Seidman, meanwhile, is back with a new edition of his book, this time with a foreword by former U.S. president Bill Clinton and a new body of independent research demonstrating that values-inspired companies do in fact outperform others. (The research is written up in The HOW Report: Rethinking the Source of Resiliency, Innovation, and Sustainable Growth [Global Edition, LRN Corporation, 2012, ]). If Seidman, who has a Harvard Law School degree and advanced degrees in moral philosophy, is correct, companies that actively seek to make a better world through their business won’t merely stand on the moral high ground. They will have a significant, sustainable performance edge.
S+B: Talk about the HOW Report and what you learned from it.
SEIDMAN: We were trying to test the link between values and performance, so we surveyed about 5,000 managers and executives in the United States. To track their values, we asked them questions on 22 behavioral dimensions. For example, when people go around their boss because they believe it’s the right thing to do, are they punished or rewarded? Is information hoarded, with people informed only on a need-to-know basis? Are they trusted to make decisions? What is the mix of coercion, motivation, and inspiration?
These questions go beyond a typical employee-engagement survey, which might ask, “Do you like this company? Do you feel fear?” Employees who feel fear don’t answer questions honestly. Some surveys ask, “Has your boss taken you to lunch lately?” But what if your boss berates you at lunch?
At my firm, the LRN Corporation, we designed the questions, statements, and descriptions used in the survey instrument; they were then tested, refined, and delivered by independent experts in behavioral economics, organizational behavior, and qualitative research. [The experts included University of Southern California professor Edward Lawler, author of “The Talent Lie,” s+b, Summer 2008, and Boston Research Group president Warren Cormier.] We kept those processes separate from LRN, because I was clearly biased from the outset. This was the biggest bet of my career.
S+B: What did you wager?
SEIDMAN: I wagered my reputation. In How I was on record claiming that companies that scored higher in day-to-day values would have better performance. If the statistics didn’t match, then I’d be toast. How could I keep giving speeches? How could I allow President Clinton’s foreword to be published? I could keep arguing for more principled business behavior, but it would have to be for non-performance-related reasons.
S+B: What were the terms of the bet? That enlightened companies would do better financially?
SEIDMAN: Not just financially, but in every metric that matters: Levels of innovation, receptivity to new ideas, employee loyalty, staff referrals, customer satisfaction, resilience, and corporate reputation.
We found that all the companies fit into one of three general categories. Companies in the first group, called “blind obedience,” rely on coercion, formal authority, policing, and top-down command-and-control leadership. The second group, “informed acquiescence” organizations, have clear-cut rules and policies, well-established procedures, and performance-based rewards and punishments — the standards of high-quality 20th-century management. The third group, organizations with “self-governance,” are the most farsighted organizations, best positioned to thrive in an interdependent world. People at all levels of the company are trusted to act on their own initiative and to collaboratively innovate; a shared purpose and common values guide employee and company behavior.
In a blind obedience system, there is a great deal of misconduct, compounded by the fact that it’s invisible; no one talks about it. In an informed acquiescence system, there is less misconduct, but people still tolerate it. In a self-governance system, when there is misconduct, people talk about it and consciously set up practices to address it.