7 Areas that make Good Companies Great

Human nature is predictable. As humans, we make mistakes, we get impatient and cut corners. When taken in the aggregate, the mistakes we make are all too common from business to business. What ABC business does, DEF eventually does too. It's the standouts we watch, the companies who seem to be bigger, more successful, and more resilient — hopefully because they do more things right.

The list below is my effort to set forth those few items that are most commonly neglected, but that will prove most likely to bring your company success.

1. Employee well-being and satisfaction

This is the single BIGGEST factor that separates good companies from great ones, IMHO. It starts with the need for companies to prioritize their employees' happiness and work-life balance. I am reminded of a team I once took over, where there had been zero engagement between employees and management. There were many issues, but the most obvious was when the two top performers told me they were constantly overwhelmed with work, while the rest of the team reported this was an easy, relaxed job, and they were standing by to be told what to do or were actively wasting time and even avoiding work. 

• According to Gallup, only 33% of employees reported that they are engaged in their work in 2023. The majority, 51% reported being unengaged at work, and another 16% reported being actively disengaged. Gallup estimates $1.9 trillion in lost productivity resulting from the engagement shortfall.

• A survey from May, 2024, by the Society for Human Resource Management (SHRM) found that 44 percent U.S. employees feel burned out at work, 45 percent feel “emotionally drained” from their work, and 51 percent feel “used up” at the end of the workday.

Effective employee engagement is a HUGE topic, which I cannot fully unfold here. For now, I will refer you to my blog article. Just know that true employee engagement starts from the top, not the other way around, and while it may seem like a burden for leaders to invest the time and effort to engage their teams, you will find that once you do it, the payoff will make you wonder why you didn't do it earlier. A successful employee engagement program is really the best way to improve productivity and retention, while capturing some of that $1.9 trillion in lost productivity mentioned above.

2. Clear and effective communication

Closely related to engagement, communication is the next most important factor within a company, the lack thereof leading to misunderstandings, inefficiency, and low morale.

• According to Grammerly's report on the Harris Poll on Communication, miscommunication costs U.S. businesses $12,506/employee/year. Time spent on communication across multiple channels has risen by 18%, while overall effectiveness is declining by 12%.

Effective communication is a broad topic, but it involves clarity of message, customer experience and brand, conflict resolution, and a culture of transparency that engenders trust and collaboration.

3. Strategic planning and goal-setting

Without clear goals and a plan to achieve them, a company may struggle to stay focused and make progress.

• A well-known Harvard study reported that 90% of businesses had developed detailed strategic plans. The same study suggested that 85% of executive leadership teams spend less than one hour per month discussing their unit’s strategy, with 50% spending no time at all. 

• A white paper from Organizational Synergies states that only 42% of managers and only 27% of employees have access to their company's strategic plan.

I might suggest that, although the majority of businesses have some semblance of a strategic plan, their lack of time reviewing and executing said plan might indicate the plan itself is stale, out of touch or not very well conceived. What kind of a plan is it that no one intends to execute?

Any decent plan should provide a clear direction and purpose for the organization. It should help to prioritize initiatives and allocate resources effectively. It should contribute to focus and alignment across all levels of the organization. It should help to anticipate and respond to changes in the market or industry. And lastly, it should provide a framework for measuring progress and making adjustments as needed.

4. Innovation and adaptation

With the advent of generative AI, there has been new emphasis on innovation by using, implementing and advertising for AI in pretty much everything. We all know it's a trend and will probably fade in time, but none of us want to be left behind in the process. According to a recent survey by Deloitte, three-quarters (79%) of respondents expect Gen AI to drive substantial organizational transformation in less than three years.

Perspective is wanted at a time like this. Business management scholar and author Peter Drucker said, "Innovation is not a separate activity, but the way an entire organization behaves, how it is managed, and what it values." While there's no harm in pursuing a trend like AI, we need to have a perspective on how it fits into business plans, both strategically and culturally. The above mentioned study by Deloitte also reports the major objective with AI initiatives is improving efficiency and productivity at 56%. 29% saw AI as encouraging innovation, and only 19% hope to uncover new ideas and insights.

Effective innovation and adaptation should help companies stay ahead of  competition and respond to changes in market conditions, encourage a culture of continuous improvement and learning, help companies develop new products, services, and business models that meet evolving customer needs, lead to increased efficiency, productivity, and new revenue streams, and should foster a growth mindset.

5. Risk management

Analyzing and planning for potential risks may seem like paranoia to some leaders, and still others may feel risk management requires no more effort than ordering their teams to stop making mistakes. Risk happens to everyone, and some of the costs can destroy a business. It is well worth the cost of risk management.

• The Association of International Certified Professional Accountants and the Chartered Institute of Management Accountants (AICPA & CIMA) produced a recent report that shows that only 37% of respondents reported having a complete formal enterprise-wide risk management process in place, and 34% of organizations have no enterprise-wide view of risks. Yet 77% of respondents reported experiencing a "significant operational surprise" in the previous five years.

• A similar survey in 2023 by Deloitte found that 91% of organizations reported at least one cyber incident or breach last year, and 38% experienced six or more events. Of these, only 62% said they had an operational and strategic plan to defend against cyber threats.

Avoid the "If only..." situation. Take the time to identify and mitigate potential risks before they become major issues. Then you can make more informed decisions in your strategic planning and allocate resources accordingly.

6. Transparency and ethical behavior

Companies that engage in unethical behavior or lack transparency may damage their reputation and lose the trust of employees, customers and shareholders.

It's about keeping your promises. In any free country, the employees of a company have a right to expect their employer to behave honestly and ethically. Employees also know they are stakeholders in a company, regardless if the company acknowledges this, and while they may not be included in all stages of strategic planning, they deserve to be informed in a timely manner about anything that affects their jobs or the security and wellbeing of the company they work for. The same could be said for customers and shareholders. All have a right to expect honest and ethical behavior from a company.

• A survey by Gartner found that 68% of employees would consider quitting their current job to work for an organization with a stronger viewpoint on the social issues that matter most to them.

• MIT's analysis of 124 organizations revealed that only 28% of executives and middle managers responsible for executing strategy could list three of their company’s strategic priorities.

• According to Gallup 28% of employees feel that they receive feedback from their managers more than once a year. But when leaders communicate clearly, lead and support change, and inspire confidence in the future, 95% of employees say they fully trust their leaders.

Make a commitment to root out and correct any less than ethical practices — you may be surprised about what you might find. What you think you are hiding now will come out eventually. Find the courage to be open and honest about your goals, your concerns, and your strategies. As a result, you can expect to build trust and loyalty with customers, employees, and stakeholders. You will enhance your company's reputation and brand image. You will better ensure compliance with regulations and avoid legal issues. Best of all, it will improve the overall culture and performance of your company with more sustainable and responsible business practices that your investors and customers value most.

7. Diversity and inclusion:

In the school cafeteria of life, human nature is to stay in our comfort zone and sit with people that resemble one's self. Jocks sit with jocks, nerds sit with nerds, and racial, ethnic, religious and other differences tend to make us uncomfortable. When we fail to make an effort to mix up our friend groups, we miss out on diversity. Gartner found that only 35% of HR leaders said that diversity, equity, and inclusion were among their top five priorities for 2022.

Failing to prioritize diversity and inclusion can lead to a lack of diverse perspectives and ideas, as well as potential legal issues.

• Research from McKinsey & Company found that companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry medians.

• Research published in the Harvard Business Review shows that employees at companies with diversity are 45% likelier to report that their firm’s market share grew over the previous year and 70% likelier to report that the firm captured a new market.

• A study by the Boston Consulting Group shows that diverse management teams achieve 19% higher revenue on average.

If it were all about logic, this issue would be a no-brainer. But as natural, organic human beings, we don't make decisions purely on logic. We make decisions based on emotion, on our intuition and level of comfort — then we apply logic to justify our decisions. It's time we stepped back and took a deep breath and allowed ourselves to embrace the advantages of diversity and inclusion. Once we get our emotions right, the logic will seep in naturally to fill the cracks.

CONCLUSION

This article is about doing the right things at a time when our businesses seem too complex, too intense and too out of control to consider the holes we are digging ourselves into. The only way to get any of these things done right is to slow down, step back, take a breath, and be intentional about running our teams and businesses. As my wife used to say, you can't let life run you, "You can't let life run you. It's your life, and you need to take control of it."