I recently sat down with i4cp's senior vice president of research, Jay Jamrog, to discuss the value of being seen as a "good place to work." I was particularly interested in why companies would expend the time, energy, and resources on lengthy, complicated application processes for what are--on the surface--vanity awards. Jamrog offered some explanations into the science behind the usefulness of these types of awards and how businesses can leverage them to drive high performance.
Companies need to be good places to work
First, it's necessary to understand why being a good place to work is important. While being ranked on a list can reap its own rewards, simply making a list should not be the end-goal. According to i4cp's People Profit Chain™, employees of high-performance organizations are 2.9x more likely to say that their companies are good places to work. But, companies not only need to be thought of as good places to work, they actually have to be good places to work.
"Corporate culture is one of the ten key performance indicators that's predictive of market performance; it also has a consistently strong correlation with market performance," says Jamrog. "So in other words, high-performance organizations are pretty nice companies to work for, usually. They're making money, people are happy--getting bonuses, they're hiring people, the staff meetings are good. In low-performing organizations, you can imagine that staff meetings are not as fun--they're trying to survive, they're laying people off and no one is getting bonuses."
In regards to people practices, low-performance organizations can make small changes to become high-performance companies
"What you can do is make managers more responsible for developing people," explains Jamrog. "There are a lot of things managers can do to make people feel welcome and needed, even in a lower-performing organization."
Lower-performing organizations should focus on three steps to hold managers more accountable for people development:
1) Instill managers with the proper skills to develop talent
2) Design a process for measuring how well managers develop talent.
3) Institute a rewards program that is tied to successful talent development.
In other words, there needs to be clear and measurable progress to the goal.
"Best Places to Work" lists can help benchmark progress
"I think that if used correctly, along with a lot of other different metrics, the criteria for top places to work awards can be one of the things to look at when measuring the success of HR practices," says Jamrog. "If you look at the criteria online for those awards, and you just follow those criteria, it's a good list of things that HR can do to really drive market performance."
The self-perpetuating cycle
Decades of i4cp research show that achieving high-performance is a multidimensional process of which culture is a vital factor. Perhaps the best proof is the fact that several of the companies on Fortune's 2014 100 Best Companies to Work For are i4cp members. Great places to work drive high performance; high performance creates great places to work.