‘Putting the wellbeing of employees into the ‘S’ of your ESG strategy’.
Henrietta Jowitt “If our wellbeing capital goes up then we know our performance will go up”.
We sat down with Henrietta Jowitt, Former Commercial Deputy Director-General at the CBI where she developed the CBI’s commercial business and digital strategies. She has 30 years’ experience in developing and implementing business, marketing and general management strategies including senior roles at Schroders Plc, Advent International, Cushman & Wakefield, and an earlier career in FMCG – notably Heinz, Nestle and United Biscuits.
Henrietta is also an iNED for the UK fund board of Franklin Templeton, is a Trustee of Opera North and a member of the Principle’s Circle of Green Templeton College, Oxford.
She has an MA in Natural Sciences from Oxford University, is an Associate Fellow of Green Templeton College and has turned to her Alma Mater and the Wellbeing Research Centre in Oxford to aid in her next venture advising MindForward Alliance. The research team have investigated the data correlation between overall employee wellbeing and future business performance which Henrietta has detailed in her paper ‘Putting the wellbeing of employees into the ‘S’ of your ESG strategy’ (attached).
It’s no surprise the market for ESG and sustainability roles has boomed in the last few years. You’ve sat in such varying roles throughout your career where you can have that lens on an organisation – is this an area you have always had an interest in?
Yes, it is - When I was at the CBI, I was very involved with ESG overall, but really when I reflect, I’ve been involved with it even from my early career. At Nestle, as a Marketing Manager getting involved in the supply chain of the chocolate business, the issue of supplying baby milk to Africa came up, that was a real learning experience, and that was in the early 90’s. In those days, it was very much about brand reputation and promotional opportunities rather than the impact on the environment or the people who worked in it, but individuals were just starting to think about it, fair trade chocolate was emerging for example. So that was the starting point for me.
I then moved into Financial Services where ESG wasn’t understood at all, but it did start to move into the risk area and was seen then seen as a risk to consider from an investment point of view. This moved to fund managers asking the questions ‘have we looked at the risk of these companies from an environmental perspective or a social impact perspective’ and then factoring that into their investment thesis and cost of capital. But interestingly, many hadn’t twigged that it was something that they needed to do themselves as well.
This is something that quite a few are only just starting to think about, although they have been holding the companies they invest in to account for some time. But actually, only recently have they looked at themselves in the mirror to say, ‘we aren’t quite as good at this as we should be and we need to do something about this too’. Which is good, because I don’t think you have a legitimate right to hold other people to account if you aren’t prepared to do it yourself. It is a basic principle of good leadership.
And why was it that you decided to write ‘Putting the wellbeing of employees into the ‘S’ of your ESG strategy’ and why was it so important to get involved in this research?
What has been interesting to watch is the ESG agenda move from Risk to overall business Strategy and that’s a really important shift because Risk tends to be preventative, but Strategy sits across the whole business and looks at opportunities too. It defines how you run the business. ESG needs to be a framework, if you will, for viewing your overall business strategy. So that it’s about what you do, how you do it and who you do it with and the impact you have more broadly than just your bottom line. The impact on the environment you work in, the colleagues you work with and the communities that you impact – right the way down your supply chain.
I think that’s a really important shift – partly driven by the pandemic, especially colleague wellbeing and partly because the penny has dropped that we have a climate and biodiversity problem.
With wellbeing and mental health in particular - when I was at the CBI, I was actively involved in the topic amongst our members and could see the shift from risk to business strategy. Poppy Jaman, who is a fantastic social entrepreneur has always been very passionate about mental health and wellbeing in the workplace.
She started City Mental Health Alliance with a number of the big financial and law firms in the city during the financial crisis as many people very sadly committed suicide during that time and there was a lot of very poor mental health. Poppy has been researching and addressing these issues for over 10 years helping businesses look after their people better – on the basis that if people are well, they tend to do better work and if they do better work, your business is more successful. The businesses City Mental Health Alliance have been working with have asked her to start looking at this globally to be able to provide the offering across all of their offices and markets, so locally, not just in London.
This is MindForward Alliance – the global charity?
Yes - It is a global charity looking to develop the same capabilities that we have in the UK across about 80 markets and at least 50% of the world ideally. Poppy has asked me to help because I’ve worked internationally and my perspective from the business world is important. It’s quite ambitious but to really make businesses think about this and see how we can support them.
It depends on many factors as culture plays such an important role. Take stigma for example. In some countries, it is illegal to commit suicide and you are a criminal if you attempt it. So many individuals don’t want to talk of it for fear of prosecution which is preventing people from actually asking for help.
MindForward Alliance does something called ‘Thriving at Work’ and that involves going into an organisation and helping them look at how they’re doing against a range of criteria that we know need to be in place to successfully drive wellbeing. This enables businesses to then think about the plans they might want to develop to tackle issues the review has raised. The ‘what do we do about it’ question that so many businesses have. Businesses find it incredibly valuable so do this analysis annually to see how they can continue to improve which is great.
There is certainly a spectrum of wellbeing and mental health. None of the work we do is at the medical intervention end of mental health. That is for medical practitioners. But we work with businesses to build wellbeing and resilience in the workplace to prevent their colleagues getting to a medical intervention. Working on the issues directly in their organisation and hence helping their employees feel well and as a result, do their best work.
How do we start thinking about the ‘S’ of ESG in business?
My personal view is that the ‘S’ has been a bit of a corporate orphan and is why I wanted to get involved. Partly because people have been very focused on the ‘E’ which is not easy but it’s easier than the ‘S’ often is, as it’s more tangible to see how we should deal with it.
However, I think that the pandemic had a real impact on everybody clearly, but on the leaders of businesses in particular, because I think they recognised that many of their people were incredibly anxious, frightened even and operating in very difficult circumstances - WFH, schooling children and family members in urgent need of care. You could not divorce your work life from your home life anymore. They’re incredibly integrated and if people were not well in themselves then they couldn’t do their work, let alone their best work.
As an Exco member at the CBI during this time, I spent 80-85% of my time making sure that people were ok, and it brought home to many leaders that wellbeing of employees had to be a top priority, or their businesses could not function effectively – the pandemic crystallised a lot of this.
And then, the question becomes – so what do we do? People were asking the right questions and trying a mixture of different interventions, some good, some not so good. But at least they recognised the issue and were trying.
But with this paper we wanted to position employee wellbeing in the right place. It needs to be part of your overall business strategy and you need to focus on delivering wellbeing because it’s an output, a result of a well-founded strategic plan. There is a correlation between employee wellbeing, individual performance and therefore company performance.
If you just focus on lots of activity, so inputs without working out what you need to do to deliver wellbeing, then you are missing the point. You must think about how you arrive at wellbeing.
Our work with Oxford University shows 11 different levers that sit underneath that, and they have a lot of fantastic business data to support it. What you need to do to pull each lever to deliver wellbeing. This will vary by your geography, the sector that you are in, the stage of development of your current culture within your organisation and the ethnic and cultural make up of your business – you cannot cookie cutter it.
You mention the difference between inputs and outputs of an organisation – can you tell us a bit more about what you mean?
You need to focus on the output which is wellbeing – that is where the correlation of the performance of individuals and the business sits and indeed, financial business performance going forward. Programmes, so sets of activities or inputs, need to sit in a holistic business strategy. Owned by the Exco and the Board – this is not a single department issue because it touches all aspects of the business. The programme will vary depending on what issues you have in your business e.g. do people feel safe in speaking up? if you have a problem with a toxic culture, they will not. Do you have an issue with pay-gap? If you do, some people will not feel valued. There are different levers you will need to pull and initiatives to address those issues in order to build and deliver your wellbeing capital.
And that won’t just differ by company – it may well be that an international corporate will have to have very different programmes in Nigeria or Germany or India to address an issue such as stigma for example.
When companies only focus on inputs – I call it ‘initiative-itus’. Lots of perfectly reasonable activities, none of which are bad, are undertaken. But it is very hard to measure them and importantly correlate them to business performance. So the ROI is hard to understand or measure. They are not part of a strategic framework. They’re all inputs with often little sense as to the overall output or what the real issue is that needs to be solved.
As soon as you get into difficult times, which is where we are headed right now, people say ‘let’s stop doing X as it’s too expensive’ and then that becomes a real problem. But you don’t know it is a problem, because no one has measured it properly and the impact of stopping it, may not be immediate. Wellbeing is not nice to have, it is business critical.
And how have you gone about collecting and measuring the data to support this?
The real data work that has been undertaken through Oxford University is phenomenal. It’s a global piece of a work. The Director of the Wellbeing Research Centre, Jan-Emmanuel De Neve, has a team working on it and working with Indeed – the leading international job site. They have been providing the data globally from internal individuals at organisations and Oxford have done some fantastic correlation analysis on what the 11 levers of wellbeing are and their relative hierarchies. We’ve also then done some work on the activities that sit underneath those levers. If your overall output or target is wellbeing capital, then how does that then tab across to financial performance because that’s the big question. Many businesses will not see this as part of their P&L or bottom line unless there is a correlation. They will continue to see it as an ‘extra’ to be nicer to their people.
The correlation analysis demonstrates return on investment and improved share price. They have also undertaken a really interesting piece of work on the top 100 global companies that perform very well on a wellbeing index. For the last 2 years, Oxford have taken the top 100 wellbeing businesses share price – tracking this index relative to other main indices such as the FTSE etc. the shape of the indices are the same, so they move in a similar fashion, but the wellbeing index has tracked above the other major indices on a consistent basis, which is so interesting.
When will this data be published?
We are starting to talk about elements now, but the data will be published early next year.
From my experience working in investment management, having that data and being able to go into a company, where typically you’ve looked at the financials, the strategy and the management team, there is now a really good indicator from this data for business resilience and performance going forward with Wellbeing Capital as a key measure. Building wellbeing capital within one’s own organisation will ultimately provide the backdrop to being able to hire great talent, keep that talent and drive innovation which of course drives business performance. So, I’m excited about that.
Oxford have also launched the World Wellbeing Movement with a number of large companies, such as McKinsey Health Institute, S&P, Indeed and Unilever, to name but a few. They are researching and measuring wellbeing and are driving at embedding wellbeing into businesses. To think about how businesses can use wellbeing as a key KPI along with cash flow and the balance sheet and the more traditional financial measures as well as to research and develop best practice.
You have mentioned that some organisations try to shoehorn it into other departments and teams rather than incorporating it into business strategy. What do you see as the end goal or main ambition?
If we get there, and I’m confident that we will, this then stops the ‘S’ in ESG being a corporate orphan. It’s not seen as an ‘extra’ and investment management companies will be holding management teams to account on it because it will be a key indicator of whether the company is being well run or not.
The ‘E’ is as important, and companies are already pretty good at ‘G’ – particularly if they’re regulated but not enough is understood about ‘S’ and the default tends to be social impact initiatives, which whilst not bad, and indeed many are really good, they do not tend to move the dial on business performance.
If our wellbeing capital goes up then we know our performance will go up.
You’ve mentioned that the data will be published early next year but is there anything from the early iterations that has been very revealing or surprised you?
Well, it hasn’t surprised me, but I’m thrilled that they’ve been able to prove it. It looks like wellbeing and therefore the foundation of ‘S’ could be at an auditable level because to date that has not been the case. I think it becomes difficult to sustain if it isn’t measurable consistently and embedded in the strategy and governance of the company.
The greenwashing backlash isn’t very surprising. It’s unfortunate at one level that businesses did jump on the bandwagon and again undertook a number of initiatives that they could point to, rather than fundamentally re-thinking their business strategy and activities. Pretending you’re doing something good superficially, when you’re not, is the worst possible outcome. And in today’s interconnected world, you will get called out very quickly indeed – as many have discovered to their cost!
However, the backlash has been helpful because businesses now realise that they need to think about ESG properly. They have to start thinking about it more deeply, more strategically and fundamentally change how they are going about their business – it is not about PR headlines and claims, but about what you are actually doing to change the impact you are having on the world for the E and for the S, on the wellbeing of your colleagues and then build out from there – now that has to be a good thing.
To read Henrietta's report in its entirety please follow the link below.
https://acrobat.adobe.com/link/review?uri=urn:aaid:scds:US:efc6f789-5646-4800-ae05-6b40fbed9e2f