Nearly three decades ago, now change management guru, John Kotter and his Harvard Business School colleague Professor James Heskett published their study of more than 200 large firms over an 11-year period. What they found was that corporate culture has a significant impact on a firm’s long-term economic performance, and those emphasizing the interests of all of a company’s key constituencies, ie, customers, stockholders, employees, outperformed those adopting a shareholder-only focus by ‘huge margins’.  Revenue, for example, grew by 682% over the period among those firms attentive to the interests of all stakeholders, versus 166% for those prioritizing shareholder interests exclusively. Most striking, the increase in net profit over the 11-year study period for the all-stakeholder-focused companies exceeded that of the shareholder-centric group by a factor of over 700—755% to be precise.

That’s not a typo.

Nor, apparently, is it a coincidence.

More recently, a study by the UK-based Barrett Values Centre of the share price performance of the top twenty public companies in the annual Best Companies to Work for in the USA survey over a ten-year period revealed an average annualized return of nearly 17%, versus less than 3% for the S&P 500 as a whole. It shouldn’t need to be said that companies topping the Best Companies list tend to line up nicely in terms of their emphasis on the broader stakeholder interests.

And Gallup studies have consistently revealed that, while US workforce engagement rates languish in the low-to-mid-30% range, companies with an engaged workforce outperform their less engaged competitors by as much as 220%, and they also enjoy an EPS growth rate more than quadruple that of the less-engaged competitor group. Gallup research also highlights the fact that an engaged workforce yields averages of 21% and 22% annual increases in productivity and profitability, respectively.

In a recent TV interview, Dr Mark Mobius, Founding Partner of London-based Mobius Capital Partners LLP had this to say:

“We’ve compared companies that have a good culture and those that don’t, and their performance in the stock market is incredibly different–much, much better performance for those that were good culturally. So we are emphasizing that more and more in our investments…we believe that companies with strong corporate cultures provide an additional driver of outperformance over the long-term.”

Now new research recently published by Bain & Company shows that companies with strong cultures are “…3.7 times more likely to be business performance leaders”.

There’s plenty more, but the point seems clear, if perhaps a bit ironic: