Good morning, everyone! Paolo here.
“Our employees are our greatest asset.” “We value our employees.” These refrains are commonplace in corporate America—they’re certainly ubiquitous among the (deserved) entrants on the Fortune 100 Best Places to Work For list.
But recent research from Columbia Business School shows that despite all their pro-employee talk, companies prioritize customers over workers. Perhaps, we already knew this to be the case, but seeing it laid bare in empirical, peer-reviewed data is, nonetheless, jarring.
In an analysis of earnings call transcripts of S&P 500 companies between 2007 and 2019, the authors found that companies mentioned customers 10 times more than employees. In fact, 92% of the more than 31,000 transcripts from 636 total companies mentioned customers, while only 55% mentioned employees, meaning that almost half the time, employees didn’t come up at all.
Even more telling, executives associated customers with opportunities and employees with risks, an unusual characterization for an asset they claim to value. Stephan Meier, the report’s coauthor, says the tendency to consider employees as a cost center rather than a stakeholder inhibits firms’ ability to truly consider workers’ needs.
“When we think about customer-centricity, nobody would say, ‘Oh, that means lowering the price,’” Meier says. “The notion is that there is some sort of win-win: We can make the customer happier and eventually increase the price. When it comes to employees, there is still a very prevalent either-or and zero-sum mentality.”
The perception that serving employees hurts the bottom line rather than fuels it, gets inculcated into future managers early on. Management textbooks and scholarly research used in business schools mention customers five times more than employees, according to the report. Moreover, executives without business degrees are more likely to share profits with employees than those with them.
That’s not to say companies shouldn’t prioritize customers. Instead, Meier believes the same skills executives use to service customers can be applied to employees.
“Employees are the new customers,” Meier says. “When we talk about employees, it’s a lot about compensation and monetary values. Twenty years ago, we did the same for customers. Now, we think about customer experience, and we need to think about employee experience.”
The most compelling data, quotes, and insights from the field.
As employers try to understand what’s at the heart of employee engagement decline, Erik Baker, a historian and lecturer at Harvard University, cautions leaders against viewing their employees’ discontent as laziness.
“The malaise is easy to mistake for a motivation deficit, but it’s more a matter of shifting priorities. For better or worse, people are still happy to work when it seems to be in their best interest. It’s the extra demands of the institution that have begun to grate—the pressure to go ‘above and beyond’ now rejected by the proverbial quiet quitters.” —Harper’s
Around the Table
A round-up of the most important HR headlines, studies, podcasts, and long-reads.
- Meta started its latest round of layoffs on Wednesday. Washington Post
- Employers previously considering adding abortion pills to their health benefits have put those plans on hold after recent legal challenges surrounding the medication. Bloomberg
- To attract employees in a tight labor market, some companies are offering additional personal days for stress relief. Wall Street Journal
- Disney is expected to begin a round of layoffs next week, referred to by some as a “bloodbath.” Deadline
Everything you need to know from Fortune.
Normies need not apply. Tech giants are still hiring despite industrywide layoffs. Some quirkier roles include a research scientist to animate avatars in the metaverse and a video game story writer. —Andrea Guzman
Price of childcare. Working parents spend over a quarter of their household income on childcare, according to a report from New York Life. —Megan Leonhardt
Step aside, boys. Last quarter, 418 CEOs left their jobs, and a record-setting 30% of replacements were women, according to data from executive recruitment firm Challenger, Grey & Christmas. —Trey Williams
I’ve got skills. Adopting a skills-based approach to hiring could expand the eligible talent pool for employers by 19 times more, according to a LinkedIn analysis. —Megan Leonhardt
This is the web version of CHRO Daily, a newsletter focusing on helping HR executives navigate the needs of the workplace. Today’s edition was curated by Paolo Confino. Sign up to get it delivered free to your inbox.