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The ‘Best Companies to Work For’: HR’s Catch-22

Is your company a best place to work? And what does that really mean?

I’ve been thinking a lot about the new Fortune 100 Best Companies to Work For list that was released last week.

These lists are an annual tradition and you might wonder if the grass is really greener at a “best” company. Or if you’re in HR, you might still be recovering from the months-long campaign to get employees to take the survey for your own company — more on that later.

I’ve been crunching some of the numbers lately, and I’m seeing a shift in which companies show up on the list.

Here’s the data:

  • 14 companies that made the list in 2018 did NOT appear on the 2019 list. Many of those companies had dominated the list for years before they *poof* disappeared this year — we’re talking notable employers such as Nordstrom, AT&T, Aflac and American Express.
  • Google sat at the top of the list for four years in a row (2014 through 2017), but they have completely dropped off the list since then.

Those numbers show me that some companies have just stopped applying. Why?

The answer is pretty simple. It turns out that being a “best place to work” is HR’s Catch-22. We all want to be recognized as a best place to work — but our workplaces can stop being one of the best once we make the list.

I know how it sounds. But here’s what I’ve found.

The Metrics Are Inherently Flawed

Organizations worldwide have rethought the traditional annual performance review. We recognize they’re an antiquated model for providing feedback. Annual reviews gives us a single snapshot in time that may not give a full picture of an employee’s strengths and opportunities. That’s why organizations are advocating for continuous feedback between employees, managers, and project teams.

As employees, we expect customized, tailored feedback presented more frequently. No two employees are the same, and personal development is enhanced when we make sure development experiences are personalized, timely, and relevant.

That’s why I have two issues with the Best Companies lists’ approach. First, we don’t have the same metrics for employees across departments, so why would we have the same metrics for companies across industries? It goes beyond comparing apples with oranges; it’s like comparing apples with french fries.

Second, a two-week survey once a year does not accurately portray an organization’s “Best-ness.” When you take that once-a-year snapshot, what’s happening at the company? Did you just report earnings? Go through a layoff? Acquire a competitor? Divest an underperforming asset? A snapshot does not make for a full picture, and I’d implore the Great Place to Work (who administers the Fortune survey) to rethink their methodology. Annual reviews aren’t good enough for employees, so why are we still using them for organizations?

Culture Doesn’t End With Winning

Organizations pride themselves on company culture and the strength and veracity of their employer value proposition. In theory, a “Best Places to Work” list is a recognition of achievement and arrival, but culture is fluid, personal, incredibly difficult to encapsulate, and not easily changed.

Being on the list sounds like a positive thing for an organization. Think about the attention it can bring your business, particularly in light of a very tight labor market.

But I know from firsthand experience that maintaining one’s place on a list often results in unintended consequences. Employees are savvy enough to weaponize placement with a simple question: “How do you want me to answer next year’s survey?”

The pressure on an organization to maintain its place on the list may result in increased escalations and one-off exceptions to tried and true policies. We all have to make exceptions here or there, but inviting the exceptions is a mistake.

So making the list may require acquiescing to employees to maintain positioning and presence? A cultural Catch-22, indeed.

You’re Riding An Emotional Rollercoaster

So, let’s say you make the list one year. You put out press releases, you unfurl a banner on the side of your building, you high-five and celebrate.

The next year, you open the list when it’s announced and you scroll…and scroll…and scroll. Aha! There you are! At the…bottom…of the list. Or perhaps you’ve dropped off the list entirely.

What does it say to your employees and your customers if you make the list again, but you’re ranked much lower? What does it say when you disappear entirely? Was making the list worth it? What does that lower ranking mean about how working at your organization has changed over the past year? And if you intentionally decided to stop participating, do you put out an internal announcement explaining why?

Take the example of The Container Store over the past four years. As an HR professional, I would walk into my local store and observe in-store signage proudly displaying their rankings, but having moved from #14 in 2016, to #49 in 2017, to #93 in 2018, and fully off the list in 2019 must be incredibly painful for all involved.

When you make the list, you’re signing up for a rollercoaster of emotions. Which brings me to my final point…

It’s Just a List

A list is just a bunch of words and numbers. And, frankly, you don’t need a list to tell you whether your company is a great place to work.

I met with a CHRO recently who has been in her role for just over a year. When I asked whether one of her objectives was to make this list, she laughed in response. She told me, “There are a thousand ways every single day that I can demonstrate we’re a great company. That’s what gets me up in the morning. That’s my true north. That’s why I do my best to connect with the wonderfully diverse group of employees who make this organization possible.” And her most profound conclusion?

“I don’t need a list. I need to listen.”

With over 25 years of experience, Mark Stelzner has worked for organizations of every size and vertical. He has spent his career fostering relationships through attention to detail, natural curiosity, and a self-deprecating sense of humor.

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5 Comments

  1. Bob Merberg on Feb 28, 2019 at 1:13 am

    Excellent post, Mark. Very well thought-out and articulated. I think most of your points are spot-on, though, in the end, I draw a somewhat different conclusion. I’ve been involved with Fortune Great Place to Work applications for a few companies and, based on your knowledge and insight, it’s clear that you have, as well. Often, critics of the list suggest that it’s capricious or based on sponsorships. Last I checked, the survey distributed to a randomized selection of employees is responsible for 70% of the employer’s final score. As for the other information the company submits… I don’t recall all of it, but aren’t there some metrics that can be revealing (albeit not conclusive) of longer-trends, such as turnover rates?

    In my experience, being on the list really doesn’t make much of a difference in terms of talent acquisition — until your company hits the #1 top spot, at which point the quality of applications will be transformed 100%. Of course, there’s only one top spot each year. Consistent with your point: The publicity from being anywhere below the top 10 doesn’t offer any advantages, in terms of talent acquisition or customer loyalty. Personally, I’d be inclined to advise a company that achieves #1 to stop applying.

    Regarding the transience of the survey questions. It’s an excellent point. This is a phenomenon well-known in surveys of employee happiness/well-being: Responses tend to be influenced by what’s going on (externally and with the respondent’s mood) at the time the survey is answered. There are some ways around this (“How happy have you felt over the last 4 weeks” evokes more meaningful responses than “How happy are you?”). How time-sensitive are the questions on the Best Places to Work questionnaire? It’s a good question for the Great Place to Work Institute. It’s something that they should have measured — and they may have.

    Your comment “organizations are advocating for continuous feedback between employees, managers, and project teams” reminds me that you wisely associate with thoughtful, evidence-oriented employers. Based on my limited observations, most employers are doing annual performance reviews and annual engagement surveys (or not doing them at all), usually accompanied by some talk about how feedback should be ongoing.

    In my experience, the advantages of Best-of lists (and awards) include that they can serve as important reminders of *objective* industry standards for excellence. Your CHRO example is fortunate to have clarity about her “true north.” But I hope it’s not only *her* true north. External lists can serve as aspirations that an entire company can get onboard with. I’ve known CHRO’s whose “true north” is consolidation of their own power within the company. It doesn’t help anyone but themselves.

    Another advantage is that external validation can be a point of pride….energizing to employees. It’s all well-and-good for a company to say “we don’t care what anyone else thinks, it’s what we think about ourselves that counts.” The question is — does this belie the attitude of leaders who are self-assured and clear about their standard for excellence… or is it the utterance of leaders who don’t understand the value of recognition?

    I’m not naive. Lots of stuff can be fabricated on award applications. And many companies have appeared on Great Place lists and turned out to be really Bad Places. In the end, I’m neutral. I suspect that a really great place to work *can* get on the list *and* have it provide added value to the company and the employee experience. And less qualified companies may manipulate their way onto the list, and it will be detrimental in the end.

    Either way, thanks for the thought-provoking post and the forum for me to share a different (but only somewhat different, I think) point of view.

  2. Mark Stelzner on Feb 28, 2019 at 2:08 pm

    What an amazing and thorough response, Bob. Your deconstruction of the points and thoughtful observations truly lends a balanced perspective to the discussion. Thank you!

  3. Jonathan Goodman on Mar 4, 2019 at 7:20 pm

    I think you’ve put your finger on something important here. As a market watcher and student of market cycles in HR tech, I look at the “best companies to work for” lists as an expression of a moment in time. And that moment is passing.

    Here’s how I think about it.

    Before our collective obsession with being the best place to work, we were obsessed with winning the war for talent. After years fighting this war, we realized even if we won by some measure, the people we won did not like the place where they worked. We saw evidence for this in engagement scores. We set about to fix this. The best place to work phenomenon gave us a way to channel that energy and ostensibly measure progress. But, as your critique points out, it’s a better snapshot than a long term strategy.

    Along the way, we also realized that even if we win the war for talent, and have a best place to work, there’s still the matter of the work itself. How’s the day-to-day work experience and productivity of the business going? Well, we realized there are lots of issues to fix there too. And HR has an opportunity to step up here.

    We’re now hyper-focused on creating meaningful “experiences” in the workplace. To me, at least, this is a different project than being named or evening creating the best workplace.

    I think we’ve seen the peak of the “best place to work” obsession. We needed to pass through this phase. We learned some things that will and should endure: being attentive to the unmet needs of employees, thinking about culture, engagement, all well-being all benefited from this era and the related market-cycle.

    Final thought: Looking at these best place to work lists, I’m reminded of Goodhart’s law in economics. “When a measure becomes a target, it ceases to be a good measure.”

    • Mark Stelzner on Mar 4, 2019 at 8:15 pm

      Thanks for your thoughtful reply, Jonathan, and the Goodhart’s law quotation was a perfect summation of the situation at hand. I hope you’re well!

  4. […] campaign to get employees to take the survey for your own company — more on that later. Explore the good and the bad of these coveted lists with Mark Stelzner from AI […]

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