JPMorgan Chase CEO Jamie Dimon recently announced that his company was planning on raising wages for its employees at the lower end of the wage continuum, and he is doing this for several good reasons: It will benefit those employees and make his company stand out from the pack in terms of the values that it represents. It also starts to speak to the increasingly important role that private companies have to play in addressing wage stagnation and inequality. But Thomas A. Kochan asks a really important question at the Harvard Business Review: If this is so good for JPMorgan, why don’t they advise the many other companies they work with to follow suit?
After all, investment analysts at JPMorgan Chase are assigned to monitor specific industries, speak up in companies’ quarterly conference calls, help execute deals and transactions, and advise corporate clients. It would be better news for all American workers and for the economy if Jamie Dimon were to instruct his investment analysts to urge their clients to do the same as his company: pay low-wage workers more. … I believe there is one key reason why the high road strategy is not spreading across industries. It’s because the investment community continues to pressure firms to focus on short-term shareholder returns and looks askance at any efforts to invest in employees for the long run. This power of the financial sector over company actions is real and costly.
Unfortunately, only a small number of investment analysts have begun to pay attention to the evidence of a good jobs strategy. Some have been asking firms for data on whether they are following strategies that pay off for both shareholders and employees. Most of these analysts are still only niche players, often labeled as “social investment” funds. The power of Jamie Dimon’s pulpit could help transform this nascent movement from the social fringe to the mainstream investment community.
To understand why JPMorgan might not be interested in pushing their peers and clients harder on this issue, it helps to think about the concept of HR as PR, and what Dimon’s announcement was meant to do in terms of his organization’s competitive advantage. In addition to being valuable to employees, raising the company’s internal minimum wage distinguishes JPMorgan among financial services organizations and positions them as a leader of a trend; this enables them to differentiate themselves in the marketplace for talent, burnishes their employer brand, and uses their HR strategy to drive a positive public relations story for their company. It’s a win on both the talent front and the PR front.
That said, JPMorgan isn’t the only major employer raising wages for low-level employees, and others may well follow suit whether or not their financial analysts advise them to do so. Indeed, Dimon’s op-ed announcing the move might put pressure on other CEOs in this regard, but it’s not hard to see why he’s sought to capture the PR and branding advantage for his own company first.