Virtue may be its own reward, but now there's evidence that virtuous behavior pays off big for companies that play by the moral rules and nurture compassionate relationships with their employees and customers.
Stop rolling your eyes, and give professor Kim S. Cameron a chance to make his case. "Organizations in which employees perceive higher levels of virtuousness have a significantly higher profit margin," claims Cameron, of the University of Michigan Business School. "When virtuousness exists in organizations, performance does not deteriorate; rather virtuousness and organizational performance are positively related. Innovation, customer retention, [low] employee turnover, quality and profitability all are positively associated with virtuousness."
How much does virtue pay off? It's difficult to say precisely. But Cameron "guesstimates" about a 15 percent increase in shareholder value due to virtuousness. He based his claims on a survey of employees at 18 Midwestern companies that measured how "virtuous" these workers said their companies were (details in a moment).
Wow. Making money by being good. Who knew?
Certainly not many business executives or economists. "Wall Street pooh-poohs the idea. 'Virtuousness? That's saccharine-sweet. Yuck,' " Cameron said. "That's why the words 'virtue' and 'compassion' are normally not used in the same phrase with the words 'competition' and 'profitability.' " (That's more than a witty line: Cameron noted that a researcher recently examined stories in the Wall Street Journal between 1984 and 2000 and documented a fourfold increase in the words "win," "advantage" and "beat" while "virtue," "caring" and "compassionate" seldom appeared.)
Well, your Unconventional Wiz fervently hopes that Cameron is right about virtue. But The Wiz is not paid to be compassionate. He must ask the uncomfortable questions: What precisely is "virtue"? And how do you go about measuring something so, well, squishy? "That was the single biggest challenge," said Cameron with a laugh. "How in the world do you know virtuousness when you see it, and what would you look for?"
To answer those questions, Cameron and his research colleagues, David Bright of Case Western Reserve University and Arran Caza of the University of Michigan, first did case studies of companies with national reputations for being kinder and gentler, including Griffin Hospital in Derby, Conn., and CH2M Hill, a Denver-based engineering and construction firm currently rated by Fortune magazine as one of the top 100 companies to work for.
From these studies emerged a detailed portrait of a virtuous company. "We found common threads," Cameron said. "Lots of volunteer and compassionate activity. The language is different. The relationships are richer. Customers and employees are treated respectfully." He said one nurse told him, "I can bring my whole self to work."
Cameron and his research colleagues used this portrait to create a questionnaire that asked employees to characterize their organizations on the basis of dozens of virtuous concepts, including their employers' "integrity, trustworthiness, honesty, courage, openness, sense of calling." Workers were asked whether they agreed or disagreed with statements such as, "Kindness and benevolence are expected of everyone in this organization." Their answers were tabulated to come up with a "virtuousness" score.
The researchers made it tough on themselves. They specifically sought out organizations that had experienced downsizing in the past five years. "Downsizing is a negative; 75 percent of all companies that downside end up worse off," Cameron said. "Productivity is lower, morale goes in the tank." If virtue worked at these recently traumatized firms, it would work anywhere, they reasoned.
And it did work, Cameron said. Not only were revenue and profits higher, employees at more virtuous firms were more productive. Morale was higher. Employee turnover was lower. Customers were more loyal, too. Virtue seemed to enhance the bottom line by making employees work harder, smarter and more harmoniously with each other and with customers, Cameron reports in a forthcoming issue of the American Behavioral Scientist.
"It was amazing," he said. "Companies that invest in human capital are creating economic capital."
Repeat After Me . . .
The world's psychologists must know how to get great service at restaurants. Or at least they should, given the plethora of scholarly research into the art and science of tipping that graces the pages of social science journals.
The latest addition to the canon comes from a team of Dutch psychologists headed by Rick B. van Baaren of the University of Nijmegen. They found that waitresses who mimic their customers' behavior got bigger tips than those who don't -- nearly twice as big.
"Mimicry makes us feel closer to other people," van Baaren wrote in the July issue of the Journal of Experimental Social Psychology. "Mimicry may be a powerful tool in guiding and maintaining positive relationships between individuals."
To conduct the study, van Baaren's team enlisted the help of a waitress in an American-style restaurant in southern Holland as she served 60 customers. In half of the tests, the waitress repeated the customer's orders back to them. In the other half, she said something else positive to clearly signal she understood the order, such as saying "Okay," or "Coming up!"
When she played copycat, eight in 10 patrons left a tip; when she didn't, six in 10 did. And her average tip increased from 1.76 Dutch guilders (about 89 cents) to 2.97 guilders ($1.51) when she repeated the order.
Wait a minute . . . a buck-and-a-half tip? We're fine with going Dutch treat, but isn't this, well, a bit cheapo? Not at all, van Baaren assured us. "Service in the Netherlands is always included in the price. Relatively small tips are given and they express the customer's satisfaction."
LUNCH WITH THE WIZ Oh, my, but my weekly lunches are such treats, and not merely because The Wiz and his unconventionally wise guests have dined out at some of the tastiest restaurants in the Washington area. The latest winner of a noontime nosh is Mark Pankowski of the Nichols-Dezenhall Communications Management Group, who tipped me to the tipping study. (Notice: The Wiz, at the urging of his editor, has declared a six-month moratorium on tipping items.)
Think you might have spotted a recently published Wiz-worthy study? E-mail me at email@example.com.