LONG-FORM COMMENTARY: Can Doing Social Good Also Be Good Economics?

Neha Malhan, Wellesley College

Organizations are increasingly being held accountable for their social and environmental impact. While increasing shareholder returns is still seen as the primary objective of a commercial enterprise, advocates of sustainability argue that the interests of all stakeholders need to be served. Yet, in a lot of this debate, the implication is often that doing social good has a cost that must be borne by the enterprise.

In this article, I intend to discuss how doing social good need not be “bad economics.” Bad economics simply refers to the negative economic impact on organizations in terms of higher costs or lost revenue or productivity.

I was inspired to research this topic when dining at a restaurant at the Lemon Tree Premier, Delhi Airport in New Delhi. During my meal, I came across a waiter who seemed to have Down syndrome. His attention was focused on laying the table, and I watched him as he worked peacefully. After finishing one table, he moved onto the next and the next and thus finished an entire row of tables. Upon further notice, I happened to spot another waiter with Down syndrome as well as a waiter who was hearing-impaired, which I inferred by his use of sign language to communicate. I inquired from the hostess at the restaurant and learned that the company had a policy of hiring differently-abled employees across its hotels.

After this experience, I remember not only a warm, fuzzy feeling in my chest from seeing these differently-abled people working and leading normal lives, but also a sense of curiosity to understand the thought process behind starting this initiative. Being a student of economics, I was also interested in understanding the economic underpinnings of this initiative and how it was positively or negatively impacting the organization.

Through my engagement with Lemon Tree Hotels and research in the area, I came to better understand the magnitude of the problem regarding employability of people with disabilities, the typical issues associated with employing them, and the methods Lemon Tree used to overcome them. I also explored the costs and benefits of this initiative for the company. My conclusion is an uplifting one—that it is possible for organizations to think of social good in a way that yields good economic outcomes. Such initiatives require creativity, a willingness to break stereotypes, and a thoughtful, systematic approach to overcoming the typical barriers.

Unemployment Among People With Disabilities Is a Major Challenge

With a population of 1.3 billion, India has been battling the problem of unemployment for decades. As of July 2020, the unemployment rate in India was approximately 7.6%. But for people with disabilities, getting employed is a more severe problem. Out of the roughly 26.8 million people with disabilities in India, only 36.3% are employed. This leaves around 17 million Indians with disabilities without a steady source of income. This figure is likely significantly understated, as there is a severe social stigma associated with physical and mental disability in India.

Typically, people with disabilities lead miserable lives in India. They often live alone, do not get married, and only have a few friends, who usually have disabilities themselves. When a child with a physical or mental disability is born into extreme poverty, their chances of climbing the socioeconomic ladder are drastically reduced. They are often illiterate and lack opportunities for quality education. They are portrayed as outcasts and marginalized in society, and due to discrimination, they often avoid visiting public places and lack many basic rights.

Employment opportunities are also limited for people with disabilities, and whenever they do get a job, they face struggles. People fail to look beyond their disability, and they are always portrayed as ‘different.’ In the workplace, the necessary accommodations are not provided to enable them to fit in. Employers often fail to realize that such accommodations are not an inconvenience but rather promote efficiency and add value. The attitude towards people with disabilities in the workplace is often insensitive and disrespectful. Their abilities are underestimated, and in most cases, their potential is not fully utilized. As a result, even if they secure a job, it is usually very basic with limited scope for advancement. This overall lack of employability thus hinders their ability to be productive citizens in society.

Why Do Organizations Not Want to Hire Differently-Abled People?

My interactions with Lemon Tree and review of literature in this area suggested that there are five broad factors that impede the employment of people with disabilities.

First, people with disabilities may lack the education, knowledge, skills, and abilities required for the available jobs. This is really a problem of poor access to education, which leaves people with disabilities ill-prepared for the job market.

Second, the general belief among employers is that employing people with disabilities will require additional costs to be undertaken by the company in terms of accommodations and skills training. Employers also assume that people with disabilities are less productive, can only use entry-level skills, and require severe job modifications.

Third, stereotypes and biases of employers sometimes result in them being less comfortable with employing people with disabilities. Research suggests that this is often a function of familiarity with people with disabilities. In other words, employers that have had direct experience working with people with disabilities have a more favorable mindset on hiring them versus those that lack such experience.

Fourth, employers sometimes fear the legal costs that could be incurred from accidents that people with disabilities might be involved with. This is more of an issue in highly-litigious societies like the US but can certainly be relevant in more hazardous or accident-prone work sites in India.

Fifth, companies may fear how customers, vendors, and people within the organization will react to hiring individuals with disabilities.

Lemon Tree’s Initiative to Employ ‘Opportunity Deprived Indians’

Lemon Tree is India’s largest hotel chain in the domain of mid-priced hotels and the third largest overall. This award-winning chain opened its first hotel with 49 rooms in 2004 and today operates 81 hotels in 49 destinations with about 8,100 rooms and 8,000 employees. The company operates several hotel brands across different price points, including Aurika, Lemon Tree Premier, Lemon Tree Hotels, Red Fox Hotels, Keys Prima, Keys Select, and Keys Lite. The company was founded by Mr. Patanjali Keswani, who continues to head the company as its Chairman and Managing Director.

The initiative of employing people with disabilities in the workforce started in 2007 with the hiring of two deaf people in one of the hotels as kitchen stewards. At the time, this was a limited initiative that Mr. Keswani was experimenting with. In 2009, buoyed by the initial experience, Lemon Tree employed two more speech and hearing-impaired employees. Over time, the organization continued to hire more people with disabilities, successfully reaching a goal of hiring 100 employees with disabilities in 2011. To expand the reach of this initiative, Lemon Tree decided to evaluate the feasibility of hiring people with other disabilities including blindness/visual impairment and orthopedically-challenged individuals.

When a professor at the Indian Institute of Technology Delhi, a premier technology education institution in the country and Mr. Keswani’s alma mater, reached out to Mr. Keswani to request employment for his son who has Down syndrome, the company expanded its list of disability profiles to include intellectual disabilities (e.g., Down syndrome, autism, and other intellectual/developmental disabilities).

In order to play a greater role in fostering social inclusiveness, Lemon Tree Hotels later decided to employ ‘Opportunity Deprived Indians, a categorization which includes people with physical disabilities, but also people who belong to marginalized sections of society such as acid attack survivors, orphans, people from poor economic backgrounds, and widowed/divorced women. This initiative has also expanded to include people who have been deprived of educational opportunities. Like other hotel companies, Lemon Tree traditionally hired college graduates, but they now also offer employment opportunities to those who have not studied beyond 8th or 9th grade. Thus, the company has broadened its focus to encompass disabilities of any kind, believing that a large percentage of India’s workforce is significantly opportunity deprived in some way.

As of July 2020, 16% of the employees at Lemon Tree Hotels fall in the category of Opportunity Deprived Indians. These people are employed across hotels in India and work in different departments such as housekeeping, kitchen stewarding, and food and beverage services. They are typically employed in low-skilled to semi-skilled areas but can move up the ladder to become supervisors depending on performance and capabilities.

Lemon Tree hopes to have 25-30% of the workforce consisting of such individuals, which would be 3,000 to 4,000 employees over the next few years. Mr. Keswani’s dream is to one day have a general manager who possesses some form of disability.

When Lemon Tree launched this initiative in 2007, they faced the same barriers associated with employing people with disabilities discussed above, but the company was able to overcome these barriers through its efforts in three areas:

Changing the mindset: The desire to play a positive role in the community was a core belief of Mr. Keswani and was shared by his leadership team as well. Such buy-in is critical to help overcome the typical biases and stereotypes associated with any change in traditional practices. The company started the initiative at a small level and slowly built awareness and familiarity amongst its employees as well as its customers and vendors. This slow sensitization allowed for greater acceptance and support for the program. Today, the employees are the biggest supporters of the initiative. The gap between disabled and non-disabled employees has disintegrated, and together, they form a strong community.

Smart mapping of jobs to skills: The key to making this initiative work has been the ability to break down the job requirements and match them to the skills of the employees. The modifications that had to be made to the jobs were minor in nature. People are employed only in roles where their disabilities do not come in the way of performing the job and where minor tweaks can help overcome the disability barrier. For example, restaurant stewards who are hearing impaired have a placard that they carry, informing the customer of their disability and asking the customer to point to objects they wish to order on the menu or write their order down in the order book.

Similarly, if an employee with a disability has a housekeeping job, the guest is made aware of this and is asked to call the front desk if they have something to convey. In such ways, Lemon Tree has managed to work around disabilities and has found that with proper communication, guests are always patient and understanding when it comes to such issues. Employees with physical disabilities are usually given a desk job in the back office, as their disability may limit their physical actions.

In employing people with Down syndrome and other such disabilities, the company realized that such people are comfortable with highly predictable, routine jobs with limited customer interaction. Lemon Tree has successfully managed to split the jobs in its hotels into two components—customer relationship management (in the case of a restaurant steward, this would include the ability to take orders, interact with the customer, and upsell the products) and highly-repetitive, routine jobs (in the same example, this would include laying the table, refreshing the buffet, pouring water, and escorting the customer to the table). Typically, an employee with a disability would do the latter kind of work, leaving the job that requires more engagement with customers to other employees. This model proved effective and continues to be employed by Lemon Tree today.

Lastly, the company took a fresh look at the minimum educational requirements for its various low-skilled and semi-skilled jobs. Rather than insist on a high school or college graduation requirement, it examined whether such educational background was key to the job on a case-by-case basis—when strict educational qualifications weren’t imperative, Lemon Tree was prepared to lower the bar.

Investment in training: Most of the work performed by employees with disabilities is of low or medium skill. As such, training requirements are tailored towards developing basic skills. The learning and development team carries out regular trainings throughout the month for various departments, such as housekeeping, front office, sales, and food and beverage. The organization has also hired an ISL (Indian Sign Language) expert who has been made part of the training team. Lemon Tree’s model of hiring people with physical disabilities has been ‘hire then train’ (such employees are kept on probation during their training). In contrast, for people with intellectual disabilities, the model followed is ‘train then hire.’ Prospective employees participate an internship that allows them to learn on the premises for six months before they are hired. Both models have proven effective in ensuring that employees will be able to carry out the work expected of them.

Assessing Additional Costs of the Initiative

As mentioned above, many companies do not wish to hire differently-abled employees due to the additional costs they would have to bear. The additional costs could be considered across three dimensions—having to spend more in the hiring process, investing more in training, and the lower productivity of people with disabilities.

About 2.21% of India’s population has some form of disability. By employing such individuals, Lemon Tree is tapping into a huge market of labor that is yet to be discovered by many sectors. By effectively mapping its jobs to the capabilities of potential employees, Lemon Tree has been able to recruit candidates from this pool at the entry level for minimum wages. Once they have acquired the skills and ability to perform tasks, they move onto higher-paying jobs, either within Lemon Tree or at other organizations. Thus, Lemon Tree acts as a training pipeline for many of these employees. Simultaneously, the company can keep its hiring and labor costs low, and the employees’ tenure with Lemon Tree is viewed as a social contract, not as charity.

With regard to training differently-abled employees, the organization did not need to undertake any major additional costs. Initially, they had to create training modules that incorporated visual aids and then purchase DVDs—a one-time expense. Lemon Tree was able to leverage the work of various non-government organizations (NGOs) serving PWDs (Persons with Disabilities) and entered into strategic partnerships with them. These NGOs helped them develop training materials, foster a welcoming atmosphere in the organization, and enhance job mapping procedures for individuals with various disabilities. In turn, when Lemon Tree is looking to explore new disability types and hire new candidates, they contact these NGOs for leads. Thus, both sides work together to attain a common goal, and no significant additional costs are undertaken. Further, once Lemon Tree hired its sign language expert, it was able to integrate the training sessions for employees with disabilities and employees without disabilities, saving significant amounts of time, money, and effort.

Finally, in terms of productivity, while the company does not have hard data, it believes that opportunity-deprived employees are able to work at or better than the expected level of productivity. Again, this is in large part due to smart mapping of jobs, which prevents their limitations from interfering with their work. In fact, these employees are so happy to get an opportunity to be productive that their focus, attitude, and commitment are often higher than non-opportunity deprived employees.

Benefits of the Initiative

Offering an opportunity-deprived individual a job gives them more than just a source of income—it changes their world. A job is associated with dignity and pride, allowing opportunity-deprived people to become self-reliant and develop a sense of independence and purpose. There have been several cases at Lemon Tree Hotels where EWDs (Employees with Disabilities) have joined the organization, gotten married, had children, and are now raising happy families.

Beyond this direct social impact, there are a number of other benefits that have accrued to the organization as well as to the broader ecosystem:

Greater employee engagement: Hiring people with disabilities has been shown to boost employee morale and loyalty. In 2018, Lemon Tree was ranked 12th amongst the Best Large Workplaces in Asia by the Great Place to Work Survey. They have also been ranked among the “Best Companies to Work for” in India for seven consecutive years from 2011 to 2017 by the Great Place to Work Institute, including in 2017, when they were ranked as the fourth best company to work for in India and were the only hotel company in the top ten. In the qualitative component of the survey, employees who had been working in the organization for more than two years were asked why they continued to work at the company for a long-term period. The responses given by the majority of employees revolved around the inclusive nature of the organization and how proud and satisfied they felt to be working at this company, a testament to the high level of employee engagement and motivation at Lemon Tree.

Improved customer loyalty: In a survey conducted by the esteemed Employment and Disability Institute of Cornell University’s School of Industrial and Labor Relations, 87% of respondents said they “agree” or “strongly agree” that they preferred to give their business to companies that employ people with disabilities.

When customers visit Lemon Tree and are served by a disabled employee, they feel as though they are contributing to a meaningful social cause. By providing patronage to Lemon Tree’s hotels, they feel somewhat responsible for the employment of such people, which helps increase customer retention.

Lemon Tree’s reviews on Trip Advisor are flooded with comments about this initiative: Customers provide very positive, direct feedback and offer specific examples of their experiences being served by employees with disabilities. Customers explicitly state that the reason they return to stay at Lemon Tree is because the company has launched this initiative and they feel proud to be associated with them. While the customer reviews are often emotional in nature (i.e., praise for the progress that the company has made through this initiative), Lemon Tree also receives specific feedback on the work done by employees with disabilities, highlighting customers’ appreciation both for the overall initiative as well as for the fact that opportunity-deprived employees are able to serve customers effectively. The number of consumer feedback awards Lemon Tree has won over the years further underscores the company’s high level of customer loyalty.

Benefits of diversity: Hiring disabled and opportunity-deprived people promotes diversity in the workplace by making the workforce more representative of the population. Diversity not only boosts employee morale, but also enhances the brand reputation and image of the company, as companies that strive to promote diversity are viewed as more socially responsible. Diverse companies are believed to enjoy higher employee engagement and lower employee turnover—when more voices are included, employees feel more engaged. Diversity is also thought to improve hiring outcomes, as diverse companies are portrayed as more desirable places to work, allowing them to attract top talent.

Improved profile with the government: The Indian government and other regulatory agencies hold a favorable view of Lemon Tree Hotels due to their social initiatives. Maintaining a strong relationship with the government is necessary for every business in India, as there are many approvals and permissions that need to be obtained constantly. Lemon Tree Hotels was presented a National Award by the President of India for ‘Best Employer of Persons with Disabilities’ in 2011 and 2016 as well as a National Award in 2012 for being a ‘Role Model in Providing a Barrier-Free Environment to Persons with Disabilities.’

The Ministry of Social Justice and Empowerment (MSJE) and the Ministry of Skill Development and Entrepreneurship (MSDE) both engage with Lemon Tree, inviting company representatives to forums, conferences, and roundtable discussions to listen to their input and opinions. In this way, Lemon Tree can make direct contributions to policies in these areas. Mr. Keswani has also served as the Chairman of the Skills Council for Persons with Disabilities (SCPwD) since its inception. This council is a part of the National Skills Development Corporation (NSDC), which is responsible for bringing people with disabilities into the business sector. Mr. Keswani is also a member of the Sector Skills Council for Hospitality, Travel, and Tourism (NSDC) and the Sector Mentor Council for the Hospitality, Travel, and Tourism Industry (Ministry of Labor and Employment).

Improved profile in the business community and across the globe: Lemon Tree is widely recognized in the hospitality sector for this initiative. Many large organizations in various sectors including travel, tourism, retail, and finance, as well as multilateral agencies and foreign governments, also reach out to Lemon Tree Hotels to consult their leadership on how best to implement socially-responsible practices in their own organizations. This has allowed Lemon Tree to develop strong relationships with other prominent organizations—there is significant engagement between Lemon Tree and approximately a hundred such organizations across the world, including the Government of Scotland, the International Labor Organization (ILO), Pan Pacific Hotels, and UOB Bank in Singapore.

Higher returns for investors and shareholders: All the aforementioned benefits associated with hiring people with disabilities ultimately drive returns for investors and shareholders. It has been shown that companies that embrace best practices for employing and supporting people with disabilities outperform their peers and achieve tangible financial benefits. In fact, research by the World Economic Forum demonstrates that on average, more-inclusive companies are twice as likely to have higher total shareholder returns than their less-inclusive counterparts. They also observed that more-inclusive companies enjoyed 28% higher revenue, double the net income, and 30% higher economic profit margins over their four-year study period.

Lemon Tree’s initiative to employ more opportunity-deprived Indians has busted the myth of viewing such programs only through the limited lens of corporate social responsibility. While there is an obvious, tangible, and direct positive social impact of the program, the benefits extend far beyond that. Achieving such success requires a willingness to break down existing stereotypes and biases, an ability to build consensus and buy-in within the organization, and a steady, sustained effort to create impact. The program has also demonstrated that launching similar initiatives need not imply significant additional costs for the enterprise. As more companies adopt a holistic approach to serve their diverse stakeholders, it should be possible to achieve significant social good while ensuring that ‘good economics’ are still in play.

Possible Limitations and Areas for Further Exploration

While weighing different costs and benefits, I have relied on impressions from the company as well as validation from external sources such as awards and Trip Advisor. Further substantiating the findings with more rigorous analysis would require access to data on specific metrics relating to hiring, training, attrition, and productivity disaggregated across opportunity-deprived employees and other employees. While I hope that more in-depth statistical analysis would not change the conclusions, it would provide more robust backing for the assertions made in this article.

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