Last month I had a dentist appointment. The dental hygienist – who I’ve known for my entire life – was asking me how business was and we eventually got on the topic of health care costs. I mentioned that our plan was being canceled and we had to pick a new plan for 2013. After quite a bit of research we were able to find a pretty good new plan. Of course, it’s still significantly more expensive than the old plan and has significantly worse coverage. Since we set up our health insurance in early 2007, costs per employee have roughly doubled. I mentioned that we still pay for all of our employee’s health and dental insurance in full. She said something along the lines of “you won’t be able to continue to do that, eventually you’ll go broke!” I responded that we’ll do everything in our power to continue to do it for as long as we absolutely can.
Why? Because it’s a core value of our company. We believe that people shouldn’t have to worry about whether or not they’ll be able to afford health care. We believe that providing this benefit is a critical building block in the structure of a great organization. Core values shouldn’t be compromised to save a few bucks.
Last week I read this great quote from Starbucks CEO Howard Schultz. Even though they’re a gigantic publicly traded company and we’re a tiny private company, I couldn’t help but draw a few parallels:
In 2008, Howard Schultz returned as Starbucks’s CEO to turn around the company. Early on, he had to fend off investors’ requests to slash Starbucks’s benefits, which had made it the model of an enlightened, post-union era company.
“Our stock was in free fall. One day, I found myself on a phone call with one large institutional shareholder. He addressed the longstanding health coverage for our employees, which at the time cost $250 million. He said this would be the perfect time for Starbucks and me to cut health care. Many companies were doing this at the time, so I would be immune from any public outcry.
I tried to describe to him that the essence of the brand is humanity, and our culture is steeped in two primary benefits that have defined who we are: comprehensive health-insurance coverage for our people and equity in the form of stock options, which we give to anyone who works more than 20 hours a week. I told him, ‘This is a nonstarter at every level because you don’t understand the essence of our company.
After all these years, if you believe the financial crisis should change our principles and core purpose, perhaps you should sell your stock. I’m not building a stock. I’m trying to build a great, enduring company.’ We are a performance-driven organization, but we have to lead the company through the lens of humanity.”