Accounting for Organizational Employment Impact

by David Freiberg, Katie Panella, George Serafeim, and T. Robert Zochowski

Impact-weighted accounting methodology standardizes previously disparate measures of impact, in this case the impact of employment. This paper’s methodology and analysis of Intel, Apple, Costco, and Merck shows the feasibility of measuring firm employment impact for insight into firm practices and performance.

Author Abstract

Organizations create significant positive and negative impacts through their employment practices. This paper builds on the substantial body of research regarding job quality and impact measurement to present a framework for monetized analysis of employment impact. We identify and propose a framework for measuring the four most salient dimensions of impact for employees, including wage quality, career advancement, opportunity, and health and wellbeing, as well as two principle impacts, diversity and employment location, for the broader labor community. The framework and methodology for calculating employment impact-weighted accounting figures is applied to several large corporations, resulting in positive impacts that range between 25 and 249% of their EBITDA suggesting significant heterogeneity in employment practices across organizations. These results demonstrate the feasibility of calculating employment impact in monetary terms, and provide a foundation for future application across additional geographies and contexts.