By Scott McDonald
When the public and politicians see businesses as agents or enemies of social policy, businesses must respond.
President Donald J. Trump won the US presidency by promising to protect Americans from the ravages of international trade and immigration and by threatening punitive action against firms that use offshore production. Economic nationalism is resurgent in Europe as well.
Emerging technology also presents political risks. When voters and politicians think that governments should prevent companies from engaging in foreign trade that eliminates domestic jobs, why shouldn’t they also advocate against technology that threatens the payroll? Even Bill Gates, whose Microsoft products have eliminated jobs that once employed tens of millions of people, recently called for a tax on robots.
Business leaders need to work with social and political imperatives, rather than inviting resistance. They need to be part of the solution.What will this entail? The avowed environmentalism of energy companies is an example. As people became increasingly concerned about global warming, hostility to oil companies was a natural corollary.
These firms responded by trying to clean up their image. Most major energy companies are now investing in renewable sources of energy.
Any firm might also be punished, by consumers or politicians, for replacing its staff with machines or with cheaper foreign labor.
To avoid reputational damage and new tax or regulatory burdens, large companies may need to take a pastoral approach to their employees. In Singapore, where commercial enterprises have long been used as vehicles of social policy, a government agency, Workforce Singapore, works with businesses to retrain their employees, providing them with skills that are expected to be in increased demand.
Similarly, firms that offer only defined contribution pension schemes could nevertheless take responsibility for ensuring their staff make contributions large enough to ensure decent retirement incomes. This should involve not only education but also incentives, such as employer contributions that go beyond what is required by law.
It’s too soon to say how economic policy will change under Trump or in a post-Brexit UK Yet, there are clear signs of a major shift. Business leaders who pay no heed to it, and fail to develop their own social and political policies, risk finding themselves on the wrong side of history.
Scott McDonald is the CEO of Oliver Wyman.