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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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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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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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Contents

Laurie Bassi Berrett-Koehler Publishers ePub
Medium 9781609940614

11 A Hopefully Idealistic Vision

Laurie Bassi Berrett-Koehler Publishers ePub

We hope we’ve made our case that the Worthiness Era is at hand. That companies, more and more, will have to prove to be good employers, sellers, and stewards to succeed. And that companies that don’t do this risk being left behind, out in the cold by a public that is increasingly ethical in its economic choices.

But we realize you may remain skeptical. You may be saying: “This sunny vision is too good to be true. Companies may be talking up sustainability, being an employer of choice, and taking care of customers, but they haven’t truly changed their stripes. They’re still profit-maximizing organizations obsessed with shareholders’ short-term gains. This Worthiness Era business is hopelessly idealistic.”

Conversely, the more conservative of you may be saying, “This vision is unrealistic. Companies may try to tap green consumer trends and fire up workers. But they can’t put excess attention on employees, communities, and the environment. Profitability will suffer, and their ultimate stakeholders—shareholders—may lose everything. This Worthiness Era business is hopelessly idealistic.”

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