Dive Brief:
- Chief marketing officers and chief human resource officers need to collaborate more often, according to a new paper by experts at Rice University and Kent State University.
- The academic paper, "Cross-Validation of Customer and Employee Signals and Firm Valuation," published in the Journal of Marketing Research, found that the relative consistency with which a company treats its customers and employees can affect the company's long-term value.
- According to the paper, that treatment includes "achievements" and "lapses." The former produce positive, beneficial outcomes for customers or employees, such as developing new products for customers or sharing profits with employees. The latter fall short of regulatory or social norms and produce negative outcomes for employees or customers, such as large-scale layoffs or product-safety recalls.
Dive Insights
Although companies have the option to treat both their customers and employees well, they don't always do it, much to their detriment, the study found.
The study reports that valuation of companies that are consistent in employee and customer achievements is on average 11% higher than those having inconsistent outcomes.
"For an average Standard & Poor's 2,000 firm with a market cap of $10 billion, this translates into $1.1 billion in firm value," the authors said. "In other words, improving consistency in employee achievements and customer achievements leads to big change -- financially and metaphorically."
