Sustainable Carrots

February 10, 2014

Economics is often referred to as the “dismal science.” Its theories are often cold and calculating, and explain such disappointing outcomes as freeriding, moral hazard, and the tragedy of the commons.

Many of these theories are based on money as being the primary and often lone focus of human value. In real life, other things matter: free time, fun, beauty, family, community, religion, baseball, music, cold beverages, naps, surfing and on and on.

Most people would agree that money matters only to a certain point and then loses its marginal value relative to all the other experiences and delights that make life so good.

When it comes to employees, many companies erroneously incentivize only with money and not with other “carrots,” which may simultaneously be less costly to the employer and more valuable to the employee. 

When it comes to sustainability, key questions of great value can often be overlooked:

* How can we utilize sustainability to get the most out of our employees?
* How do we best compensate our employees for hitting sustainability targets?
* How do we challenge our employees to think innovatively about sustainability to better our business?

Here’s a hint: think beyond money.

I once volunteered with an eNGO to study the impacts of development on the coastal ecology in the Bahamas. Of the 12 volunteers on Andros Island, six were from a team of HSBC employees. Their employer offered (fully paid) trip as a team building and innovation inspiring activity.  I can assure you that this benefit strengthened employee loyalty and on-the-ground awareness of sustainability far better than the cash value of that trip would have, had employees simply received bonus checks.

Patagonia and Timberland offer their employees a similar benefit -- and so do a handful of other leading-edge companies:

* United Health: Contributes $4 million in volunteer hours as part of A Billion+ Change (skills-based service for local communities)

* Aegon: Extends program of paid time-off for volunteer work to remaining 36% of employees

* Dell: Provides 5 million cumulative hours of service to the communities in which we live and work

--> (please see to find out what other companies are doing).

It all may sound strange, but I think it works.

For companies who think exclusively in terms of monetary compensation, it may be time to introduce some change in how employees are rewarded and motivated. Change can be strange and require hard work. But history has shown that those most adept at changing quickly and gracefully will survive and thrive. And those least adept become part of the fossil record -- the most dismal of outcomes.

What question is your business overlooking? What change awaits you?

-- Jeff Gowdy is an Adjunct Professor of Strategy & Economics at the Vanderbilt University Owen Graduate School of Management.




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