In our new book, “How to Build a Thriving Culture at Work, Featuring the 7 Points of Transformation,” we provide a conceptualization of Thriving Organizational Wellbeing that serves as a foundation for sustainable high performance, and we highlight companies that are making their competition irrelevant by creating the conditions for both organizational and employee wellbeing to thrive. For the purposes of this blog, I explore lessons learned from valuable research identifying Firms of Endearment and Deliberately Developmental Organizations™.
Lessons in Thriving Organizational Wellbeing from Firms of Endearment
The most efficient way to achieve sustained superior business performance is to have a stakeholder relationship management (SRM) business model. This means the organization has close relationships and seeks to maximize value with all its stakeholders — employees, suppliers, the communities in which they operate, and their stockholders. When it’s taken a step further to become a humanistic company, the stakeholders develop an emotional connection to the organization that some call the “soul of a company.” Companies that have soul and fiercely loyal customers who love them, and that value equally the interests of all stakeholder groups are considered to be Firms of Endearment (FoEs).1
So why should you care about these FoEs? Because they are kicking the competition’s butt, and people are knocking down doors to try to work there. After a two-year research period, 28 companies were identified as FoEs. These widely loved companies outperformed the S&P 500 by more than an 8-to-1 ratio and also outperformed the Good to Great companies by a 3-to-1 ratio over a 10-year period. Just a few of the FoEs include: Whole Foods, FedEx, Google, Costco, Starbucks, Panera, Walt Disney, Southwest Airlines, Patagonia, TOMS and New Balance.
FoEs share a distinct set of core values, policies, and operating attributes. Here are just some of them:
- They have a clear purpose for being (beyond making money).
- They don’t just balance the interests of all stakeholder groups; they actively align.
- Their executive salaries are relatively modest.
- They truly have an open-door policy at the executive level.
- Employee compensation and benefits are significantly greater than the standard for the company’s category.
- They devote considerably more time than their competitors to employee training and development.
- Their turnover is far lower than the industry average.
- They consciously humanize the company experience for customers and employees.
- They consider their corporate culture to be their greatest asset and primary source of competitive advantage.
- Their cultures are resistant to short-term, incidental pressures but can also adapt quickly when needed.
And with attributes that support thriving organizational wellbeing, FoEs are easily able to create fun, flexible, and balanced work environments that also support thriving employee wellbeing.
Lessons in Thriving Individual Wellbeing from Deliberately Developmental Organizations
Other organizations have been defined that are doing profound work in supporting individual growth and wellbeing as a means to high organizational performance. In their book, Immunity to Change: How to Overcome It and Unlock the Potential in Yourself and Your Organization, Robert Kegan and Lisa Laskow Lahey explore how our individual beliefs and the collective mindsets in organizations combine to create a powerful immunity to change. The authors suggest that what will distinguish leaders (and ultimately organizations) from others is their ability to develop themselves, their employees, and their teams.
Kegan and Lahey’s work allows people to identify the thinking that holds them back and then provides a framework to support them in doing the difficult adaptive-change work needed to move past their limiting thinking.2 Kegan and colleagues have identified what they believe is the cornerstone for a high potential culture — a Deliberately Developmental Organization (DDO) that supports people in turning personal struggles into growth opportunities.3
DDOs view work as an essential context for personal growth.4 They are organized around the conviction that organizations prosper best when they are deeply aligned with people’s strong motive to grow.5
“Deep alignment with people’s motive to grow means fashioning an organizational culture in which support to people’s ongoing development is woven into the daily fabric of working life, visible in the company’s regular operations, day-to-day routines, and conversations.” 5 (p. 1-2)
These organizations represent a series of departures from typical, business-as-usual principles and practices.5 In DDOs, people are expected to be working on identifying and overcoming patterns of thinking and behavior as part of doing their job well; in other words, people are supported and expected to do significant adaptive-change work.4 So how do they do it?
- DDOs create a culture in which people embrace their vulnerabilities as prime opportunities for personal growth; they are committed to developing every single person by weaving personal growth into daily work.
- They operate on the assumption that personal growth of employees and the bottom line are interdependent.
- The personal growth work that is the key to a DDO is profound adaptive-change work in which people are challenged and supported via coaching to recognize and transcend their blind spots and “stuck” thinking that has them resisting change.
- DDOs go beyond simply accepting employees’ inadequacies; they cultivate them as part of the journey toward organizational transformation.
- In DDOs, employees feel valuable even when they’re messing up because they are able to see their limitations as their “growing edge” on a path to the next level of performance rather than as failures.
- DDOs create a climate and community that make employees feel safe and includes accountability, transparency, and support for doing self-work that many may find uncomfortable; this means people don’t do this work in a bubble but reveal their inadequacies to their colleagues to create a supportive network as they stretch themselves out of their comfort zones.3
Identifying and creating DDOs is relatively new but stems from years of work by Kegan and colleagues. After three years of searching, they have only identified a small handful of companies that qualify. Two that have been operating as DDOs for more than 10 years, and seeing great success, are:
- Bridgewater Associates (an East Coast investment firm). Bridgewater is recognized as a top-performing money manager and has won more than 40 industry awards just in the past five years. The firm also has been consistently ranked as the largest and best performing hedge fund manager in the world.
- Decurion Corporation (a California real estate company). Decurion’s portfolio of companies has won numerous awards while benefiting from consistent, profound growth during the past few years.
One company I work with is in the middle of their journey toward becoming a DDO. It has had a good culture for years but is now committed to thriving. Here is how the company is approaching its journey.
- It started with the leadership team and framed it as leadership development in the context of better handling conflict. This provided a neutral platform to make it safe for leaders to do this work.
- The leaders met as a group for a half-day session with their DDO coach (a Certified Immunity to Change Coach who is also completing Intrinsic Coaching® development). Then they began their seven-month individual journeys, meeting with the coach every three weeks for an hour. Although each leader’s journey was unique, all leaders focused on identifying patterns of thinking that hold them back and doing the work to start to challenge their old thinking.
- The leadership team then met again as a group for a full-day offsite retreat with the DDO coach to share what leaders learned about themselves and to create a structure for them to support one another. They were all provided as-needed sessions with the coach, and encouraged to partner and have weekly 30-minute check-ins with each other.
- Next, leaders shared with their respective teams about the DDO work and what they learned. The rest of the company was split into two groups. The first group started its DDO journey (structured much like the leadership team’s journey), and the second group will be starting its journey in mid-2015 when the first group finishes.
- Once the first group finishes its individual coaching and follow-up group retreat, an additional session will be held combining that group with the leadership team to further broaden the support structure within the organization. When the final group completes individual coaching, the entire company will meet to expand and enhance the ongoing structure to support self-work as part of the culture.
What’s interesting as you talk to people who are working with the coach is they keep expressing how amazing it is to be supported by their employer in doing this profound work. Several people have even stated, “This beats the heck out of any stupid wellness program; this is amazing!” It’s also created anticipation for the future groups as they watch the changes happening in their colleagues.
So what are the overall lessons we can learn from FoEs and DDOs (besides the power of three-letter acronyms)?
- Culture is EVERYTHING! And a high-trust culture is critical to be a FoE or DDO, and ultimately for thriving organizational and employee wellbeing.
- Quality leadership is essential to a thriving workplace culture. Specifically, organizations need servant leaders who can lead adaptive change.
- When people feel valued and are able to find meaning and purpose in their work, their wellbeing flourishes and the organization thrives. The resulting benefits do so much more for employee health and organizational performance than any 4P (pry, poke, prod and punish) “Wellness or Else” program ever could.
- Supporting meaningful personal development growth not only improves individual wellbeing but improves organizational performance. This goes beyond lifestyle behaviors to support people in identifying and shifting ineffective thinking patterns.
- Sisodia, R., Wolfe,D. & Sheth, J. (2014). Firms of Endearment: How World-Class Companies PROFIT from Passion and Purpose. Upper Saddle River, NJ: Pearson Education.
- Kegan, R. & Lahey, L.L. (2009). Immunity to Change: How to Overcome It and Unlock the Potential in Yourself and Your Organization. Boston: Harvard Business Press.
- Kegan, R. Lahey, L.L., Fleming, A., & Miller, M. (April 2014). Making Business Personal. Harvard Business Review.
- Kegan, R., Lahey, L.L., & Fleming, A. (January 22, 2014). Does Your Company Make you a Better Person? HBR Blog. http://blogs.hbr.org/2014/01/does-your-company-make-you-a-better-person/
- Kegan, R., Lahey, L.L., Fleming, A., Miller, M., & Markus, I. (2014). The Deliberately Developmental Organization. White Paper from Way to Grow Inc., LLC.