Doing Well by Doing Good is an Innovative Idea!

I’ve always believed that you can do well – or at least pay the rent – by doing good, but throughout my career, I’ve found that most people feel that commitment to doing good should include accepting below market compensation. In other words, those who want to help the poor and disadvantaged or protect the environment should be willing to accept compensation that undervalues their skills and experience. This may be especially true in the non-profit sector, but I’ve found a similar bias on the for-profit side as well. In fact, I’d hazard a guess that most of today’s opportunities to do good on a full-time basis come with sub-par compensation.

How perverse is it to hold one group of dedicated, ethical individuals down because they are willing to devote their lives to making our world a better place? How can we argue, on the one hand, that major corporates should offer living wages and benefits to their employees in emerging markets while at the same time arguing to curtail the wages and benefits of those who work in philanthropy, development and impact investment?

The concept of social equity suggests that we should want to fairly compensate our “do-good” talent for their skills and experience, both because their efforts are important and because we want to attract more “do-good” talent to address the challenges faced by people and planet. That would mean higher core budgets at most non-profits, which donors would be advised to support. Staff turnover costs money; staff burnout is a mostly avoidable (and tragic) waste of resources. Hiring a bright, passionate and committed staffer without the right experience because that’s what talent is available or affordable is not the most efficient way to achieve high performance. Sure, they’ll learn how to swim if you throw them in the water, but imagine if you could provide coaching and support before you threw them in and after they were in the water trying to swim?

How often have we heard business leaders say that their people are their best asset? And yet, comparatively speaking, how well do we treat employees and where in our strategic plans and financial reports is this value reflected? R. Paul Herman of HIP Investors raised (and answered) this question during a recent impact investment webinar through Ventureneer, which you can watch here http://ventureneer.com/webclass/impact-investing-challenges-and-prospects

The way we compensate, nurture, reward and develop our human capital should reflect the same values and outcomes we hope to achieve through our “do good” work. My vision of a post-industrial utopia would include fair compensation, flexible schedules, work-life balance and a passionate, productive and empowered workforce. Three day weekends would be nice too!

The Impact Investment world relies heavily on phrases like “do well by doing good” as a way to attract new investment capital of all kinds. Truly, this notion is an important innovation and should not just be a marketing slogan. Long-term, we need to look at all investments through a blended value lens: in addition to financial returns, we need to consider social and environmental costs & benefits.

Would Coca-Cola be as good an investment prospect if it wasn’t looking to reduce water use in advance of coming scarcity? Is it a coincidence that companies on Fortune’s “100 Best Places to Work” list generate returns 3 times higher than the general market (read more about this at: http://www.greatplacetowork.com/our-approach/what-are-the-benefits-great-workplaces)?

As long as we think social finance, environmental finance and “mainstream finance” are different worlds, we encourage sub-optimal resource deployment. On the flip side, anything can be an impact investment if financial targets are accompanied by social, environmental and/or governance targets as well. If you believe that doing well by doing good is a reasonable proposition, make sure that this value flows through to the organizations and people that you expect to do good things! To do anything less means accepting that our best and brightest will always be better off doing well and donating money than applying their talents to making our planet a better place to live.

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