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  • Shared Capitalism and Firm Performance

    Published on Thursday, January 19, 2012

    A recently released National Bureau of Economic Research Working Paper documents the powerful role that shared capitalism practices play in the overall positive financial performance of an organization. This research paper reports on analysis conducted by Doug Kruse and Joseph Blasi of Rutgers University and Richard Freeman of Harvard University, using a dataset from the 2005-2007 100 Best Companies to Work For applicant pool.

    The paper shares the results of an exacting, detailed analysis of the Best Companies applicant data provided by firms and employees, along with comparative data used by the authors to support their full examination of the links between pay, performance and workplace culture.  For those of you interested in following the analysis please read the full working paper that is posted in the Resources section of this site.

    The conclusion from this study is worth highlighting here: The combination of group incentive pay with policies that empower employees and create a positive workplace culture reduces voluntary turnover and increases employee intent to stay and raises return on equity.

    For all of us concerned with creating a healthy society, improving people’s lives and affirming that sharing, kindness, cooperation and collaboration are essential to organization success, this study is a gold mine. It joins a long line of studies over the past years that affirm that workplace practices based in trust create more successful organizations on a number of measures – turnover, employee satisfaction and return on equity in particular.

    Hopefully this study’s results will receive significant attention and I will certainly do my part to share the findings of this research. Yet as with the other studies in that ‘long line’ I mention above, there is much more that needs to be done than simply share the results of this study.

    In a slight riff on the major conclusion of the study, I believe that it will be

    1)   the combination of rigorous research (such as the Kruse, Blasi, Freeman study),

    2)   documented examples of positive workplace cultures and organization success (through lists such as the 100 Best Companies),

    3)   entrepreneurs and organization leaders creating great workplaces

    4)   more focused storytelling to document the examples and creation process (in books such as The Trustworthy Leader and The Great Workplace) and

    5)   active coaching and consulting from skilled practitioners

    that will help us to achieve what is absolutely possible – an economic system that operates within a human system based in kindness, cooperation and collaboration, to promote a just and fair society.

    A lofty goal – yet it is possible as so many people are already showing us every day.


    To find the paper on the National Bureau of Economic Research site please use this link: http://www.nber.org/papers/w17745

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