The 100 Best Places to Work - Brilliant or Lucky?

Are companies listed in the annual "100 Best Places to Work" brilliant or lucky?

I'm a Fortune subscriber and a HR pro.  So, it stands to reason that I sit up and take notice when "Fortune's 100 Best Companies to Work For" arrives in the mailbox.   After all, that kind of recognition is what we wish for our own company, right?

Then I read the feature article on Google, and the first thing that comes to mind is "you know, I work at a great place, but there's no way we can do the things Google does, because our margins won't allow it".  I've got a feeling that's the reality for most of us and the companies we support.

The problem with that approach - it discounts the power of what the companies in the Top 100 are doing and can accomplish.  From Mike Brennen at the Consultant's Corner via Knowledge Infusion:

"Great article by Peter Capelli in today's HR Executive that discusses the relationship between HR policies and stock performance. It summarizes the findings, entitled, "Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices ," published by his Wharton colleague, Alex Edmans. The study implies that investments in intangibles that lead to employee satisfaction drive long-term stock performance. He bases much of this stance on an analysis of the long-term stock performance of companies on "Fortune Magazine's 100 Best Places to Work For." For the 7 years between 1998 and 2005, the stock prices of companies on the list generated an average annual rate of return of 14%, which is more than double the 6% average return of the S&P 500 index during that time.

As I read both the article and summary of the study's findings, I couldn't help but think of some of the clients with whom we have worked to develop business cases for investing in talent management strategies that call for a shift in the way organizations manage their people."

So after reading Mike's post, I've made the pledge to stop discounting the Top 100 because it includes high margin companies that can spend what they want to spend.  Instead, I'm going to focus on the companies by name and industry that look like they have no business being on this list with companies like Google.

In other words, I'm looking for the companies that are brilliant, not lucky.  Those in tough margin industries that have worked through the business case and done enough to make the list.

I'm guessing that's where the case study with true value lies for most of us.

Comments

[Michael VanDervort]

Kris,

I have spent time working for three companies that have been on the list at one time or another, and have done a significant amount of research on the companies on the 2007 list.

Clearly not every company is Google, and clearly not every company makes it just because of cool perks, or really any one factor.

As you probably know, the audit consists of two pieces, one part which counts for about a third is a detailed report on your company practices, benefits, and goodies. The second and much more influential piece is a corporate culture audit. Each employer who makes the cut gets 400 surveys that they get to distribute randomly to associates within their company and the feedback from those surveys makes up the bulk of the selection process.

It is difficult to totally reconcile this wehn you have some companies with one location and just over 1000 associates filling out 400 surveys, or you can have FedEx and Starbucks and Publix with well obver 100,000 associates and many physical locations filling out the same number of surveys. This is one case where size doesn't matter, but apparently content does.

I think the bottom line is that the companies who make the list aren't lucky, and certainly are not perfect. Rather they have developed a culture and track record that differentiates them over time from companies that might be perceived as average.

My web site linkingtogreatplacestowork.blogspot.com is an on-going exercise in tracking the Top 100 lists in the US, Europe and Asia, as well as various other groups.

-- Michael

[KD]

Michael -

With that said, I think it's important to note that some companies on this list may be in a position where developing employee satisfaction is easier. This is definitely the case if your margins are high and you elect to reinvest some of that margin to benefits and other employee satisfaction factors.

That decision is smart. The market position and margins some of these companies find themselves with is usually defined by industry and market position.

Lucky? Maybe not. Fortunate? At times. Smart for the reinvestment? You bet.

That's why I'm focused on the companies with low margins on the list. I think that's where the real value lies for the HR Generalist in a manufacturing plant who's trying to be creative.

Thanks for the comment!

KD

[KD]

Michael -

Forgot to say - I'd include Publix in my definition of those in tough, tough industries who still manage to make the list.

Thanks - KD