Corporations have an obligation to constituent groups in society other than stockholders . . . What are these groups? How many of these groups must be served? Which of their interests are most important? How can their interests be balanced? How much corporate money should be allotted to serve these interests?
Thomas M. Jones
Every organization is a living organism, made up of many people and groups working together, ideally toward a common goal. All organizations rely heavily on people for their success, growth, and survival. Because people play such a vital role throughout an organization's life cycle, it makes sense that a virtuous organization would need to consider the groups of people it interacts with—both inside and outside of the organization—and its responsibilities toward those people.
It is easy to understand an organization’s responsibility toward the people it employs. This sort of approach details practices for human resource policies such as compensation and benefit structures, diversity and inclusion practices, professional development, and psychological safety in the workplace. Certainly, many books have been written on how best to select, compensate, and motivate employees.
Similarly, we could focus on the organization’s relationships with its customers or clients: How do organizations attract, please, and maintain positive relationships with the customers who make their existence possible? Excellent volumes and research have also explored these issues.
The problem with these traditional approaches to considering the interactions of organizations with people is that people are often considered forms or sources of capital—either they are viewed as important because they generate resources for the organization or they are important because they are themselves an important resource for the organization. Terms like “social capital,” “human capital,” and “human resources” emphasize this instrumental view.
We believe that a virtuous organization sees people as inherently valuable, simply because they are human beings. A virtuous organization thus centers all of its interactions with a person—regardless of that person’s role in relation to the organization—on honor and respect. This goes beyond a sense of professional courtesy. Rather, a virtuous organization structures itself and its interactions with all people in a way that honors their humanity. We call this the principle of humanizing interactions.
In this chapter, we identify general principles that should guide virtuous organizations as they work to establish humanizing interactions. As we move through this discussion, we will first consider the concept of humanizing interactions—what this means and why it is important for virtuous organizations. Second, we will give some guidance for how to identify the groups of people most likely to be impacted by the organization, and whose unique interests and needs should be considered as humanizing interactions are developed. Third, we will delve into the general principles that should guide a virtuous organization as it establishes specific people practices, drawing heavily on Maslow’s Hierarchy of Needs, Schwartz’s theory of universal human values, and the United Nations Declaration of Human Rights.
This chapter invites you to take a broader look at how your interactions with all stakeholders affect the entire range of their basic needs and human rights. For example, considering an employee’s personal well-being above her mere productive capacity is the mark of a virtuous shift in organizational perspective. When companies begin to look this way at all the people they interact with, they will find subtle shifts in their approach to business.
Honoring what makes us human
The core idea underlying the principle of humanizing interactions is that virtuous organizations honor the humanity in every individual human being. In order to do so, it is important to understand what makes human beings special—what makes us different from other living creatures. By appealing to the unique needs, drives, and values of human beings can help inform the ways in which we design our organizational interactions with individual people.
The human brain has evolved in ways that allow for advanced language skills, collaboration and cooperation skills (uniquely, even with those who are not blood-relations or partners/mates), and the ability to infer what other people are thinking and feeling. The cognitive and social capabilities of human beings are more advanced than has yet been observed in any other creature.
Our human cognitive abilities have allowed for incredible advances and innovation in all areas of human experience: technology, science, communication, business, education, and medicine. We can hop in a machine that flies in the sky and be on the other side of globe in half a day, we are living longer than at any time in recent history, and more people have more access to more knowledge than at any other time in history. Our enhanced cognitive abilities allow us to start organizations and build products and services that add value to our world. While our cognitive abilities tend to get the spotlight, it is the combination of our cognitive and social abilities that allow our innovations and technology to have such a big impact.
Like other animals, humans act in ways that ensure either their survival or the survival of those closely related to them. The difference is that humans also take into consideration the needs, wants, and desires of others who do not share our same genes. This allows for a greater scope of collaboration and a greater chance for survival and evolution. Without this ability to collaborate with people who are not like us (i.e., to ensure the survival of individuals we have never met) many of the advances we have made as human beings would not have come about.
Our ability to take into consideration the needs, wants, and desires of all the people we interact with is exactly what makes us different than all other creatures. It’s at the core of what makes us human. Our advanced social abilities often motivate and channel our cognitive abilities. Our ability to collaborate in these enhanced ways is what drives and enables us to create organizations in the first place.
It seems natural, then, that people interact with your organization at least in part to express their uniquely human ability to socially be “part of something larger than themselves.” This desire is part of what makes humans special.
Individuals interact with your organization to express their uniquely human ability to co-create. Even customers who purchase a product are co-creating with the organization, shaping the person’s own user experience, potentially shaping the organization’s future product mix, and influencing the nature of the broader market.
Every interaction an organization has with a human being should humanize this experience by honoring that sociality, that creativity, that sense of expression.
As a virtuous organization, humanizing interactions are the foundation on which all of people practices should be built.
In addition to these uniquely human characteristics that should be honored through humanizing interactions, it is essential to recognize and believe that people also have fundamental needs, wants, and desires that your organization can use its collective, advanced cognitive and social abilities to address.
Principle trumps practice
As we seek to create organizations that are virtuous in the sense described in this book—making decisions based on a desire to be good rather than solely to do good—it is important to understand that no set of practices alone is sufficient to fulfill the demands of what it means to embody humanizing interactions.
Certainly the improvement of standard practices is a good start, and there are a great many fundamental practices in managing people, communicating with customers, and relating to external stakeholders that can help us to honor the humanity in our organization’s people. The truly virtuous organization, however, will strive to have an even deeper commitment.
In business, profit strategy often precedes and even trumps considerations about how these decisions will impact individuals. We commend the numerous organizations that are turning toward better human resource practices, but often, even the motivation for such practices is profit: good people practices make employees and customers happier, and happier employees and customers mean more profit. Certainly, we believe that profitable organizations have the ability to do incredible amounts of good, and we want organizations to contribute to the creation of wealth. We also acknowledge the win-win proposition of benefits to both employee and company.
But to be a virtuous organization, the culture of the organization must be saturated with the beliefs that people have basic needs and rights that the organization has a responsibility to honor, that people deserve to be treated with dignity and respect, and that people deserve to be viewed as whole people with lives that matter. These beliefs should be independent of your organization's profit goals.
For example, your core motivation for creating a humanizing workplace for your employees could recognize the fact that your employees are spending the majority of their lives giving their energy to build your business. In return, you can honor their whole selves by treating them with dignity and respect, providing them with fair compensation and benefits, creating a diverse and inclusive workplace, and providing opportunities for professional and personal development opportunities because, as people, they matter to your organization even if these practices do not enhance productivity and increase financial gains.
Identifying organizational stakeholders
Organizations interact with and impact a wide array of individuals and groups of people: shareholders and investors, employees, customers, suppliers, buyers, and the people that live in the communities where the organization manufactures, produces, and delivers its goods and services. We can refer to these groups of people within an organization’s circle of influence as stakeholders.
According to a well-known theory, stakeholders that should be considered by an organization are those who have power, legitimacy, and/or urgency claims on the organization. Although the organization has a responsibility to all groups that possess even one of these qualities, the authors say that those who possess just one quality should be given the least attention, those who have two should be given moderate attention, and those who have all three should be given the greatest attention. This is a dynamic process: stakeholders can shift from having one to having two or three qualities, depending on the circumstance.
This theory is a useful framework, and it can help managers to address limitations on time and attention when dealing with multiple demands from many types of people. Certainly, groups like employees and customers would qualify as having power, legitimacy, and urgency.
But what if we relaxed the constraint on which this theory was built? What if we did not assume limited resources in our ability to respond meaningfully to the needs of all stakeholders, even when those needs are expensive, difficult, and conflicting? What if instead of demanding limited time and money from the executive and her budget, the entire culture of the organization was built to self-govern in a manner that honors the humanity in every person, as a matter of course?
Certainly difficult decisions must be made to determine which needs to address and among which populations of stakeholders. The process of identifying your stakeholders through the power, legitimacy, and urgency each possesses in relation to your organization, and the priority you will place on meeting their needs, is an essential process for every virtuous organization.
But stakeholders know this. They know that not all needs can be met. They know that some of their demands are difficult or even impossible. Then why do they make these demands? They are an expression of a desire to be connected with others in a creative process. They are like the emotional bids described by the Gottman Institute as the act of seeking “attention, affirmation, affection, or any other positive connection.” In other words, contacts with people—whether inside or outside the organization—are not mere inputs for a decision-making calculus. Rather, they indicate home for connection made by individual human beings to other human beings. Demands are not only bids for attention, but are also creative in nature as well. In other words, the act of making requests or demands of a company—by community members, employees, customers, or anyone else—is an expression of humanity that can be honored regardless of whether the company ultimately grants the request.
How do you honor the humanity of your stakeholders while interacting with them? You offer them voice and choice. You treat them with kindness. You ensure that you have their ideas, feedback, and interests correctly identified and recorded. You consider their requests. You respond personally. You connect with them in more, deeper, meaningful ways. This likely means automating less and training more.
As a virtuous organization, you will seek to have humanizing interactions with all of your stakeholders, regardless of the category they fit into. While your decision about how to act on the demands of different stakeholder groups will be greater or smaller, depending on the stakeholder salience framework, the virtuous organization will recognize that all interactions with people can be treated as opportunities to respect the autonomy and connectedness that make us human.
Honoring basic human needs
Stakeholders' bids for social connection and creative expression are two uniquely human traits, but people also have needs that are more basic. In his article, "A Theory of Human Motivation," Abraham Maslow sets forth a hierarchy of basic human needs. Maslow’s theory claims that all human beings have basic needs— physiological, safety, love (or belonging), esteem, self-actualization, and self-transcendence—and that these needs are fulfilled in a hierarchical order. For example, “A person who is lacking food [physiological], safety, love, and esteem would most probably hunger for food more strongly than for anything else.”
This means that if organizations are to honor the humanity of others, they must address the full complement of needs that people experience. This is not to suggest that organizations are responsible to ensure that all human needs are met for all people, or even that all needs are met for all stakeholders. Organizations need to acknowledge that people have a full range of needs and not inhibit people from being able to pursue the fulfillment of their own needs.
Maslow explains that these needs are hierarchical in the sense that if one need on the bottom of the pyramid is not sufficiently satisfied, then that need will be the main driving force in an individual’s subconscious. However, the needs are not completely hierarchical because one need does not need to be 100% satisfied before the drive for the next need begins. He writes, “Most members of our society who are normal, are partially satisfied in all their basic needs and partially unsatisfied in all their basic needs at the same time.” You can also experience some of all the needs but still be lacking.
Following is a brief explanation of the five basic needs and examples of how a virtuous organization could meet these needs.
Food, air, water, shelter, clothing, sleep, and reproduction: these are all physiological needs and are the most basic needs people have. If an individual is severely hungry or sleep-deprived, their main drive will be to eat or to sleep before anything else. Which group of stakeholders’ physiological needs might you be responsible for? And in what ways should you be meeting these needs?
Let’s look at this in terms of your employees. As a virtuous organization, you are responsible for compensating your employees in a way that allows them to meet their need for adequate food, water, shelter, clothing, and other basic necessities required to function in society. This is the very least an organization should be doing for their employees who spend the majority of their lives giving their time, energy, and inner resources to the organization. This compensation is called a living wage. In most nations, the physiological needs extend to things that allow people to provide for these needs—transportation, phone service, and internet access.
In the United States, many jobs pay a living wage, specifically for those with college education and advanced degrees. But there are also many jobs that do not pay a living wage. The dollar per hour amount a person needs to earn to procure a living wage varies, state by state, varies. But the minimum wage in the United States is currently $7.25 per hour ($12,140/year). For a two-person household where one person works full-time, this is below the current poverty line ($15,080) and not anywhere close to a living wage. According to data from MIT’s living wage calculator, the living wage in the United States ranges from $45,000 to $68,000 per year, depending on what state you live in.
If a person working full-time cannot meet their basic needs, they will not be able to move up the hierarchy. So, as an organization that desires to be virtuous, it is important that you find a way to create a compensation structure that will help all of your full-time employees meet their basic needs. (Note: the specific numbers used above do not represent a bar (either low or high) for organizations to reach. They are used for illustrative purposes.)
Safety needs are things like personal security, employment, resources, health, and property. Maslow lists several basic safety needs, including safety “from wild animals, extremes of temperature, criminals, assault and murder, tyranny, etc.” But once these basic safety needs are adequately met, safety needs begin to take a different form, such as “a job with tenure and protection, the desire for a savings account, and for insurance of various kinds (medical, dental, unemployment, disability, old age).” What groups of stakeholders' safety needs might you be responsible for? And which safety needs?
In the United States, the responsibility to provide healthcare largely falls on employers. But not all employers provide this benefit to their employees, and those who do generally provide it only to their full-time employees. The U.S. government only requires employers with 50 or more full-time equivalent employees to provide basic health coverage. Those individuals who work full-time and earn a wage above the poverty line (and thus, do not qualify for government health coverage), and who work for employers with 49 or fewer employees are not guaranteed to receive health coverage. And those who work less than thirty hours a week are not guaranteed health coverage by their employer, regardless of how many employees the company has. Thus, it often falls on individuals to pay for their own health coverage. This is a heavy financial burden and can cause individuals and families to not be able to meet their basic physiological needs. As a virtuous organization, your goal should be to provide health coverage to all of your employees, regardless of their full-time or part-time status. For example, Costco provides health and dental coverage to all of its employees—both full-time and part-time.
We acknowledge that not all organizations have the money to provide health coverage to all of their employees. During our discussions as a class, we worked to tackle this problem. Coming up with some arbitrary number or percentage of profit above which an organization should be making in order to be required to provide health coverage to their employees felt unsettling. So, we came up with the phrase “benefits before boats.” If an organization can afford luxuries (i.e., things that go beyond the physiological and safety needs of those who are benefiting from the surplus profit) and they do not provide adequate health coverage to their employees, they are not being virtuous.
Love and belonging
Love is next in the hierarchy, specifically both the giving and receiving of affection and belonging within a group. This includes the need for family, friendship, intimacy, and a sense of connection. Which group of stakeholders’ love and belonging needs might you be responsible for? And how should you go about fulfilling these needs?
Zappos is notorious for its superior customer service. The company pride itself on connecting with its customers, which engenders feelings of love and acceptance. Unlike many other online retailers, Zappos posts its phone number at the top of its website, with the phrase “Available 24/7.” The founder, Tony Hsieh, encourages his employees to use the phone to talk to customers with the intention of creating moments of human connection. Employees are encouraged to stay on the phone as long as they need to make that human connection, and they are rewarded for doing so. They are also encouraged to treat customers like they would a friend. By doing this, Zappos is fulfilling part of its customers’ basic human needs for love and belonging.
Next in the hierarchy is esteem: dignity, respect, self-esteem, status, recognition, strength, and freedom. Maslow says that humans have the need for personal self-respect and esteem and esteem from others. He explains that esteem must be founded on “real capacity, achievement and respect from others.” While some narcissistic individuals will desire flattery and lies that puff up their egos, the general population desires to be respected and esteemed for actual achievements, accomplishments, and internal qualities they have developed.
Those who feel adequately satisfied in their need for esteem will typically have a strong sense of “self-confidence, worth, strength, capability, and adequacy of being useful and necessary in the world.” Individuals whose esteem has not been adequately met typically feel inferior, weak, and helpless.
Principles of diversity and inclusion are about esteem, dignity, respect. These principles are about recognizing a person for the things that make them unique and allowing each person the full expression of who they are. Virtuous organizations value diversity and inclusion. They recognize the intrinsic value in all of their stakeholders and treat them as whole people.
Self-actualization is “the desire to become more and more what one is, to become everything that one is capable of becoming.” Maslow says, “A musician must make music, an artist must paint, a poet must write, if he is to be ultimately happy. What a man can be, he must be.”
Each person has immense potential, but oftentimes, this potential is woefully underdeveloped. “The clear emergence of these needs rests upon prior satisfaction of the physiological, safety, love, and esteem needs. We shall call people who are satisfied in these needs, basically satisfied people, and it is from these that we may expect the fullest (and healthiest) creativeness.” Maslow claims that few in our society are basically satisfied, and therefore, few ever reach true self-actualization.
In her book, Multipliers, Liz Wiseman explains the importance of helping employees reach self-actualization and gives guidance for how to do this. A “Multiplier” is someone who, through specific ways in which they interact with others, unleashes the intelligence genius in those around them. They bring out the best in people and make themselves and everyone around them smarter by doing it. In other words, they help the people around them reach self-actualization. Wiseman also talks about “Diminishers,” or people who suck the intelligence out of the room and through their self-aggrandizing behavior and squelch the genius of those they lead. Virtuous organizations not only attract and cultivate Multipliers, but they also seek to rid themselves of Diminishers, either by asking them to leave or by training them to be Multipliers.
Preconditions for basic need satisfaction
In his article, Maslow also sets forth certain preconditions that must exist in order for the five basic needs to emerge: “freedom to speak, freedom to do what one wishes so long as no harm is done to others, freedom to express one's self, freedom to investigate and seek for information, freedom to defend one's self, justice, fairness, honesty, orderliness in the group.” He claims that, without these preconditions, an individual’s ability to satisfy his or her basic needs is “impossible, or at least, very severely endangered.” As the foundation on which our basic needs are met, we are highly motivated to achieve and maintain these preconditions.
Maslow also says that we are also motivated by “intellectual desires,” in particular “the desire to know, . . . understand, to systematize, to organize, to analyze, to look for relations and meanings.” He calls this “the search for ‘meaning.’” Satisfaction of these intellectual desires are as important as the five basic needs, and cannot be separated from each other. Virtuous organizations should keep these pre-conditions in mind, along with the basic needs, and ensure that these are seen as a priority as they map the responsibilities they have to their stakeholders.
Recognizing basic human rights
This chapter would not be complete without a discussion of human rights. We have discussed human needs and the responsibility you have to ensure that your stakeholders are moving up the hierarchy, but what about human rights? Virtuous organizations have a responsibility to ensure that their actions do not impede the basic, universal human rights of their stakeholders. In 1948, the United Nations General Assembly proclaimed thirty universal human rights, set forth in a document called “The Universal Declaration of Human Rights.” These rights are accepted and protected by nations across the globe and provide a good basis for organizations to work with. Some of the rights that all virtuous organizations should seek to protect are listed below:
Free Expression. Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.
Social Security and Development of Personality: Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international cooperation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.
Workers’ Rights: (1) Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment. (2) Everyone, without any discrimination, has the right to equal pay for equal work. (3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection. (4) Everyone has the right to form and to join trade unions for the protection of his interests.
Rest and Leisure: Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay.
Standard of Living: Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing, medical care, and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
Collective Responsibility: We have a duty to other people, and we should protect their rights and freedoms.
All organizations have a responsibility to refrain from impeding the human rights of any individual. Virtuous organizations seek to protect and promote these human rights. They also cease to partner with or promote others who impede the human rights of others. As a virtuous organization, you have a responsibility to ensure that your suppliers, buyers, contractors, etc. are not violating the human rights of their stakeholders. While you do not need to have an intense focus on your partners’ stakeholders, you should be aware of them and commit to treating them in humanizing ways.
We have discussed principles for thinking about people practices, how to identify your people (i.e., your stakeholders), and a framework on which to build these people practices. But this is simply the beginning. This process of developing a virtuous people strategy, including virtuous people practices, is a continuous, ongoing process. As a virtuous organization, your strategy for interacting with people cannot be separate from your overall business strategy. The two are inseparable. The reason for this is that if the two are not intertwined, what tends to happen is that either the business strategy overrides the needs of the people or that the people strategy overrides that business strategy. Remember, your organization would not be here without people. They are at the heart of everything you do. You cannot separate the people from any other part of the organization. Virtuous organizations understand this and incorporate their virtuous people strategy as a core part of their overall business strategy.
We acknowledge that individuals have personal responsibility when it comes to moving themselves up the hierarchy of needs, doing all they can with the resources, power, and abilities that they personally possess. But organizations, as entities with tremendous power and access to resources that people need, must acknowledge their responsibility to help their unique stakeholders move up the hierarchy.
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 Ben Zipper, “The erosion of the federal minimum wage has increased poverty, especially for black and Hispanic families,” Economic Policy Institute, blog, June 13, 2018, https://open.byu.edu/-zJKI.
 “Costco has Great Benefits,” Costco Wholesale, accessed December 1, 2018, https://www.costco.com/benefits.html.
 Micah Solomon, “Tony Hsieh Reveals The Secret To Zappos' Customer Service Success In One Word” Forbes, blog, June, 12, 2017, https://open.byu.edu/-Lfr.
Liz Wiseman. Multipliers: How the best leaders make everyone smarter (New York: Harper Collins, 2017) 5.
 “Universal Declaration of Human Rights,” United Nations, accessed December 1, 2018, http://www.un.org/en/universal-declaration-human-rights/.
 “United Nations Universal Declaration of Human Rights: Simplified Version,” Youth for Human Rights, accessed December 1, 2018, https://open.byu.edu/-kXgu.