By Laurie Bassi, Ed Frauenheim, and Dan McMurrer with Larry Costello
What does worthiness mean more concretely?
The foundations are a degree of business smarts and a purpose that goes beyond making money. The ability to earn profits in the marketplace against tough competition is the table stakes of the emerging economy. Companies also must reframe their fundamental aims to be about a wide circle of stakeholders rather than about merely enriching shareholders.
Economist Milton Friedman’s argument that the only social responsibility of business is to increase profits has become outdated, if it ever made sense. Instead, companies will have to put worthiness at their center.
Pledges to be a good corporate citizen or commitments to sustainability must be taken seriously throughout an organization. Companies may want to formalize such promises along the lines of B-Corporations, a growing group of firms that incorporate the interests of employees, consumers, the community, and the environment into their governing documents.
Beyond business acumen and a worthy purpose, successful firms of the future will have three key features: worthiness as an employer, as a seller, and as a steward.
What worthiness means as an employer
Worthiness as an employer means treating workers decently while striking the right balance between viewing people as a cost and an asset. It requires a revision of the arms-length, layoff-prone relationship with workers common over the past three decades. It involves heeding workers’ growing desires for employment security and career development. But it is not a return to the employment-for-life mentality that held sway from the 1950s through the 1970s.
In fact, good employers will combine greater care for workers with a more rigorous, analytic approach to people management than is typical today. Through wise use of data — about interests, abilities, performance, and how these tie to overall goals — employers will set up employees to thrive. And leaders will foster an inspiring culture, in part through a compelling mission. More intelligently orchestrated and stirring workplaces, in turn, will translate into better business results.
Our notion of the good company expands on the concern for employees typically found in corporate social responsibility efforts. The corporate responsibility movement and its variants — such as the push for a “triple bottom line” that accounts for people, planet, and profits — have focused chiefly on fundamental worker rights such as freedom from forced labor, freedom to organize unions, and decent pay.
Those are necessary elements. But for a firm to go beyond these basic rights to the point of optimizing employees’ contributions and helping them feel more alive on the job, smart people management and an inspiring mission are required. Increasingly, people are seeking such a worthy employment experience.
What worthiness means as a seller
Worthiness as a seller means seeking win-win exchanges with customers that leave both parties better off. This emphasis on reciprocity upends the caveat emptor standard that has governed commercial transactions for centuries.
The philosophy of buyer beware presumes a zero-sum situation, where one party will get the better of the other in a purchase. It lends itself to a mindset of corporate greed versus common good and leads to practices like the skimpy customer service found at Home Depot a few years ago. But increasingly, the public is calling for a new sensibility — Seller take care.
What worthiness means as a steward
Worthiness as a steward means caring for the environment and the communities a firm affects. It means limiting the ecological harm a com- pany’s operations inflict through pollution and energy consumption. But it extends past doing less damage to doing more good. To creatively helping solve environmental problems.
A firm that’s a good steward also demonstrates deep concern for localities in which it operates. Concern for the people who buy from it, certainly, but also for those who live or work nearby. Community stewardship encompasses traditional philanthropy such as donations to hospitals. But it also includes more active engagement in communities. It means helping to solve social problems with skills or resources specific to the firm.
Worthiness as a seller and a steward both imply a long-term view as well as a degree of humility and restraint. As a worthy seller and steward, taking care of business means — to a much greater extent than is typical today — taking care of others.
That’s not to say that companies have to be perfect to be good. In fact, the three primary examples we use in the book to illustrate worthiness as an employer, seller, and steward — Beth Israel Deaconess Hospital, American Express, and Seventh Generation — all have stumbled in some respects in recent years.
A blend of the old and the new
But fueled by expansive purposes, such as Seventh Generation’s mission to inspire a more conscious and sustainable world, the three have kept at it. Persistence, in other words, can make up for inevitable setbacks on the road to becoming a good company.
Worthiness is a blend of the old and the new. It builds on notions of fairness, responsibility, and stewardship found in ancient myths and the stories of all the world’s great religions. In the context of more recent decades, it meshes the tighter bonds with employees found in the 1950s, 60s, and 70s with the focus on higher performance dominant since the 1980s.
Worthiness seeks to marry the best of smaller, family-owned businesses, which often embody good employee relations and a sense of community service, with the economic scale and clout of large publicly owned corporations.
Worthiness also represents a union of East and West. It takes the connectedness of people and environment central to Eastern religions and philosophy and fuses it with the power of individual initiative and the sense of progress fundamental to Western thinking.
The Good Company Index
The worthy company, then, starts with good intentions and puts those into practice as an employer, a seller, and a steward. Most companies aren’t there yet. Most are somewhere along a continuum of worthiness.
We have placed each of the Fortune 100 companies on the worthiness continuum, assigning a Good Company grade — from A to F — to each. To do so, we gathered data about company actions with respect to employers, customers, and the environment.
We did not judge particular industries to be inherently good or bad. Many industries (oil, financial services, entertainment) have generated vehement opposition from some segments of the population. We steered clear of all industry-based debates, opting instead for alternative criteria in assessing the goodness of companies: their record as employers, sellers, and stewards.
Our index is based largely on publicly available information. We considered Fortune’s list of the best companies to work for and Newsweek’s ranking of America’s largest 500 firms on green criteria. We also tapped the Dow Jones Sustainability Index of the most sustainable large companies in the United States and the employee ratings of firms at Glassdoor .com. For data on customer service and experience, we drew on information from research firm wRatings.
Our index also accounts for other evidence of bad corporate behavior, such as egregious CEO pay and significant fines by regulatory agencies.
Finally, we asked the companies in the Fortune 100 about the extent to which they marshal their particular strengths to do good in the world.
Only 2 “A” grades in the Fortune 100
We were looking for cases like the one in which IBM employees used their computer expertise to help coordinate relief efforts after the 2004 tsunami in South Asia. To us, such practices are an important sign of a genuine commitment to a wide circle of stakeholders.
Among the publicly traded Fortune 100 firms, only Disney and FedEx got a grade of A, qualifying them as “Good” in early 2010.
FedEx stood out as a good employer and steward on our index. The shipping titan made Fortune’s Best Companies to Work For in America from 2008 to 2010, and it is working to minimize its environmental impact through steps like the introduction of zero-emission electric delivery vehicles in the United Kingdom.
FedEx prides itself as being a sustainability leader and showed as much in 2007 by calling for the U.S. government to set fuel-efficiency standards annually for medium- and heavy-duty vehicles. Founder and CEO Fred Smith also was named by Forbes.com in 2010 as one of the seven most influential people in “clean tech.”
Disney earned points as an employer, seller, and steward, reflecting the way the entertainment giant has done such things as emphasize lead- ership training, deliver holistic “experiences” to customers at its theme parks, and hold “Environmentality Summits” focused on sustainability issues.
Disney also is in step with the shift from “responsible” to something worthier. As of late 2010, the company was revamping its “Corporate Responsibility” efforts under the new name of “Corporate Citizenship.” A wording change means little by itself. But Disney by its actions is proving to be a good, well-rounded corporate citizen. And its philosophy captures the way worthiness allows all of a company’s stakeholders to win.
“At The Walt Disney Company, we believe that being a good corporate citizen is not just the right thing to do; it also benefits our guests, our employees and our businesses,” Disney’s Web site states. “It makes the Company a desirable place to work, reinforces the attractiveness of our brands and products, and strengthens our bonds with consumers and neighbors in communities the world over.”
Still, both Disney and FedEx have room to improve. FedEx, for example, set up shop in a tax haven, effectively doing a disservice to the communities it serves. And Disney could do better as an employer — it has not appeared on Fortune’s list of the 100 Best U.S. Companies to Work For, and its employee ratings on feedback site Glassdoor.com have been solid but not spectacular.
Excerpted from the book Good Company: Business Success in the Worthiness Era, Copyright (c) 2011 by Laurie Bassi. Reprinted with permission of Berrett-Koehler Publishers, San Francisco, CA. www.bkconnection.com or 800-929-2929.
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About the authors: Laurie Bassi is an economist, an expert in human capital analytics, and CEO of McBassi & Company. Ed Frauenheim is a journalist with 15 years of experience writing about topics including technology, work, business, and education. He currently is Senior Editor at Workforce Management magazine. Dan McMurrer is the chief analyst at McBassi & Company and chief research officer at Bassi Investments. Larry Costello is the founder of consulting firm The Lawrence Bradford Group.