In part one of this two-part blog series, we dealt with the weeds in our garden and discussed the costs we bear when our companies experience a lapse of character or purpose. In this second part, we will shift gears to cultivating the good fruit in our garden by examining the benefits of developing character and integrating purpose in our companies.
Employee Engagement & Turnover
Prior to COVID-19, the average 100-person company lost over $400,000 each year on employee turnover based on a $40,000 average salary, 17% turnover rate (national average) and typical costs (hiring expense, training, lost productivity). Moving this turnover rate by just 2 percentage points would save the company $48,000 each year. Moving it 4 points to 13%, nearly $100,000. What are the highest payoff strategies that improve employee turnover and engagement?
Three of the most important variables that positively impact employee turnover (and employee engagement) are being a part of a company
with a broad impact,
extensive stakeholder care, and
strong growth.
In other words, employees indicate they want most to work for a company with an integrated greater purpose and strong corporate character. Employees want to be a part of something good.
Be Careful
CalTex is a manufacturer in Schertz, Texas, making OEM and ancillary aftermarket automotive coatings. One of their employees, a single mother, began to progressively take time off to be with her terminally ill son. Going above and beyond FMLA requirements, CalTex informed the single mom she would continue to receive her regular pay even after her paid leave ran out. But they did not stop there. “We told her that one thing God didn’t like was His creation being alone,” says Gary Osborn, a former CalTex executive. "So even though we couldn’t fix the problem for her, she would not go through it alone.” CalTex activated the employees participating on The Care Team and allowed them to sit with her in the hospital without using up their paid leave. This included company executives and their spouses. The employee was clearly touched by this level of care sharing that CalTex cared for her as much or more than her church or family. You can imagine the new level of engagement and commitment from not only the single mom but the rest of her team.
Productivity & Profitability
JUST Capital and Firms of Endearment both highlight the financial performance and growth of companies focused on serving broad stakeholder value in emotional, experiential, social, and financial domains. Firms of Endearment companies outperform the S&P 500 2-4x over 5-15 years. This is a significant difference in both short and long-term time frames. Sometimes our head tells us that we must choose between profitability and goodness. However, this data should encourage us that “building on love,” as the Firms of Endearment authors describe, is more profitable than not. The data bears it out.
Innovation & Creativity
Innovation, creativity, and generative learning rely on a high trust environment and shared vision. Conscious leadership fosters the prefrontal cortex brain activity required for creative thought. However, anxiety from a dysfunctional low trust work environment more often engages the amygdala portion of the brain used for fight/flight/freeze survival. Team members in personal survival mode will tend towards self-preservation behaviors and decisions rather than creative innovative thinking that moves the corporate mission forward. Patrick Lencioni targets lack of trust as the number one dysfunction in corporate teams. Survivor Island makes for interesting entertainment but not a corporate culture geared for sustained growth, innovation, and creativity – except perhaps creative dysfunctional or even unethical behavior.
Customer Trust & Loyalty
Finally, let’s look outside of our company walls. We have already mentioned in another post that customers stop buying from brands they perceive as unethical, even if no substitute is available. Customer trust is built with performance, when we deliver a defect-free product, on time, and at a reasonable price. However, with only trust in place, an equivalent or better product will likely lure your customer away. Customer loyalty, on the other hand, is built with care. Loyal customers are resilient to competing options and tend to produce referrals, both lowering marketing and customer acquisition costs.
Ready to Buy??
Hopefully, the value proposition that character and purpose integration brings is compelling for you – better ethical decisions, increased employee engagement, lower turnover, increased productivity and profitability, greater innovation and creativity, and higher customer trust and loyalty. All of these lead to real dollars, real growth, and seemingly too good to be true, intangibles like healthier families and communities. Not only is there real benefit to investing in character and purpose integration, but there is clearly a cost not to, in the form of increased controls, more shrink, more lawsuits, and lost impact on others. Are you ready to buy? Don't wait any longer. Contact Brent Fessler today and take the next step toward your goal.
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