By now, business executives have heard the message many times over: Do right by your employees or face long-term trouble. Usually the argument centers on the need to motivate workers so they are productive and serve customers well.
But there are new twists to the treat-talent-well advice.
Increasingly, consumers and investors care that companies care for their workers. The latest evidence of this comes from advertising firm Young & Rubicam and a paper published earlier this year by Y&R executive John Gerzema and journalist Michael D'Antonio. The authors found that between 2005 and 2009, U.S. consumers expressed a nearly fourfold increase in their preference for companies, brands and products that show kindness in both their operations and their encounters with customers. The research, which involved some 16,000 U.S. respondents, also discovered that nearly two-thirds of consumers avoided companies whose values contradicted their own.
According to Gerzema and D'Antonio, these finding point to a broad "Spend Shift" movement where consumers--partly in response to economic hard times--want better citizenship from the companies in their lives:
"People are returning to old-fashioned values to build new lives of purpose and connection. They also realize that how they spend their money is a form of power, and are moving from mindless consumption to mindful consumption, increasingly taking care to purchase goods and services from sellers that meet their standards and reflect their values."
Some are skeptical of this sort of consumer research. People don?t always do as they say they do in surveys--this may be especially true in research about spending habits.
But there are harder data points backing the need for a soft company heart. In writing the book Good Company: Business Success in the Worthiness Era, my co-authors and I found a variety of studies tying corporate social responsibility--including good employee relations--to positive financial outcomes.
Our own research on the publically traded Fortune 100 also showed the connection. We rated Fortune 100 firms on their records as employers, sellers and stewards of society and the planet, and then compared those rankings with stock market performance. The results? Worthiness pays off. Companies in the same industry with higher scores on our Good Company IndexTM--that is, companies that have behaved better--substantially outperformed their peers in the stock market.
Not surprising, investors, besides consumers, are gravitating to companies that treat all their stakeholders well. The value of assets linked to the Dow Jones Sustainability Indexes--which list the most sustainable large public companies in the world--grew from about $1.5 billion at the end of 2000 to more than $8 billion at the close of 2009.
It is easy in the current context of high unemployment for businesses to pay less attention to worker needs and desires--like pay raises, job security and career development opportunities.
But demands for decent, generous treatment of workers are now coming from investors and consumers besides employees, their advocates and forward-thinking workplace consultants. Smart companies will not only hear the message; they will crank up the kindness.