How should we measure business success? This is the question I’m reflecting on after a recent visit to Micro Enterprise Services of Oregon (MESO), a community development finance institution (CDFI) participating in the Shared Success demonstration, an Aspen Institute initiative, with generous support from the Gates Foundation, that supports CDFIs to build job quality advising and incentives into their small business support programs. MESO chose to focus on child care in their work with Shared Success since they had a long history of providing loans and support to child care businesses. Moreover, many of their child care business clients had asked for help attracting and retaining qualified workers. This challenge among child care providers is not surprising, as child care workers typically are poorly paid and have few benefits, even while many states and local areas have training and other requirements child care workers are expected to meet.
Compounding this problem is the fact that child care businesses in the US already face significant financial challenges, since the industry typically gets little public investment, but service providers must meet child safety regulations that raise costs. Since many parents earn low wages, families struggle to afford quality care. Consequently, in communities across the country, the availability, affordability, and quality of child care are chronic challenges. Public investment in the sector is sorely needed (as I have argued previously) and fortunately, a new public program in Multnomah County created a new opportunity for MESO to support the success of their small business clients in the child care sector.
Over the course of two days, my colleagues and I visited five different child care businesses, spoke with MESO’s organizational leadership and staff, observed a training for small business owners, and conducted a group feedback exercise with 16 childcare business owners. We were impressed with the number and variety of job quality improvements that the small business owners described implementing since they began working with MESO. Because of Multnomah County’s relatively new Preschool for All (PFA) program, many of the small business owners reported raising wages in recent years. In addition, as PFA requires a certain level of training, many had to invest in training their current workers or new hires who were willing to fulfill the program’s requirements.
Shared Success, however, inspired them to do more to improve job quality for their workers. Importantly, for many business owners, their first step was to consult their employees and hear their perspectives about what kinds of job quality improvements they would value. In response, business owners described making a number of changes designed to improve the work environment and reduce the stress and potential for burnout among their employees. Several business owners described adding wellness benefits, which might include a free gym membership, massages, or acupuncture. Many described implementing or expanding paid time off, including paid vacation, holidays, and personal days. (Paid sick leave is required for businesses with more than six employees.) Some created break rooms for staff, so they have a comfortable place to have lunch or just take a moment when they need it.Others described increasing staffing levels above required ratios. Many also reported supporting continued advancement for their workers through paid time to participate in trainings that would qualify workers for a raise, in addition to expanding their knowledge and abilities. Business owners also described creating employee handbooks and other written policies that provide employees with clarity around their roles and expected operating standards and procedures. This clarity was particularly helpful for staff who needed support in working with parents to ensure adherence to drop-off and pick-up times and other operational requirements. Many employers also created recognition programs, providing staff with gift certificates for a manicure or other types of gift cards. Business owners also described involving staff in decision-making in new ways, such as considering what new toys or materials to buy for the kids. Conversations with employees at some of the businesses showed that they appreciated having a job that they enjoyed, felt competent and qualified to do well, and were proud of the value they provide for the kids in their care and the families in their community.
The Aspen Institute Economic Opportunities Program’s working definition of a good jobincludes the three areas — (1) economic stability; (2) economic mobility; and (3) equity, agency, and respect — and these small business owners are making progress in all of these major components. At the Institute, our theory is that good jobs are not only good for workers, but also good for business. The business owners we spoke with agreed that improving job quality has been good for their business, and often expressed an intention to sustain or expand on the job quality improvements that they had made.
But they didn’t describe their improved business performance in financial terms. In fact, when asked specifically about profitability, answers were mixed. Some noted that their businesses were profitable and that they were pleased about that, while others were less sure. All noted that recent and significant increases in insurance premiums were a major challenge to the financial performance of their business.
Instead, they described how job quality improvements resulted in less stressful working conditions and happier employees. They described fewer unplanned staff absences, more confidence in staff focus and ability to provide quality care, and a generally more pleasant and positive work environment. Many noted that having happier staff leads to better care for the kids, which leads to happier families and a more stable business. Some described how they were now poised to expand their business, and while job quality was not the only factor or even primary factor in that decision, the results of job quality improvements made the expansion process easier.
Overall, the business owners are proud of their businesses. They expressed gratitude to MESO for supporting their efforts to make job quality improvements and feel that the work was a success in that it allowed them to improve the working conditions for their employees and support them better, and that, in turn, helped them to improve the quality and reliability of care they offer to the children and families in their community. These business owners see the children in their care as the future and express both joy and pride with respect to the role their business plays in raising future generations.
Looking at these businesses in more typical business success terms —Are they improving their margins? Are they expanding their market share? Are they poised for future growth and profitability? —might yield disappointing answers. But this brings me back to the original question about how to measure business success. If, instead, we measured these businesses on the quality of jobs they create, the value of the service they provide to the community, and the positive relationships that are nurtured among staff, the children they serve, and within the community, then our assessment of business success would be very different. These businesses seem to be successful in a way that is indeed shared — with their staff, with their customers, and in their community. These businesses illuminate the value that is missed by conventional business metrics and the need for new measures of success that align with a fuller understanding of the value a business creates in our economy and society.
