Page 60 - Chapter One

28 The Management Shift

If all these elements are at a high level, emerging approaches would be
much more suitable than the traditional ones. For example, managing
knowledge workers such as academics, software developers or medical
doctors should be predominantly based on emerging management
paradigms. In practice, at best, most companies would use a mixture of
traditional and emerging management approaches.

Examples from the real world of business: companies
implementing emerging management practices do well fi nancially

There is growing evidence that inspirational, trustworthy companies built
on authentic values, focused on a higher purpose and caring culture, experi-
ence exceptional financial performance over the long term. In short, com-
panies that have implemented The Management Shift do well financially,

sustained over the long term. In a well- known study carried out by Raj Siso-
dia, David Wolfe and Jac Sheth for their book Firms of Endearment, the
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authors studied the financial performance of 30 Firms of Endearment (FoE),
defined as firms that focus on passion and purpose and bring the interests
of all stakeholder groups (including society, partners, investors, customers
and employees) into strategic alignment. They found that the public FoEs
returned 1,184 percent for investors over ten years (to the end of June 2006)
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compared to 122 percent for the S&P 500, which is about a 9 to 1 ratio.
Furthermore, the authors compared the performance of 30 FoEs with the
performance of 11 companies identified in Jim Collins’ bestselling book

Good to Great 103 and found that over the same ten- year period, FoEs out-
performed the Good to Great companies by a ratio of 3.6 to 1. They have
also updated the data to cover the 15- year period between 1996 and 2011.

In that period, FoEs outperformed the S&P 500 index by a factor of 10.5. 104
An analysis of the performance of Fortune’s “100 Best Companies to Work
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For” – where criteria used includes trust, pride and camaraderie (creating
a genuine sense of satisfaction amongst employees), reveals that between
1997 and 2011 these companies had three times higher stock market
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returns than S&P 500 companies. An organization called Ethisphere is
producing an annual list of the world’s most ethical companies assessed