Thu, Sep 1, 2011
While many quantitative ways exist to measure how good a company is, there are also important but less tangible ways of assessing companies as employers, sellers and stewards.
Here are snippets from Good Company: Business Success in the Worthiness Era demonstrating these 5 intangible attributes:
Reciprocity is a focus on creating win-win relationships. Think about the difference between Southwest and United Airlines. The organizations’ commitment to reciprocity — or the lack thereof — shows up in both employee and customer relations. To illustrate: in the crisis that followed the September 11 World Trade Center destruction, all major airlines laid off 16% of their workforces except Southwest.
Southwest is near the very top of Glassdoor’s employee ratings, whereas United is near the bottom, and not coincidentally, in 2010 Southwest had the top customer satisfaction ratings in the airline industry, while United had the worst.
Need to cancel a reservation on a Southwest flight? No problem. Even with the lowest-price ticket — the “Wanna Get Away” fare — you can quickly go online, cancel the ticket and your full payment goes into an account that you can instantly access for your next Southwest ticket. But if you need to cancel your reservation with United, you have to call them (unless you have purchased an expensive “refundable” ticket), wait for a customer service representative (waits of over 30 minutes are not uncommon in bad weather), and pay a $150 cancellation fee to have your original payment applied to a new flight.
United charges you this fee because they can — they’ve got your money and they don’t have to give it back to you. Southwest chooses not to do so — even though they could — because they are committed to reciprocity.
Human beings have a fundamental desire for connectivity. As technology has enabled new ways for people to be connected with one another, people’s expectations have risen. Both employees and customers increasingly expect the organizations in their lives to provide them with more and better ways to connect to improve their quality of life.
Kaiser Permanente is leading the way in health care — an industry that is badly in need of finding new and better ways of delivering its services efficiently and effectively. Kaiser uses technology to provide its customers with easy 24/7 access that they can use to schedule appointments with doctors at the customer’s convenience (imagine that!), access their health-care records, see results from diagnostic tests as soon as the lab has completed them, and send questions via email to their doctors.
From the customer’s perspective, the system seems to be designed for their convenience, rather than that of the physicians’. It enables customers to take much more active ownership of their health care, rather than being forced to passively wait until the system chooses to deliver it.
It’s what builds trust and good will. McAlvain Group of Companies, an Idaho-based construction firm, prominently promotes its commitment to transparency on its web site as follows: “Our open-book accounting and line-item budgeting allows our clients to identify where project costs reside by division. From design through final completion, we provide cost-saving options by analyzing schedules, means and methods, alternative construction, and constructability surveys…”
Their CEO, Torry McAlvain, says “In the construction business there are so many ways to make money that you don’t feel good about. Our open book policy is a way to make sure that we feel good about what we do. It promotes trust with our customers, and it drives accountability throughout our employee base. It’s knit into the fabric of the organization. And it works — it’s how we win business.”
Balance between the interests of different stakeholders, sometimes-conflicting values, and short-term gains against long-term goals is an attribute of a Good Company. Among the firms that have best managed to create harmony amid discordant demands is Seventh Generation. The household product maker’s very name builds balance into the business. It is a reference to a concept from the Native American Iroquis people, that decisions today ought to consider the effects on descendents seven generations into the future.
Seventh Generation puts this principle into practice by balancing consumer convenience and manufacturing ease with environmental and community stewardship. For example, Seventh Generation has eliminated synthetic fragrances from all its products and backed a push to grow palm oil — a major ingredient in cleaning products — more sustainably.
It also has dared to try to change consumer behavior. Among the company’s campaigns in 2008 was a “Get out of Hot Water” effort. It called attention to the fact that 90% of the energy expended when washing clothes is used for heating water, and encouraged consumers to do the laundry in cold water instead.
5. Courage Good companies aren’t for the faint of heart. They take courage, especially in this transition period when companies can continue to get a leg up on worthier rivals with low-road tactics. For a portrait of corporate courage, consider Ultimate Software and its CEO Scott Scherr.
Scherr hasn’t laid off a single employee of his HR and payroll software company since he founded the Weston, Florida-based in 1990. Ultimate has stuck by its employees in both good times and bad, including a stretch from 2000 to 2004 when the company lost more than $45 million. Scherr also refused to toss any of his nearly 1,000 employees during the Great Recession, even though Ultimate posted losses in 2008 and 2009 totaling about $4 million. “We never threw anybody under the bus,” Scherr says. “The test is always the tough times.”
Ultimate ranked as the best medium-size company to work for in America in both 2008 and 2009. When accepting the 2009 honor, Scherr laid out his philosophy: “The true measure of a company is how they treat their lowest-paid employee.”
That’s as good a yardstick as any for a good company.
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About the Author:
Dr. Laurie Bassi is the CEO and co-founder of McBassi & Company. She is also Chair of the Board at Bassi Investments, Inc. Laurie is a co-author of Good Company: Business Success in the Worthiness Era (Berrett-Koehler, September 2011) – a bold new book containing fresh thinking and analysis about the changing relationships that we have with the companies in our lives. Multiple factors are driving all companies to act more like “good company” to us – as good employers, good sellers, and good stewards.
Laurie is one of the world’s leading authorities on the emerging “decision-science” of human capital management – the processes and practices within an organization that align the management and development of employees with its business results. She holds a Ph.D. in economics from Princeton University, an M.S. in industrial and labor relations from Cornell University, and a B.S. in mathematics from Illinois State University.