Make Rituals Work For You

by Jeremy Ryan and Jim Durning, Wells Fargo Asset Management

Major stock indexes in the U.S. declined modestly as investors parsed signals ahead of Federal Reserve Chair Janet Yellen’s comments at the central bank retreat in Jackson Hole, Wyoming, tomorrow. The Dow lost 33 points, with 19 of its 30 components declining; the S&P 500 Index was down almost 3 points; and the Nasdaq dropped more than 5 points. Advancers led decliners by about five to four on the NYSE and by about eight to seven on the Nasdaq. The prices of Treasuries declined. Gold futures fell $5.10 to settle at $1,324.60 an ounce. The price of crude oil increased $0.56, settling at $47.33 a barrel.

In earnings news:

• Dollar Tree Inc. missed fiscal-second quarter profit and sales expectations. Earnings were $170.2 million, or 72 cents a share, while estimates were for earnings per share of 73 cents. Revenue was $5 billion, which was below the estimate of $5.08 billion. Dollar Tree’s shares (DLTR) fell 9.93% in trading.
• Dollar General Corp. reported quarterly profit and sales that missed expectations. Earnings were $306.5 million, or $1.08 a share, while the consensus earnings estimate was $1.09 per share. Revenue was $5.39 billion, below the $5.50 billion estimate. Dollar General’s stock (DG) declined 17.63% on the day.
• Tiffany & Co. announced fiscal second-quarter profit that beat expectations. Earnings were $105.7 million, or 84 cents a share, beating the estimate of earnings per share of 72 cents. Revenue fell to $931.6 million from $990.5 million. Tiffany maintained its full-year outlook for sales and earnings per share. Company shares (TIF) gained 6.40% in trading.
• Guess Inc. reported fiscal second-quarter earnings and same-store sales that beat estimates. Net income was $32.3 million, or 38 cents per share, beating the estimate of 6 cents per share. Same-store sales for the Americas retail segment, including e-commerce, fell 2%, compared with the estimate of a 4.3% decline. Shares of Guess (GES) gained 22.15% on the news in trading.
• HP Inc. reported better-than-expected quarterly earnings. The PC and printer-focused arm of Hewlett-Packard, which split into HP Inc. and Hewlett Packard Enterprise Co. last year, reported net profit of $783 million, or 46 cents a share. After adjusting for discontinued operations, restructuring charges, and other effects, HP announced earnings of 48 cents a share. HP was expected to post adjusted earnings of 44 cents a share, according to analysts. HP predicted fourth-quarter adjusted earnings of 34–37 cents a share, while analysts, on average, expect profit of 41 cents a share. HP shares (HPQ) fell 0.21% in trading.

In other business news:

• The Department of Commerce said new orders for U.S. manufactured capital goods rose for a second straight month in July as demand for machinery and a range of other products picked up. In a separate report, the number of Americans filing for unemployment benefits declined last week, according to the Department of Labor.

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Rituals are in plain view in many professions. Some tennis players bounce the ball a certain number of times before serving. Some speakers listen to select songs before taking the stage. Singers perform scales and actors repeat tongue twisters. According to Harvard Business School professor Alison Wood Brooks, some existing evidence shows that pre-performance routines can help, but it is not clear “whether they merely prepared motor action or had some higher meaning,” The Boston Globe reported.

Wood Brooks and her colleagues found in testing that among two groups of people undertaking the same task, people who performed a prescribed ritual were less anxious than those who executed the task with no ritual. The next time you are at a business meeting that opens with an ice-breaker exercise, consider that this ritual might relax your colleagues and encourage a freer exchange of ideas. And, if ideas are the lifeblood of a successful business, more open discussion of them is not a bad thing.

“We see in every culture—and throughout history—that people who perform rituals report feeling better,” behavioral scientist Michael I. Norton told Harvard Business School Working Knowledge. For companies that seek to build strong cultures, rituals may have a more important place in corporate strategy than many may think. Ritualized physical and mental activities can build teams, alleviate anxiety, and give participants a great sense of control, Norton and his colleagues found.

A particularly interesting aspect of the effects that rituals can have occurs in relation to food consumption. In one of Norton’s studies, one group of participants performed several rituals before eating carrots while another group unceremoniously ate the carrots. You guessed it, the participants who performed the rituals before consuming the carrots reported more enjoyment than the others.

Upon reading about Norton’s research, it occurred to me … we haven’t had a fresh-baked blueberry muffin in our house for a while. For a few years, we had lots of blueberry muffins and scrambled eggs because we heard through the double-secret parents network that loading our sons up with blueberries and eggs in advance of exams would enhance performance.

The boys performed pretty well on tests. The question was, did they perform well on tests because of the blueberries and scrambled eggs, or did they get good grades to sustain the arrival of blueberries and scrambled eggs on their breakfast plates? We may never know for sure, and that’s the inscrutable nature of—call them what you will—rituals, superstitions, traditions, or customs.

“Parents have been employing this technique for time immemorial—pretending that a spoonful of pureed peas is, say, ‘a place coming in for a landing,’ in order to make it more appealing,” Norton told Working Knowledge. So that’s what they were doing! Well, now I just kind of feel silly.

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