Dignity & Co.

A call to stand up for your rights at work and to run ethical businesses.

My day-to-day life in private equity investing primarily revolves around screening Southeast Asian companies and start-ups our firm should invest into and partner with. The bread-and-butter activities of my type of work are relatively finance-centric: understanding industry growth, competitive landscape, supplier and customer relationships, shareholding and transaction dynamics, profitability and returns metrics, quality of management, etc.

Over the years, I’ve learned that there’s more to investing than just numbers you can model up in Excel and data you can benchmark in Bloomberg. At least at the firm I work with, core to its investment philosophy is to only support and invest in companies that are ethical in the way they conduct their businesses. There’s zero tolerance for getting entangled with companies blatantly involved in depraved activities: child trafficking, dumping of hazardous waste, selling of human organs, etc. There’s no price tags associated with them. They’re flagged as no-gos.

Increasingly, everyone — not just investment professionals — has been looking at an aspect of corporate ethics that doesn’t necessarily make headlines, as it isn’t an apparent trigger of reputational risk: the respect for employees’ rights. It’s a subset of ethics that, despite it permeating our daily lives, is unfortunately often ignored, not just by employers, but interestingly by employees, too.

I’ve met a couple of relatives and friends, asking their experience on how their rights as employees have been treated throughout the course of their careers. Instead of discussing cases on how they stood up when they felt their rights were violated, some were even surprised to understand they possessed such rights at all. Their experience — getting their resignation letters rejected by their supervisors, having their proposal for a dedicated smoking room to avoid pregnant non-smokers getting second-handed laughed at — were so embedded in their corporate culture to an extent they’re perceived as normal.

“After all, we’re just idle pawns in a life-long chess game of capitalism, right?”

No.

Stand up for your rights

Employers must respect employees’ rights and employees must hold tight onto their rights because those rights symbolize respect for human dignity. What a grandiose, fancy statement – but as pessimistic as you are reading this, you know you hate it when you’re objectified. Violating them simply means dishonoring employees’ status as human beings, who are inherently worthy. Respecting workers’ rights has nothing to do with achieving employers’ KPI targets on employee satisfaction, corporate sustainability, or legal compliance. Violating them is simply unethical.

But first, on ethics: I see ethics as a set of norms deriving from a common denominator interplay among every individual’s moral compass, often pre-agreed, but may occasionally be fluid at times. It’s relational and communal. In the context of respecting people, I believe we’ve collectively pre-agreed not to dilute a maxim that we’re worth it, in-and-of ourselves.

Such philosophy should and must apply within the corporate setting. Disrespecting employees is an unethical venture.

21st century capitalism should not advocate for lord-serf or master-servant relationships popular back when the whole world were still driven by feudals. Responsible capitalism — our form of capitalism — must be entrenched on various parties voluntarily making decisions on commerce together, both employers and employees wielding equal negotiation leverage. Yes, it’s rarely the case. But that just means we should strive towards eliminating significant power gaps between employers and employees in every key aspect affecting both.

Given the power gap, our job as employees at the least is to ensure for our rights not to be meddled with. Here’s how I see this can unfold – some based on real-life accounts of the people I spoke to.

• Right to no harassment. Physically and mentally, directly or subtly. Say you’re a CBD warrior. On your way to the pantry, your superior starts calling you names, or worse: bro-ing his way through, performing inappropriate gestures. Or say you work for a law firm, and your partner starts smearing your name to his/her deemed equally unethical clients or partner buddies. To do: report those who harassed you — or best, find a bunch of other guys / gals who’ve been harassed by the same person, and make your case. Like these Yale students. Or the #MeToo movement.
• Right to no racism. You’re an Asian studying engineering: of course you’re an introverted math-whiz, right? Thus for a project involving a TED-talk-like presentation in front of 100+ people, your boss puts you at the backseat, in charge of swapping slides for some guy named Chad from @litquidity. To do: stand up for yourself and tell your boss: just because Chad’s English isn’t ESL, it doesn’t mean he’s better than you in the intonation management department. Highlight your boss’ unconscious bias towards a particular race, professionally.
• Right to physical safety. You work 9-to-5 in a building construction department, but your employer tells you to buy your own helmet and buy your own insurance. “We’re running short of budget here.” To do: gather others who are planning to join and propose to management to have your safety basics covered.
• Right to due process for promotions and terminations. It’s promotion season. You’ve been awarded “employee of the month” 12 months in a row, and last time you checked bankruptcy filings, the company you worked for wasn’t there. On a Monday morning, HR told you to clean up your desk and leave the company’s premises immediately. When you asked why, they said “just because.” To do: don’t take that “just because”. Find a way to meet your supervisor at least to get an answer — never settle. You deserve to know why you’re fired.
• Right to form a bargaining group. You work for a 5-star hotel, who held your paycheck for 3 months straight with no explanations why. You formed a group — call it a union, but the hotel started firing those leading the union, on the basis of them “destabilizing the cultural integrity of the hotel chain.” To do: report the hotel to relevant authorities.
• Right to quit. You’re done working because of personal reasons — enough savings to travel the world, getting ready to nurture your newlyborn daughter. You submitted your resignation letter and signed a non-compete, but your boss rejected your resignation, with a letterhead template, signed by all his fellow C-levels. To do: aside from being not classy at all, that’s an illegal move from your employer’s side – at least in Singapore, the country I’m residing in. Re-assert and stand up for yourself.

… and other rights not outlined here.

“Standing up for yourself” or “gathering others who are in the same boat to opine together” is easier said than done. It’s indisputable that employers have far more substantive bargaining power vis-a-vis their employees, simply by the nature of their size, capital, and resources. Yes, the employer-employee relationship is asymmetric, but it doesn’t mean that it’s impossible to protect your right and advance your interest.

In a worst case scenario, whereby you’re working for an unethical company and your fighting hard for your right didn’t work out, at least you should be immensely proud of yourself. It will trigger some unwanted repercussions, no doubt. But you stood up, protected your worth, and did the right thing. Even better: you defended others who haven’t had the chance or haven’t mustered the courage to speak up yet.

Better than being an “idle pawn in a life-long chess game of capitalism.”

Do ethical companies fare better?

I’m not entirely a fan of justifying acts from a pure consequentalist perspective, including when it comes to fighting for employees’ rights. Respecting others shouldn’t solely be driven by the desire for any form of expected positive reciprocation in the future, including because such act will be advantageous to the employers in the long term. It doesn’t sound genuine, it’s prone to overseeing minority rights, and it departs from the notion of respecting people for respecting people’s sake. Employee’s satisfaction and happiness shouldn’t just be a monthly KPI to target just because it’s good for the employer.

Still a supportive argument to make, nevertheless.

There’s a wide range of research on whether ethical companies thrive better, stronger, and more profitable compared to their less ethical counterparts. An easy gauge to see if they do or don’t is to check out if these companies make more money if they’re more ethical, including ethical in terms of respecting their employees’ rights.

So are they more profitable? Are their stock returns better? Questions like these gave birth to research within a segment of investing known as impact, sustainable, or responsible investing. It’s a practice of investing that believes in investments that take into account social aspects of the assets without sacrificing investment returns. Some even extend the argument by saying that ‘ethics’ in itself is a source of alpha for the stock.

However, my cursory read of articles available publicly gave me mixed answers on whether ethical companies fare better: Blackrock said companies with clearly delineated ESG policies don’t necessarily do better than others, JUST capital returns don’t deviate much from S&P 500’s, etc.

On the surface, downsides of being ethical include the need to pay for insurance, pensions, and all other tangible and intangible resources needed to facilitate an ethical work environment. But to me, it’s intuitive that in the long run, respecting your employees always works to your advantage. Some catalysts below. I leave it to full time researchers to run regressions on whether the benefits outweigh the costs:

• Less employee turnover. Employees who are treated well and are happier stay longer. Those who aren’t happy would even quit for lower-paying jobs simply to search for places with better culture. That’s less recruiting costs for you, as the employer.
• Greater employee engagement. Employees who are asked to be an active part of the team and speak up will have more skin in the game and greater sense of ownership, leading to greater productivity. That’s greater volume per head for your topline P&L.
• Stronger corporate reputation and brand equity. Gossipping is within people’s nature — those working for an ethical (or an unethical) company will tell others. Also, customers increasingly care about who made their products, how, and whether they’re ethically produced — arguably the previously unseen drivers behind Beyond Meat’s pricey IPO or Sweetgreen — a salad bar — raising VC money. That’s some massive save on your marketing spend department.
• Fewer litigations. You don’t want to be stuck facing a prosecutor somewhere, settling triple-digit millions because of unethical conducts — you get to save these and capex them somewhere productive. That’s you avoiding getting embroiled in courtroom shenanigans.

Being legally compliant checks the box, but it isn’t enough. Legal compliance isn’t the mere bedrock of business ethics. Companies must go above and beyond their fiduciary duty and answer not only to their shareholders, but also to their stakeholders, which include their employees. Existing so-called shortterm-ism — getting on analyst calls every quarter — doesn’t mean ignoring employees’ rights and reasonable demands.

At my line of work, our workstreams include performing extensive due diligence on a company on commercial, financial, tax, legal, and reputational fronts. Arguably, there’s an increasing focus on the latter. Reputational risk analysis goes beyond just screening whether anyone within the potential investee company is on the Panama papers. Potential investors formally and informally utilize all diligence tools at their disposal — including crosschecking with their competitors — on whether the potential target company conducts its business within an accepted ethical framework.

How’s management’s view on ESG? What do employees think of founders’ leadership style? We’re trained to leave no stones unturned during diligence, and I’m genuinely proud of how the investing industry has marched towards a more ethical, sustainable trajectory. Putting an optimist hat on.

Our duty

What’s left to do then?

If you’re working for someone, always ensure to stand up and speak up for yourself and your colleagues in need. If you sensed, witnessed, or experienced unethical behavior in your workplace, use all available channels provided to direct your voice. If that doesn’t work out, organize up. Guard and advance your rights as employees. You shouldn’t let your dignity be stepped on.

If you’re the employer, hats off to you if you’re actively incorporating and articulating human dignity within your company’s DNA. Thank you for paving the way towards a more ethical economy. If you haven’t consciously thought about it yet, look inward first instead of outward — there’s no need to score a moral compass medal by establishing external CSR efforts, without first setting up your house in order.

“So we should be active playmakers in a life-long ball game of capitalism?”

Yes.