An economic downturn is a big test of corporate policies that aim to keep employees loyal and motivated. With cost cuts and lay-offs hitting some sectors hard in the wake of the credit crisis, there will be plenty of employees feeling sceptical at the moment about any employer’s claim to be a great place to work.
Yet some companies manage to maintain the trust of their workforce even when economic and market conditions turn sour, says the Great Place to Work Institute, which compiles the annual Best Workplaces rankings around the world.
What makes a company an enduringly attractive place to work? The handful of companies that have featured consistently in the rankings over a number of years provide some useful pointers.
This year’s top-ranked large company in Europe is Microsoft. Eight of its subsidiaries across the continent have appeared in the rankings for the past five years. Two-thirds of the score for each ranked company is based on anonymous surveys of employees.
At Microsoft, employees spoke about the openness of the culture and communication with their leaders. Their comments included: “Higher management is open for a talk when you need advice or feedback”, and “They share the goals and results without withholding any information.” Nine out of 10 employees surveyed at Microsoft Netherlands said they could “ask management any reasonable question and get a straight answer”.
Honest two-way communication is crucial in preserving employees’ trust, especially when there is bad news to share, says Palle Ellemann, managing director of the Great Place to Work Institute Europe.
“It’s easier to create energy, optimism and team spirit when the company is growing and you can share profits,” he says. “When you have to reduce staff because of an economic downturn, you can distinguish the enduring cultures. At that point, it’s particularly focused on communication. It’s extremely important that you tell the truth and continue communicating and make yourself accessible from the top.”
The coming year is likely to demonstrate more clearly whether positive practices at ranked companies can be sustained if job cuts become more widespread. Only 10 per cent of companies in the European list cut their employee numbers over the past year – on average, the ranked companies increased staff by 16 per cent and revenues by 26 per cent. “It is not a huge percentage [that cut staff], but it proves the point that great workplaces with high levels of trust can do that without dropping out of the list,” says Mr Ellemann.
He adds that the best workplaces are distinguished by having people policies embedded throughout the company and linked to business strategy, rather than just handled as a human resources function.
“When they have to tell bad news, it will not just be an HR thing – there have to be senior executives saying why this is necessary.”
Reaktor Innovations, a privately-owned software and technology consulting company based in Helsinki, is winner of the European ranking for smaller businesses. The company “lives and breathes being a great workplace”, says the institute. It goes to exceptional lengths to retain employees: both its satellite offices, one in western Finland and the other in Buenos Aires, were established to hold on to employees who had to move away for other reasons.
Another key to maintaining trust can be found by looking at the companies that have appeared consistently in the European list since the first ranking in 2003. Superficially, these “European Trust Champions” seem to have little in common. They are: Admiral Group, a UK-based insurance company; the Spanish operation of Eli Lilly, the pharmaceuticals group; and two small Danish companies, Middelfart Sparekasse, a bank, and Unimerco, a tools manufacturer. Fishburn Hedges, which has featured in the UK list since the start, is a communications agency.
|50 Best Large Workplaces*|
|6||WL Gore & Associates|
|50 Best Small/Medium-sized Workplaces**|
|9||Cushman & Wakefield|
|10||The Structure Group|
|*500 or more employees|
|** 50-500 employees|
Yet they all share one characteristic: their leaders have been in place for many years. Kenneth Iversen has headed Unimerco for more than 20 years, while Hans Erik Brønserud became chief executive of Middelfart Sparekasse in 1990. Henry Engelhardt set up what was to become Admiral in 1991 and still runs it. Fishburn Hedges is chaired by Neil Hedges, who co-founded the company in 1991. Javier Ellena has been chief executive of Lilly Spain since 1996.
“In today’s highly competitive business environment, this CEO tenure is rather unusual and, apparently, a strong factor for why these companies are able to stay on top,” says Mr Ellemann.
Underlining the benefits of CEO longevity, Mr Brønserud of Middelfart Sparekasse says the company has been working towards being the best workplace in Denmark since 1991. It has used social and ethical accounting as well as financial accounting since 1993, and has enabled employees to manage themselves since 1996.
Mr Engelhardt of Admiral says he knew from the start what kind of company he wanted to work for and has always tried to foster a culture of fun and fairness. “The main problem for employees working in companies with a high CEO turnover is the amount of change this often generates,” he says. “People are naturally afraid of change; it can lead to a feeling of insecurity and doubt over one’s own abilities.”
The FT’s annual Best Workplaces survey comes against the backdrop of an ageing workforce, a highly selective generation of young people entering the labour market, and big changes in the way we work, aided by rapid technological advances. Information technology and internet companies dominate the top of this year’s lists, an acknowledgment of their ability to pioneer new ways of working and to measure performance by output rather than hours spent in the office.
The European ranking, divided for the first time into large companies and small and medium-sized ones, has Microsoft, Google and Cisco taking the top three places for large companies. The biggest company in terms of employees is SAP, the German software group, with more than 15,000 people. Google is this year’s clear leader in the UK ranking.
More than 1,250 European companies with 1.3m employees participated in this year’s process, a rise of 25 per cent on last year, suggesting a growing desire to be seen as an employer of choice.
This may be because the benefits to the bottom line are becoming more manifest.
Take recruitment costs, for example. On average, each of the 100 Best Workplaces in Europe receives almost nine job applications a year per staff member, a rate coveted by companies that did not make it into the list, says Mr Ellemann. Google’s French operation employs 125 people, yet received more than 23,000 job applications in the past year.
“The Best Workplaces are able to attract the most qualified people and probably don’t even have to advertise.”
For complete rankings, see 100 Best Workplaces in Europe 2008