Having happy, healthy-minded employees really does matter to a company’s overall performance and profitability, according to research conducted by the University of Michigan’s Ross School of Business. More companies are turning to compassion as a way to improve the bottom line.
In 2004, Prudential Financial paid $2.1 billion to acquire the full-service retirement operations of CIGNA, a global health services company based in Hartford, Conn. This acquisition, says Dr. Kim Cameron, a professor of management at the University of Michigan, “was like merging the Red Sox and the Yankees”—a severe mash-up of different cultures and different systems on a massive scale. The merger came with the usual announcement of job attrition, and Hartford expected to lose one-fourth of the jobs associated with CIGNA’s retirement business.
John Y. Kim, a former CIGNA executive who was tapped to lead the merger for the newly formed Prudential Retirement, did his best to pacify concerns with improved workforce forecasts and civic pledges to the city of Hartford—charitable contributions, economic development promises and so on. Prudential also provided temporary retention bonuses for employees who stuck around.
These are standard steps that companies take to stem the disgruntled tide, but John wanted to do something more. He had been down this road before, having managed a merger between the ING Group and Aetna Financial Services. He was acutely aware that combining companies involves not just the “hard facets” of work and product systems, but also the “soft facets” of company culture.
When culture goes bad, he says, companies might get the hard facets right and still lose customers and create miserable employees.
Can big, complex corporate mergers actually be good not just for business, but for people, too?
That’s the question John faced as he took a trip to his alma mater, the University of Michigan, about a year into the merger. While there, he learned about the Ross School of Business’s new Center for Positive Organizational Scholarship (POS), which had been founded in 2002 as the home of a new field of study that analyzes how organizations foster and achieve positive outcomes. POS was the brainchild of Kim, Dr. Jane Dutton, and Dr. Robert Quinn, three scholars at Ross who decided to take seriously some questions that no organizational studies scholars had ever quite taken seriously before, such as what good human behavior and “positive deviance” (exceptional, aberrational successes) have to do with businesses that prosper. In other words, Jane explains, POS is “about trying to reinvent professional practice in a way that’s ‘life-giving’ for both employees and the companies they work for.”
Ten minutes into learning about the group’s research, John “decided to inject it into his organization,” Kim says. With the help of Kim and Robert, John and his team began to introduce positive organizational principles into Prudential Retirement—including institutionalizing forgiveness, resilience, supportive communication and employee empowerment—with the goal of creating sustainable culture change and meeting business goals.
“Over the next four to five years, they had a lot of sessions with the senior team and salespeople. A lot of interventions occurred in which John was the champion for implementing these principles,” explains Kim.
Over a period of time, there was a systemic change at the firm—a culture change, built around positivity, which had a remarkable business impact. Prudential Retirement executives feared they could lose 50 percent of their customers during the transition, but they retained 95 percent.
“Bottom-line revenues,” Kim says, “increased by 5 or 6 percent.”
The Virtues of Victorious Companies
Kim’s area of expertise is the importance of “virtuousness” in organizations, and what he’s found since the emergence of POS is that the good guys really do win. Companies have a role to play in employee wellbeing beyond “up with people” motivational slogans—and even beyond compensation. Companies can structure themselves around the promotion and practice of good habits that engender spirits of genuine goodwill, and when they do, they’re more likely to flourish alongside their employees.
The term “virtuousness” is intentionally broad. It is inclusive of several individual virtues, including kindness, compassion, forgiveness, humility, generosity, empathy and patience. In other words, “the best of the human condition.” Kim has conducted studies that attempt to determine “if one particular virtue or cluster of virtues is especially accountable for good performance. As it turns out, none of these virtues operate independently of each other. It’s the aggregation of virtue that’s more important than any single thing.”
Kim stresses that a virtuous organization is more than just a collection of virtuous people. Businesses and other kinds of collectives possess a particular character just as an individual possesses a particular character. “You can have a whole bunch of virtuous people, and they can get into an organization where the culture or practices or routines drive out any opportunity to display virtues. The dynamics of organizations often supersede any individual attributes.”
Practicing virtues, Kim has found, can turn organizations around. “Virtuousness is its own reward,” he says. “Of course, CEOs say, ‘Show me how it will pay off.’ And unequivocally, after a dozen years of research, we can see that bottom-line performance is significantly affected by these sorts of things.”
Like Kim and all POS scholars, Jane agrees that positivity-driven success emerges from a braid of several good behaviors, but she has made compassion in the workplace her specialty. “There is so much human suffering at work,” she says. Other scholarly fields have long studied compassion, but “up until 10 or 15 years ago, we weren’t even thinking it had a place at work. But because people are at work, and people inherently suffer, there is always a place for compassion.”
Jane has come to see compassion as “essential for sustainable economic performance.” The reason is simple: People who are grieving from pain are not as productive or successful as people who are healthy and whole, people whose most urgent emotional needs are being met. One study estimates that gaps in performance caused by grief cost U.S. firms an average of $75 billion annually.
Jeff Weiner, the CEO of LinkedIn, one of the major social networking success stories of the last decade, is an outspoken advocate of compassionate leadership. Jeff has said that the practice of compassion is the single most important management principle he has ever adopted. Jane says that while “you hear a lot of leaders spinning this stuff,” she’s also seen recent evidence that Jeff means it.
Earlier this year, a graduate student in Jane’s program applied for a summer internship with LinkedIn. One of the application questions asked the prospective intern to imagine that she was a manager who received a phone call from an employee whose baby had been put into a special incubator that was an hour away from the office. What would you do?
“Most MBA internship questions are not about what you should do in response to human suffering,” Jane says. “Weiner is screening people for their compassion values. In recruitment, he’s favoring people who are compassionate.”
Alongside the POS field in general, Jane’s attention to compassion in the workplace was kick-started by the events of Sept. 11, 2001. She had already been studying compassion for a few years, having become interested in it during a time of personal trauma in her own life when two different organizations responded to her needs in different ways—one caring, one not.
Earlier in 2001, Jane and some colleagues proposed an article to the Harvard Business Review on workplace compassion, and “they had just canned it” in the days before 9/11. “On Sept. 14, I called the editor and said, ‘We know from what we’re seeing all around us that there needs to be an article’ ” on compassionate leadership and managing people through trauma. The Harvard editor agreed, and the journal “produced the fastest article they had ever done.”
Jane’s research has grown ever since, and she’s replete with examples of the power of compassion in the workplace. One favorite is the story of “Ari,” a low-level district sales manager for the multinational corporation Cisco Systems. Not long after a regional office hired him, Ari was involved in a serious bicycle accident. John Chambers, Cisco’s CEO, had been working to instill a culture of employee care, and from the top down, Ari and his family were cared for generously during his long recovery period. Employees contributed unused vacation time, which was converted to cash. Cisco matched all donated funds, but it didn’t stop there. Ari and his family were given cell phones so they could stay in touch. He received regular emails from management, both local and global. Cisco even changed the description of Ari’s job, which had required extensive travel, so that he could return to work when he was ready.
In short, Cisco and its employees took care of Ari—in a variety of ways, and for an extended period of time. “Imagine a wound in a body,” Jane says. “You’ve got lots of different systems that are emerging and coordinating in response to the need. That’s what compassion is like.”
“Compassion is not a separate thing,” Jane says. “It’s an indicator of a healthy community. If you have an organization that is learning to flourish that is deeply alive, the compassion is just part of the soil. It’s just part of the competence of the collective. They care for each other in a way that allows them to do extraordinary things.”
A more humble but no less compassionately powerful place that Jane and her colleagues studied was a 30-employee billing department at Jackson Community Hospital in Jackson, Mich. A medical billing department might be the last place you’d expect to be thriving in goodwill. “They do tough work,” Jane says. “Their job is to call people and chew them out for not paying their bills.” Many of the women who work there have tough lives outside of work. “These are single parents, or people who have had significant trauma in their lives,” Jane says. “Some normal suffering, but also some people who were experiencing domestic violence.”
But throughout Jackson’s health system, the billing department is hailed as a dynamic, delightful place to work. Jane and her colleagues discovered that the reason for the department’s reputation is that it is a place that excels at compassion. “These employees would say they loved going to work,” Jane says, “because at work they were learning to love.” While the medical billing industry averages a staff turnover rate of 25 percent, the Jackson unit’s turnover rate is just 2 percent.
One staffer, Korinna, lost her mother unexpectedly soon after she was hired, and her new billing department colleagues supported her for weeks on end. Korinna eventually needed a leave of absence to deal with her grief. “I was never made to feel guilty,” she told Jane.
I knew that I was in everyone’s prayers and I knew that when I did come back, that I would be in a condition that I could give back what I had received— the compassion and the professionalism.”
Perhaps unsurprisingly, Jackson’s billing department wears its good mood on its sleeve. It is located in “this pretty vanilla office building,” says Jane. “Vanilla walls. Vanilla everything. But you get off on the next floor and walk into the billing department and it’s like walking into that one classroom when you were a kid—that classroom that everyone wanted to be in. It’s vibrant, colorful. Nothing that costs a lot of money, but the rooms have all these beautiful construction paper cutouts and creative expression on the walls. It’s like play—they play a lot together.”
In this compassionate climate, Jackson’s accounts receivable achieved a formidable accounts receivable record. In one five-year stretch, the department reduced the average number of days to collect monies from 160 to 60. As of the last study in 2011, that number is closer to 50 days, which rivals the industry average.
Jane’s files are becoming packed with these stories. “We started this work thinking that the major story was going to be the absence of compassion” in the workplace, Jane says. “And there are huge absences of compassion. But the big surprise is that compassion is everywhere.”
Patton Dodd’s work has been featured in Newsweek, Slate and Christianity Today. He has authored two books, The Tebow Mystique and My Faith So Far.