|
The Business Case for the Best Place to Work, by Bob Grassberger, Ph.D
I asked my friend Bob Grassberger to help us understand why a leader should even consider creating a “best place to work.” Bob is an entrepreneur, economist, teacher, and a deep and contemporary thinker. I think you will enjoy this article. -----------------------------------------------------------
If you do a search for “best places to work” you find that each year, cities and states around the country seek and recognize companies whose employees say are the absolute best organizations to work for. Most city and state lists make the awards delineated by company size. But there are numerous other best lists as well – the best places for working mothers, for people over 50, and for young people seeking to launch a career.
Independent of the criteria for what types of organizations can be included; applying for selection to a “best places” list generally involves a survey of at least ˝ of the organization’s employees (and often its managers). Employees are asked to respond to questions about such things as collaboration with others, trust of management and colleagues, the ability for career advancement, equity in the applications of rules and work policies, and their overall happiness in the workplace. Ultimately a score of employee engagement is derived and those organizations with the highest scores make the list.
And while selection is determined by the scores from employee interviews, an interesting point of note is that these firms offer benefits and perks that are fairly uncommon in other “non-best” firms. As you review these offerings, you have to wonder how these companies can afford to provide such perks. Sure these are places with happy employees – who wouldn’t be happy with 30 days of paid leave, flexible work schedules, and a foosball table in the break room – but is this truly a good investment for the organization? Is there quantitative evidence of a correlation between employee happiness and organizational productivity and returns?
Perhaps the most well known list is Fortune’s annual 100 Great Places to Work. This list has been around a little longer and subject to greater academic scrutiny. Researchers have found that for publicly traded firms, in terms of longer-term investor returns, the list companies have generally outperformed their industry competitors. For example, a 2003 study found that a portfolio comprised of the organizations from the Fortune list provided a cumulative return of 82% versus 37% for the broad market over a 3-year period. Similarly, in her award winning research on work-family programs and firm value, the University of New Mexico’s Anderson Schools of Management Professor Michelle Arthur found increased share values at family-friendly firms.
Promoting positive employee relations is the cornerstone of building the best places to work. Once the domain of the HR department these practices have captured the attention of business strategists. Business uber guru Tom Peters, who 30 years ago promoted the “people programs” of excellent companies, now touts the creation of “exciting, spirited, entrepreneurial, diverse, humane ‘professional homes’ where employees can thrive and flourish”. Good to Great author Jim Collins found that great companies do what it takes to “get the right people on the bus” and keep them there. Business professor Gary Hamel promotes “management innovation” where one of the primary tenets is creating a company where everyone gives their best. Others herald building attractive workplaces as “the only sustainable competitive advantage” in a global market place where talent is becoming increasingly scarce.
However, while the specific programs and policies of these firms are ever more discussed, it is worth noting that most of the company leaders we have interviewed for our research did not start their “people first” programs with the primary intent of increasing profits. Instead they drew from deep personal values – a contention that the modern workplace doesn’t have to be the gray factories of Fredrick Taylor’s methodical and repressive Scientific Management. [Taylor is perhaps best known as the inventor of time-motion studies]. As these leaders tell it, building a best place to work is not a tactical ploy but a philosophy that work can be meaningful and satisfying. The benefits are secondary to that philosophical objective.
We have also found that the programs and policies vary widely – there is no specific template to “Lego together” a best place to work. It is the “why” not the “what” that drives the success of these programs. And that “why” involves committed leadership and a vigilant focus on internal communications. Without these components, having satisfied workers provides no guarantee of improved productivity or enhanced profits.
Studies continue to mount that conclude that in a highly competitive world with a tightening labor market, building a workplace that attracts and retains people affords a sustainable competitive advantage that differentiates the firm. As Bob Lee of the Great Places to Work Institute recently stated, “In 5 to 10 years Great Workplaces will be as mainstream as Quality Management systems are today.”
Some of the benefits reported by best places to work include:
Employee retention
Employee turnover is costly both in time and money. Further, employees who terminate often leave with knowledge and skills important to the organization. Because of retired and lost employees, NASA no longer has the capacity to fly to the moon according to MIT research fellow David DeLong.
It is estimated that finding and training a new employee costs from 70 to 200% of the annual salary of that job. Most of the best places firms exhibit little turnover when compared to their competitors.
Employee attraction
In our research, we’ve referred to this as “building a talent magnet” – a place that attracts the best and brightest. There is a distinct advantage in having your pick of the best in a tight market. Each day Google receives an estimated 3,000 resumes and hires an average of 9 people. Given the cost of finding and interviewing qualified people, having applicants line up at your door can be a money saver.
Pride in work
Best places employees tend to take pride in their work. That pride is reflected in increased quality and reductions in rework. Improved quality can result in improved customer satisfaction and in reduced production costs.
Customer service / retention
Southwest Airlines is legend in its delivery of customer service. It is also makes the list of best places to work year after year. Employees who are happy at work consistently deliver better customer service. Research shows that it is five times more costly to find a new customer than to retain an existing one and that current customers are responsible for 60 to 90% of revenues.
Innovation
Many best places are structured as participative organizations where employees have a voice in the direction of the company. Best places employers listen to and value the ideas of their employees. New ideas from the those on the front line can result in new products generating new revenues or in new production processes that reduce costs and improve existing products.
Branding / enhanced reputation
Organizations known to put people first are often recognized in their communities resulting in increased publicity and recommendations from others. This “good will” can generate new sales opportunities for the firm. Employees of best places also tend to evangelize for the enterprise. -------------------------------------------- Bob Grassberger is the Principal of i-Nexus, a consultancy helping clients plan for changes in the workplace and the workforce. Trained in economics and in organizational learning, he has authored or coauthored over 90 research studies. Dr. Grassberger holds a part-time appointment at New Mexico State University working in international rural development and teaches “The Future of Work” at the University of New Mexico. He was formerly the Chief Operating Officer of the Vitel Corporation. He can be reached at rgrassberger@comcast.net. |
|
MPAEA Testimonies
Dr. Kroth gave a “passionate” talk and pro-active approaches to taking control of the work environment and your life.
Overall, I felt the conference focus was on leadership and producing happy, productive adult employees (students) in a nurturing environment.
Click here to view these in their complete contents and more testimonies. |