Good Companies Keep Winning


Our 2014 edition of the Good Company Index Report contains a hopeful message: the good guys keep winning.

The report is a follow-up study on the behavior of Fortune 500 companies, first published in our book Good Company: Business Success in the Worthiness Era. The report contains an updated Good Company Index (GCI), which we use to assign grades to nearly 300 of America’s largest companies based on their record as employers, sellers, and stewards of communities and the environment. The top-ranked companies in the Fortune 100 this year are Apple, Ford Motor Company, and United Parcel Service.

We also analyze company stock market performance based on the previous GCI grades we assigned in 2012. The results? On average, those companies with higher 2012 GCI grades significantly outperformed their industry peers in the two years that followed.  The median outperformance was 5.1 percentage points, with almost 60 percent of the higher-ranked companies outperforming their lower-ranked competitors.

Further, a live portfolio comprised of the top-scoring companies on the 2012 GCI, invested since October 2012, outperformed the benchmark S&P 500 average (total return, including dividends) by 17 percentage points in its first two years, ending October 1, 2014 (see figure below).  The Good Company Index is used by the Enterprise Engagement Alliance to manage both their Engaged Company Stock Index and their People Centric Annual Awards.

Be sure to check out the full 2014 Good Company Index Report for complete details on the latest ratings!
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Six Attributes of Companies Worthy of Your Business


In our ongoing research for the book we are working on (Good Company) we have done extensive interviews with executives as well as front-line employees.  In these interviews we have been seeking to understand how the convergence of “meta-forces” (globalization, technology, demographic change, political and regulatory change, and environmental change) is shaping the future of business.  No small undertaking.

This process has led us to the identification of six key attributes that organizations must develop in themselves (and their leaders) to thrive in the future.  Companies that exhibit these attributes are also the types of companies with which we’d want to do business ourselves.

  1. Reciprocity—a mindset of seeking mutual benefit (rather than exploitation)  
  2. Connectivity—using the fundamental need and emergent power of human beings to be connected, informed, and effective through new forms of electronic sharing and collaboration 
  3. Transparency— a  willingness to expose the reasoning behind decisions with stakeholders (essential to rebuilding trust) 
  4. Balance— the wisdom to make judgment calls amid competing priorities, such as short-term versus long-term goals and the desire for transparency versus a legitimate need for secrecy (e.g.,  mergers or new products)  
  5. Courage doing what is right despite possible adverse consequences in the short-run
  6. A Purpose for Being—Henry Ford’s words of long ago are more true today than ever: “A business that makes nothing but money is a poor kind of business.”

Nick’s Pizza


14 years ago Nick Sarillo opened Nick’s Pizza & Pub in the northwest suburbs of Chicago.  Today, his two locations take in over $7 million a year in sales.  A recent article highlights Nick’s management approach. 

Among the 10 key elements he’s used to build a unique company culture that delivers: an emphasis on learning and the importance of creating a “meaningful place” for people to work.

Sounds like an organization worthy of exploration for Good Company!

Good Company – Chapter 1 available


First, a note about the book we’re in the process of writing. As we mentioned, finding the right title has occupied a good deal of our time. We’re optimistic that we’ve finally struck on the right title: Good Company. (This replaces our previous working title The Worthiness Era.)

Second, we’re excited to announce that we have a draft of Chapter 1 of Good Company available for you to download.  It’s still a work in progress, but we wanted to get it out there for feedback. (One caution: please be aware that the chapter draft was drafted based on the previous working title, so much of the text is still focused on the term “worthiness” and concept of the worthiness era. Our main ideas will remain the same, but we expect to reconcile the title with the text down the road.)

If you have thoughts or reactions on the chapter, please let us know!  You can post them on the blog itself using the comments feature, or you can email them directly to us (the email address is listed on the first page of the document).

Ranking companies’ worthiness


As part of our work on The Worthiness Era, we’re developing a quantitative “Worthiness Ranking” system which we expect to apply to every firm in the Fortune 100 (this will allow us to “name names” among our largest corporations, both positively and negatively). 

In calculating this score, we’ll evaluate each company’s behavior in five different realms:

  • Employer
  • Customer focus
  • Sustainability
  • Absence of greed
  • Contribution

Whenever possible, we’re planning to use publicly-available information as the source for each of the five indicators that combine to yield a company’s “Worthiness” score. 

In future blog entries, we’ll explore some of the details of each of the five indicators.  (In the meantime, let us know if it looks like we’ve missed any major categories.)

Lessons from Toyota


For the past few decades, people around the world have flocked to Toyota plants to study their greatly admired quality processes.  Now the tables are turned, and people are beginning to study Toyota to understand just the opposite—what went wrong?

 As I read the newspapers and listen to stories about Toyota on NPR, I filter these analyses through the framework that my co-authors and I are using as we write The Worthiness Era.    We use five separate criteria for quantifying the “worthiness” of companies.

Based on the currently available evidence, my hypothesis is that despite all of the public accolades, Toyota has had serious (and heretofore largely unexposed) deficiencies on three of the criteria: worthy employer, customer focus, and (absence of) greed.

 I’ve used our People Index® to help me think through how Toyota measures up on the first category, worthy employer.  The facts strongly suggest that Toyota has had serious deficiencies in multiple areas:

  • Working conditions (too much focus on cost cutting and too little focus on responding to customer input)
  • Accountability (building in true accountability for delivering on Toyota’s promise to its customers)
  • Leadership behaviors (actions that are inconsistent with Toyota’s stated values)

The second category – customer focus – speaks for itself.  Toyota is now paying an extraordinary price for consistently downplaying or flat out ignoring input from its customers.

 At the root of this must be the third category: greed.  In its quest for growth through cost cutting, Toyota has sacrificed the lives of some of it customers. 

 In so doing, it has now put its very existence in jeopardy.  As one of my psychologist friends is fond of saying, “It’s what you get away with in life that kills you.” 

 Toyota was suffering from an undiagnosed organizational cancer.   The old saw that “an ounce of prevention is better than a pound of cure” is applicable. 

Those who want to learn from Toyota should be seeking diagnostics that enable a rigorous, clear-eyed assessment of their organization’s health.

A license to grow (or not)


I recently had the good fortune to interview Sandy Ogg, the SVP of HR at Unilever.

(With three co-authors, I am writing a book called The Worthiness Era – or some such title.  Hence my interview with Sandy.  And more on the book in future blog entries.)

Here’s what Sandy said that I love:

“Companies are either going to get a license to grow, or not.” 

Sandy’s saying that with the increased transparency under which all companies operate, it is harder and harder to get away with dirty tricks and less-than-worthy behaviors.  Therefore, consumers are increasingly in a position of power – they can issue (or not issue) a “license to grow” based on what they know about a company.

The future in Sandy’s view (and mine) belongs to worthy companies.  I think Unilever is one of them.  Take a look at their web site – I especially love the work they’re doing with women in Africa.