For some VPs of HR and recruiters, Christmas comes in January, not December. It’s happy days for these lucky few in January, because that’s when Fortune Magazine’s “100 Best Companies To Work For” list is published. In my opinion, getting listed near the top of Fortune’s “100 Best Companies to Work For” list is the best measure of HR effectiveness, bar none! Ranking high on the list guarantees you notoriety, and even better, an increased flow of top-quality applicants – in some cases as much as double the flow prior to the recognition. Nothing builds your great-people-place brand better than appearing on published lists that rank companies as great places to work. There are many lists out there. But without a doubt the Oscar equivalent for HR and recruiting is Fortune’s list. If you’re not on it, you are a nobody. If you are on it one year and you drop off the next, be prepared for a call from the CEO – it’s that powerful! I know this because I am a list expert. This is a relatively secret, but increasingly important, practice area that advises companies on how to “get talked about.” (It turns out that, just like beauty contests, a little coaching and practice go a long way.) There are a variety of goals for any list strategy. They begin with:
- Getting ranked on “best of” lists in general
- Getting ranked on more desirable lists
- Improving your ranking on the lists you’re currently on
- Avoiding being dropped from lists (a disaster)
- Generally becoming a talked about company in articles in leading business and industry publications.
Show Me the Money!
I have advised numerous companies in this area. During the time I have spent with them, I have calculated the value of getting listed on the Fortune list (in terms of free PR and publicity). It can easily exceed $10 million – and be worth well over $15 million for firms ranked among the top 10! One CEO of a frequently top-listed software firm estimated a value of $75 million (in recruiting, retention, and productivity gains) as a result of proactively spending the money on the people programs that ultimately resulted in the company becoming highly ranked. The foundation behind a people-place strategy is quite simple, but very compelling: you either spend money on your employees now or spend it later on headhunters! In addition to the economic value of the direct and indirect publicity that results from getting on “best of” lists, there are many other benefits for becoming a talked-about company. Some of those benefits include:
- Retention. Ranking on “best of” lists directly impacts retention rates by building pride among your current employees, and reminding them of positive aspects of being a part of the organization that might not otherwise get reinforced each day.
- Referrals. It builds employee referrals, because employees now have the ranking (and the reasons behind it) as ammunition (something to talk about) when initiating a referral-type conversation, which can be difficult for some.
- Quality of applicants. Past experience and external research has validated that both the quality and the volume of resumes received increase significantly after being listed. This ultimately means that future recruiting costs will be lower, and that the quality of hire will increase for firms either being listed for the first time, or for those increasing their position.
- HR roadmap. The application process (especially for Fortune’s list, which is managed in part by the exceptionally well run Great Place to Work? Institute) serves as a great tool to force attention on a firm’s HR roadmap, pointing out to HR executives where they currently stand and what needs to be done to improve their HR function.
- HR pride. It builds pride within HR and motivates all of the internal functions to keep improving.
- Sales and brand. Listing has an indirect impact on sales and market position, due to the increased brand recognition that is achieved thanks in part to all of the publicity that follows the listing. Becoming recognized as a great place to work adds an additional layer to your corporate brand, called an “organizational brand.” Several published studies have produced evidence that being known as a great organization translates into increased sales, because customers directly associate being a great place to work with perceived product quality.
A Source of Pride
In addition to the financial benefits of making the Fortune Magazine list, most companies seize the opportunity to inject a little fun into their lives. For example, Wegman’s Food Markets, a four-year veteran of the Fortune list, has provided all employees with brightly colored T-shirts that recognize their significant accomplishment. Continental Airlines, also a four-year veteran, has painted it their accomplishment on the side of their airplanes, while Charles Schwab, a three-year veteran, shared their success by distributing fortune cookies, with the announcement inside, to all employees. Other outstanding showings include Agilent Technologies, advancing from #48 last year to #31 this year. Last year, Agilent outranked former parent company HP – only two years after being spun off (HP was a recognized pioneer in providing an excellent place to work, but has fallen into notoriety in recent years and no longer appears on the list).
Companies like SAS have turned a minor company practice, giving away M&Ms, into a great-people-place brand initiative, and achieved the lowest turnover rate in their industry. Companies like Starbucks, Granite Rock, and R.J. Reynolds tobacco have made the list, representing industries that, let’s face it, can be difficult to glamorize. One such company, W.L. Gore & Associates, Inc., a fabric company, has been on the list since inception. Incidentally, you don’t have to be a large company to make the list, nor do you have to be a public company. The Container Store, with less than 2,000 employees and no HR department has been ranked #1 or #2 for each of the last three years.
What Does It Take To “Make The List”?
Although the Fortune “100 Best Companies to Work For” list is clearly the crown jewel, the Working Mother’s “100 Best Companies for Working Mothers” and the Fortune “Best Companies for Minorities” lists are also among the most desirable. Unfortunately for applicants, the different lists are not coordinated, and all use somewhat different criteria. The key is to remember that all the lists clearly prioritize what they expect, and have criteria that, while different, demonstrates similar patterns. Different firms target lists they want to appear on in many different ways, but I recommend a strictly scientific approach.
By looking at patterns and identifying which companies do well year after year, which companies have had a decrease in their ranking, and which have dropped off completely, you can easily identify which best practices are recognized and given a top priority by each listing authority. Developing your personalized methodology takes a little effort and some money. But, the effort is worth it, because the companies and professionals that develop and manage these lists are clearly experts in identifying the key factors that really make a difference to employees. In addition, you can’t go wrong as an HR function if you use these common criteria to plot your course for excellence. Benchmarking the companies that continually do well on the lists is an excellent way of identifying how firms continually improve. For example, Cisco, Charles Schwab, and Qualcomm all received excellent ratings this year – even after the completion of layoffs. It turns out that by laying off people in a classy and respectful manner, you can actually have a positive impact on your ratings.
What Are the Best Lists?
There are four basic kinds of lists. General business lists, industry specific lists, business functional lists and lists unique to certain countries – they all have value. But some lists have more than others and should be targeted first, depending on who you are trying to impress. The following are my personal favorites. Incidentally, a more complete “list of lists” can be found on the always excellent resource, Hoovers Online.
- “100 Best Companies to Work For” (Fortune)
- “100 Best Companies for Working Mothers” (Working Mother)
- “50 Best Companies For Minorities” (Fortune)
- “The 100 Best Places To Work In IT” (Computer World)
- “The World’s Most Respected Companies” (Financial Times)
- “World’s Best Managed Companies” (Industry Week)
- “The Citizens Index For Social And Environmental Responsibility” (Citizens Fund)
- “10 Worst Corporations” (Mother Jones)
- “Global Most Admired Companies” (Fortune)
- “America’s Most Admired Companies” (Fortune)
Getting Talked About
A separate but related strategy that I recommend is becoming a talked about company. Being talked about means getting written about in leading business and industry publications for your great management and people practices. The clear world champion here is Cisco Systems. In the last five years Cisco has gone from an obscure hardware company to the most talked about and benchmarked firm on the planet. The Cisco effort was no accident. It took a team of world-class HR professionals to both build those great people practices and to identify the approach that was needed to get those practices talked about. As a result of that effort, the Cisco “Friends” program (a web-based recruiting tool) is, without a doubt, the most written about HR program. Once again, I have found that becoming talked about requires a systematic process of identifying what it takes to become found and written about by savvy journalists and industry analysts. More on the topic of the “becoming talked about” process will appear in an upcoming article.
What Does It Take To Become a Great “People Place”?
There is not enough space here to list all of the factors that HR departments need to focus on in order to be listed or talked about as a great people place. However, areas that are consistently used in ranking criteria include:
- Opportunities for women, gays, and minorities (especially at the executive and board level)
- Work/life balance programs that can demonstrate they reach a large number of employees
- Employee dignity
- Low turnover rates (relative to competitors)
- High salaries or stock options (generous compensation)
- Benefits that are offered equally to the “little guy” and executives
- Environmentally and community friendly programs
- Demonstrating that you are a pioneer in your industry by being the first to offer unique benefits
- Job growth or maintaining employment levels during economic downturns
- Flexibility in jobs (job sharing, work at home, or flexible schedules)
- Extensive training and learning opportunities offered to all levels of employees
Most of the best-places-to-work lists are relatively new, but their importance (and participation) grows every year. The reason why their popularity is growing is simple. Building your brand as a great people place has one of the highest ROIs of anything you can do in HR. Yes, it’s hard work because success requires a strong brand manager and a structured process. But the results are phenomenal. If you do get on these lists, I guarantee you will get a call from your CEO, your achievement will be mentioned in the annual report (a rare event for most HR practices) and (at least from my experience) you will get a bonus! Because it takes a while to gather the information for the application and to tweak weak programs, the time to start is now (the Fortune list, in particular, has a long lead time). So stop working on the mundane administrative stuff and become an HR hero! Any questions?