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What businesses can do about poverty

First published in Rochester’s daily newspaper, the Democrat & Chronicle, on September 5. Click here.

On the heels of the release of a landmark report on poverty by ACT Rochester and the Rochester Area Community Foundation, I wrote an essay for this paper titled ‘Just Tell Me What to Do About Poverty.’ In it, I expressed my frustration at, yet, another report decrying the depth and breadth of poverty in our community without offering a prescription for what we, as a community, can do about it.

As it turns out, the response to my complaint is right here in our own backyard. The Democrat & Chronicle’s Patti Singer reported last week on four companies that are actively addressing Rochester’s greatest challenge. The companies – TruForm Manufacturing, ENEROC, Genesee Brewery, and Green Visions – are piloting programs to hire and train less fortunate members of our community. Tyrone Reaves, owner of TruForm, has gone an extra step, founding and managing a non-profit to train people on both the job skills and the social skills to succeed in the workplace.

Solutions such as these address local challenges in the context of a global economy. The Wall Street Journal story on September’s monthly unemployment report outlined the challenge of finding qualified employees across the country. One example: Cutco Corp.’s difficulty of finding qualified workers in Olean, NY. The population of rural communities, like Olean, is declining as baby-boomers are retiring. The net result for growing companies like Cutco is a growing gap between their hiring needs and available talent.

These events were predictable and, in fact, were predicted. A 2013 study by the Boston Consulting Group predicted that, by 2020, the U.S. would create 2.5 to 5 million American jobs in the manufacturing sector. The key drivers of growth are structural cost shifts in transportation, energy, and labor. The main risk to our success in taking advantage of these trends was cited as — you guessed it – availability of qualified labor.

Now, it seems, those chickens have come home to roost.

So, there is a confluence of factors at play here: manufacturing companies with growth opportunities, a shortage of qualified workers, and our community’s need to address entrenched poverty.

The free enterprise system has been under pressure since the financial crisis. Those on the political left who believe we, as a society, should strive for equal outcomes suggest that capitalism has its limits in providing for our diverse national needs. Business owners, for their part, often bristle at the suggestion that free enterprise may not be the best economic system to provide prosperity for all.

Both arguments have merit.

This is a consciousness raising moment for local business owners. Those of us raised in a management culture characterized by a focus on bottom line results to the exclusion of all else must retrofit a new mentality into our management cultures. The old paradigm where businesses contribute to society by making a profit, which supports employment, wages, purchases, investments and taxes must be reconsidered. Companies can create more sustainable economic value by creating social value.

Companies have always contributed to their communities by donating to and encouraging their employees to engage with local charities. But, those activities were always viewed as a cost of doing business. The local companies mentioned in the D&C article are doing something quite different.

Their investments have huge paybacks not only for the community but also for their companies. Not only are they burnishing their brands but also they are connecting their employees emotionally to their mission. In a tough labor market, it makes it easier to attract talent and easier to retain them.

These initiatives represent a cross-section of the interests of businesses and our community. They remind business leaders that they must be leaders of their communities as well as their companies. Acting as prime movers and engaging with government and non-profit organizations to achieve common goals are part of the 21st Century job description of every CEO.

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