Ed Frauenheim and Kim Peters -
March 31, 2016
Originally published on
Forget over-the-top perks and focus on transparency instead.
You can’t hide your company’s workplace culture.
We’re living in an age when people research jobs like they do restaurants or cars and use social media to do so, and mainstream media outlets publish exposes on working conditions at companies such as Amazon and Zenefits.
As job seekers, customers, and potential investors look for information on the inner workings of companies where they want to work, do business with, or patronize, employers need to become more open about their people practices.
“Companies have to make it easy to find out about what it’s really like to work there, says Anil Saxena, a partner with Great Place to Work, the consulting and research firm that produces Fortune’s annual list of the 100 Best Companies to Work For. “The harder they make it to find it, the more people want to try. It doesn’t make sense to try to hide.”
Hiding may not make sense, but how, then, does a company impress job seekers and other stakeholders? It’s tempting to think over-the-top perks are the key to a killer culture. After all, companies such as Google (Alphabet) GOOG -0.34% , No. 1 on the 100 Best Companies list, have become synonymous with generous amenities such as on-site baristas, nap rooms, and private commuter shuttles. But decades of research by Great Place to Work and other experts have demonstrated that the heart of a healthy culture has to do with positive relationships at work, especially the amount of trust employees have toward leaders.
Perks Reflect a Company’s Mission
Fancy fringe benefits can be a sign of an excellent employer. But even powerful perks don’t have to break the bank. In fact, a perk that’s great for one company might not be as valued at another. “You’re not going to have nap rooms at a mining company,” Saxena says. “Perks are a reflection of the mission, or a representation of the culture. There are lots of organizations that do cool things for employees that employees feel are valuable to them, but they aren’t things you’ll find in Silicon Valley and that’s okay.”
At Recreational Equipment, Inc., No. 26 on the list, for example, employees get to test the latest outdoor gear. “That’s a huge perk because they’re outdoorsy people, campers, mountain climbers and bikers. It makes sense,” Saxena says. Because employees at The Boston Consulting Group (No. 3) and Perkins Coie (No. 37) often work long hours, the professional services firms offer paid sabbaticals so people can relax and recharge.
Employees at No. 47 Hyatt Hotels H 0.70% can stay for free up to a dozen nights a year at any of the hotel chain’s properties around the world, and get discounts on food, drinks and spa services while they’re there. All Hyatt properties have employee lounges with computers, TVs and video games. The $4.4 billion company spent an average $50,000 upgrading employee cafeterias to make them more like restaurants, with healthy menus available 24/7 at little or no cost. That’s not insignificant for hotel workers earning lower wages who might not otherwise be able to afford to buy and eat organic food, Saxena says.
Good perks don’t have to cost a lot to have a meaningful impact. No. 14 The Container Store TCS -0.37% , hosts an annual soapbox derby for headquarters and distribution center employees, and chili cook-offs at all locations. On Valentine’s Day, retail store employees get love letters, gifts, and hugs.
A Great Workplace Isn’t Just About Perks
In addition to perks, great workplaces offer employees equitable compensation, training, and opportunities to grow. They also offer employees a chance to give back by doing service work in the community, something Millennials find especially appealing.
“How an organization shows up in the community is a demonstration of their impact, that they’re living their values, and doing something that makes a difference,” Saxena says.
At The Container Store, full-time retail employees earn salary and bonuses of more than $48,000 a year, well over the U.S. retail industry average annual wage of $21,390, according to the Bureau of Labor Statistics. New employees at the company’s 79 retail locations get 263 hours of training during their first year — a rarity at a time when employers in a variety of industries have cut back on job-related learning.
Employees also have the flexibility to leave work early to take care of a family member if they need to. “We hire great people and trust they’ll get their work done,” says Audrey Robertson, The Container Store’s vice president of cultural programs and community relations. “Creating a high level of trust between employee and company is one thing that drives our culture.”
Great When Times Are Good … And Tough
At great workplaces, culture doesn’t evaporate at the first sign of financial trouble. In January, The Container Store’s stock dropped 40% after the company announced an unexpected loss of 4 cents a share on slower-than-expected sales for the quarter ended Nov. 28. The company says it’s working on “strategic initiatives” meant to improve financials in the coming year. While it does, management has said it may re-institute a freeze on salaries and 401(k) retirement savings plan matches that the company put in place during the worst of the recession. But The Container Store hasn’t cut pay, perks or its commitment to training. Instead, the company has trimmed marketing and other costs to leave pay untouched, Robertson said. “Just like you do in your mom or dad says we have to tighten the belt and look under every rock to find ways to realize savings, we do that together as a company,” she says.
The Container Store’s dedication to its workforce in good times and bad has paid off in its ability to attract and retain employees. The company averages 110 applications for every job opening, and its employee ranks include former Wall Street bankers, MBAs, professional ballerinas, doctors, lawyers, and teachers. Despite ongoing financial challenges, in the past year voluntary turnover for full-time employee was a low 8%. What’s more, employee referrals accounted for fully 30% of all new hires at The Container Store.
Being a great workplace even in tough times is crucial to sustainable success. And that great culture has little to do with the common conception of a perks-focused workplace.
“We get calls all the time from companies that want a magic checklist of programs and recognition events” that will help them become a great workplace, Robertson says. That approach means they fail to see the point, she says. “It goes back to looking at each individual employee and making sure their fundamental needs are being met.”