Drop the buzzwords, big business
How do large-scale job cuts in the midst of a global pandemic fit with the values big NZ businesses say they uphold? Cat MacLennan tries to reconcile employers' corporate social responsibility policies with their plans to slash jobs.
Prime Minister Jacinda Ardern is right to be angry about The Warehouse Group’s plan for massive job cuts in the wake of Covid-19.
But the red sheds are not the only employer slashing hundreds of jobs in this country. On top of The Warehouse Group’s proposed abolition of at least 1000 positions, five other NZX-listed companies have announced almost 7500 redundancies in total. Air New Zealand is letting 4000 staff go; Fletcher Building 1500; the Millennium Copthorne 910; SkyCity Entertainment 900; and Tourism Holdings Ltd 140.
In addition, Steel & Tube plans 200 job losses, NZME a further 200, and Bunnings 145.
And many more workers are expected to be laid off in the coming weeks and months. They face stressful times and catastrophic losses of family incomes.
So how do large-scale job cuts in the midst of a global pandemic fit with the values these big businesses say they uphold?
Air New Zealand
Air New Zealand’s website says that its company purpose is “Supercharging New Zealand’s success socially, environmentally and economically.” It aims to be recognised as a driver of strategic community investment, helping to build strong and sustainable communities nationwide.
The company’s Sustainability Framework states that the airline aspires to be a global employer of choice and an inclusive and equitable place to work, helping to raise the bar for progressive workplace practices across New Zealand. Its 2030 goal is for the airline to be a global benchmark organisation for its employee engagement, grounded in a distinct employee experience that ensures safety and fosters high performance, innovation, community involvement, diversity and inclusion.
The website identifies as a challenge the fact that New Zealand communities are developing at increasingly uneven rates, with some struggling to maintain cohesion, resilience and prosperity. Accordingly, the airline’s aspiration is that New Zealand communities are thriving economically, culturally, socially and environmentally, with the country’s businesses helping to address current disparities in per capita income and opportunity.
Laying off hundreds of staff in a downturn appears to be just the same old approach that profit-driven businesses have always adopted. If that is the case, they should just come out and admit that their mantras about people being at the heart of their businesses are simply words.
At the end of this decade, the company says it wants to be recognised as the most influential exponent of strategic community investment in New Zealand, helping to building cohesive, resilient and sustainable communities across the country.
The CEO’s letter in the Sustainability Report 2019 says that “People are at the heart of Air New Zealand,” while the letter from the Sustainability Advisory Panel chair states that “Corporate sustainability for Air New Zealand starts with Air New Zealanders – the heart and soul of the company.” The document goes on to trumpet Air New Zealand’s commitment to being “a talent incubator for the wider community and fostering a culture that delivers a highly engaged workforce.”
Fletcher Building’s Annual Report 2019 says that the company’s sustainability strategy deepens its commitment to its people, with a key aim of the business being to support its people and communities. In relation to people and communities, the document points to people and culture and Fletcher Building’s role as a large employer as being the areas in which it can have the biggest impact and most influence.
The report says that the company’s sustainability aims support eight of the United Nations’ Sustainable Development Goals, including decent work and economic growth. It states that continuing to increase the engagement and capability of “our people” will be crucial in delivering its strategy.
The company says that it values its people and their families and lives a value of “Better Together.” One of the business’s long-term goals is to be recognised as a diverse, inclusive and equitable place to work.
The Warehouse Group Ltd
The Warehouse Group’s website has similarly stirring words about its employees. It says that its team members are the heart and soul of what drives it and the company is committed to “building a better tomorrow for all of us from the inside out.” The business’s vision is to be the country’s most sustainable business, meaning that it “will not only be profitable but we’ll also take responsibility for our environmental impact and the impact we have on people’s lives.”
The company’s philosophy is “Here for Good,” which it says is focused on the three key pillars of “our people, our products and our planet.” The company’s website states that the group is founded on the vision of creating a business that helps New Zealanders flourish.
The company’s Annual Report for the year ended 30 June 2019 has an “Our people” section which says that the business’s goal is to create a dynamic organisation with the highest-performing retail talent in New Zealand, building a skills pipeline and workforce planning, and introducing continuous learning.
The Warehouse’s Sustainability News dated 27 May 2020 state: was
“As the world is gasping for air, slowly moving past the worst of the pandemic, we are looking at our beloved country, our frazzled economy, our bruised communities, and asking ourselves the question: What does sustainability stand for in a post Covid-19 world ? Where should we make the best use of leadership to deliver what our country needs the most ? How do we balance economic recovery, social support and the long term urgency to address climate change and protect our planet ?”
SkyCity Entertainment’s website states that a commitment to corporate social responsibility lies at the heart of the company’s business. It says that part of being a responsible business is understanding the impacts of its operations, thereby enabling positive impacts to be fostered and negative outcomes to be mitigated.
The company’s Annual Report for the year ended 30 June 2019 says that better communities are at the heart of the business, with SkyCity’s sustainability initiatives focusing on doing good for its communities of customers, employees and suppliers. The business’s objective is to ensure that its strategic decisions strengthen the communities it operates in.
Millennium & Copthorne Hotels
The Millennium & Copthorne Hotels plc Annual Report & Accounts 2018 says that, as a service business “it is our people, and their attitude and skills, which set us apart from our competitors. We are committed to developing all of our colleagues, identifying and nurturing future leaders, and enabling everyone within the business to perform to their true potential.” The document states that the business aims to develop, support and retain its employees.
Tourism Holdings Ltd
Tourism Holdings Ltd’s Sustainability 2018 report says that businesses can no longer simply walk the talk. All firms need to dramatically increase the pace of change, as the strain placed on natural systems and the social fabric relied on to ensure society functions in a healthy way is too great for simple year-on-year, incremental improvement. Tourism Holdings Ltd has accordingly introduced its first integrated report to ensure it manages what really matters to the business, the natural environment and the community.
“We are becoming a Future-Fit Business. The Future-Fit Benchmark outlines 23 goals; all of which we will measure ourselves against, reporting on our progress and ensuring that we deliver to 100% of each (in time) – thus being Future-Fit. By evolving into a Future-Fit Business, we will contribute to a Future-Fit Society, one that protects the possibility that humans and other life will flourish on Earth by being environmentally restorative, socially just and economically inclusive. This is not a radical utopia.”
The company’s website states that “Our business is people, and we love our crew.” It goes on to say that, in any company, it is people who ultimately determine the success of the business. In a service industry such as tourism, the passion, skills and knowledge of staff are vital to delivering the best possible experience for customers. Tourism Holdings Ltd says that looking after the health and wellbeing of employees is crucial and many new initiatives have been introduced in recent times.
Bunnings says that its team members are the heart and soul of its business, acting as the face of the company to customers and providing the organisation’s friendly and helpful service. The firm describes itself as a large organisation with a family feel and a high employee retention rate.
The company states that it pursues sustainability by striving to make its operations socially responsible, environmentally aware and economically viable.
Air New Zealand, Fletcher Building, SkyCity Entertainment, Tourism Holdings Ltd and The Warehouse Group are all members of the Sustainable Business Council. The council’s website states that it helps businesses to be the best for New Zealand and the world, with its members being committed to “the balanced pursuit of economic growth, ecological integrity and social progress within a business context.”
The council’s Member Report 2019-2020 states that sustainability is “all about people, communities, the environment and [the] economy.” It says that the best businesses are good for people, communities, the environment and the economy, with the impact of Covid-19 meaning that actively demonstrating sustainability in the New Zealand business community has never been more important.
The council says that the private sector has a leading role to play in addressing climate change and key social issues. Members know that businesses can only be successful in the long term when people live well and within the limits of the planet. The council’s website explains that one of its six focus areas is social impact, with members making employment decisions that contribute to national efforts to reduce youth unemployment.
The commitment to a triple bottom line recognising the importance of social and environmental goals as well as economic returns marks a major shift away from the traditional, Friedmanite view that corporations existed only to make profits. The triple bottom line posits that, instead of one bottom line, there should be three: profit, people and the planet. Triple bottom lines aim to measure firms’ commitments to corporate social responsibility by tracking the financial, social and environmental performances of companies over time.
Since management consultant and sustainability advocate John Elkington coined the phrase “triple bottom line” in 1994, companies have increasingly sought to demonstrate their environmental and social credentials. Corporate social responsibility is also used to describe businesses’ integration of social and environmental issues into decisions, goals and operations.
In the United States in 2006, B Corporation certification was created for businesses balancing purpose and profit. The firms are legally required to consider the impact of their decisions on workers, customers, the community and the environment. There are now 3358 certified B Corporations in 71 countries, including 31 in New Zealand.
In August 2019, the United States Business Roundtable released a new Statement on the Purpose of a Corporation signed by 181 CEOs who committed themselves to leading their companies for the benefit of all stakeholders – customers, employees, suppliers and communities, as well as shareholders.
The roundtable has since 1978 periodically issued principles of corporate governance, with all of them between 1997 and 2018 asserting that corporations existed primarily to serve shareholders. Last year’s document represented a major break with that philosophy, outlining a modern standard for corporate responsibility.
The 2019 statement says that Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. Businesses signing the statement commit to investing in employees, beginning with compensating them fairly and providing important benefits, as well as supporting them through training and education that helps develop new skills for a rapidly-changing world.
But does all of this actually mean anything for workers ? Have large businesses either in Aotearoa or elsewhere moved away from slashing jobs as their first response to an economic downturn ?
The actions of this country’s large companies would seem to indicate that the answer is no. Air New Zealand’s share price is very high at present and it has a government $900 million debt facility available which it has not yet touched. It is forecasting a return to profit by August 2022 and has the option of a capital raising up its sleeve. It also received $71 million from the Government’s wage subsidy.
The Warehouse Group Ltd took $67 million in wage subsidy; SkyCity Management Ltd $21.7 million; Steel & Tube $5.5 million; and NZME Print Ltd, Radio Ltd, Holdings Ltd and Publishing Ltd a total of over $9 million.
SkyCity Entertainment reported a profit of $327 million for the six months to 31 December 2019, while Air New Zealand in February 2020 announced an interim profit of $198 million for the same period.
The question accordingly is whether all of these companies really had no better option than to make hundreds of employees redundant in response to Covid-19. It is hard to believe that.
Rather, laying off hundreds of staff in a downturn appears to be just the same old approach that profit-driven businesses have always adopted. If that is the case, they should just come out and admit that their mantras about people being at the heart of their businesses are simply words.
John Elkington, who coined the phrase “triple bottom line” in 1994, wrote an article in 2018 proposing a “recall” of the concept. This was not because he no longer believed in it, but because so many businesses were misusing it. Elkington said that success or failure on sustainability goals could not be measured only in terms of profit and loss. It must also be measured in terms of the wellbeing of billions of people and the health of the planet.
The triple bottom line had been designed to provoke deeper thinking about capitalism, but there was a hard-wired cultural problem in business, finance and markets.
“Whereas CEOs, CFOs, and other corporate leaders move heaven and earth to ensure that they hit their profit targets, the same is very rarely true of their people and planet targets. Clearly, the Triple Bottom Line has failed to bury the single bottom line paradigm.”
Elkington said that the triple bottom line concept had been captured and diluted by accountants and reporting consultants. Thousands of triple bottom line reports were now produced, but the system change the concept had been designed to drive was not occurring.
It is devastating to workers, families and their communities for employers to lay off hundreds of workers – particularly during a steep economic downturn. There is nothing supportive either of the employees or their communities in slashing jobs.
Benefit levels in this country are deliberately set so low as to be unliveable, meaning that people thrown out of work rapidly fall into poverty. They cannot support their families properly or participate fully in their communities.
Big businesses in Aotearoa need to rethink both their actions and their visions. If sustainability is just a buzzword rather than a guiding principle of their companies, they should just admit that.
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