A new study presents some of the first solid evidence linking employee involvement and higher profits. The University of Southern California's Marshall School of Business recently published a study of the nation's largest corporations that found, among other things, that in 1996, the return on stockholder investment -- stock price appreciation plus dividends -- was 44% for companies with a high degree of employee involvement compared with 21% at other companies. Such companies also had an average return on sales of 10.4% compared with 8.3% at companies where employee involvement was low.
Companies stressing either total quality management or reengineering had a marginally higher return on investments than companies without such programs.
"Each of the three strategies produce a positive effect," says Edward E. Lawler III, professor of management and organization at USC. "But employee involvement is a stronger driver of financial performance than total quality management or reengineering."