Name: Chobani and PayPal are rethinking capitalism
Uploaded: 2020-10-26
Duration: 7 min 36 s
Description: “People want to be a part of a company that stands for something,” says PayPal CEO Dan Schulman.

 ELLEN McGIRT: I think that the human moral element of this is going to require a certain kind of courage that some executives who just simply aren't fluent in the language of justice or purpose or stakeholder capitalism need to generate in order to have the tough conversations, including learning out loud. What's your best advice for those executives who are earlier on the path and you and Hamdi? DANIEL SCHULMAN: Well, I try really hard not to give anybody advice because it's so hard not being in their shoes, but I can say what's worked for us. And what's worked for us is having a set of values that we live up to. And that is what takes real courage, I think. Because values that are just up on a wall and you don't act upon them are just propaganda. And it's worse to actually have values that you don't live up to than no values at all because you're-- HAMDI ULUKAYA: I'm going to steal [INAUDIBLE] from [INAUDIBLE]. DANIEL SCHULMAN: That's I mean it's so true. And by the way, living to those takes courage. Because we live in a culturally charged environment where when we stand up for something, people always think you're taking a political stance. And I always say we're not taking a political stance. We're standing up for our values. And even if that results in death threats, which frequently happens to me because what we-- the stance we take are sometimes controversial, but we're consistent on them. Like we will always take down Nazi sites or KKK sites or sites that promote hatred or violence. And sometimes people are upset about that, but I think that is consistent with our values of inclusion. And that courage to do that, your employees see it, your customers see it, and people want to be a part of a company that stands for something. ELLEN McGIRT: You broke some news on fortune.com today with my wonderful colleague Beth Kowitt. Thank you for that. Specifically I'm thinking about stakeholders and your employees. Can you tell us a little bit about your news and why it's important now? HAMDI ULUKAYA: I feel that we still have a long way to go. This is just the beginning. We announced before the stock options for every employees, including factory workers and tell them to lead help for the children. I always keep saying these are not gifts, these are our-- these are our responsibilities. And this should the normal. This should be the normal business that we shouldn't even be talking about these things. But I'm hoping that this pandemic made us all tick. And I see the signs. And, of course, this gathering that you put together and putting this kind of topics in the top of everybody's mind. And we need to be aligned. We need to be helping each other. We need to inspire each other. And we need to make massive convincing out there in the world of business and say, OK, we might not have to figure this out all at once right from the beginning, but let's start this way instead of this way that we've been on for a long, long time that hasn't been helping society and community and humanity all together. ELLEN McGIRT: Because I know that journey really resonated with you particularly around employee pay and your net disposable income efforts. Can you talk us through that journey, please? DANIEL SCHULMAN: Sure. Well, first of all, I want to, again, thank you for having me and Hamdi. It's so great to be on with you as well. You've inspired me for so long, and I've learned so much from watching you in action. To your point, Ellen, I couldn't agree more with Hamdi in terms of employees being the single most important asset that a company has. When I think about what creates competitive advantage, it's always the strength of your employees, their skills, their passion for the business. And I think any company that hopes to move from being a good company to maybe someday being a great company has as its foundation talented, financially secure, financially healthy employees. And one of the things that I was always proud of at PayPal is that we paid at or above market in every single location where we employed 30,000 people at PayPal. And I always thought because we did that that our employees would be financially healthy because I believe that if you rely on the market, then your employees will be OK. And I put out a survey to find out how our employees felt in terms of their financial health. And what I found is that 2/3 of our employees, 2/3 of our entry-level employees and all of our call center employees struggled to make ends meet at the end of the month, which was shocking to me because I came to realize that capitalism in its current form isn't working for a large segment of the population. And so then I really decided to measure just what it meant to be financially healthy. And we came up with this metric called net disposable income, which is after an employee pays their taxes and all of their essential living expenses, how much money do they have left over for the rest of life. And what I found out, to my surprise, is that our employees, entry-level employees, call center employees only had between 4% and 6% net disposable income. And the team and I decided that the minimum NDI that we could accept for somebody to be financially healthy was 20%. And so we lowered the cost of health benefits by 60%. We raised salaries. We gave every single person in the company just like Hamdi did, we gave them actual stock in the company, and we wrapped all that into a financial education program to show them how to save, how to think about their long term financial health. And today the minimum somebody has in the company is 16% NDI, and by the end of next year we'll be at 20%. And what I saw from that is employee passion, engagement, attrition go way down, absenteeism go way down. And I feel like this idea of profit and purpose working hand in hand together is exactly what makes companies successful. 

“People want to be a part of a company that stands for something,” says PayPal CEO Dan Schulman.

Chobani and PayPal are rethinking capitalism

Leadership

“People want to be a part of a company that stands for something,” says PayPal CEO Dan Schulman. 