While the downturn established the credibility of management teams in organizations, it also exposed weakness in others
A great place to work is one where employees trust the people they work for, have pride in what they do and enjoy the people they work with
India’s Best Companies to Work For – Study 2010, is a part of our global Study to analyse and identify the best workplaces. Over 1.5 million employees in more than 3500 Organizations in over 40 countries participate in our global Study every year. This year 426 organizations registered for this Study in India (395 qualified for ranking), making it not just the largest Study of workplace culture in India, but also one of the largest in the world. Participating companies came from 20 different industries with IT & ITES, Manufacturing and Financial Services being the largest chunk.
What is a Great Place to Work®
Over 25 years of research by the Great Place to Work® Institute, San Francisco, reveals that it is the nature of relationship between the company and its employees that makes a company a great place to work. The relationship characterized between an employee and an employer can further be broken down into three fundamental questions. Do I trust the people I work for, do I take pride in what I do, and do I enjoy the people I work with? The relationship between an employee and his management – Trust; the relationship between an employee and his job – Pride; and the relationship between an employee and his peers – Camaraderie. A great place to work therefore is one where employees trust the people they work for, have pride in what they do and enjoy the people they work with. Building trust is the biggest challenge in becoming a Great Place to Work©. Trust is built when management has Credibility, which is a factor of integrity and competence, management treats employees with Respect by recognizing their personal & professional worth and contributions, and the organization is perceived to be a Fair employer with equitable sharing of opportunities and rewards.
Macro Trends over last 7 years
First, the good news. Almost all areas of workplace culture measured by our Study have shown significant improvement over the last 7 years in India. The most significant improvement has been in the areas of work-life balance with 13% more employees in the Top 25 workplaces agreeing that people are encouraged to balance their work life and their personal life in their organizations. Employee communication and collaboration has seen significant improvement with 7% more employees in the Top 25 companies endorsing the statements ‘Management keeps me informed about important issues and changes’ and ‘Management genuinely seeks and responds to suggestions and ideas’.
Fairness has emerged as one of the key differentiators with 7% more employees in the Top 25 best workplaces agreeing with the statement ‘If I am unfairly treated, I believe I will be given a fair hearing if I appeal’. Our studies across the globe reveal that the toughest facet of managing workplace dynamics is ensuring fairness in the form of equity, i.e., balanced treatment for all in terms of rewards and impartiality and absence of favoritism in hiring and promotions. The best workplaces however, differentiate themselves on this very aspect, which is evident from the fact that the score of Top 25 companies is 133% higher than that of the bottom 25 on the statement, ‘I feel I receive a fair share of the profits made by this organization’ and 83% higher on the statement, ‘Promotions go to those who best deserve them’.
However, a more relevant comparison will be between 2009 and 2010 that will contrast employee perception of their workplace culture when we were in the middle of the economic downturn, with employee perception as we come out of the downturn.
Background to the 2010 Study
The 2010 Study came on the back of our previous Study in 2009 which was right in the middle of the economic downturn. Our 2009 Study had shown that the best workplaces had managed to not only retain their employees’ confidence, but actually enhance it in the midst of a recessionary environment. Even though most organizations had implemented salary freeze, their employee perceptions did not suffer. Most employees were happy to keep their jobs.
The backdrop to the 2010 Study is, however, very different from the beginning of 2009. It was clear by the time employees started giving their feedback in the anonymous employee survey that we administer to a randomly chosen set of employees in the participating companies that the impact of the global downturn in India will be limited. Consumer spending went up from the beginning of 2010 and organizations which had shelved their expansion plans had to quickly change tracks and revive their growth plans, including hiring of key talent. The job market started looking up again.
While the downturn established the credibility of management teams in organizations, it also exposed weakness in others. Many organizations reduced employees. Indeed, 17 of the Top 50 Best Companies to Work For in 2010 had less employees in 2010 compared to the beginning of 2009. Globally, best workplaces like Google and NetApp were reported to have reduced employees. However, what exposed the pretenders from the really great workplaces was not what they did, but how they did it. One of the Top 5 companies in our 2010 list for example, not only organized counseling services for exiting employees, but also a farewell where exiting employees and senior managers spoke about their feelings. As the economy bounced back, they reached out to these employees and many rejoined. Contrast this with many organizations whose employees discovered that they were laid off only when their office cabs did not turn up to take them to office!
One would, therefore, expect that the employee perceptions of the best workplaces in 2010 would perhaps be even higher in contrast to the knee jerk responses of many other companies during the downturn.
That was not to be. The Top 25 Best Workplaces on the Institute’s List (which includes companies like Google, Intel & Marriott, apart from Indian companies like NTPC, Taj Hotels and Godrej Consumer Products) saw a dip of 5%, on an average, in their positive employee perceptions. This is the only time since 2003 that the positive perceptions of employees of the Top 25 have dropped in our Study. While this is lower than the 9% drop for the Bottom 25 companies in our Study, it is perhaps indicative of the soaring expectations of employees after a year of salary freeze. With galloping inflation and salary freeze, it was perhaps to be expected that the supervisory and below supervisory categories saw the maximum drop in their average positive perception about their companies – a drop of 5% and 7% respectively.
The two areas which showed the highest increase in our 2009 Study, perhaps due to low employee expectations, are precisely the two that have shown maximum decrease this year, namely, fair pay and fair share of profits.
Only three industries, namely, Biotechnology & Pharmaceuticals, Hospitality and Media managed to buck the trend and retain the level of their positive employee perception. The fall was the highest in industries like Construction and Real Estate, FMCG, IT/ITES and Manufacturing with positive employee perceptions about their workplace in these industries dipping, on an average by 5% to 7%.
The difference between Good and Great
Which are the areas where most organizations find it very hard to match the best workplaces? We call them the differentiators. They are derived by comparing average positive score of the “Top 25” best workplaces with the average score of “Bottom Placed 25” workplaces for each of the 59 statements in our employee survey – those with the highest percentage difference are these statements.
These areas represent issues or aspects that are at the core, and are difficult to do very well consistently, even for the great workplaces. They are a “tough ask,” but they seem to separate Average and Good from Great!
1. Equity – Fair share of profits/special & unique benefits & fair pay
A recent example is a financial services company where we did a series of focus group discussions to find out why employee perceptions are not very high. What transpired is that this organization has implemented a series of cost cutting measures, including salary cuts, during the economic downturn. But these measures continued even after the financial results started looking up. Employees who could see the top line and the bottom line improving could not understand why they were expected to continue to sacrifice. Organizations are often foxed by what can be considered as a“special and unique” benefit. In fact, many times it may not cost any money. For example, Qualcomm has a ‘Leave Donation Policy’ under which an employee can donate up to 5 days of his or her leave to a colleague in need. Paypal (a subsidiary of eBay) has a Personal Board of Directors for employees. This Board supports the employee in implementing his or her development plan.
2. Reliability – Management’s actions match their words/Management delivers on promises
No amount of ‘best practices’ and ‘next practices’ can be a substitute for old fashioned walking the talk. The best workplaces have excelled in feedback mechanisms even for the senior most managers. In a practice that is rapidly catching up Infosys has implemented ‘Ask Krish’. The Infosys online channel of asking questions to their CEO Krish is a transparent process where even the most uncomfortable question can be asked without fear of consequences. Other employees can vote to indicate which questions are more important. This is a process that this year’s number one best workplace, Google, has had for years.
When senior managers subject themselves to such open and transparent feedback, they have a fair chance of knowing if they are being perceived as someone who walks the talk.
3. Impartiality – People avoid politicking/favouritism/promotions go to deserving people
One of the most difficult areas to deal with, the best workplaces also struggle with lower employee perceptions. Why they are able to score over others is because of the robust processes they have to deliver justice. It is not that the best workplaces do not have value violations, in fact most have many examples even at the senior most levels. What sets them apart is what they do in such times. They almost always do the right thing. As I write, the global head of HP, Mark Hurd, has put in his papers after being accused of falsifying expense reports to conceal a “close personal relationship” with a contractor. The best companies use the same yardstick for the CEO as they would for any other employee. And they do not spend too much time agonising over such decisions. HP’s share price may temporarily fall, but they are likely to retain the trust of their stakeholders, not the least of which is employees, by being perceived to be fair.
4. Caring – Work-life balance
As discussed earlier in this article, this is one area that has seen the maximum gain in the best workplaces over the last 7 years. The best workplaces have moved beyond paying lip service to this area. Organizations are involving families by creating special programmes, building separate departments for quality of life of employees and incorporating work life balance in the scorecards of managers.
While the overall dip in positive employee perceptions in our 2010 Study can be explained on the basis of rising expectations, perhaps the biggest casualty of the downturn, and how we dealt with it, is in employees’ perceptions of impartiality at the workplace. Strangely, the Top 25 companies in our Study have seen an average drop of 6% for employee perceptions about avoidance of favoritism and politicking at the workplace, a drop which is even more than the average drop of all companies in the Study. This perhaps indicates the higher expectation levels of employees at the best workplaces, who are likely to be quickly disappointed. Beware of the pitfalls of articulating an “Employee First” policy if you cannot live by it when the chips are down. A key learning from this year’s Study is that even the best workplaces cannot take their employees for granted and employees’ trust is only a loan that can be taken back.