You’re probably familiar with the term “people first,” referring to a company culture that highly values its employees. Recognizing employees as a primary stakeholder challenges the short-term thinking involved in the traditional shareholder value system. Valuing everyone doing work on the ground -- the work that makes your company what it is today -- is not only a moral decision, but a monetary decision.
As companies increasingly add another layer to their workforce, particularly in the gig economy, the separation between “workers” and “employees” is clear in compensation, benefits, and who is (and is not) involved in the conversation. As an early stage company, Avala is challenging this divide from its inception -- so much so, that our first hire was a Chief Community Officer.
At Avala, a digital work platform, we refer to our workforce as “co-workers.” While there will be a variety of work arrangements across the workforce, we have already begun research and conversations with potential co-workers to better understand their needs and relationships to work. It’s safe to say that society (mostly) agrees on the idea that companies should treat their workforces ethically, but its implementation is often held up by whether or not it makes sense financially. Plenty of research has been conducted to make this case, but to quickly note a few:
A University of California study of the San Francisco airport saw the turnover of contracted security screeners decrease from 95% to 19% when their wages increased from $6.45 to $10 per hour. This saved the airport thousands of dollars per worker on recruitment and training. In addition, 35% of employers reported improvements in work performance, 47% reported better employee morale, 44% reported fewer disciplinary issues, and 45% reported that customer service had improved.
Wholesale retailer, Costco, offers a higher wage than its retail competitors and they have a 17% turnover rate, compared to 44% at Walmart, which is more reflective of the industry average. Costco also sees greater productivity and lower levels of employee theft.
A study by the Wharton School of Business found that for every $1 increase in payroll, a company (retailers, in particular) could see a monthly sales increase of $4 to $28.
MIT Sloan School of Management Professor, Zeynep Ton, closely studied American retailers. Generous labor budgets resulted in adequate staffing and high-performing employees, leading to effective operational execution, strong sales, and healthy profits; whereas lower labor budgets resulted in poor training, unmotivated and understaffed workforces, and poor execution. She added that it is also essential to invest in heavily training a workforce to provide long-term stability, autonomy, and adaptability, reducing overall recruiting and training costs associated with turnover.
For contractor-based work, in which a workforce is not necessarily part of the employee base, a study conducted by professors from Yale and UCLA confirmed that Uber drivers are highly sensitive (responsive) to changes in earnings. They found that, “On average, they increase their hours by 20 percent in response to a 10 percent increase in wages. That is about four times larger than the response by passengers to changes in the price of a ride.” For passengers, “For every 10 percent increase in price, demand fell by only about 5 percent.”
Although there will always be people available and interested in doing the work, it cannot replace the negative impact it has on any company’s bottom line, as it pertains to worker happiness, safety, loyalty, morale, performance, and retention.
When it comes to this “people first” approach, our goal at Avala goes beyond providing work and reskilling; Avala hopes to provide more good jobs to its entire workforce. Zeynep Ton, who is also the Co-Founder and President of Good Jobs Institute, outlines six ways that business leaders can address inequities and our team plans to hold ourselves accountable to these practices:
1. Recognize the problem and make a collective pledge to address it. Ton emphasizes the importance of providing good jobs, as too many people have been stuck with “low wages, few benefits, unstable schedules, and lack of respect and dignity.” Employers, especially in the U.S., have long accepted these conditions as the status quo, rather than an intentional business decision. Avala understands the investment required in creating good jobs, but is in it for the long haul and ready to make this profit-maximizing choice.
2. Commit to raise low wages. Many of the potential co-workers we interviewed were working multiple jobs, endlessly searching for their next contracts, and trying their best to make ends meet. Their work with other digital work platforms was causing them to feel grossly overworked and underpaid, meaning that they could not be fully present in any job or for any project. Avala is working to treat people ethically, acknowledging and building around their complex needs, especially when it comes to wages.
3. Provide career paths for low-wage workers. As an early stage startup, Avala is leaning into what it means to build a strong foundation. The team has engaged in multiple conversations about the types of opportunities, career paths, and promotions that can be provided to its co-workers, and realizes that there is no shortage of possibilities, as long as it remains top of mind.
4. Disclose pay and turnover data. Quantitative benchmarks, not to be confused with quotas, are essential for companies that truly want to avoid exacerbating the same exploitative cycles. Avala is committed to collecting and sharing relevant data about its workforce, with the goal of being as honest with ourselves and all stakeholders as possible.
5. Involve workers in technology decisions that affect their work. Our team talks a lot about the future of work, where work will be conducted, and the industries that will thrive over the coming years. Those conversations also involve wanting to ensure that those at all levels of the company have the opportunity to bring ideas to the table, especially as it relates to work that people are finding necessary in their own communities, as well as what types of tools and technologies are needed to carry out that work. Avala wants to take autonomy a step further by encouraging our co-workers to identify needs and improve their communities.
6. Drive public policies that improve workers’ well-being and the economy. Avala might be far from driving public policies, but we are eager to test the waters and lead by example.In addition to increased wages, Avala is figuring out what it means to challenge the current norms in a workforce’s relationship to work. There is still a lot of work to do to ensure basic benefits such as health insurance, life insurance, paid sick leave, and maternity and paternity leave, but what about non-emergency essentials? Built-in breaks, meditations, or exercises? Access to community resources? Gatherings or group activities to meet other virtual co-workers? Incentivized support and communication among co-workers who have never met before? We plan to do our part in ensuring worker happiness and well-being, not only staying ahead of the regulatory environment, but one day driving those public policies, presenting the efficacy in our own work.
By no means do we believe that any of this is or will be easy, BUT we do believe that it’s extremely important for the future of our society. Avala is calling on more companies to reverse this cycle, from the building of their foundations, to take a stand for human dignity, access to thriving livelihoods, and love and respect for those we share this planet with. If, at the end of the day, it is primarily a financial decision, there are plenty of resources and case studies that point to how treating people with dignity is great for business.