Employment Enterprises Blog

Rise of the B-Corps

Posted by Mike Haberman on Nov 30, 2016 6:51:00 AM

benefit corporation

I used to work for a company that treated its employees well. We had profit sharing and everyone got a ham at Christmas time along with a bonus check. I don't know if they still do that or not, but I would like to think they do. I read an article the other day that suggests that some companies are returning to the "old" model of treating employees well and there is even a name for it.

B-Corps

Alana Semuels, writing in The Atlantic, talked about a new type of business called a "benefit corporation." She says these businesses have as their mission "to consider the needs of society and the environment, in addition to profit." There are 27 states that have passed legislation that allows this form of business. Additionally there is something in all states called the "Certified B-corporation" where "The companies pledge to think about people and the planet in addition to profit, and an outside nonprofit inspects them and makes sure they're doing so." According to Semuels:

The assessment process begins with companies filling out an extensive questionnaire about how they are governed, how workers are paid and evaluated, what their mission is, what types of people (women, minorities) they employ, and what sustainability practices they have in place. Then the nonprofit inspects their books and scores them on each category, and if they fail to receive a certain grade, they lose certification.

Treating employees well is good for business
Many of these B-corporations are finding that treating employees well is a good long term strategy, though public B-corporations find that investors may shy away because of the potential impact on short-term results. In reality though, if you are concerned about employees it is the long-term results you are more interested in. You want to be there for the long haul and you want to keep employees working. Naturally to do that, the employees have to be committed to producing good products and services. Apparently though, according to Semuels, most of these companies would have excellent employee engagement numbers.

Investors coming around
Semuels points out that "Studies show that companies that behave "ethically" outperform their peers. Companies that put society and their employees first have a 25 percent higher stock value than their peers...And Zeynep Ton, an MIT professor, found that companies that look out for long-term employee happiness can actually be more efficient and profitable." As a result investors are starting to pay attention to companies that treat their employees well.

Millennials like it too
In a generation where many opt to be self-employed because of the quality of life, the option of working for a company with a reputation for caring for its employees and the planet is attractive. This will give these companies a competitive advantage in the marketplace in the future because of the talent they can attract.

Becoming a certified B-Corp might not be on your radar right now but as you look to your strategy for attracting and retaining talent in 2015, it certainly should be something you consider.

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Michael Haberman is cofounder and senior HR consultant of Omega HR Solutions, Inc., which offers compliance reviews, wage and hour guidance, supervisory and managerial training, strategic guidance, executive advisement, and more. He can be reached at mhaberman@omegahrsolutions.com. 

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Topics: Labor & Industrial Insights

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