Companies shirk taxes while padding profits. Firms foul the planet but keep raking in revenue. Reckless greed on Wall Street goes largely unpunished. More evidence that bad guys finish first in business?
No. A different story is unfolding. Despite the dispiriting headlines, we are entering a more hopeful economic age. My co-authors and I call it the “Worthiness Era.” And in it, the good guys are poised to win.
This new era results from a convergence of forces, ranging from the explosion of online information-sharing to the emergence of the ethical consumer and the arrival of civic-minded Millennials. Across the globe, people are choosing the companies in their lives in the same way they choose the guests they invite into their homes. They are demanding that companies be “good company.”
I realize you may be skeptical. Amid a tepid recovery, high unemployment gives companies the upper hand with workers. And galling examples of corporate greed and wrongdoing are, unfortunately, not in short supply. It can, indeed, look like the bad guys finish first. But their days are numbered. The good guys have the wind in their sails.
Proof is in the numbers. We took a tough-minded look at whether worthiness pays off with the Good Company Index™, our ranking of Fortune 100 firms regarding their records as employers, sellers, and stewards of society and the planet. The results were clear: worthiness pays off. Companies in the same industry with higher scores on the index—that is, companies that have behaved better—outperform their peers in the stock market over a one, three and five year period. For example, in the 12 month period after we created the Good Company Index, the good guys’ stock outperformed their less worthy competitors by 19.8%.
For us this is not just an academic exercise. For over ten years now, we have been using the principles of the index to manage portfolios that deliver market-beating results.
Whether you work in a public sector or not-for-profit organization, or in a privately-held or publicly-traded firm – these findings are relevant to you. The convergence of economic, social, and political forces that has put the wind in the sails of the good guys is having a direct impact on all organizations. And these forces are at work in both developed and developing economies. They are forcing change for good.
Over the next two months, I’ll be posting a series of blog entries tracing out the implications of the emerging worthiness era. In the meantime, if you’d like a quick assessment of how your organization stacks up as a “good company”, use our quick Good Company Assessment. It will give you instant feedback on where your organization stands.