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While capitalism has evolved over centuries to become a dominant economic system, it is not always an equitable one, and often stacked in favour of the privileged few. In the face of growing global inequality, the climate crisis, and the devastation of the coronavirus pandemic, experts say capitalism’s obsessive focus on maximising profit risks further splintering societies, economies, and the environment.
In their book “Rethinking Capitalism,” economists Michael Jacobs and Mariana Mazzucato write that: “The capitalist economies of the developed world, which for two hundred years transformed human society through an unparalleled dynamism, have over the past decade looked profoundly dysfunctional.”
However, they argue that a “more innovative, sustainable and inclusive economic system is possible. But it will require fundamental changes in our understanding of how capitalism works.”
Today’s business leaders are uniquely placed to help reshape capitalism, and effect real change within their companies and their democracies.
In fact, people are actively looking to companies to be a force for change. The Edelman 2019 Trust Barometer found that 92% of people believed their company CEOs should speak out more on issues such as training for the jobs of the future, income equality, diversity, and the ethical use of tech. Almost three quarters of people in the global survey said that CEOs should take the lead on change rather than waiting for the government to impose it.
In the third season of the #ChamberBreakers podcast series, Verizon Business and Yahoo Finance UK talked to a cross-section of business and thought leaders to find out how companies can actively tackle capitalism’s failings to create a more equitable future for all.
Dismantling gendered capitalism
The capitalist economic system is defined by those who dominate it, and they are mainly straight, white cisgender men. As a result, every aspect of business, from company policy, hiring and promotions, to capital allocation, is shaped by the experience and priorities of those at the helm.
“We think of capitalism as some sort of neutral concept, but in fact it is gendered,” said Professor Sarah Kaplan, Director of the Institute for Gender and the Economy at the University of Toronto's Rotman School of Management.
Bolting on equality or diversity fixes on a deeply gendered structure simply won’t work, according to Kaplan, it needs to be fundamentally rebuilt.
“We can think about the flows of capital being gendered looking at, for example, venture capital, and how almost none of the venture capital funding for startups goes to women or people of colour,” Kaplan told the #ChamberBreakers podcast.
When CEOs allocate company capital disproportionately to men, it sets women up to fail, as they are unable to grow their portions of the business and achieve the best results. The knock-on effect is that women appear like they are underperforming compared to their male peers, and are thus less likely to be promoted.
“Through capital allocation inside an organization, you can actually create a situation where you no longer have any qualified women candidates, because you haven't given them the chance to grow,” Kaplan said.
Stepping aside and ceding privilege
As well as examining bias in their capital allocation, Kaplan urges managers to do two things to tackle gender bias: Step aside and step in front.
“Stepping aside is giving up some of the positions that you have achieved because of your own privilege and ceding that to other people,” she said. One way to step aside may be to pass the opportunity to appear on a panel onto someone else, allowing a talented-but-overlooked employee to get recognition or a career boost.
Stepping aside requires a radical mind shift, as many executives feel they achieved their success due to sheer hard work, but they need to recognize that others have worked equally as hard but just haven’t enjoyed the same head-start in terms of privilege.
Stepping in front involves taking a stand to ensure people from diverse backgrounds are hired, promoted and developed in the company – even it that makes you unpopular at the time.
“If we're really going to get change, it can't be an add-on that you sprinkle on top of everything and you feel good,” Kaplan says. “You have to do something that costs you in order to really make the shifts that we have been hoping for but haven't happened.”
Diversity on every agenda
David Kenny, Chief Executive Officer of global marketing research giant Nielsen, has led the way when it comes to really implementing diversity and inclusion, by making sure it was on the board agenda and in every meeting.
He told the #ChamberBreakers podcast that while measuring diversity and inclusion in a company is tough, it definitely needs to go much deeper than just representation. It must also take into account how people feel at work, for example, whether they feel supported and respected and as a result are able to do better in their roles.
Kenny went as far as to take over the role of Chief Diversity Officer for a while, partially to ensure that “people knew that I was judging myself and them by our inclusion impact as much as our financial impact.”
“I'm not doing this just because it's a good thing to do, I'm doing it so Nielsen wins,” he said. “In order to win, I've got to get the full potential out of every asset, and the most important [asset] is every person… It is as important as the financial results to measure our success.”
The power of vulnerability
Kenny says he always reminds himself and his fellow CEOs that there is a lot of power that comes with the job, and they need to share it: “I think that humility, vulnerability and being willing to share power and let go of it in order to learn is super important in leadership.”
Leaders should not presume they have all the answers, according to Kenny. By creating a safe space where his employees could share their individual experiences, and he could actively listen and learn, he was able to use his power to make real change.
Nielsen has established a Diverse Leadership Network, which helps people from different backgrounds get exposure to new aspects of the business. Kenny describes it as “kind of a mini MBA to level the playing field” and an “awesome step forward in equity,” because it not only helps their professional growth, but also puts them on the management radar for future roles.
Baking CSR into your business
Susan McPherson, founder and CEO of communications consultancy McPherson Strategies, echoes Kenny’s belief that diversity, equity, inclusion needs to be baked into the business, and that CSR should permeate every action and decision.
“It needs to be part of systemic change that companies are enacting,” McPherson told #ChamberBreakers. “It needs to be embedded, whether you are a startup or a Fortune 500 multinational.”
McPherson, who is the author of “The Lost Art of Connecting,” recommends that company leaders need to see CSR as an octopus, something with brains in all its tentacles. “If you are only putting it in marketing, you are greenwashing, you are pinkwashing,” she says, adding that CSR must reach into all departments, from recruitment, to supply-chain operations, to communications.
CSR has come a long way from the days when CEOs would practice a bit of ostentatious cheque-book philanthropy and do the bare minimum to avoid being fined for their company’s environmental practices. Business leaders now increasingly take a public stand on major issues of the day, such as voting rights or LGBTQ+ rights.
This new transparency is to a large extent down to instant news and social media allowing people to hold companies to account. Essentially, they have nowhere to hide in today’s hyperconnected world.
“You have transparency, you have a smarter consuming public, you have the fact that climate change is real, you also have younger people who are growing up wanting to work for companies that they perceive to be making purpose part of the ethos of the business,” she says.
That’s not a bad thing: Studies show that companies who embed CSR in the fabric of their company are much more likely to attract and retain employees.