2012
2012 Good Company Index – webinar
A few days ago, we held a webinar discussing the release of the 2012 Good Company Index, including an exploration of what every CFO should know about our research on the benefits of being a Good Company.
The video of the webinar is embedded below; feel free to check it out if you missed it the first time!
GoodCompanyWebinar Sept20-2012 from Good Company on Vimeo.
2012
Slow and steady slays the antelope and wins the rat race
Slow may be the new secret to success.
That is, the greatest workplace productivity could come from taking our time on tasks and tuning out the pressure to do more at once.
So says Peter Bacevice, research director at consulting firm DEGW. Bacevice borrows the language from the growing “Slow Food” movement to coin the term “Slow Work.”
“Many of us recognize that constantly reacting to immediate demands distracts us from focusing on long-term goals and aspirations—and yet, we often feel starved for time to do so,” he says. “Today’s quick wins are undermining tomorrow’s performance.”
This rings true to me. I write and edit best when I carve out an hour and a half or two hours of dedicated work, ignoring IM, email alerts and even phone calls. And it’s the long-term projects that typically are most satisfying or move the needle most. A case in point is Workforce’s recent package on contingent labor strategy, where we stepped back and tried to chart a new course for how companies ought to work with contractors, temps and the like.
Bacevice’s tortoise-over-hare strategy has some strong evidence behind it. For example, research shows that “heavy media multitaskers” are less likely than “light media multitaskers” to filter out distractions and have a more difficult time switching between tasks. In other words, the people constantly answering texts, tweeting, posting to LinkedIn and checking YouTube videos aren’t ultimately as good at focusing on what matters.
Another study found that employees of companies with flexible work practices—defined by reduced working hours & work-from-home options—are more satisfied with their jobs and demonstrate escalated levels of commitment to the organization.
As my colleague Rick Bell points out, “Slow Work” also echoes the “persistence hunting” recounted in the brilliant book Born to Run by Christopher McDougall. Persistence hunting refers to running after antelope or other game for hours on end. Humans can actually out-run any four-legged beast over long distances, thanks largely to our ability to cool ourselves by sweating. And most of the chase is at a jogging pace, not a sprint. Armed with our cooling system and marathoner legs, one theory goes, our ancestors became deadly, efficient hunters and eventually rose to dominance as a species.
To be sure, there are times these days when we need to sprint like cheetahs or flit about like hummingbirds. But I think there’s a strong case to be made for remembering our inner marathoner, our latent persistent hunter.
Slow and steady can slay the antelope and win the rat race.
A version of this post originally appeared at Ed’s Work in Progress blog at Workforce.com.
2012
Good companies outperform in the stock market
We originally assigned Good Company Index grades to Fortune 100 companies in June 2010 (those grades were reported as the 2011 Good Company Index, reflecting the year in which our book was published). As we did last year on the one-year anniversary of the Index, this year we again examined all “industry-matched pairs” (two companies in the same industry) in the Fortune 100 in which the companies’ Good Company grades differed by one or more full grade levels (for example, a grade of B versus a grade of C).
Those companies with higher Good Company grades significantly outperformed their competitors in the first year and then further extended that outperformance in the second year. The stock price of the company with the higher grade outperformed that of its competitor with the lower grade by an average of 30.2 percentage points cumulatively over the 2-year period (see figure below).
In addition, we found that in 83 percent of the pairs (10 of 12), the higher-ranked company outperformed the other over the 24-month period. For example, the stock value of Verizon (grade of C+ in June 2010) outperformed AT&T (grade of D+) by 21.7 percentage points during that period, 76.5 percent to 54.8 percent.
2012
Consistently good companies
Below is an excerpt from our recently-released report “2012 Good Company Index: It (Still) Pays to Be Good.”
Although Disney’s grade dropped, other Fortune 100 companies repeated strong performances on the Good Company Index™. In particular, FedEx, Procter & Gamble, American Express, Intel, Cisco Systems, United Parcel Service, and Best Buy all earned at least a solid B on both the 2011 and 2012 editions of the index (see table below).
Procter & Gamble stands out as a particularly worthy company, having achieved a B+ in both years. As with Time Warner, it had a neutral mark with respect to customers. But the consumer products giant earned high marks as an employer thanks to a Glassdoor.com rating of 3.8 of 5. P&G also made a solid showing as a steward, with a high score on the Newsweek Green Rankings and membership in the Dow Jones Sustainability North America Index.
FedEx slipped some from an A- to a B. This was a rare year that the shipping specialist did not make the Fortune Best Companies to Work For list, which cost it a point in our scoring system. But FedEx did rate highly enough with employees at Glassdoor.com to earn one point as a Good Employer. It also stood out for good customer service at wRatings. And with a variety of environmental initiatives, a number of which we discussed in Good Company, FedEx scored highly on the Newsweek Green Rankings.
Apple bears special mention. Although it didn’t earn a solid B in both years of the index (it had a B- last year), it was one of the top three index performers this year along with Time Warner and P&G. Apple earned a B+, on the strength of a top good seller score, a high Newsweek Green Ranking, and lofty employee ratings at Glassdoor.com. Only a demerit for giving CEO Tim Cook the largest pay package of any company in the rankings prevented Apple from earning an A- grade.
Apple clearly has delighted customers with innovative products and services such as the iPad, FaceTime and Siri. But we find ourselves a bit troubled with the company’s high rating as an employer given evidence in recent years of less-than-decent treatment of Apple’s extended workforce in overseas factories run by partners. We have yet to find a reliable, comprehensive source of data on companies’ outsourced workers to include in our index calculations, though. Lacking such a data source, we can only rely on the enthusiasm direct employees have for Apple. And we also trust that the “technology-fueled people power” we discussed in Good Company—forces such as social media tools and a culture of personal disclosure—will continue to push Apple to improve the treatment of workers in its supply chain.
2012
A higher standard of worthiness
Below is an excerpt from our recently-released report “2012 Good Company Index: It (Still) Pays to Be Good.”
The 2012 Good Company Index has a slightly different methodology from the inaugural index. While some might initially see this as “moving the goal posts,” we think our changes reflect the ever-evolving understanding of what it means to be a worthy company. In particular, we made some changes in how we assessed companies as stewards.
We believed it was important to capture a company’s political transparency, especially in the wake of the landmark Supreme Court Citizens United ruling, which removed key political spending restrictions on corporations. The effects of this ruling have been quite visible in the 2012 presidential election. Unlimited independent corporate spending in the political arena threatens to undermine important elements of the democratic process, making transparency in this arena a vital characteristic of worthy stewards.
Such information was not available for our first rankings. But a recent joint effort of the Center for Political Accountability and the Carol and Lawrence Zicklin Center for Business Ethics Research at The Wharton School at the University of Pennsylvania has resulted in the CPA-Zicklin Index of Corporate Political Accountability and Disclosure, which rates how companies currently handle and report on their political spending.
We also added an ethics element. The Ethisphere Institute’s World’s Most Ethical Companies recognizes companies with outstanding performance on criteria including programs for complying with laws, governance, corporate citizenship, and a culture of ethics. The significance of a company-wide ethical ethos is growing in light of continuing corporate scandals that harm communities. Among the most recent ones: allegations of extensive bribery in Mexico by Wal-Mart officials, evidence that Barclays and possibly other banks rigged a key international interest rate, and accusations that Standard Chartered bank violated rules designed to uphold sanctions against Iran. Ethics matter, and our 2012 Good Company Index better reflects their importance.
Another change to the index holds corporations to a more rigorous standard with respect to taxes. Our initial index examined use of tax havens by companies as reported by the U.S. Government Accountability Office in 2008. But relying on that report not only carried the risk of outdated information, but also meant examining just one way companies may have shirked their fair share of taxes.
The “Corporate Taxpayers & Corporate Tax Dodgers 2008-10” report from Citizens for Tax Justice & the Institute on Taxation and Economic Policy offers an improved method for assessing companies and their approach to tax fairness. In particular, the report lists major companies that paid no income tax in 2008, 2009, and 2010. We subtracted a point from a company’s Good Steward score if it had two or more years of zero income tax payments in that three-year period. We recognize that use of tax havens and other schemes for avoiding U.S. taxes may be perfectly legal. But the public has shown decreasing patience for companies that take advantage of loophole after loophole to avoid paying a “fair share” of taxes, especially when the United States and other countries are struggling with significant public deficits.
We also dropped an element of our stewardship grade that we believed was fast becoming outdated. The “contribution” section of our index awarded companies points if they systematically gave back to the community in some fashion, and if they did so in a way that used their “core competencies” such that the philanthropy made an optimal impact. We don’t mean to suggest that contributions such as financial gifts and volunteer efforts are no longer important. On the contrary, what’s variously known as “corporate social responsibility,” “corporate giving” and “corporate citizenship” is increasingly a baseline expectation of all large companies today. In fact, most companies have programs along these lines. This is good news. But it also means it is not necessary to reward companies on our Index for making contributions.
Our decision to drop this category had the most significant effect on companies that had earned two full points in the inaugural index for their contribution. This includes Disney. Disney continues to do many good works. But it, like all other companies, has to clear an increasingly high bar.