By: Maria E. Luna Issue: Resource Management Section: Book Review
An Interview With Laurie Bassi
Merging global economic security starts with the Worthiness Era. Good Company, Business Success in the Worthiness Era, by Laurie Bassi, proves that in order to yield high profits, companies must make investments in employees, customers and investors. Good Company was written for leaders on the frontlines and to demonstrate that in The Worthiness Era “halfhearted corporate responsibility efforts common today,” can be marginalized. Bassi says, “Only thoroughly worthy companies that genuinely see to do more than enrich a narrow set of shareholders and executives will thrive.” Such enrichment comes about through managing and inspiring employees effectively, and avoiding The Worthiness Era will result in not only a poor reputation, but poor business in general.
ICOSA: What’s the most surprising thing you learned from writing Good Company?
Bassi: Through our systematic compilation of information on the Fortune 100 we gave each company a grade from A to F. And, there were two surprising things we learned. The happiest thing we learned was how good many of these companies were doing. We looked at how they used their core capabilities to make contributions to the community and society. For example, Proctor and Gamble learned that in India adolocent girls tended to miss school a couple of days every month because they didn’t have access to hygiene products. This ultimately caused them to drop out of school, get married, have children at a younger age, which then increased childhood mortality, and poverty rates. So the simple act of using their core capabilities and distributing the products they produce to these girls in India helps break the cycle. They have been able to document the impact—reductions in childhood mortality, increases in female education rate, and overall increases in income. Some may look at that cynically and say they are just in this for the money when incomes raise—but I say they have earned it.
ICOSA: You say your title has a double meaning. Tell us more.
Bassi: What we are discovering is that people are requiring more of companies. We are tired of greed, as evidenced by the Occupy Wall Street efforts. The double meaning of Good Company is it pays for companies to be good and we want companies in our lives that are good companies.
ICOSA: The economy is sluggish, the deficit is astronomical; yet do you think things are getting better?
Bassi: At a micro-level, as opposed to a macro-level, the power is shifting from big corporations to people. There is a lot that we as individual consumers and investors can do to make things better for ourselves, our families and ultimately the society in which we live. People are exercising that power.
ICOSA: What is The Worthiness Era?
Bassi: There is a convergence of forces going on. It’s a convergence of economic, social and political forces that is actually forcing companies towards better behaviors; being good employers, being better sellers and good stewards of the community and environment. That is what we define as a good company. It’s not about being good for goodness sake. It’s about being good because it is the way to make money. In the end it all boils down to technology-fueled people power. That is what is giving people the power to force better behavior on companies. To be a good employer you need to simultaneously be caring, exacting and inspiring. It’s not enough anymore to just make money. Most of us expect more out of our work today.
ICOSA: How is what you’re doing different from other socially responsible assessments, like the KLD 400 Social Index or the Dow Jones Sustainability Index? Hasn’t this already been done?
Bassi: The Good Company Index we created is a comprehensive look at companies versus the Dow Jones Sustainability Index which focuses primarily on the environment. And the KLD Index is not all that exclusive. We think most concepts of social responsibility are the starting point and the other Indexes don’t look at the concept of being a good employer. Their concepts of good employers are minimal. We go beyond the concept of social responsibility. Goldman Sachs has been “socially responsible” according to the others, but clearly they have demonstrated some behaviors like betting against their own customers. Goldman is “socially responsible” by the technical definition—but that is not good enough.
ICOSA: You talk about a turnaround whereby firms that have tried to insinuate themselves into our lives as “friends” or “family” are now getting more attention from people than they ever wanted. Tell us more about that.
Bassi: We start the book with a story about Home Depot back in 2007. Remember Home Depot’s motto, “You can do it, we can help.” Well, in 2007 Home Depot's service quality was declining. An MSN blogger wrote a piece complaining about the decline at Home Depot and within a week there were over 4,000 additional blog entries commenting—mostly complaints. As a result, the newly appointed CEO went online and apologized for the oversight and bad service. This is an example of technology-fueled people power. It is fundamental to what is causing the shift we are talking about—The Worthiness Era.
ICOSA: What should boards of directors do differently to help promote sustainable profitability?
Bassi: This is where boards of directors really need to get more involved, not at a micro-management level, but at the macro, good employer level. People actually do the work and I think this is the place boards need to get more involved in now.
ICOSA: What concrete advice do you have to give to investors? People looking for jobs? Customers who want to use their spending to encourage better corporate stewardship?
Bassi: This book is written for thoughtful people who want a broader and deeper understanding of the forces at work and how they can contribute and benefit from this unfolding Worthiness Era. This is not a political message. In fact, people from the far left and far right can agree that we need to focus on this. The book lays out the common grounds. Remarkably the message is the same for investors and people looking for jobs. Both should ask the question, ‘Is this a good employer I’m investing in—whether I’m investing my work life or my hard earned dollars?’ To learn more about these companies, go to a website called www.glassdoor.com, it enables users to see into these companies. It has employee reviews on 133,000 firms—another example of technology-fueled people power. What we have found is that employee satisfaction is very powerfully correlated with stock prices, so investors should be looking at it too. They should want to know the same thing an employee would want to know.
ICOSA: Is the CEO of XYZ company overpaid?
Bassi: Often yes. We have a rock star celebrity culture in the United States for CEOs. That is one of the reasons I say boards of directors need to be paying more attention to the people side of the business.
ICOSA: Final thoughts?
Bassi: In an interview for the book with Mitch Markson, president of consumer marketing at Edelman, a large public-relations firm, we learned that companies that become catalysts for social change and respond to rising consumer expectations, their brands will help make the world a better place and will not only survive, but thrive in ways their competitors will not. For up-to-date ratings, visit: www.goodcompanyindex.com.