I have been arguing for years that managing human dynamics in organizations is critical to bottom line success, so I was pleased to see an article in September’s Fast Company that cited some research that substantiates that claim.
Sisodia, Sheth, and Wolfe recently studied organizations by first selecting the ones that scored the highest in the way they treated their employees, customers, suppliers, and other stakeholders. After detailed case studies, they ended up with thirty-five companies that scored the highest. Only then did they look at financial performance, and they found that these firms over the last ten years had produced 758% returns, compared to 128% for the S&P 500. The leaders in these organizations commanded respect and affection, not fear. They were tolerant and humane. They led (and lead) very successful companies, like JetBlue, Toyota, Best Buy and Whole Foods.
Of course with me, you’re preaching to the choir. I believed this without the research. But even the article asks if this is just a fad. Perhaps the hard-nosed, cut the bottom 10% style will come back in fashion in a few years, laughing at our sentimental notion that people actually matter.
A quote from Sisodia at the end of the article makes me think otherwise. He points out that there has been a culture shift of late—one that makes the human element ever more important:
“People are expecting more form the companies they’re working for, more from the companies they’re doing business with, and more from the companies they’re buying from.”
We expect more, and with the help of things like the internet, we know more, and we know it more quickly. As Dan Pink points out, we have such abundance today that you are less likely to beat the competition by providing a technically better mouse trap. But you can beat them by being more humane. You can easily show your public that you are more tolerant. And when you connect at that level, you can build very loyal customers, members, or stakeholders—and, according to the research, bottom line results.
A friend of mine emailed me about this post. He said:
I read your blog today and I am reminded of companies that I believe are good places to work. When I’ve read the Washingtonian over the years, they have the 50 or so best companies to work for in the area. Allegedly they consider a lot of criteria.
I believe that one, which I’m sure isn’t considered, can yield a lot of insight about a company. That’s if a majority the of its lowest paid workers say that it is a good place to work.
That’s a great question! What do the lowest paid people in YOUR company say about you?