The Good Growth Imperative

Sponsored by PwC

What does good growth look like?

Growth sounds good, but is it always good? Bad growth can quickly evaporate (‘boom and bust’). Bad growth brings little benefit to society, depletes more resources and exacts more resources and exacts a bigger cost on society than the short term resources it generates. The benefits of bad growth are not shared.

Good growth is real, inclusive, responsible and lasting. Good growth benefits everyone – consumers, employees, suppliers, shareholders and society alike. Good growth makes sound business sense as business perform better in a society that is stable, healthy and prosperous. But it may not always be reflected in conventional financial and management reporting.

So what do we mean by real, inclusive, responsible and lasting?

Real growth doesn’t simply shift market share from one business to another (‘zero sum growth’). Expansion into new and untapped markets drives real growth. So does innovation, providing solutions to help meet people’s changing needs and aspirations.

Inclusive growth shares the benefits by combining expansion in business output with improvements in living standards and outcomes that matter for people’s quality of life (e.g. good health, jobs and skills, clean environment, community support).

Responsible growth considers the impact of doing business rather than just the profits. Financial return can’t be gauged in isolation from the tax contribution, environmental and economic impact and effect on community stability, health and prosperity.

Lasting growth is maintained over the long term. The focus on meeting short term financial targets may obscure the underlying strengths, weakness and potential of the enterprise. The long-term view is at the heart of good growth

Total impact is on the CEO Agenda
Public backlashes against businesses' increasing profits are becoming more high profile, as consumers, campaigning groups and governments question whether a business is paying its fair share of tax, driving water scarcity, depleting resources or destroying natural habitats. The impact not only rocks reputations, but can damage revenues, and leave the door open for competitors to step in.

A holistic view allows risks to business to be identified and managed.

“74% of CEOs told us that measuring and reporting their total (non-financial) impact contributes to their long term success.” – PwC’s 17th Annual Global CEO Survey

Total Impact Measurement and Management (TIMM)

PwC has developed the ‘Total Impact Measurement & Management’ with our clients to provide the total perspective on business impact. This provide a new language for business decisions and the benefits of embedding it into decision making.

  • Total – A holistic view of social, environmental, fiscal and economic dimensions – the big picture
  • Impact – Look beyond inputs and outputs to outcomes and impacts – understand your footprint
  • Measurement – Quantify and monetize the impacts – value in a language business understands
  • Management – Evaluate options and optimize trade-offs – make better decisions

We see a need for more holistic measurement systems that take account of global mega-trends and allow management to make decisions based on a broader set of criteria than traditional management accounts.

We think that if the measure of business success goes beyond financials, and a value (and a cost) is calculated for the social, environmental, fiscal and economic activities of a company, business can see at a glance the impact they're making and the trade-offs between their strategies. In effect, the business can see the optimal decision for all its stakeholders.

On Reflection: Foreign Service

On Reflection: Foreign Service

An unlikely alliance is pointing out how immigration reform would aid the economy.

The United States has long been schizophrenic on the issue of immigration, says Washington Technology Industry Association (WTIA) CEO Michael Schutzler. As each new wave of arrivals played critical roles in the nation’s economic growth, their presence often generated fear and disdain.

Recent anger toward Muslims and Mexicans expressed at presidential candidate Donald Trump’s rallies are exceptional only in that the sentiments come at a time when immigration has actually been on the decline.

Partnership for a New American Economy, a bipartisan group that makes allies of such unlikely pairs as right-wing media magnate Rupert Murdoch and grass-roots activist group One America, has released an extensive report that highlights the benefits of immigration to each state and calls for reforms in the immigration system.

When it comes to Washington state, a key concern is the need for more talented tech workers. “We don’t have enough people to fill our needs,” says Maud Daudon, CEO of the Seattle Metropolitan Chamber of Commerce. In Seattle in 2014, seven tech vacancies existed for every unemployed tech worker.

While many have criticized H-1B visas granted to technology workers as taking away jobs that could go to native-born Americans, the report points out that only 8,000 of the 275,000 people working in Washington’s tech industry possess such visas. Meanwhile, the report argues that each foreign tech worker employed creates an additional two to three jobs for native-born Americans. 

Each graduate-level STEM worker employed creates an additional 2.6 jobs, yet “the United States turns away half of all foreign born Ph.D.’s coming out of U.S. institutions,” says Matt Oppenheimer, CEO of Remitly, a Seattle startup that offers a cheaper way for foreign workers to send money back to their families.

With each generation of immigrants leaving the agricultural workforce in search of year-round jobs that don’t require travel and outside work, Washington’s farmers also depend heavily on new immigrants, says Michael Gempler, executive director of the Washington Growers League, a Yakima organization that represents Washington farmers. A reduced workforce, he says, is causing more agricultural production to move offshore.

A 20 percent reduction in the number of new field and crop workers immigrating to the United State between 2002 and 2014 resulted in $3.1 billion less production of labor-intensive crops like fruits, vegetables and tree nuts, according to the Partnership for a New American Economy report. That production, the group says, would have led to an additional $2.8 billion in spending and created an additional 41,000 jobs.

Locally, says Gempler, lower agricultural production threatens to reduce not only the acreage of fields planted but also investment in factories to process that food. Particularly hurt, he says, are small farmers who don’t have the resources to navigate the complex and costly process for getting workers into the country legally.

Immigrants in Washington
929,505: State residents born abroad (13% of total population)

251,703: Undocumented immigrants in state (who earned $4.7 billion and paid $586 million in taxes and $417 million in Medicare and Social Security in 2014)

Immigrants in Washington Make Up
55% of farmworkers
34% of computer system designers
42% of maids and housecleaners
30% of personal care aides
25% of STEM workers

Immigrants in Washington Contribute
$249.9 billion: 2014 revenues of state-based Fortune 500 firms founded by immigrants or the children of immigrants

$30.9 billion: 2014 earnings of state’s immigrants

SOURCE: The Contributions of New Americans in Washington, by The Partnership for a New American Economy