Stakeholder Capitalism: A Way of Life for Local Business
During a recent conversation in Athens, Georgia, goBeyondProfit sat down with the founder and CEO of Jittery Joe’s Coffee, Bob Googe. Bob’s professional journey has traversed between management consulting, ministry and entrepreneurship. In a conversation with peers at our Athens CEO Forum, he offered unvarnished comments on life as a local business owner.
Perhaps most compelling was Bob’s take on the realities of stakeholder capitalism in the local business setting. Unlike the lofty concepts taught in business school classrooms, for a local business to survive it must integrate caring for employees, customers and the issues impacting those so closely tied to your business. Success of the business is intertwined with the success of stakeholders. And the CEO is just a few steps away from the daily demands.
What makes a small business the ideal example of business generosity?
When I was in business school, one of the things that they taught us was that the job of a company is to maximize shareholder profits. That was literally the job of the company. Back when I was in college no one said anything against that. That’s what a company was supposed to do. I don’t think you could say that in a business classroom right now without getting some pushback from people. The world has changed.
Just to give an example, if someone goes to a Starbucks and asks for a donation and Starbucks tells them no, some big corporation is telling them no. When they come to Jittery Joe’s they are walking up the stairs to my office and they’re talking to the owner of the company, so it’s much more personal. The owner of the company is saying yes or no and that really matters. I don’t think you can successfully have a small business if you were just about maximizing shareholder profit.
I think local businesses make decisions every single day that actually reduce shareholder value. We have given raises to people who didn’t deserve raises, but needed raises. We’ve loaned money for down payments, interest free, for employees who needed to buy a house. This is just the kind of thing that you do as a small business owner. Our kids are going to school with our employees’ kids and they’re playing on the same teams, and you see your employees around town, as a small business owner you have to be part of that community.
Valuing your employees needs over the bottom line
Back in 2008-2009, during the Great Recession, Jittery Joe’s had just opened a bunch of stores in about six months. When the recession hit, the economy fell off the cliff. Business here in Athens dropped 30-35% overnight. As a business, we had to make really painful decisions about who to keep and who to let go, in order to simply keep the ship afloat. If you add to that your commitment to the community, you find yourself in an awful situation. Consider you have two really good employees, one of them has a spouse with a solid job, and the other’s spouse just lost their job. Do you let the one go whose spouse has a solid job so that the other will be okay? We had to make those decisions day after day and it was awful.
It was an inflection point for us and our company. Because of this, we did a better job of looking at our financial needs and our employees’ needs and learned to take better care of the people that were already a part of our team. This allowed us to have people that we can invest in and who will invest in us so that when times get tough, we can figure it out together. You want to keep the folks who are in it with you and understand that we will get through the tough times together, and when we come out of it we will all benefit.
Increased flexibility yields greater loyalty from employees
As a business operating in Athens, when the University of Georgia went virtual it was a really tough time for us. We employ a lot of college students who were no longer living on campus, so half of my workforce went home within a few weeks.
At Jittery Joe’s we understand that it’s not a great paying job. People are making $15 or $16 an hour plus tips, but the deal was always that if you need time off, you can have it. If you have spring break or finals, if your band gets booked for a gig or you need to study abroad for three months you can do that. When you come back you will still have your shift. It was always a sort of a tradeoff – We’ll give you flexibility and you give us loyalty.
But since COVID and the “Great Resignation” that whole tradeoff has been upside down. As a company, we’re still trying to figure out what our employees want. It was easy when everybody wanted flexibility and we could provide stability and flexibility. But now that flexibility is almost a given, we’re trying to figure out what exactly is it our employees are looking for. We could pay more, we could add more benefits, but if you’re a small business what’s happening right now with the supply chain crisis and inflation is making our profit margins even tighter. At the very time that more money and more benefits would be beneficial to our employees, our margins have plummeted. It’s a difficult situation for every small business leader to try and figure out.
Mental Health Crisis Hits Young Employees
Since we hire a lot of college students, I will say that it is obvious to us that there is a mental health crisis in the workforce. Between all of our stores we have over 100 employees, most of them are college students. The mental health crisis in that demographic is off the rails. We have employees who were solid employees a year ago who have just lost it three or four times at work. As a former minister, I’m finding myself with employees in my office trying to counsel them, give them a chance to cry, go home, and try again tomorrow. It is epidemic in the workforce. We have people who call up say they can’t come into work because they simply cannot get out of bed. How do you respond to that as a business leader?
What I’ve found is that our flexibility has to be even more flexible now. We simply can’t handle things the same way as we have in the past. If an employee doesn’t call or show up to work, that used to get you let go. But now, if an employee says they are in bed after crying all night long, are you going to fire that person? No, we’re going to offer them help, whatever it is that they need.
Role of the CEO during Crisis
As a CEO or owner your job is to be the calm in the storm. When everyone else gets mad, my job is to not be mad. In most cases, anger is simply fear. Fear someone will lose an account, or lose their job, and people make the worst decisions of their life when they are afraid. A CEO’s job is to not be afraid, even when everybody else around them is afraid. It is our job to take a deep breath and try to objectively look at the situation and help other people calm down and make better decisions. It doesn’t necessarily mean that we aren’t afraid also, it just means we must be the unafraid presence in the room.
How have the expectations on businesses changed when it comes to speaking out on social issues?
It’s such a no-win situation. It might be old school of me, but I think the primary job of a business is to provide decent jobs for people to earn enough money so that they can go out and be involved in the causes and the things that matter to their lives. Additionally, we should provide a commodity or a service that the community needs and wants. Our role is not to be on the forefront of every march or every issue in society.
We train our employees to not get involved in political discussions with customers because you can’t win. However, we encourage our employees to invest themselves in the causes that they want to invest in and we provide them with the time and the resources to do that.