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Some Good News: Nice Guys CAN Finish First

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A colleague of mine sent me an article from Fast Company recently that really made my day.  I've long observed that companies that treat their employees well seem to have lots of advantages as a result: higher retention, better employee engagement, more resilience in tough times. I've always believed that there must also be a correlation between high employee engagement and good results: it just seemed obvious that when employees are treated with respect and helped to grow, they will feel and be more loyal and productive, and the company will do well. I've even blogged about data that Gallup and others have gathered, showing the relationship between employee engagement and financial performance.

But now I have even more proof. It turns out there's an investment fund called the Parnassus Workplace Fund, started in 2005 by Jerome Dodson (who founded Parnassus Investments in 1984), that 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] provide some meaningful form of profit sharing, health care, and retirement benefits while also being especially supportive of working mothers."

Dodson started the fund after conversations with Milton Moskowitz, a journalist who was one of the original developers of the “100 Best Companies To Work For” list for Fortune magazine.  The fund started slowly - people were somewhat reluctant to invest in something based on this unproven premise.  But it almost immediately began to generate returns that outpaced the market significantly, and now - 8 years later - the fund has over $300 million dollars under investment.

Now: here's the really great news, for all of us who believe that companies can do well by doing right - especially doing right by their employees. Since 2005, the S&P index has shown average annual returns of about 5.6%. The Parnassus Workplace Fund has achieved annual returns just over 9.6% - roughly 70% higher ROI.  And that's not all:  during the five worst years of the "Great Recession," the S&P index fell to an annual return of just under 4% -- while Parnassus Workplace yielded 10.8%.

It makes complete sense to me that a company with happy and dedicated workers would do even better, relative to companies without that advantage, when things get tough. As Dodson commented (and I couldn't agree more),  “I think what happens when you have a contented workplace, people are willing to put out more effort to improve operations during really difficult times."

So, for any of you out there who are trying to convince your own boss or the senior leaders or owners of your company that investing in people will pay off in terms of the company's success - this is great information to support your argument.  The investment these high-performing companies make is financial - through reasonable benefits, essential training and development, good working conditions, and supportive family policies - but it's also investment in hiring, developing and promoting leaders who understand that employees are key to success, and treat them as valued partners in that success.  Moskowitz notes that the senior executives and owners of the firms in the fund  “genuinely care about their employees as people, not just hired hands.”

And if you work in a place where you're not treated well, and the culture is - shall we say - less than stellar...maybe this will be the incentive you need to starting looking for a new job where you and the company can succeed together.

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