Below the Radar – How Conscious Compensation Looks in Real Life

Fred WhittleseyConscious Compensation: The Impact Compensation Blog0 Comments

Conscious Compensation® ideas appeal to many, offend others, and are scoffed at by some. The most difficult part of the conversation is the pragmatic aspect:  Even if you agree with the principles put forth by the various organizations advocating the principles underlying Conscious Compensation®, the typical opposition is that it is idealistic and unworkable.In a global economy based on capitalism, and in the country known for being a primary source of that philosophy, who on earth (literally) is going to change their compensation system away from a short-term profit-based model?  More importantly, where is there any data that shows this is more than just a socialistic feel-good movement? Who cares if John Mackey or Sir Richard Branson is on a soapbox about this?

Well, here’s some data.  I was made aware of this from an interesting opinion piece in the Puget Sound Business Journal (subscription required but everyone knows how to find subscription content free online).

In March 2013, Puget Sound Sage issued a report titled “Below the Radar:  How Sea‑Tac Airport’s substandard working conditions hurt our region and how other major airports changed course toward growth and prosperity

For those with internet-length attention spans, here’s the video.  Actually, it’s an 18-minute video, so it’s faster to read the summary in the pdf, which points out that four west coast airports that I know so well (LAX, SFO, SJC, and OAK) have implemented changes in employee compensation and benefits practices (living wage, benefits, paid time off) in order to “reduce poverty, strengthen safety and security, improve public health and minimize the public cost of their low-wage workforces.”  Missing from the list?  SEA, my home airport and home of my beloved provider of air transport, Alaska Airlines.

Yes, I know, it still sounds lefty pro-employee anti-employer.  But read on.

As a good capitalist, I know that sustainable compensation programs will be accepted by for-profit employers only if it can be shown that these practices actually increase profit. (My next blog will discuss a company that pays double the market pay rate and ends up saving 1/3 in costs.)

Maybe data like this would encourage a profit-oriented company full of profit-based executive incentives and stock-price based programs to consider some new ideas:  A UC Berkeley study assessed the results of SFO’s changes and found:

  • Employee turnover reduced by 60% (lowering costs and improving airport security)
  • Decreases in grievances (45%), employee disciplinary issues (44%), and absenteeism (29%) – all of which affect profit
  • Total cost reduced by 11%

The Sage report, of course, is a call for SEA to implement similar changes.  But if we could have lower costs, better security, happier airport employees, and safer airport operations – and provide better pay and benefits to employees – then everybody wins. That’s more than a triple bottom line. More like quintuple.

Even notorious low-cost Southwest Airline’s CEO publicly-supported SJC’s living wage ordinance writing “Southwest Airlines fully supports the objectives and purpose of the Living Wage Policy”.

Southwest was prominently featured at the recent Conscious Capitalism conference in San Francisco.  I attended by flying AK from SEA to OAK because my airline loyalty shifted after Herb was no longer in charge at SWA, but I may have to rethink my choice of airlines in light of this new information.

That’s B Corp thinking.

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