful employment opportunities for refugees in Colorado.
How can you start thinking about human capital and your own investment strategy? Our network recently examined how best to perform due diligence on a company’s leaders and management team. Now, expand that assessment to look at the full workforce. Are employees really engaged? Do workers have mechanisms for providing feedback, and if so, how do leaders use that feedback to drive operational performance? Does the company culture resonate with you? Would you want to work there? These are some questions you can start asking as you engage with entrepreneurs and assess deals in any sector or impact area.
Stay tuned for much more, including a deeper dive into considerations on recruitment, culture, feedback, employee ownership, and leadership per The Hitachi Foundation’s “Human Capital Advantage” curriculum. We are thankful to have inherited this thought leadership and the opportunity to carry this work forward. Reach out to Renata Hron Gomez to learn more about how you can join this conversation, and we hope to see you at our “Good Jobs ARE Good Investments” panel at SOCAP (IC members receive a discount; registration details coming soon)!