It’s been almost two years since I started my job as U.S. Secretary of Labor. And during that time, I’ve met a lot of business leaders who are combining idealism and pragmatism to create and expand opportunity.
Take Kip Tindell, CEO of the Container Store, as an example. Kip recently stopped by my office to talk about his belief in “conscious capitalism” — the idea that businesses can look out for the best interests of their communities and workers without hurting their bottom line.
Container Store employees earn well above the minimum wage and bonuses each year based on their performance. The company’s turnover rate is just 10 percent, compared to the 70 percent retail industry average. This approach has earned the Container Store a spot on Fortune’s “100 Best Companies to Work For” list for 15 straight years because they understand that investing in their workers is good for business.
More and more companies are discovering that an innovative high-road business model improves their bottom line. It reduces turnover and training costs and it makes for more productive employees who provide better customer service.
The goal is to build an economy that works for everyone. How do we do that? How do we ensure that the wind at our back propels everyone forward? How do we create broadly shared prosperity? I believe that government at all levels plays a critical role, but government simply can’t do it alone. We need leadership from a business community that recognizes shareholders are best served when all stakeholders are well-served. We need even more employers to embrace the idea that we all succeed only when we all succeed.
Adopting and updating the Sullivan Principles, a simple code of conduct for companies, could be a catalyst for the change we need. The Sullivan Principles were developed in 1977 by the Reverend Dr. Leon Sullivan, the first African-American in our nation’s history to sit on the board of directors of a major corporation. They included: equal pay, non-segregation, training opportunities, and quality of life in housing, transportation, education and health.
The Sullivan Principles were updated in 1999, but I think it’s time for another version. I have a few ideas of what might be included in a set of 21st-century Sullivan Principles for shared prosperity:
1. Reject false choices.
Do I treat my workers with dignity or grow my business? That’s a false choice. It’s possible and profitable to do both. Companies like the Container Store, Costco, Shake Shack, and others have proven that the right decisions lead to win-win-win scenarios where you can do the right thing by your workers, your shareholders and your customers.
2. Shareholder return is not the only metric of a successful business.
It’s an important outcome, but not the only important outcome. We need a stakeholder, rather than a shareholder, model. Doing business in America is a great privilege; employers benefit from a great number of public services like schools and roads to make their businesses grow. So your responsibility has to be not just to quarterly earnings, but also to the common good.
3. Lifting up worker voice.
“Worker voice,” defined in many ways and taking various forms, is indispensable to business competitiveness and a growing economy. One example is Volkswagen, which uses a works council model. For New Belgium beer company, it’s employee stock ownership. Proctor & Gamble has done it with profit-sharing for decades. Unions run organizing campaigns and engage in collective bargaining. But for all of them, regardless of the vehicle, the value proposition is the same: We’re stronger together; we prosper because we embrace the power of we.
4. Fair pay leads to “countrywide prosperity.”
If you work full-time in America, you should be able to support your family without being on public assistance. Higher wages actually reduce employer costs in the long run, and the benefits reverberate throughout the economy. Henry Ford figured that out this virtuous cycle more than 100 years ago. “If we can distribute high wages,” he said, “then that money is going to be spent and it will serve to make storekeepers and distributors and manufacturers and workers in other lines more prosperous and their prosperity will be reflected in our sales. Countrywide high wages spell countrywide prosperity.”
5. Respect work-life balance.
If you really believe family comes first, don’t just pay lip service to it, put it into practice. Twenty-first-century workers, in order to be productive and add value, need the same paid leave enjoyed by their counterparts in every other advanced economy on earth. Companies should help people meet their obligations at work and at home. Something is wrong when families have to pay, in many cases, more for infant day care than for in-state tuition at a public university. We live in a Modern Family world; let’s not live byLeave It to Beaver rules.
6. The most important word in a democracy is “we.”
America has often mythologized individualism, but in reality the nation became great and can only become greater when we work together, strive together, and overcome hardship together. That’s true not just of social justice movements — it’s true of our most successful businesses too.
That’s my back-of-the-envelope attempt to enumerate Sullivan Principles for the world we live in today. I consider it a work in progress, and I challenge everyone to build on it by creating an accountability measure for the businesses you work for, spend at, and invest in.
We have a growing movement of business leaders and others who are committed to building human capital, who believe they can prosper by harnessing the power of we. The sooner we upscale this movement, the sooner we can expand opportunity for all Americans.