The Market Value of Why

Even if you are not one of those rare folks blessed with a gift for finding joy in the concentration camps of life, you intuitively know that you and your work team would be more productive, more satisfied, and more creative if work engaged not only your head and your hands but your heart and soul as well. What most of us know intuitively research confirms: when employees find meaning at work, they care enough about it to develop their competence; they work harder and are more productive; they stay longer and are more positive about their work experience. But there is more: when employees are more positive, customers generally respond in kind. Employee attitude is a key lead indicator of customer attitude, and satisfied customers help the businesses they patronize to survive and thrive. In brief:

1. Employees who find meaning at work are more competent, committed, and contributing.
2. In turn, employee competence, commitment, and sense of contribution lead to increased customer commitment.
3. In turn, customer commitment leads to better financial results for the company.

Making meaning is an important cause and a lead indicator of long-term organizational success. So-called intangibles explain about 50 percent of the market value of publicly traded firms.1 Intangibles are the assets and capabilities of a company that cannot be touched or put on a balance sheet but give investors confidence in the future earnings of the company. Intangibles include nonthings such as leadership, talent, innovation, skill, and vision. Investors increasingly value these intangible organizational capabilities because they increase confidence in a company’s future success.

Employee competence, commitment, and passion or energy are among these intangible assets. Employees can be competent, even committed, but still lack passion for their work. Meaning reinforces employees’ passion for work because it ties what they do to a greater good that also pays off in the marketplace. Passion for work is an intangible asset that has a direct impact on a firm’s market value.

Consider some additional data points on the value for both employees and customers of abundant organizations (exemplified here in organizations that employees like to work for, that investors admire, that invest in people, and that have positive work practices):

• Over a 10-year period (1998 to 2008) “best companies to work for” have a 6.8 percent stock appreciation versus 1.0 percent for the average firm.
• Over a seven-year period, the most-admired firms in Fortune’s list of admired companies had doubled the market returns of competitors.
• The probability of an initial public offering (IPO; a new company) succeeding goes from 60 to 79 percent when the new company invests in its people.
  
• Sixty-one hospitals in the United Kingdom had a 7 percent decline in death rate when they invested in the well-being of their staff.
• A one-standard-deviation increase in high-performance work practices yields $27,044 increase in sales per employee and $3,814 increase in profit per employee.
• Only 13 percent of disengaged employees would recommend their company’s products or services, compared with 78 percent of engaged employees.
• Disengaged employees are 10 times more likely to say they will leave their company within a year.
  

Franklin D. Roosevelt, U.S. president during the Great Depression of the 1930s, said, “We have always known that heedless self-interest was bad morals. We know now that it is bad economics.” This is even more true in today’s transparent and fluid cultures.

The Abundant Organization

Abundant organizations are profitable organizations, but rather than focusing only on assumptions of competition and scarcity, abundant organizations also focus on opportunity and synergy. Rather than accepting the fear-based breakdown of meaning in hard times, abundant organizations concentrate on bringing order, integrity, and purpose out of chaos and disintegration. Rather than restricting themselves to narrow, self-serving agendas, abundant organizations integrate a diversity of human needs, experiences, and timetables.

In good times and in hard times, abundant organizations create meaning for both the employees who comprise them and the customers who keep them in business. Employees, customers, investors, and society benefit when employees find meaning at work and when companies give meaning to society. This logic applies to small and large organizations, to public agencies and private enterprises, to local storefronts and global conglomerates.

The Case for Meaning

This morning, people all over the planet got out of bed and got ready for work. Some headed out before dawn in high-end cars to claim high-rise offices with high-tech computers and highbrow clients. Some headed out before dawn to walk barefoot, wares on their head, to claim a choice spot in the dirt near the entrance to the village market. Some wrestled with the muses to create artistic masterpieces or solve perplexing scientific problems. Others wrestled with boredom to complete their shifts at cash registers, call centers, or assembly lines. Some pitched their résumés in business suits, looking for good benefits and a sure path to comfortable retirement. Some made their pitch in ragged jeans on street corners, looking for someone to rent their muscles for at least the day.

Some people in each one of these and many other categories by which we could define work found a sense of meaning, purpose, even abundance in their labor today. Others in each category found world-weary tedium, frustration, and despair.

Which were you?
Which were the people you lead?

Viktor Frankl was a budding psychologist following in the footsteps of Freud when World War II erupted. Frankl survived three years in a Nazi concentration camp, but upon his liberation he found his family, home, and writings gone. Before the war Frankl had been developing a system of psychotherapy based on our need for meaning. Once he was incarcerated, his previous philosophical speculations about what helps people heal and cope were no longer just interesting cerebral playthings; they were tested in the fire of a dreadful and lengthy ordeal. Frankl’s book Man’s Search for Meaning, which has sold more than nine million copies, has become a classic. Against the backdrop of horrific adversity, his insistence on the possibility—even the necessity—of finding meaning in life becomes deeply credible. After all, adversity generally disrupts our sense of meaning and robs life of what previously gave it sense and purpose. In troubled times our search for meaning becomes both more difficult and more compelling. Frankl quotes the philosopher Friedrich Nietzsche: “He who has a why to live can bear with almost any how.”

He or she who has a why to work can bear with almost any how as well. Obviously, people find meaning in many settings—in the privacy of homes and the expanses of nature, in churches, ballparks, and community centers, in family and friendship circles. But work takes the lion’s share of our time and energy. Most of us spend more time at work than at play, at family gatherings, at religious meetings, or at hobbies. The organizations in which we labor are thus a primary setting not only for accomplishing assignments but also for finding an abiding sense of meaning in life. Work is a universal setting in which to pursue our universal search for meaning.