Have you heard of Humanized Companies? Do you know how the famous New Balance brand differs from Nike and Adidas, for example? In this book, the author explains how the society-company relationship is changing. While some businesses insist on focusing only on competitiveness at all costs, Humanized Companies are worried about working for society by focusing on their customers, even if they continue to work for profit as well. Packed with examples, the book shows how these companies are achieving unmatched successes. Businesses that want to evolve need to learn from society and act as Humanized Companies. Want to know how? Come with the 12min Team!
As the American population ages, more people are reaching the "Age of Transcendence" as they begin to care about serving the needs of the people around them rather than being motivated by their interests or ambitions. This development - called "self-actualization" by psychologist Abraham Maslow - has spread in the business community.
More companies are building corporate cultures around service to society, even if they continue to work to earn profits.
These companies are called "Humanized Companies" or "FoE's." A broad survey in the United States followed by a screening process identified 28 companies in which people not only enjoy but love to work because they exemplify a high standard of humanistic performance. These Humanized Companies are: Amazon, BMW, CarMax, Caterpillar, Commerce Bank, Container Store, Costco, eBay, Google, Harley-Davidson, Honda, IDEO, IKEA, JetBlue, Johnson & Johnson, Jordan's Furniture, LL Bean, New Balance, Patagonia, REI, Southwest Airlines, Starbucks, Timberland, Toyota, Trader Joe's, UPS, Webmans Food Markets and Whole Foods.
These businesses thrive because they encourage all of their stakeholders - society, partners, investors, customers, and employees - by practicing these core values:
Alignment of the needs, interests, and expectations of all stakeholders.
Pay relatively modest salaries but giving other employees more in wages and benefits when compared to other companies.
Cultivating a culture of freedom from the top down.
Time spent to train and develop employees.
Empowering employees at all levels to make decisions that ensure customer satisfaction.
Hiring people with a passion for work, resulting in better employee retention.
Creating close relationships with stakeholders and customers.
Low marketing costs while seeking to maintain high customer satisfaction.
Suppliers are treated as partners and encouraging collaboration.
The law is honored.
Corporate culture is seen as a great business asset.
Resistance to short-term pressures in favor of a long-term business model.
While building profits, US corporations are also struggling to develop strong relationships with stakeholders. Traditionally, corporations try to keep their operations free of emotions. However, people are emotional by nature and, as people make businesses, companies are bound to have emotions. Humanized Companies do well in this environment because they develop cultures based on emotional intelligence. This awareness gives you baggage and experience so that they can handle the needs of your stakeholders.
Ordinary corporations try to overcome challenges with a spirit of strength and control. Humanized Companies face both challenges and change with open communication. For example, eBay customers are responsible for the evolution of the site. Instead of struggling with them, eBay lets them build the company. FoEs are highly adaptable. They take responsibility for where they operate. For example, Patagonia became the first company in California to use only renewable energy and built its Nevada offices only with recycled and reclaimed materials.
Wal-Mart has a very good image with the CEOs of other companies, but it has a bad image with the public. The company has been named one of the "Most Admired" by CEOs numerous times. It has already been "number one" on the Fortune list as "Most Admired" in 2003 and 2004, for example. However, there is a very big chasm between the views of CEOs and many other observers on what makes a company admired.
Wal-Mart is one of the largest employers in the world and has nearly 1.5 million employees. Their low prices have already saved their customers millions of dollars. But there are countless critics who think that society is paying a much higher price for this economy. Many people have already accused the company of forcing these low prices off value from their employees and their suppliers.
But there are other ways to achieve competitive pricing without harming employees and suppliers. In an industry known for small margins, two supermarkets - Trader Joe's and Wegmans Food Market, Inc. - pay their employees more than their competitors' salaries and provide great benefits, even for half-hour workers. They have learned that good wages and benefits can cut costs with human resources. Modern employees look for work environments where they feel valued. It is inevitable that companies that provide such an environment will attract more creative and productive workers. Wegmans was named by Fortune magazine in 2004 as the best place to work in the United States. And this is amazing for an industry that works with small margins, low wages and high turnover. Wegman's philosophy is that "good people, working toward a common goal, can achieve anything they want. "The Whole Foods supermarket hires people who label themselves as" passionate about food. " Another example is New Balance, which manages to manufacture 30% of its shoes in the United States using well-paid workers, who are ten times more productive than workers in Asia.
In the past, work was simply a way to collect your salary. Working conditions were inhumane and painful. Over time, these conditions improved, but the work itself remained boring and repetitive. But these days, people want more than a salary. Educational levels have soared, and global awareness of life choices has increased with the Internet. People want work that is inclusive, a job that fulfills social needs, a job that is meaningful-that is, a job with psychological rewards, not financial rewards. In the age of Transcendence, people want to see work as a calling. And responding to this need, FoEs companies give an inspiring character to business models. Employees feel that they are helping clients to lead a better life and that they are doing what they can to improve society and the planet they live on.
Most Humanized Companies seek close relationships with their unions or, on the other hand, provide environments where their employees do not feel they need unions to protect themselves. FoEs maintain a culture of respect and transparency. For example, Toyota's culture is always open. FoEs spend time and money building teams and empower front-line employees to make immediate decisions to solve customer problems. FoEs attract and retain great people by providing a fun environment, a personal work-life balance, and creative benefits that provide quality of life. The FoEs value training, career development, recognition and the celebration of a job well done.
Shareholders benefit from how FoEs treat their employees. These companies have a lower turnover than their competitors and their employees create more revenue. The Costco retailer pays employees twice as much as Wal-Mart, but Costco people generate three times more revenue.
Humanized Companies generate customer loyalty by consistently exceeding their expectations. They differ in meeting the emotional needs of consumers. For example, New Balance sells its ability to heal problems in the feet, and Dove used an ad to try to correct the way society promotes the female body.
FoEs' inevitable success comes from their inspiring leadership, working differently from competitors who are not FoE. Nike founder Phil Knight is an inspiring leader but operates in a very different way from New Balance founder Jim Davis. Nike sees the tennis market through the lens of competitiveness. Seeing the markets that way makes it wise to spend millions of dollars on marketing for famous athletes to support their products, and millions more to announce such support. Adidas signed with soccer star David Beckham for an estimated $ 160 million, the largest endorsement deal in history to date. Nike signed with basketball player LeBron James for an estimated $ 90 million, shortly after signing with Tiger Woods for another $ 100 million.
New Balance sees the tennis market with lenses of a different consciousness. First, New Balance sees itself as a shoe-making company. Thirty percent of its stock is manufactured in its factories in the United States. Jim Davis sees his closest competitors, including Nike, as companies that sell sneakers. They do not create sneakers. They outsource all manufacturing. They only sell what the Chinese, Indonesians, and others do (though the design is done by the companies). New Balance's marketing base is "fit and performance." But some people also buy New Balance sneakers because they want to recognize this resistance from the company in outsourcing. The style, which is the main feature among New Balance's main competitors, is a secondary feature of New Balance. Nike and other companies see customers regarding "social being" (wanting to adjust, impress others, and be competitive). New Balance sees its clients regarding the "inner being" (a life with balance and meaning). And that view does not depend on expensive endorsements and advertisements. This vision employs a lot of money in research and cares with partner suppliers. Also, it helps to cover the higher-wage costs of manufacturing operations in the United States, although the superior productivity of American officials helps to achieve this as well.
But has New Balance succeeded with this unconventional view of the tennis market? Much. The company moved up from twelfth in the 1990s to second place in 2004 before the merger of Adidas with Reebok. In the US market in the 1990s, Nike, Reebok, and Adidas experienced declines in shoe sales and market share. Over the same period, New Balance's sales and market share grew strongly, with annual sales growing about 25% between 1995 and 2003. Being a FoE generated a very large reward for New Balance.
FoEs honor legal and emotional contracts with their stakeholders. Treating the emotional contract seriously helps prevent legal problems. When Toro sought to reduce her injury litigation, she began making personal contacts with injured clients and making deals. The company hired legal assistants to deal with clients' cases, rather than hiring other intimidating lawyers. As a result, from 1994 to 2007, Toro did not have to return to court for any case of bodily injury.
FoEs believe that keeping employees happy and engaged results in interactions with the most significant customers. FOEs value consumer confidence. For example, LL Bean and Costco have unrestricted, uncontested return policies.
FoEs often outperform the market and their industry competitors. They provide continuous values for investors - from bankers to ordinary citizens (51% of American households own shares). For example, while Whole Foods works in a volatile industry, it has shown a return on investment of 185 percent in the three years before 2007. Its policy of stakeholder interdependence sets it apart from its competitors. FoEs have larger shareholder returns and risk-adjusted returns, higher price/earnings ratios, and better returns on capital. They have historically outperformed the stock market by an 8: 1 ratio. FoEs are the kind of investment that Warren Buffet likes.
A company's investors, employees, and customers can come together to achieve more stable results for the company and achieve greater harmony between the interests of all stakeholder groups. For example, in most Humanized Companies, employees are encouraged to become company customers through discounts on products and services offered. In many cases (especially in lifestyle products), companies find that the best hires come from the most demanding and loyal customers. Most of these businesses also have several types of ESOP (employee action plans) programs. Instead of focusing on just giving options (which are often of a short-term nature) to employees, companies should pay more attention to rewarding and providing incentives to employees for the acquisition and maintenance of company stock in the long run.
Possible links between customers and investors are more unusual and interesting. Companies should encourage hybrid relationships; they should try to get their investors to become customers and vice versa. They should consider giving long-term investors the same discounts as their employees have. On the other hand, some businesses have started experimenting with new types of loyalty programs for the best customers. Rather than rewarding them with free products and services, some businesses reward the best customers with stock.
And what makes FoEs different for investors? Humanized Companies are evaluated differently from other companies. They achieve higher returns for shareholders, typically have higher price-to-earnings ratios, and have good returns on equity. And all this without presenting more risks than the rest of the companies in the market.
FoEs are looking for partnerships. They are less threatened by competition and are more focused on cooperation. For example, an IKEA store teamed up with Jordan's Furniture and Costco - although they are competitors - to open new stores next to each other on the same day, thus attracting a record number of customers.
Partnerships with stakeholders are essential for these companies. For example, Southwest Airlines partnered with its employees to survive the industrial crises following the September 11, 2001, terrorist attacks. New Balance stakeholders helped bring the company from the twelfth place to the second in the industry. Whole Foods has recruited stakeholders to help shape its five-year vision statement.
Modern FoEs adopt collaboration as being far more efficient than exploration. They see their suppliers as important partners and seek to create mutually beneficial relationships. They negotiate contracts without disrupting their suppliers. For example, Honda has created a cost method that allows its suppliers to make reasonable profits while still allowing the company to provide an affordable product.
FoEs feel they have an obligation to serve their communities and society. They encourage their employees to volunteer. When they move their factories to other locations or cities, they ask for opinions from the local community and relevant government agencies. FoEs serve the global community by reducing their environmental impacts. During crises, they get involved in helping, particularly when the government and NGOs are overwhelmed. From 1996 to 2000, only 61% of US corporations paid taxes, but 100% of FoEs paid their taxes correctly.
A strong corporate culture based on humanistic values has three elements:
"Organizational vision" - Developing a corporate vision to chart the company's future path requires the recognition that the greatest assets of an organization are people and their intellectual property. FoEs create a spirit of "service leadership," in which no one is more important than the other. Executives do not receive absurd salaries and bonuses.
"Organizational values" - strong values unite the people of a company and express their identity and priorities. FoEs communicate their values and put them into action to create inspiring cultures. They give employees incentives to implement corporate culture and to behave in alignment with meaningful values.
"Organizational Energy" - FoEs encourage positive energy and enthusiasm by seeking employees who are passionate about their jobs.
FoEs work in a culture built on: "learning, trust, interdependence, integrity, transparency, loyalty, respect, fun. "These companies often challenge standard business practices. For example, while many manufacturers were moving their operations from the United States to Asia, New Balance continued to manufacture their shoes in the USA.
These companies usually spend less on marketing than their competitors, and they emphasize organic growth. FoEs develop creative solutions such as JetBlue low prices with high-quality promises to customers. These businesses plan long-term sustainability, rather than being driven by the short-term urgencies of Wall Street. They believe that slow development and long-term values are more important than rapid growth spurts. For example, Costco places only 14% of margin on all products and gives its workers excellent pay and benefits. This has resulted in slow growth with long-term stability.
Some companies start out as FoEs. Others, like Timberland and Toyota, have turned into FoEs. If your company wants to undergo this transformation, the first thing to overcome is the mindset that says a business needs to address the interests of each stakeholder group at a time - often at the expense of other groups. FoEs prove that inclusive thinking, encompassing all the company's stakeholders, provides a viable and sustainable way of doing business. These companies act on the belief that the more an organization gives, the more it gets in return.
How about knowing the history of Nike? Read 'The Mark of Victory'!...
David "Avocado" Wolfe is an entrepreneur, author and product spokesman. He is known for promo... (Read more)
Jagdish N. Sheth is an internationally recognized marketing professor and business consultant whose client list includes top-notch companies such as AT & T, BellSouth, Ford, GE, Motorola, Square D, Whirlp... (Read more)
A founding member of the Conscious Capitalism movement, Raj Sisodia is Professor of Global Business and Researche... (Read more)
Now you can! Start a free trial and gain access to the knowledge of the biggest non-fiction bestsellers.