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How "Nice Companies" Can Finish First

People want "nice leaders" and "nice companies" to do business with

In my article in The Financial Post, “Why Nice Guys Can Finish First in Business,” I said ““our culture for some time has embraced the notion that the strongest, toughest and most aggressive leaders get the job done and are more desirable, than “likeable,” or humble people who are viewed to be weak.” Despite the fact that this stereotype continues to be embraced by many and projected in the media, it doesn’t reflect changing times or recent psychological and business research.

In decades past, there was saying that “nice guys finish last,” which reflected the belier that if you wanted to be really successful land make it to the top, you have to be hard-nosed, tough on people and even ruthless if necessary. An aggressive aura about business was projected, complete with the language of the battlefield and competitive professional sports. The paradigm was win-lose.

The era of the command and control, charismatic leaders such as Jack Welch and Lee Iacocca, and projected in the extreme in movies by the character Gordon Gecko, may be over. In an era of increasing transparency and younger, more independent-minded, values driven workers, it no longer pays to be a jerk to employees, customers, vendors or competitors.

David Rand, of Harvard’s Department of Psychology, is lead author of a new study, published in the Proceedings of the National Academy of Sciences, “What it boils down to is you’d better be a nice guy, or else you’re going to get cut off.” University of California, Berkeley social psychologist Robb Willer, argues the more generous we are, the more respect and influence we wield. He contends “that anyone who acts only in his or her narrow self-interest will be shunned, disrespected, even hated, but those who behave generously toward others are held in high esteem by their peers and thus rise in status.”

Research by Jon Bohlmann and Rob Handfield of North Carolina State University, Tianjao Qiu of California State university, William Qualls and Deborah Rupp of the University Illinois, published in The Journal of Product Innovation Management shows that project managers got much better performance from their team members when they treated them with honesty, kindness and respect. Bohlmann explains “if you think you are being treated well, you are going to work well with others on your team.”

Peter Shankman, author of Nice Companies Finish Fist: Why Cutthroat Management Is Over And Collaboration Is In, outlines how employee dissatisfaction with their leaders is rampant and growing in organizations, largely because those leaders are “jerks” and abusive, and often, their companies reflect their leadership style.

Shankman profiles famously nice executives, entrepreneurs and companies that are setting the standard of success in our collaborative world, citing examples such as Jet Blue and Don Needleman, Zappos and Tony Hseigh, American Express and Ken Chenault and the whole team at Patagonia.

Shankman says companies should commit themselves to “enlightened self-interest,” which requires more than just the bottom line of financial results. Rather, they should have an equal focus on employee and customer welfare and doing something for the greater good.

Increasingly, businesses today are judged not just on their products and services, but on their values, and ethics—their corporate citizenship. In the past, marketing was largely about the business deciding who their customers would be, crafting a message that was often manipulative to create demand and converting the public to need their products or services. Those days are passing and businesses are now scrambling to find relevance in a world of social media ratings.

The power of social media to affect business began back in 2002 when Evan Williams, the inventor of Twitter, gave the population the freedom to post opinions, references and ratings on the web. Since then, a plethora of social networks, commentary, ratings and review sites have spread quickly.

Dave Kerpen and Theresa Braun and Valerie Pitchard, authors of Likeable Business: Why Today’s Consumers Demand More and How Leaders Can Deliver, argue “one thing is guaranteed in today’s hyper connected society: If your business isn’t likeable, it will fail.” They outline 11 strategies for organizations to become likeable and successful, including such things as transparency, authenticity and gratitude.

In their book, What’s Mine is Yours: The Rise of Collaborative Consumption, authors Rachel Botsman and Roo Rogers argue that a significant part of the growing collaborative economy is the concept of “reputation bank accounts,” that will measure and rank a company’s contributions to society. Firms which have high reputations will fare better than those with negative reviews and little in the bank.

Craig Newmark, the founder of Craigslist, predicts the next development in business will be C to C or peer-to-peer firms, which focus on helping people with whatever their needs may be, based on the web platform.

The Parnassus Workplace Fund, started by Jerome Dodson in 2005, invests only in companies that have built solid reputations for treating employees with profound respect and supporting them through ongoing training and personal development and provides some meaningful form of profit sharing, health care and retirement benefits The Parnassus Workplace Fund has achieved annual returns just over 9.6%, and outperformed the S&P Index.

There are clear signs that the nice guys and nice companies can indeed finish first.

Ray Williams is the author of Breaking Bad Habits and The Leadership Edge.

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