My frustration with Firms of Endearment: Shame, meaning, and action
Who wouldn’t want to work for, or lead, a firm of endearment? As attractive as the name sounds, the book of the same title exposes both frustration and shame that more organisations have not taken up the mantra.
What are Firms of Endearment?
Firms of Endearment is a 2007 management book by authors Sisodia, Wolfe, and Sheth. Similar to Collins’ Good to Great, Firms of Endearment assesses performance of companies that fit defined criteria. Where Good to Great highlighted a company’s financial characteristics, Firms of Endearment looks first to qualitative metrics.
The book points to the aging population as a cause for a movement towards meaning in organisations. Older generations of business leaders, begin to search for a deeper meaning from their efforts. This meaning is found in a holistic approach to stakeholder relationship management in five groups: Society, Partners, Investors, Customers, and Employees.
The book highlights 30 organisations that best meet the criteria and demonstrate the following core values, policies, and operating attributes:
- Align the interest of all stakeholder groups, not just balance them.
- Their executive salaries are relatively modest.
- They operate at the executive level with an open door policy.
- 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 empower employees to make sure customers leave a transaction experience fully satisfied.
- They make a conscious effort to hire people who are passionate about the company and its products.
- They consciously humanise the company experience for customers and employees, as well as the working environment.
- They project a genuine passion for customers, and emotionally connect with customers at a deep level.
- Their marketing costs are much lower than those of their industry peers, while customer satisfaction and retention are much higher.
- They view suppliers as true partners and encourage suppliers to collaborate with them in moving both their companies forward.
- They honour the spirit of laws rather than merely following the letter of the law.
- They consider their corporate culture to be their greatest asset and primary source of competitive advantage.
- Their cultures are resistant to short-term, incidental pressures but also prove able to quickly adapt when needed. As a result, they are typically innovators and breakers of conventional rules within their industries.
Examples of work environment characteristics include:
- Fun
- Flexibility
- Balance
- Creative quality of life benefits
Primary elements of the corporate vision for a Firm of Endearment include:
- A purpose more broad than just wealth generation
- Dedication to servant leadership
- Emotionally intelligent leadership
- Commitment to exemplary citizenship
- Recognition that they are part of an economic ecosystem with many interdependent participants
The bullet points seem an obvious checklist for business leader aspirations. So why are there not more organisations that can refer to themselves as Firms of Endearment?
What are we doing here?
I entered the management profession in my 20s with an inherent belief in managing with principles of equality, empowerment, hope, and love. This belief led to self-doubt through my 30s as my ideas bounced off the rational ceiling of traditional top-down management. These insecurities in part drove me to embark upon studies in management-focused social science to determine if I was simply an idealistic fool or if the corporate world really did have it all wrong.
A few months away from 40 and two modules away from a Masters of Applied Social Science (Management), I find myself getting increasingly frustrated as I read books like Firms and Endearment. I am frustrated at our largely unchanging collective corporate culture that has such books collecting dust in desk drawers and executive bookshelves. I am frustrated at marginalised and commercialised academia that seems unable to propagate principles to the masses.
Most of all, I am frustrated with myself for compromises made along the way. My belief has always been that the end expression of our efforts is not to produce some product or service, but rather it is the development of individual people towards their full potential. Whether through external restrictions or internal limitations, my ability to propagate this belief in the commercial mandate feels limited.
My frustration is fuelled by the insanity of a situation where as a society we know there is a better way but continue down an exclusively profit-focused path. As Firms of Endearment states, “the most profit-oriented companies are usually not the most profitable, whereas companies that are highly profitable are usually not primarily focused on making profit”.
Shame resulting in action
In my last post, I outlined the risk of shame when commercial leaders are exposed to meaning. Two responses a leader can take when feeling this shame is 1) defensiveness resulting in denial or exclusion, or 2) self-reflection and change. The latter option is of little help to a change agent, as negotiating the other party into a position of shame can come at irreparable cost to the relationship.
I am debating this point with one of my colleagues as to whether real change occurs without pain of some sort. My colleague states change is possible through inspiration such as being moved by personal accounts like Ghandi or Mother Teresa. I believe these situations to be rare, as I have observed and read about few significant change initiatives that have not been prompted by personal pain or loss of some form.
I question why more organisations do not follow principles outlined in books such as Firms of Endearment. Based on book sales, it is not due to lack of access. The book outlines clear profit outcomes, so it is not because there is not a business case. I wish I could say leaders would step up if they were inspired on a personal account. Unfortunately, I suspect rather that the principles are not embraced because there is not enough pain resulting from organisations not searching out the meaning behind their actions.
I do not believe I am alone in my belief that organisations can stand for something more than just financial success. Is the solution as Ghandi says “to be the change I want to see” and inspire to solicit change? Or is the resolution to produce change by inflicting pain, such as the actions of Wall Street protesters?
Perhaps it is a combination of both options, making the current situation uncomfortable and inspiring towards a vision of tomorrow. Either way, it will take action that will make 2012 an exciting year.
Values vs compromise… hmmm… 2012 should prove to be interesting.
Hey Chad great blog really challenging stuff for me as a small business owner we are looking to grow our business but want the make sure the values that your are talking about are the foundation of it. Can you point me in the direction of info that looks to help small business in this area?
Hello Chad, This post was offered today (3 August 2012) as source of insight to a FB members of a social enterprise group. I’m glad I checked it out, and wonder, now that 7 months have passed, what you would say if you were to revisit your theme. (Perhaps you have in subsequent posts, if so, my apologies for not searching!)
As it happens, I am neither a social entrepreneur (by industry definition) nor am I a “capitalist”. I lean heavily toward full-out cooperative and/or collaborative models to the extent they can effectively bring what is wanted by members and non-member product purchasers. That said, I have never held strong objections to “for profit” enterprises that I have known that in my experience would meet the criteria you give for “firms of endearment”. How could I when the criteria so intentionally recognizes employee and client value as living beings with their own visions, potentials, and intelligence!
Your musings about shame are particularly interesting. It’s my observation that “judgement and shame” are strong elements in the general culture. It’s also my observation that – as you say – accusation and shame as “techniques” to “force enlightenment” frequently create defensive, more deeply entrenched, resistance.
But I also agree that pain is very often a key motivator for change! Scarcely anyone who finds life relatively pleasant and comfortable from day to day, year to year, is inclined to disrupt patterns or to question personal beliefs/values. Or – the comfortable person (group) approaches change and reflection, if at all, somewhat languidly. I sometimes look at personal psychology and inter-personal models as applicable to societal systems. Co-dependency, rooted in power imbalance, has been significantly addressed when the person of “less apparent power” ceases to cooperate, or directly challenges, someone who abuses power, (i.e. introduces some level of ‘pain’). I think, along with shame and judgment, co-dependency is rife in our general culture.
I’ve no major solutions to offer! In some of the better organized Occupy camps I observed (via internet) alternative forms of social structures emerge. I characterized these as highly inclusive, and non-proprietary. I suspect “highly inclusive and non-proprietary” are necessary ingredients to humanity’s success in the 21stC and beyond.
But we’re not there yet! And the earth itself is looking somewhat ragged and damaged from high consumption lifestyles – lifestyles which we sustain in an unexamined practice of continual expansion and exploitation of resources.
In my mind, “expansion and exploitation of resources” (be they of humans of other life-forms, or of non-living resources), simply does not “compute” with – for instance – the ‘integrity’ so often mentioned by Buckminster Fuller. I honestly don’t “see” how we can do both. I don’t see how we can develop an inspired 21stC while also seeking to “add on profit taking in business ventures” (beyond sensible amounts to cover costs including depreciation, etc.). I honestly believe we will need to shift from competitive models (winners/losers) to cooperative and collaborative models.
I am genuinely interested in your “reflective journey” from your point of view, goals, and experiences. Thanks for a good article!
great response to the book, I just read conscious capitalism, and was hooked onto it, have started incorporating lots of changes as recommended in the book. The cultural advantages of a conscious business over other businesses is immense and it becomes a definite long term differentiator.