The Problem with Fortune’s 100 Best Companies to Work for List
Originally published February 20,2018 by Robert Hatta
Last week, Fortune put out its annual list of the 100 Best Companies to Work For, produced in partnership with Great Place to Work Institute (a workplace satisfaction consultancy and benchmarking firm). The leading paragraph touts “generous sabbaticals, all-expenses-paid trips, eye-popping bonuses” along with parental leave. When talking about this year’s top company, Salesforce, the headline is similarly all about the perks, even referencing the software giant’s “mindfulness” rooms (whatever the hell those are). Scrolling down the page, it’s all about perks, perks and more perks, mingled in with other, more important, data like diversity numbers. Nothing was mentioned about the company’s performance (Salesforce’s stock price nearly doubled in 2017 while it grew revenue by 27%).
Along with a barrage of pop-ups and annoying ads is an accompanying video about the prestigious list. About 13 seconds in, you see this happy horse shit:
And then there’s the feature article on T-Mobile (number 86), that credits confetti canons and cheering contests at company “rah rah” rallies (pictured below) as the one of the reasons why the company’s stock price has outperformed those of its competitors over the last several years.
Surprisingly, perks and goofing off at the office play a minor role in scoring companies on this list. The underlying survey* rates companies across six factors they believe are the hallmarks of a great workplace: basics like a sound business model, a smart strategy, and savvy financial management along with high scores on leadership effectiveness, values, and trust. The survey goes further, adding points to companies if they score consistently well across all demographic and employee types — a very thoughtful way of weighting companies that are more inclusive.
And companies that score highly on these attributes outperform those that do not — substantially. According to the survey’s authors, “Our research shows that the publicly-held companies that appear on Fortune’s 100 Best Companies list have delivered stock market returns two to three times greater than major stock indices.”
So why all the focus on perks and school spirit rallies? Unfortunately, the false coupling of ancillary benefits and workplace happiness, versus the things that truly matter to employees, is part of a long, shallow narrative on company culture. The conventional discussion still focuses on surface items that are relatively easy to reproduce. It’s tempting for a CEO or HR leader to look at these successful companies and think, “hey, all we need to do is offer on-site yoga and generous parental leave and everybody will happily do their best work.” It’s harder to invest in leadership and communication structures that provide what employees really care about: inspiring colleagues, clear purpose, opportunities for impact. It appears that it’s harder to write about these things as well.
Or not. In her book, Powerful: Building a Culture of Freedom and Responsibility, Patty McCord lays out the many ways Netflix was able to build one of the most successful companies of the last decade (Netflix’s stock has increased ten-fold in the last five years). Spoiler alert: it isn’t about perks. It’s about building teams that are talented, transparent and aligned. It’s about hiring top performers and setting them loose on the hardest problems, unfettered by process and unnecessary oversight. If you’re looking for inspiration on how to build a great workplace, start here.
Every time I ask someone why they love their job (every single time), I hear a version of the following: “I work with smart, collaborative people… toward a purpose I believe in… and where I can have a meaningful impact.” It’s also a lot of fun working for a winner. I’ve yet to hear someone brag about their 401k or vacation policy. If building a great workplace is important to you, look past the cheesy editorial and focus on the underlying data. Fortune does this fantastic survey, and its readers, a disservice by highlighting frivolous and irrelevant perks instead of what really matters.
*The below paragraphs detail the methodology of the survey:
Great Place to Work U.S. measures companies on the following characteristics: Executive team effectiveness, innovation, people-focused programs, and Great Place to Work For All. In a Great Place to Work For All, employees report high levels of trust, credible and respectful leadership, pride in the work, and camaraderie. We also look to see that employees consistently experience this great workplace, regardless of who they are or what they do. Each company is scored on our analysis of anonymous employee responses to more than 50 survey questions on our Trust Index Survey, together with our evaluation of company programs and practices as measured through our Culture Audit assessment.
More than 315,000 employees provided feedback to determine the winners of the 2018 list. To be considered, companies needed to have at least 1,000 employees and receive enough survey responses to achieve a 95% confidence level with no more than a 5% margin of error.