McBassi & Company, EEA Develop Engagement-Based Stock Index
Costco, FedEx, Time Warner, Google and others earn top grades in ‘Good Company Index’
The EEA Good Company Stock Index has been created to draw attention to the compelling connection between an organization’s relationships with customers, employees and communities and its subsequent performance in the stock market. The EEA Good Company Stock Index (GCSI) uses the Good Company Index™ developed by human resource analytics leader McBassi & Company to track organizations based on their business practices as sellers, employers and stewards of communities and the planet. Firms making the inaugural Good Company Index list include Agilent Technologies, Apple, American Express, Biogen Idec, Campbell Soup, Costco, FedEx, Ford Motor, Gap, Google, Intel, Johnson & Johnson, Procter & Gamble, Time Warner and Whole Foods. Low-scoring companies include Bank of New York Mellon Corp., Dollar General, GameStop; Oracle, Sears Holdings, Tyson Foods and United States Steel (see full lists).
The EEA Good Company Stock Index, to be released on Oct. 1, will track the stock performance of approximately 30 companies with high Good Company scores compared against those with low scores and the S&P 500 average. Like other stock indices, the GCSI will provide a cumulative score that can be easily compared over time with other indices. “The Good Company Stock Index is designed to draw the attention of Wall Street and other investors to the link between an organization’s ability to engage with customers, employees and communities and its long-term share price performance,” says Bruce Bolger, Managing Director of the Enterprise Engagement Alliance.
Now in its third year of tracking 300 of America’s largest public companies, McBassi & Company’s Good Company Index™ uses the metrics outlined in the book Good Company: Business Success in the Worthiness Era, authored by Laurie Bassi, Ed Frauenheim, Dan McMurrer and Larry Costello. “We’re pleased to apply this research to the creation of an ongoing stock index,” says Bassi, who is also CEO of McBassi & Company, “because the research clearly shows a compelling connection between companies that are good for people and long-term share price performance.
To study the impact on stock market performance, McBassi & Company examined pairs of companies in the same industry where the firms’ Good Company grades differed by one or more full grade levels (for example, a grade of B versus a grade of C) over a two-year period. Across the twelve pairs of companies that met this criterion, the stock price of the company with the higher grade outperformed that of its competitor with the lower grade by an average of 30.2 percentage points over the two-year period following the assignment of Good Company grades. Those companies with higher Good Company grades significantly outperformed in the first year and then further extended that “outperformance” in the second year. In addition, in 83% of the pairs (10 of 12), the higher-ranked company outperformed the other over the 24-month period.