A couple of years ago, I read the book, Firms of Endearment where the authors share how world-class companies profit from passion and purpose. We’ve all heard that having engaged employees is important if you want a high performing organization. Yet in my experience, few organizations make engagement a priority. Many leaders think it’s difficult to measure engagement, so it isn’t a strategic focus. And most leaders think that engagement is about having happy employees. Engagement is much deeper than just having happy employees—it’s about productive employees, and productivity impacts the bottom line. In fact, a high performer can deliver 400% more productivity than an average performer!
What are Firms of Endearment?
- Companies that strive through their words and actions to endear themselves to all their primary stakeholders.
- They build a business on love and care: they build superior value and have close relationships with all their stakeholders.
- They profit from passion and purpose—beyond making money
The firms of endearment subscribe to the philosophy that investing in all your primary stakeholders—including your employees—leads to superior value and profitability. Examples of firms of endearment include Southwest Airlines, USAA, Starbucks, Patagonia, Trader Joe’s, Wegmans, and Ikea.Below are the principles of the firms of endearment. Notice that they invest significantly more in engagement factors than most companies—training, benefits, and salaries.
- Subscribe to a purpose that goes beyond making money
- Executive salaries are relatively modest
- Any level employee has access to the executive level leaders
- Their employee compensation and benefits are significantly greater than the standard for the company’s category.
- They devote considerably more time than their competitors to employee training.
- Their employee turnover is far lower than the industry average.
- They make a conscious effort to hire people who are passionate about the company and its products. They hire for character, not just expertise.
Most executives would still not be convinced that it’s worth focusing on engagement. They would see the above principles and zero in on the significant expense of employee training and paying higher salaries and benefits. But this is where the book gets really interesting.The authors compare the cumulative performance of the firms of endearment to eleven Good to Great companies in Jim Collins’s popular book. At the five-year mark, the cumulative performance of the firms of endearment and good to great companies are on par with each other, with both outperforming the S&P 500. But at the 10-year mark, the U.S. firms of endearment deliver a cumulative performance of 410% compared to 176% of the good to great companies. And at the 15-year mark, the U.S firms of endearment deliver a cumulative performance of 1,681% compared to 263% of the good to great companies! (http://www.firmsofendearment.com/)
The authors of Firms of Endearment disagree with Jim Collins on what defines a company as “great.” Collins described companies going from “good” to “great” by virtue of their having delivered superior returns to investors over an extended period of time (each delivered cumulative returns at least three times greater than the market over a 15-year period). The authors of Firms of Endearment believe a great company is one that spreads joy and fulfillment and makes the world a better place because it exists, not just because it outperforms the market over a certain period of time. And that distinction clearly makes a big difference in the profitability of the company.
I find this research to be extraordinary. If creating cultures based on joy, fulfillment, and engagement lead to significantly more profitable companies, than why aren’t more organizations investing in their cultures? Why do most executives still see salaries, benefits, and training as expenses? Because most organizations are still operating in a traditional model of leadership that focuses on tangible organizational functions like finance, lending, and marketing. These are functions that are easy to measure, and therefore a strategic priority.
Of course, finance, lending, and marketing are important. But if you want to build a long-term profitable business, you better start investing in your people. The people are your culture. And organizational culture is what separates merely good--and maybe even great--companies from exceptional organizations.
I really love and enjoy this reading. Reading this I learned that when you speak out clearly you thoughts and ideas people see you as winner, because you are not afraid to go straight to the point.
Great article.....And happy belated birthday! Welcome to my world, young lady!
Whenever I have a work project that I keep putting off - I think about delegating that project to someone else - which accomplishes 2 things- it gets the project done and frees us my brain space thinking about it.
Good morning. I loved this read. Thank you so much for sharing. Sincerely, Melissa :)
Thank you for this blog Laurie. I liked most part and specially "As organizations have become more complex, there is a tendency to require employees to do more with less. This is a slippery slope, and often can result in employees feeling overwhelmed and burnt out. One of the biggest contributors to this is not evaluating resources during the strategic planning process." I will use this practice "A best practice is to do what I call Priority Planning—putting important practices on your calendar ahead of time so they become a priority in your day. Examples of activities to Priority Plan include scheduling recurring coaching sessions with each team member, time for strategic thinking and planning, vacations, doctor appointments, important children’s events, and blocks of time for focused work on projects." To be more effective, I will get a good rest so I can have enough energy in the morning. I will read the blog again along with the other links on employee evaluation. Thank you so much Laurie. Best wishes to you and your family.
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I love the feedback on the more than 50 hours of work. AND filling time. So true. Unfortunately, showing that you work longer hours is still seen as being a "hard worker" - not sure how to change that though.
I enjoyed the read. I concur that transitioning from technical skills to delegating results was a task within itself. I did not realize I was almost trying to do the same thing from my previous position, and it was not working. However, I am seeing the results of how delegating daily tasks makes my job and workload easier. Thank you, Laurie.
Thank you for sharing information about your trip Laurie! All 3 things resonate with me - probably #1 being the biggest. I know when I'm gone for a week, I'm still thinking about work and need a vacation when I get back because I did not relax enough. I think your idea of a longer vacation is definitely in my future!!
Hey Laurie, My take on your list - 1 - everyone has a story - listen 2- social media causes interpersonal problems 5- generational differences create hurdles / earn it you aren't entitled / we should help them get there not give it to them 6 AMEN some leaders I would have followed thru Hell, some I wish - well, you know 7- true BUT be as good as your word and 14- Hopefully we leave some good from our efforts, I know the good leaders I have had have. Seen a lot in my career but it really comes down to treat others the way you want to be treated, fair, honest, and straight forward. Good read. Take care
I love this so much and thank you so much for sharing! I really just love realizing that enjoying the simple things sometimes is the best! Also recognizing that what is important and fun to you may not be everyone else's fun on the on the trip. “Do we get to keep these toiletries?” was my favorite!!!! :):) Glad you had a great time and got to spend it with your family!
I very much resonate with lesson no 3! Thank you Laurie
I think the part that you might have missed in their top 5 things, some of which were not "Italian" or even different from home, all of them happened with you, both of you. And i think that is what they will remember too. And you've got tons of photos that will remind them of what the Sistine Chapel looked like - then they might remember what it sounded like or smelled like. Oh- and i agree with you 100% about sleep!
LOTS of great take-aways from this post! Thank you for posting! I especially love "slow down to speed up". That's a keeper!
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the not getting enough rest to be at my best. definitely need to get more quality sleep and make that a priority
It really is hard to narrow down the 3 lessons into one because they are all so interconnected. You need to give your mind and body THE TIME to relax SO THAT you can enjoy the SIMPLE THINGS, including REST. I enjoyed that lesson as a whole. I will take that lesson with me on my next vacation (or staycation). As always, thank you Laurie for your candor and for sharing your own lessons with others so that we too can benefit.
Great information and reminders
Laurie, Thank you for sharing your trip and these nuggets. The lessons that resonate most with me are it does take time to relax and getting proper rest. When you devote 15 plus hours of your day for work, taking care of home and others; the 6-7 hours you lay down does not cut it! For me during this time I'm trying to unwind and find myself thinking fighting not to think about what I have to do tomorrow. Even after I create a to do list for the next day...I find things I need to add. Taking a day off here and there doesn't cut it as well because of all the plans you have for that day. I try to make sure my Mental Health Days remains just that.... time for me to laugh, cry, scream.... whatever I need to release the cares and stress!
Really enjoyed the article... and all very true!
Since I was already well aware of #1 (I'm in the same boat with taking a long time to relax), I think I'm resonating most with #3. I'm learning to prioritize sleep / rest and it's been wonderful. Love that you said "I love sleep.". :)
Welcome back from vacation. Well deserve! Action is the key to success. Shoulder to shoulder, coaching and delegating task to help other employees grow are very important. It is a sacrifice that one must do. Forget about yourself and be with your team day in and out to help them grow, is not always easy. On the long run, your team is stronger, and you can depend on them for the success of the organization. Thank you so much!
So many great tips here, thank you!
I am so impressed you're able to disconnect and these are great tips I'll be sure to try on my next trip!
Such a great post - so inspiring!