Don't Rebuild - Build Back Better - After The COVID-19 Crisis

6/23/2020 Don't rebuild—"build back better" after the COVID-19 crisis
F O L LOW 
N TECH WORK LIFE C R E AT I V I T Y I M PAC T PODCASTS VIDEO RECOMMENDER SUBSCRIBE
UPDATES: COVID-19
 A DV E R T I S E M E N T

Artec 3D professional portable and desktop
 LEARN MORE
scanners and user-friendly 3D software.

05 -1 3 -2 0 T H E N E W C A P I TA L I S M
What it means for businesses to ‘build back better’ after

COVID-19
The health and economic crisis has prompted pro-employee changes at some companies. Business
school professor Sarah Kaplan argues they should keep them and do even more.
[Source Images: rasslava/iStock, krung99/iStock]
We updated our Privacy Policy as of February 24, 2020. Learn about our personal information collection
practices here.
https://www.fastcompany.com/90504151/what-it-means-for-businesses-to-build-back-better-after-covid-19 1/14
BY S A R A H K A P L A N
8 MINUTE READ
Amazon’s Jeff Bezos signed it. So did Doug McMillon, the CEO of Walmart, and Charlie Scharf, the CEO of
WellsFargo. Last summer these corporate chieftains and 178 others made a big fuss over affirming the
Business Roundtable’s updated statement of purpose, declaring the end of shareholder primacy in favor of
 capitalism” that aims to create value for employees, suppliers, communities, and others.
“stakeholder

What a difference a crisis makes. As America scrambled to deal with the health and economic fallout of the
 pandemic, workers in Amazon warehouses across the U.S. staged walkouts to protest unsafe
COVID-19
working conditions, and the company’s Whole Foods division had to walk back an initial statement asking
employees to donate sick days. Walmart’s ASDA division has canceled orders from apparel manufacturers in
places such as Bangladesh even if production was completed or in progress. And Wells Fargo’s deferred-
mortgage-repayment program—designed to alleviate monthly payments for suddenly unemployed
homeowners—still requires borrowers to repay the whole lump sum after three months.
It’s a tightrope, of course. Companies are trying to stay afloat. The J. Crew and Neiman Marcus bankruptcies
are harbingers of many to come. Some companies are just waiting to get “back to normal” and using bailouts
to tide them over. However, myriad signals tell us that the old normal won’t be adequate or even possible.
COVID-19 is revealing fractures in our economy that many in the corporate elite might not have paid
attention to in the past.
We need to build back better.
USING RECOVERY TO CREATE RESILIENCE

“Build back better” is an expression coined by a UN task force charged with coming up with improved
disaster-recovery plans. For them, building back better meant using recovery after calamities—they were
thinking of earthquakes, tsunamis, and hurricanes—to restore equitable social systems, revitalize livelihoods,
and protect the environment. Don’t just rebuild houses—install clean water systems. Don’t just improve early
warning systems— create safer roads and dwellings.
For us in the midst of the COVID-19 crisis, build back better means making good on the commitments to
stakeholders that everyone was so eagerly talking about last year.




Even very short-term evidence indicates that a more socially responsible approach might also be a more
resilient approach. According to an analysis by Just Capital, companies that have prioritized workers and
customers during this crisis are doing better in the market. Scholarly research in finance has shown that
investing in corporate social responsibility (CSR) creates greater social capital—norms of trustworthiness and
the propensity to reciprocate—which leads to greater resilience, because being trustworthy is more valuable
in times of uncertainty and upheaval.
Yet, even before the crisis, one-third of Americans thought technology companies and banks had a negative
effect on the country, and more than half had a negative view of large corporations overall. The trust isn’t
there . . . yet.
What would it take? To build back better, companies need to redesign, reorient, and realign.
REDESIGNING WORK FOR THE 21ST CENTURY

First, companies need to radically redesign work. Here, workers are guiding us to solutions. A living wage,
guaranteed sick leave and care leave, and increased safety will address many of the deep inequalities that
the pandemic has brought even more clearly into focus. For many years, companies have resisted attempts
to provide these benefits.
But we have now seen that it is possible. Aldi, Anheuser-Busch, Danone, and Nestlé, among others, have
increased pay to essential workers. Dominion Energy, SimpliPhi, and S&P Global are offering more paid sick
leave; and even Uber is now offering two weeks of paid sick leave to its drivers. Now that the previously
unthinkable has been accomplished, it seems hard to return to old ways.
Even at a moment when workers might not have much power given soaring unemployment rates, they are
conducting walkouts and strikes to improve their precarious situation. They are unlikely to stand down as the
economy recovers.
The 1918 Spanish flu pandemic holds some lessons: One of the biggest waves of labor protest in U.S.
history occurred just after that pandemic peaked. Twenty percent of the total workforce went out on strike—
police officers, steelworkers, dressmakers, coal miners, shipyard workers, and even Broadway theater actors
—and they got better working conditions as a result.

Today,essential workers are being applauded for risking their own personal safety to supply food, transport
goods, and care for the sick. Yet they have historically been paid notoriously low wages with few benefits. Do
we can go back to an old normal when grocery workers, home health assistants, farmworkers, and
we think
delivery drivers can barely scratch out a livelihood? Should we want to?

The pandemic has forced many of us who still have jobs into completely new modes of working. Disability
advocates have long asked for accommodations such as work-from-home options, requests that employers
often denied as too expensive or too complicated to implement. Now that abled people must work from
home, organizations are finding that it is indeed possible to hold meetings, teach classes, and brainstorm
remotely. Why wouldn’t we continue investing in these types of more flexible accommodations?
Modern capitalism has long rewarded the “ideal worker”—available at all times, dedicated to the job, without
family encumbrances—but this is likely to change as people, in quarantine, rediscover the simple joys in life:
time with family, friends, gardening, baking, crafts, hiking, woodworking, and so on.
Finally, it all comes down to childcare. Many men working from home are now finding out just how intensive
childcare is. Work has needed to morph to deal with parents taking shifts with the kids. As the economy
reopens, women are disproportionately going to be held back if adequate childcare options and work
arrangements are not available. Childcare has always been a rate limiter in women’s advancement.
Companies now just have a clearer window through which to see the challenge.
REORIENTING PRIORITIES
When companies commit to “purpose,” this must by definition reorient corporate priorities. We have for the
past five decades—guided by Milton Friedman’s 1970 dictate—glorified total returns to shareholders where
interests of stakeholders were only a derivative of the duty to the shareholder.
It wasn’t always this way. After the Second World War, as Mark Mizruchi wrote in The Fracturing of the
American Corporate Elite, there was a broad settlement in which companies acceded to the legitimacy of
organized labor and other interests, accepting and even supporting federal legislation to protect the
environment, eliminate discrimination in hiring, and so on. In the 1970s, stagflation, the oil crisis, and other
economic concerns prepared the way for a different settlement, one which has for half a century privileged
the shareholder and led to a massive increase in inequality
The COVID-19 pandemic creates an opening for a new settlement with different priorities. While companies
are thinking about survival, they are also imagining new futures. Even before the pandemic, there was a
surfeit of reasons for urgency: millennials who won’t work for companies that don’t emphasize social goals;
greater inequality leading to political instability; the risk of disruptions due to climate change; employees
crafting viral social media posts to fight bad working conditions; consumers boycotting unethical products.
One guide for this reorientation is already in place: the UN Sustainable Development Goals (SDGs). These
carefully negotiated, consensus-driven themes address poverty, hunger, health, education, gender equality,
and decent work. They focus on the sustainability of cities and communities, of the climate, of the oceans
and of the land. Companies have begun to sign on to individual goals, such as reducing carbon emissions or
avoiding deforestation. The real power would be in using these 17 goals as a central part of corporate
strategy-making and operations.

Former Unilever CEO Paul Polman called for “heroic chief executive officers” to achieve the SDGs. Surely
be true. But it’s not enough. Companies will need to transform how they operate in ways that we are
that will
only beginning to imagine. These transformations will require innovation to create new opportunities for
growthand prosperity, but that will require companies to avoid “pink washing” or “green washing” or “purpose

washing.”
RECONFIGURING CORPORATE GOVERNANCE

Corporate boards will need to prepare for this new normal. The COVID-19 crisis has shifted the conversation:
More attention is being paid to companies that offshore their profits to avoid taxes but then seek bailouts, to
the need for universal healthcare and childcare, to the impact of reduced activity on air pollution, to
unnecessary consumerism, to the possibilities created by a Green New Deal.
Saying you want to create value for all stakeholders is one thing, but doing it is another. So, if companies are
going to make good on promises to pursue “purpose,” then boards of directors will have to create new
standard operating procedures.
The most obvious step is to create mechanisms for these stakeholders to have a voice in oversight and
decision-making. This requires an honest assessment of who stakeholders really are (the SDGs help here).
It’s not just the usual suspects (for instance, customers or employees): Companies need to think about the
communities in which they operate, the environment, their impact on supply chains, and the like.
Then stakeholders need a seat at the table. In Germany, labor is represented on the supervisory boards
(aufsichtsrat). In the U.S., we are seeing increasing pressure to do the same, with a recent shareholder
proposal at Walmart and a variety of legislative efforts in Congress. Other companies are creating
stakeholder committees on their board (Airbnb is an example), charging individual board members with
representing different stakeholder interests, or creating separate stakeholder advisory groups.
Some of these actions could be mere Band-Aids on deep wounds if they’re not done seriously. Governance
processes will need mechanisms for understanding trade-offs created by stakeholder interests and finding
innovative ways to address them.
Building back better may also amplify forms of governance that are better attuned to diverse stakeholders.
Cooperatives—with their democratic management processes and economic participation by members—may
be best suited to a post-COVID-19 world. Or perhaps companies should be required over a period of years to
qualify as B Corporations, which are legally obliged to address the impact on all stakeholders. These are
more radical approaches than merely creating a board committee, but it is worth pointing out that these
models already exist and may be better guides for our new understanding of 21st-century business.
The COVID-19 crisis shows us that corporate “purpose” cannot just be a fancy bow that companies tie on top
of their operations to dress them up. Taking care of all stakeholders will require real transformation. In this
moment of upheaval, we should be envisioning how we can build back better.
Sarah Kaplan is the author of The 360º Corporation: From Stakeholder Trade-offs to Transformation and
Distinguished Professor and Director, Institute for Gender and the Economy, at the University of Toronto’s
Rotman School of Management.
 IMPACT

I M PAC T
 long ‘problem map’ looks at the systemic failures that made COVID spread in the U.S.
This 22-foot

I M PAC T
Companies talk a lot about ending plastic pollution—but they’re not doing much to back it up
I M PAC T
This new car-free district in Shenzhen is the size of midtown Manha an
C R E AT I V I T Y
C R E AT I V I T Y
Amazon’s media business is worth two and a half Netflixes—and it’s their side hustle
C R E AT I V I T Y
Ahead of July 4th, powerful PSA says simple acts like breathing are part of American freedom
C R E AT I V I T Y
Fox News can’t get its story straight about Sea le’s Autonomous Zone
CO.DESIGN
CO. D E S I G N
This sixth grader reinvented a classic video game to combat the stress of COVID-19
CO. D E S I G N
Have an ambitious design idea? This new platform gets brands to give you money
CO. D E S I G N
Ideo apologizes for Instagram post expressing ‘white guilt’
WORK LIFE
WO R K L I F E
Diversity efforts have become formulaic over the years. Where is leadership missing the mark?
WO R K L I F E
We’re feeling more lonely than ever—here are 5 ways technology can help

WO R K L I F E
The best part about working from home is fewer microa ressions

 Advertise | Privacy Policy | Terms | Notice of Collection | Do Not Sell My
 | Permissions | Contact | About Us | Site Map | Fast Company & Inc © 2020 Mansueto Ventures, LLC
Data
UPDATES: COVID-19
A DV E R T I S E M E N T
05 -1 3 -2 0 T H E N E W C A P I TA L I S M
What it means for businesses to ‘build back better’ after

COVID-19
The health and economic crisis has prompted pro-employee changes at some companies. Business
school professor Sarah Kaplan argues they should keep them and do even more.





BY S A R A H K A P L A N
8 MINUTE READ

 Jeff Bezos signed it. So did Doug McMillon, the CEO of Walmart, and Charlie Scharf, the CEO of
Amazon’s
Wells Fargo. Last summer these corporate chieftains and 178 others made a big fuss over affirming the
 Roundtable’s updated statement of purpose, declaring the end of shareholder primacy in favor of
Business
“stakeholder capitalism” that aims to create value for employees, suppliers, communities, and others.
What a difference a crisis makes. As America scrambled to deal with the health and economic fallout of the
COVID-19 pandemic, workers in Amazon warehouses across the U.S. staged walkouts to protest unsafe
working conditions, and the company’s Whole Foods division had to walk back an initial statement asking
employees to donate sick days. Walmart’s ASDA division has canceled orders from apparel manufacturers in
places such as Bangladesh even if production was completed or in progress. And Wells Fargo’s deferred-
mortgage-repayment program—designed to alleviate monthly payments for suddenly unemployed
homeowners—still requires borrowers to repay the whole lump sum after three months.
It’s a tightrope, of course. Companies are trying to stay afloat. The J. Crew and Neiman Marcus bankruptcies
are harbingers of many to come. Some companies are just waiting to get “back to normal” and using bailouts
to tide them over. However, myriad signals tell us that the old normal won’t be adequate or even possible.
COVID-19 is revealing fractures in our economy that many in the corporate elite might not have paid
attention to in the past.
We need to build back better.
USING RECOVERY TO CREATE RESILIENCE

“Build back better” is an expression coined by a UN task force charged with coming up with improved
disaster-recovery plans. For them, building back better meant using recovery after calamities—they were
thinking of earthquakes, tsunamis, and hurricanes—to restore equitable social systems, revitalize livelihoods,
and protect the environment. Don’t just rebuild houses—install clean water systems. Don’t just improve early
warning systems— create safer roads and dwellings.
For us in the midst of the COVID-19 crisis, build back better means making good on the commitments to
stakeholders that everyone was so eagerly talking about last year.
Even very short-term evidence indicates that a more socially responsible approach might also be a more
resilient approach. According to an analysis by Just Capital, companies that have prioritized workers and
customers during this crisis are doing better in the market. Scholarly research in finance has shown that
investing in corporate social responsibility (CSR) creates greater social capital—norms of trustworthiness and
the propensity to reciprocate—which leads to greater resilience, because being trustworthy is more valuable
in times of uncertainty and upheaval.
Yet, even before the crisis, one-third of Americans thought technology companies and banks had a negative
effect on the country, and more than half had a negative view of large corporations overall. The trust isn’t
there . . . yet.
What would it take? To build back better, companies need to redesign, reorient, and realign.

REDESIGNING WORK FOR THE 21ST CENTURY

First, companies need to radically redesign work. Here, workers are guiding us to solutions. A living wage,
 sick leave and care leave, and increased safety will address many of the deep inequalities that
guaranteed
the pandemic has brought even more clearly into focus. For many years, companies have resisted attempts
 these benefits.
to provide
But we have now seen that it is possible. Aldi, Anheuser-Busch, Danone, and Nestlé, among others, have
increased pay to essential workers. Dominion Energy, SimpliPhi, and S&P Global are offering more paid sick
leave; and even Uber is now offering two weeks of paid sick leave to its drivers. Now that the previously
unthinkable has been accomplished, it seems hard to return to old ways.
Even at a moment when workers might not have much power given soaring unemployment rates, they are
conducting walkouts and strikes to improve their precarious situation. They are unlikely to stand down as the
economy recovers.
The 1918 Spanish flu pandemic holds some lessons: One of the biggest waves of labor protest in U.S.
history occurred just after that pandemic peaked. Twenty percent of the total workforce went out on strike—
police officers, steelworkers, dressmakers, coal miners, shipyard workers, and even Broadway theater actors
—and they got better working conditions as a result.
Today, essential workers are being applauded for risking their own personal safety to supply food, transport
goods, and care for the sick. Yet they have historically been paid notoriously low wages with few benefits. Do
we think we can go back to an old normal when grocery workers, home health assistants, farmworkers, and
delivery drivers can barely scratch out a livelihood? Should we want to?
The pandemic has forced many of us who still have jobs into completely new modes of working. Disability
advocates have long asked for accommodations such as work-from-home options, requests that employers
often denied as too expensive or too complicated to implement. Now that abled people must work from
home, organizations are finding that it is indeed possible to hold meetings, teach classes, and brainstorm
remotely. Why wouldn’t we continue investing in these types of more flexible accommodations?
Modern capitalism has long rewarded the “ideal worker”—available at all times, dedicated to the job, without
family encumbrances—but this is likely to change as people, in quarantine, rediscover the simple joys in life:
time with family, friends, gardening, baking, crafts, hiking, woodworking, and so on.
Finally, it all comes down to childcare. Many men working from home are now finding out just how intensive
childcare is. Work has needed to morph to deal with parents taking shifts with the kids. As the economy
reopens, women are disproportionately going to be held back if adequate childcare options and work
arrangements are not available. Childcare has always been a rate limiter in women’s advancement.
Companies now just have a clearer window through which to see the challenge.
REORIENTING PRIORITIES
When companies commit to “purpose,” this must by definition reorient corporate priorities. We have for the
past five decades—guided by Milton Friedman’s 1970 dictate—glorified total returns to shareholders where
interests of stakeholders were only a derivative of the duty to the shareholder.
It wasn’t always this way. After the Second World War, as Mark Mizruchi wrote in The Fracturing of the
American Corporate Elite, there was a broad settlement in which companies acceded to the legitimacy of
 labor and other interests, accepting and even supporting federal legislation to protect the
organized
environment, eliminate discrimination in hiring, and so on. In the 1970s, stagflation, the oil crisis, and other
 concerns prepared the way for a different settlement, one which has for half a century privileged
economic
the shareholder and led to a massive increase in inequality


The COVID-19 pandemic creates an opening for a new settlement with different priorities. While companies
are thinking about survival, they are also imagining new futures. Even before the pandemic, there was a
surfeit of reasons for urgency: millennials who won’t work for companies that don’t emphasize social goals;
greater inequality leading to political instability; the risk of disruptions due to climate change; employees
crafting viral social media posts to fight bad working conditions; consumers boycotting unethical products.
One guide for this reorientation is already in place: the UN Sustainable Development Goals (SDGs). These
carefully negotiated, consensus-driven themes address poverty, hunger, health, education, gender equality,
and decent work. They focus on the sustainability of cities and communities, of the climate, of the oceans
and of the land. Companies have begun to sign on to individual goals, such as reducing carbon emissions or
avoiding deforestation. The real power would be in using these 17 goals as a central part of corporate
strategy-making and operations.
Former Unilever CEO Paul Polman called for “heroic chief executive officers” to achieve the SDGs. Surely
that will be true. But it’s not enough. Companies will need to transform how they operate in ways that we are
only beginning to imagine. These transformations will require innovation to create new opportunities for
growth and prosperity, but that will require companies to avoid “pink washing” or “green washing” or “purpose
washing.”
RECONFIGURING CORPORATE GOVERNANCE

Corporate boards will need to prepare for this new normal. The COVID-19 crisis has shifted the conversation:
More attention is being paid to companies that offshore their profits to avoid taxes but then seek bailouts, to
the need for universal healthcare and childcare, to the impact of reduced activity on air pollution, to
unnecessary consumerism, to the possibilities created by a Green New Deal.
Saying you want to create value for all stakeholders is one thing, but doing it is another. So, if companies are
going to make good on promises to pursue “purpose,” then boards of directors will have to create new
standard operating procedures.
The most obvious step is to create mechanisms for these stakeholders to have a voice in oversight and
decision-making. This requires an honest assessment of who stakeholders really are (the SDGs help here).
It’s not just the usual suspects (for instance, customers or employees): Companies need to think about the
communities in which they operate, the environment, their impact on supply chains, and the like.
Then stakeholders need a seat at the table. In Germany, labor is represented on the supervisory boards
(aufsichtsrat). In the U.S., we are seeing increasing pressure to do the same, with a recent shareholder
proposal at Walmart and a variety of legislative efforts in Congress. Other companies are creating
stakeholder committees on their board (Airbnb is an example), charging individual board members with
representing different stakeholder interests, or creating separate stakeholder advisory groups.
Some of these actions could be mere Band-Aids on deep wounds if they’re not done seriously. Governance
processes will need mechanisms for understanding trade-offs created by stakeholder interests and finding
 ways to address them.
innovative

Building back better may also amplify forms of governance that are better attuned to diverse stakeholders.

Cooperatives—with their democratic management processes and economic participation by members—may
be best suited to a post-COVID-19 world. Or perhaps companies should be required over a period of years to
qualify
as B Corporations, which are legally obliged to address the impact on all stakeholders. These are
more radical approaches than merely creating a board committee, but it is worth pointing out that these
models already exist and may be better guides for our new understanding of 21st-century business.
The COVID-19 crisis shows us that corporate “purpose” cannot just be a fancy bow that companies tie on top
of their operations to dress them up. Taking care of all stakeholders will require real transformation. In this
moment of upheaval, we should be envisioning how we can build back better.
Sarah Kaplan is the author of The 360º Corporation: From Stakeholder Trade-offs to Transformation and
Distinguished Professor and Director, Institute for Gender and the Economy, at the University of Toronto’s
Rotman School of Management.
Ideas Newsle er
YO U R E M A I L A D D R E S S SIGN UP
Receive special Fast Company offers. See All Newsle ers
SPONSORED CONTENT
FROM OUR PARTNERS




THE AIC THE AIC L ATA M I N V E S TO R E T F G LO B A L
 the waves
Riding Going Green Now is a Great Time All three major
to Invest in Latin indexes gained at
American Mining least 3% this week
VIDEO
Sorry, the video player failed to load.(Error Code: 101102)
IMPACT
I M PAC T
This 22-foot long ‘problem map’ looks at the systemic failures that made COVID spread in the U.S.
I M PAC T
Companies talk a lot about ending plastic pollution—but they’re not doing much to back it up
I M PAC T
This new car-free district in Shenzhen is the size of midtown Manha an


 C R E AT I V I T Y

C R E AT I V I T Y
Amazon’s media business is worth two and a half Netflixes—and it’s their side hustle
C R E AT I V I T Y
Ahead of July 4th, powerful PSA says simple acts like breathing are part of American freedom
C R E AT I V I T Y
Fox News can’t get its story straight about Sea le’s Autonomous Zone
CO.DESIGN
CO. D E S I G N
This sixth grader reinvented a classic video game to combat the stress of COVID-19
CO. D E S I G N
Have an ambitious design idea? This new platform gets brands to give you money
CO. D E S I G N
Ideo apologizes for Instagram post expressing ‘white guilt’
WORK LIFE
WO R K L I F E
Diversity efforts have become formulaic over the years. Where is leadership missing the mark?
WO R K L I F E
We’re feeling more lonely than ever—here are 5 ways technology can help
WO R K L I F E
The best part about working from home is fewer microa ressions
Advertise | Privacy Policy | Terms | Notice of Collection | Do Not Sell My

Data | Permissions | Contact | About Us | Site Map | Fast Company & Inc © 2020 Mansueto Ventures, LLC





Don't Rebuild - Build Back Better - After The COVID-19 Crisis

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Don't Rebuild - Build Back Better - After The COVID-19 Crisis

Uploaded by

Copyright:

Available Formats

6/23/2020 Don't rebuild—"build back better" after the COVID-19 crisis

N TECH WORK LIFE C R E AT I V I T Y I M PAC T PODCASTS VIDEO RECOMMENDER SUBSCRIBE

What it means for businesses to ‘build back better’ after

[Source Images: rasslava/iStock, krung99/iStock]

We need to build back better.

USING RECOVERY TO CREATE RESILIENCE

[Source Images: rasslava/iStock, krung99/iStock]

REDESIGNING WORK FOR THE 21ST CENTURY

[Source Images: rasslava/iStock, krung99/iStock]

RECONFIGURING CORPORATE GOVERNANCE

What it means for businesses to ‘build back better’ after

[Source Images: rasslava/iStock, krung99/iStock]

We need to build back better.

USING RECOVERY TO CREATE RESILIENCE

[Source Images: rasslava/iStock, krung99/iStock]

RECONFIGURING CORPORATE GOVERNANCE

Receive special Fast Company offers. See All Newsle ers

FROM OUR PARTNERS

Sorry, the video player failed to load.(Error Code: 101102)

Advertise | Privacy Policy | Terms | Notice of Collection | Do Not Sell My

You might also like