The Good Guys Keep Winning, Say Authors of Good Company: Business Success in the Worthiness Era

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Newest Edition of Good Company Index Report Grades Fortune 500 Firms; Analysis Shows Better Corporate Behavior Is a Leading Indicator of Stock Market Outperformance, Say Authors Laurie Bassi, Dan McMurrer and Ed Frauenheim

The latest edition of the Good Company Index Report contains a hopeful message: the good guys keep winning.

The report is a follow-up study on the behavior of Fortune 500 companies by the authors of Good Company: Business Success in the Worthiness Era. The report contains an updated Good Company Index (GCI), in which authors Laurie Bassi, Dan McMurrer and Ed Frauenheim assign grades to nearly 300 of America’s largest companies based on their record as employers, sellers and stewards of communities and the environment. The top-ranked companies in the Fortune 100 this year are Apple, Ford Motor Company and United Parcel Service.

The authors also analyze company stock market performance based on previous (2012) GCI grades. The results? On average, those companies with higher 2012 GCI grades significantly outperformed their industry peers in the two years that followed. The median outperformance was 5.1 percentage points, with almost 60 percent of the higher-ranked companies outperforming their lower-ranked competitors.

This result is in keeping with previous stock analyses of GCI grades, in the original 2011 book and a 2012 follow-up report. Better-behaving companies as measured by the GCI have consistently beaten peers in the stock market in subsequent years.

On a less optimistic note, authors Bassi, McMurrer and Frauenheim find that a measure of corporate malfeasance has increased significantly. A five-year tally of government fines and penalties paid by Fortune 100 companies—a unique feature of the GCI and a key element of the stewardship component of company grades—has climbed 48 percent from the 2012 GCI Report, to over $25 billion. This jump may reflect declining public tolerance for corporate bad behavior, although it is too early to tell, given that recent fines typically are for actions that occurred years in the past.

The overall message of the 2014 Good Company Index Report is clear: the good guys continue to win and a more hopeful age is taking shape.

“The companies that prove to be ‘good company’ through their actions as employers, sellers, and stewards are also outperforming their peers and are the ones most likely to be successful going forward,” Bassi, McMurrer and Frauenheim write in the report. “The latest data on companies’ stock market performance again shows that the world is moving in the direction of demanding ever-better behavior from businesses.”

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ABOUT THE AUTHORS: Dr. Laurie Bassi is the CEO of McBassi & Company, a consulting firm that specializes in human capital analytics. An economist, author, and speaker, Laurie focuses her work on helping companies to identify opportunities to drive better business results through more effective and enlightened management of employees. Ed Frauenheim is an author, editor and speaker. He is co-author of Organized Innovation: A Blueprint for Renewing America’s Prosperity. He currently works as Content & Curation Specialist at the Great Place to Work Institute. Dan McMurrer is chief analyst at McBassi & Company. Over the past 15 years, Dan and Laurie have worked together in the world of HR analytics, designing and deploying assessment tools for understanding the unique strengths and weaknesses of organizations’ work and learning environments, and analyzing how those are linked to business results.

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