Why Companies Are (Finally) Falling All Over Each Other To Become Best Places To Work

Smart companies have figured out that happy workplaces mean bigger bottom lines and winning the talent battle. Which is only good news for you.

Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him.

—Former U.S. General and President Dwight D. Eisenhower

According to a seemingly endless number of research studies—all arriving at the same conclusion—the American workplace has become profoundly destructive to the human spirit.

The trends have become all too familiar: Employee engagement and job satisfaction have fallen to modern-day lows, countless workers can’t wait for the job market to fully recover so they can high-tail it out of organizations they feel deeply disregard them—and a huge percentage of people enjoy their commutes to and from work more than the jobs they are heading to.

To state the blatantly obvious, all this discontent can’t be very good for business. It also begs the question: How much better can all companies perform were we collectively able to restore worker engagement and loyalty?

For the past several months, I’ve been intrigued by evidence that some astute firms are well on their way to transforming their leadership practices in response to these dour trends. Convinced we’ve reached an inflection point where traditional methods have become fully destructive to organizational success, they’ve initiated more caring and supportive methods to intentionally humanize their work environments—and gain a competitive advantage in the process.

In January, I began writing a series of articles for Fast Company, each one dedicated to better understanding the movement to create "great workplaces." The underlying reason for all this research is to answer one question: Will this inevitably prove to be a feel-good strategy that flames out—or an approach to leadership that will derail organizations which fail to get on board?

If you hold any position in leadership today, you should know this: Companies that authentically value their employees will be (and already are) the big winners in the 21st-century economy.

Here’s my evidence:

In a visit to software analytics giant, SAS, I met CEO and cofounder Jim Goodnight, arguably the pioneer of a workplace culture that esteems employees over customers and owners. Several times ranked the "Best Company To Work For" in America, and recently named the world's best multinational workplace, SAS has produced record profits for 37 consecutive years. A company that emphasizes trust, generosity, and work-life balance has a track record of success that irrefutably proves companies "reap what they sow." A talent magnet because of their "Great Place To Work" status, SAS now receives 100 applications for every open position.

I met with senior executives at Google who’ve made it their prime mission to create the best workplace in the universe. They’re already #1 in the United States. Google takes it on face value that employee well-being is a profound driver of productivity and innovation, and ensures its workers have great influence on their work hours—and a significant voice in how the firm is run. Since it went public nine years ago, Google’s stock has soared 800%.

I interviewed Gallup chief scientist Jim Harter, who launched the first "State of the American Workplace" study in 1997, and recently revealed that only 3 in 10 U.S. workers are engaged in their jobs. To fix this, says Harter, companies need to find deeply caring leaders "capable of seeing, supporting, and adjusting to the differences in people. The truly differentiated manager will be someone who understands that the more they nurture and support employees, the more success they will produce."

I went to see Jerome Dodson, founder of Parnassus Investments. Since 2005, Dodson has been the portfolio manager for the Parnassus Workplace Fund, a mutual fund that invests exclusively in companies regarded by employees as great places to work. Over the past eight years, the Workplace Fund has had an average return of 9.63%—more than 4% higher than the S&P 500 index in the same timeframe. "What these companies have proved to Wall Street," says Dodson, "is that treating employees well, and truly respecting them, consistently leads to far better business performance."

My Research Continues:

For the next step in my journey, I visited with Robert Levering, cofounder and CEO of the Great Place To Work Institute.

Since 1997, Levering’s firm has determined which organizations make Fortune magazine’s annual list of the "100 Best Companies To Work For" in America—and now produces a similar list in nearly 50 other countries.

Levering, along with business partner, Milton Moskowitz, got his start in evaluating workplaces nearly 30 years ago, and has, perhaps, the greatest optics into the future of business leadership. Nearing his 70th birthday, he has no interest in retiring: "I think we’re on the threshold of becoming even more significant in the corporate world," he said proudly. Here are some of his key insights:

Few Organizations Historically Sought To Become A Great Place To Work

"When Milt and I started," Levering told me, "being perceived as a great employer was categorized as a ‘nice to have’ in major organizations. Few sought to actively pursue it. But definitely in the last 10 years—it increases every year—more people in the C-suites have grown convinced that creating a great workplace is integral to their success as a business. Just recently, I visited Intel, and the CEO, Brian Krzanich, articulated his vision brilliantly when he told his team: ‘We want to attract the very best talent, and you can’t do that unless you acquire a reputation for having a great workplace—and people feel it when they are there. And, if you want to get the most out of them for the shareholders, we know they’re only going to excel if they think Intel is a great place to be.’"

After Decades Of Insincere Efforts, Business Is Now Shifting

Back in the 1990s, many companies began proclaiming that their people "were their greatest asset." According to Levering, just the idea that workers were being described in financial terms suggested these expressions were nothing more than lip service.

But Levering believes business leaders are being forced to change their ways. "I think it’s really clear that technological change has made having very talented employees increasingly important," he stressed. "Underlying that is how competitive business has become everywhere. At one time, there were real monopolies—companies that effectively had very secure markets. I don’t think there are such things anymore—and this means companies have to be constantly innovating and relying on people to produce it. So, what’s really shifted is the understanding that companies cannot succeed without attracting and retaining great people. CEOs, therefore, are coming to value people with much greater authenticity."

Levering also is very clear that most organizations are changing their leadership cultures simply in recognition that doing so is expansive to the bottom line. "What we’re finding are CEOs, like at Intel, who genuinely care about people—yet they simultaneously understand their doing so has become an important aspect of running their company. It’s not altruistically motivated," he insists. "CEOs are coming to justify creating great workplaces in business terms."

We’re Near The Tipping Point. For Organizations To Endure, They Must Create More Supportive Cultures

Robert Levering not only is convinced a major shift in workplace management has begun to take hold, he’s certain that organizational existence soon will be dependent upon adopting more caring and humane leadership practices.

"I think the focus on becoming a great workplace can best be compared to what happened with the ‘Quality Movement,’" he told me. "Recall back to the 1970s, when producing products with high quality was largely seen as optional in business. That is, until Japanese manufacturers started to beat the pants off American and Western European companies in everything from automobiles to electronics. The sudden competitive disadvantage these organizations faced forced them to acknowledge that making high-quality products had become essential to their success and even to their very survival. Soon, every American company was adopting the quality processes that were pioneered in Japan."

"I think the same thing is going to happen with workplace issues," Levering added. "We’re just at the beginning stages where people have started to see that some of the best performing companies are ones that have terrific cultures. CEOs are all wondering, ‘Why is Google so great?’ And if you look at what makes that company so distinctive, you see that it has much to do with the kind of workplace they’re intentionally creating. Because the competitive pressures will be so great, people will come to understand that having a great workplace is not optional anymore and has instead become essential. The urgency for leaders to take action now is to get there before their competitors do. Would you want to have been the last company in your industry to embrace the quality movement?"

[Image: Flickr user John Morgan]

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18 Comments

  • John

    Do you think that "best places to work" will "replace" workers' unions, maybe even the need for them? 
    One thing unions did was to standardize contracts and pay, so that favoritisms were ruled out. What are "best places to work" putting in the place of contracts in order to deal with this problem?

  • Mark C. Crowley

    Great question!  Unions were created first in response to a lack of safety in the workplace (meaning owners didn't take sufficient measures to protect workers from injury so employees united to get a fix) and generally exist today because of a lack of trust between employer and employee.  When the belief system that says people are to be paid as little as possible and squeezed as much as possible is no longer understood to be the most productive model, I do believe the need for unions will be greatly reduced.  Since workers have to pay to have union representation, I'm pretty certain they'll become far less willing to have their paycheck docked every week if greater trust exists between them and their managers.  To my knowledge, there are no unions at companies like Google, SAS, REI, Starbucks and the far majority of great places to work.  Something for others to aspire to!  

    Another downside of unions: When people are all treated the same -- and not as the individuals they are -- their engagement is reduced right out of the gate!   

  • John

    Thanks for your kind response. I work at a major research university in a neighborhood where for a long time African Americans had a difficult time getting jobs, and then when they did were discriminated against in their pay. It was this and related favoritism and nepotism that led to the union organizing effort which succeeded here.

    I mention this specifically because it is this kind of discrimination which could, and maybe is, repeated in many work places, where union organizing has not been successful. 

    Based on your experience of "best places to work" companies, would you say that they actively seek transparency, or some related strategies, which reassure employees that they all are being treated fairly?

  • Mark C. Crowley

    I think you can anticipate my answer.  Yes!  The cornerstone of all great workplaces is trust -- management extends great trust to employees and seeks to earn it in return from them.  The place for CEOs to begin is to assess the degree of trust that exists in their company and intentionally grow it from there.

  • John

    ps. While at the same time, providing enough incentives for individual performance so that, as you say, "...their engagement is reduced right out of the gate!", is no longer an issue.  

  • Phil

    I have to give a plug to my company at this point. For the first time in my professional career, I have found a firm that actually understands loyalty and believing in a person. I have been inspired, motivated and encouraged from the top down for the first time in years.

    This has a direct effect on my productivity, my loyalty and my pride in my company. And believe me, they are profiting from it - a scenario where everyone actually wins!

  • Elyse Lopez, Brightwing

    Brightwing, (www.gobrightwing.com) my company, has had the emphasis for over 40 years. I had worked in a company that couldn't care less about culture, and working here is not only a step up but an incredible change in attitude, mental and physical health. CEO's and companies that actually care about their employees make an incredible difference like Phil said, in loyalty and pride. I just won employee of the month for July so it definitely shows that drive and dedication are directly tied to an organization that is behind you. 

  • David Sollars

    Mark, very much enjoyed the learning arc of your post. I think your article points out for decades organizations have delegated leadership and allowed mission driven values to be shelved due to over riding external pressures. I took a workshop with Authentic Leadership Intitute, where they foster the concept of exploring an individuals values and purpose, then create leadership priorities around their sweet spots.

    How does feeling part of a mission driven organization increase employee engagement play? Have you ever looked at lessons learned from non-profits. Very much enjoyed your  culture rich  points.

  • Mark C. Crowley

    Thank you David.  Leadership like this almost always thrives in non-profits (tied to my personal experience on Boards) as they're often mission driven and supported largely by people who are volunteering.  Since money isn't often the driver for them, feelings of significance, making a difference, knowing their connected to a larger and meaningful cause -- are all deeply inspiring motivators.   But when it comes to traditional work environments, the funny thing is that pay now ranks 5th in importance to people -- all over the world -- as a motivator for performance.  If you (or anyone reading this) want to test it out, ask yourself if working for an organization whose mission you support and admire has become important to you?  How about working for a boss who you know cares about you and advocates for you?  People want to grow and develop, they want greater autonomy and feelings of appreciation.  Pay will always be important to people, of course, but it's generally the things human beings feel in their hearts that drive engagement, initiative, loyalty and productivity -- all the things leaders seek to secure from people!

  • AmiMcGuire7854

    Mark,

    I agree and am so happy to see this concept becoming more main stream. I was fortunate to work in a department of a company that did all of the things you describe in your article.  Not only was it a great place to work, but it was rewarding; from day-to-day work life and also seeing that because of our work, culture and people, we not only met our financial goals, we exceeded them repeatedly throughout the years.  After I left the company for what was considered to be a "more stable" business, I was disheartened to return to the regular you're-nothing-but-a-number culture and the company is constantly wondering why they have so many issues (that the leaders create themselves).

    The rewards that both company leaders and employees reap when they (genuinely) instill the practices you mention in your article, are infinite. 

    I hope more leaders take note and follow your words of wisdom.  I've seen first hand just how much success can come from it.

  • David Sollars

    Mark, great point about compensation being 5th, while a sense of cultural values that are lived within an organization lead to the most loyalty and productivity.

    What are the common intersections that derail the process that you've encountered? Research illustrated we learn 70% of our lessons on the job and the most learning comes form overcoming challenges. How do you see a leader's role in guidance to keep their team on track?

    I've seen ego as one of the most recognizable currency in non-profits. Non-profit stake holders are paid in emotional satisfaction. A common currecy conflict is when a voluteer's ideas or efforts are not in allignment with the organization's overall values or current strategy. Refocusing the volunteer so their efforts create success is a way to guide both non-profit and industry workforce to feel satisfaction and achieve that deep feeling of being part of the solution.

    It's a caring leader who guides their team's efforts, takes on the tough conversations and allows the team to take the credit at the victory party.
     

     

  • Mark C. Crowley

    The most common complaint I hear in non-profits, David, is that people feel like they kill themselves for the cause (often taking lower incomes because they believe so much in the mission) and too infrequently get made to feel appreciated.  Recognition goes a long way when people are paid well -- but its uber-essential when people make big sacrifices.  Seems so obvious, but......

  • Billie

    Mark, what a wonderful blog post to read.  I think the C in CEO stands for caring.  Went to a great talk in London by Sir Nicholas Young (CEO British Red Cross) entitled: Effective but caring leadership.  It was quite enlightening and highlighted to me how you can be 'nice' and succeed in business.  His key points were:
    - compassion
    - communication
    - emotional intelligence
    - confidence & trust
    - developing team for themselves and their jobs
    - generating confidence for the next challenge.

    Nick was humble yet powerful, had time for everyone and 'cared' for his team and his organisation.  
    Considering how many hours of our lives we spend in the office surely caring for each other as a team is fundamental, to our well being and how we can best serve our team and organisation.

  • Robert Tanner

    It was only a matter of time before "taking care of your people" became a requirement for leaders to keep their businesses profitable. As noted, companies have been riding the wave of improving processes and innovation since the 1970's. Every wave tapers off at some point!

    For some companies, improving processes and innovation has been at the expense of the people side of the business for far too long. These companies face closure unless they adapt to this new changing business climate. This new business climate can quickly make whole industries irrelevant. (We have a lesson from history. Remember the dinosaurs?) 

    It is time for leaders to really see their people as their most important assets. The findings in this article are promising. 

    Robert Tanner
    Founder, Business Consulting Solutions LLC

  • Eduardo

    Great article.  I cannot, however, share it on a social network.  It re-directs to the article "JAPAN'S FUKUSHIMA NUCLEAR PLANT IS STILL LEAKING"

  • Peopleguru

    Great! 4 ways to humanize orgs: stop engagement
    surveys & talk to employees/ kill “zero-sum” mentality/foster collaboration/reward
    risk-taking.