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6 Ranking Companies

Laurie Bassi Berrett-Koehler Publishers ePub

More and more, people are demanding that companies in their lives be “good company.” The convergence of economic, social, and political forces that we describe in Chapters 2, 3, and 4 put us at the dawn of a new economic era in which genuine, broad-based worthiness is no longer an added bonus but a necessity. Some of the world’s largest companies are in the vanguard, pointing the way and serving as examples for others to follow. Many others, however, are laggards, apparently oblivious to these forces—and to the fact that ignoring them imperils their existence, their employees’ livelihoods, and their shareholders’ investments.

In this chapter, we quantitatively rank the publicly traded companies in the Fortune 100 on the Good Company Index and describe how you can qualitatively assess other companies outside the Fortune 100 with which you do business as a consumer, investor, or employee.

In our framework, being a good company is based on how a company acts in three different arenas: as an employer, as a seller, and as a steward of its community, the environment, and society overall. In order to (1) identify which organizations are already behaving as good companies, (2) identify which ones have a long way to go, and (3) track progress in the years ahead, we sought to create an objective system of ranking companies’ actions in these areas. We explored multiple sources of information to feed into this ranking system, seeking data that ideally had all of the following characteristics:

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1 The Worthiness Imperative

Laurie Bassi Berrett-Koehler Publishers ePub

The Home Depot didn’t look bad on paper in early 2007. But online, I the home improvement giant didn’t look good. And the story of that disconnect gets at the heart of this book: we’re entering an age when goodness matters for companies like never before.

In January 2007, Home Depot ousted an unpopular, highly paid CEO, Robert Nardelli. And although Nardelli’s whopping $210 million severance package irked investors, the company signed a much more reasonable deal with his successor, Frank Blake.1 The Nardelli-Blake transition earned Home Depot positive press.2 And although Home Depot was suffering from the housing market decline, Blake announced a hopeful outlook in late February.

“The long-term fundamentals of our company are strong,” Blake said, “and we believe we can improve our performance and grow at, or faster than, the market beyond 2007.”3 He also outlined investments for better employee engagement, improved product innovation, and tidier stores.

But one month later, this corporate giant—which in 2006 had ranked 14th in the Fortune 100—was beset by the consumer equivalent of a mosquito swarm. The trouble started with an essay by personal finance columnist Scott Burns at Web site MSN Money. In the article, Burns lamented that Home Depot no longer held an intimate place in his life.

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10 The Worthiness Era

Laurie Bassi Berrett-Koehler Publishers ePub

The forces we’ve sketched out in this book dovetail with other key, emerging business trends—all of which are converging to create a future in which companies increasingly must prove they are worthy of consumers’ business, employees’ best efforts, and investors’ dollars. The growing importance of organizational agility and the rise of Asia as an economic power have worked against the arrival of the Worthiness Era. But in both cases, factors in play are now propelling company goodness to the fore.

The stakes are high that companies take goodness to heart in the coming years. Without better stewardship of communities and the environment, humanity will continue on the path toward climatic disaster. Without better employer practices, millions of people will suffer unnecessarily in dissatisfying, anxiety-producing jobs. And without increased worthiness as sellers, companies will continue to sell products and services that too often harm customers physically and financially. The degree to which the Worthiness Era takes hold also has implications for the future of capitalism and America’s prosperity in the years ahead.

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7 The Good Employer

Laurie Bassi Berrett-Koehler Publishers ePub

Paul Levy walked the halls of Beth Israel Deaconess Medical Center.

But he may as well have been walking a tightrope.

The Great Recession had hit, and Levy, CEO of the Boston hospital, had to cut labor costs while somehow preserving a high level of patient care. As he considered his options, Levy watched as a janitor emptied the wastebasket, a food service worker delivered meals, and other low-wage employees pushed patients through the halls on gurneys. He listened as they spoke kind words to patients and their families, he witnessed their cheerful presence and gentle care, and he realized that these “low-skill” workers were delivering health care.

As layoffs loomed large, this was not an idle insight. Levy knew that these workers are normally the first to go. But he also knew that patients would suffer in small but real ways as a result. Levy was not content with “normal,” and so he called a meeting of all employees who were able to attend in the hospital’s auditorium.

He struggled to find the right words that would explain to all present what he had seen and heard: that each of them, down to the lowest-paid employee, was critical to delivering quality health care, and that perhaps there was some way that high-wage employees could find to save the jobs of their colleagues who earned less. He didn’t have to struggle for long. Before he was able to finish his thought, the auditorium erupted in applause. He had spoken a truth that touched the hearts of those present. Money-saving ideas poured in, and the hospital managed to save almost all of the positions targeted for layoffs.

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Appendix. Good Company Index: Scoring and Sources

Laurie Bassi Berrett-Koehler Publishers ePub

In calculating the Good Company Index Scores for the companies represented in this book, we used data from a variety of sources, which are listed at the end. (The most up-to-date information on the Good Company Index can be found at http://www.goodcompanyindex.com.)

In some categories, companies were ranked from high to low into octiles, or eighths, which were used to assign category scores that make up the Good Company Index ratings. For example, a company that falls in the top 12.5 percent (the equivalent of the top one-eighth of the overall distribution) would be in the first, or top, octile. A company that falls between 75 percent and 87.5 percent would be in the second octile, and so on.

Overall Good Company Grades and
Corresponding Numerical Scores

In order to calculate a score for a given company, we begin by measuring how good an employer it is. Using companies that have at least 25 employee reviews as of April 2010, we get a starting number based on the octile into which a company falls in Glassdoor.com’s overall ratings, relative to other Fortune 100 companies.

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