The chefs and nap rooms are pretty nice perks, but that’s not what makes employees happy.
Fortune’s annual “100 Best Companies to Work For” list provides useful insights into how we collectively view corporate culture. Most of us flip through the pages or click through the screens hovering over pictures and blurbs highlighting gourmet chefs, nap rooms, yoga instructors and other signifiers of “great” workplaces.
That said, the true “Best Companies to Work For” have the right culture and aren’t just great workplaces.
Fortune itself is aware of this, even assigning one of its top writers to argue that being a “Best Company to Work For” has little to do with the jaw-dropping (and mouth-watering – trying biting into Google’s lavender pecan cornbread) employee perks these organizations offer.
“Knockout perks aren’t the reason any company makes this list,” writes Fortune’s Geoff Colvin. “The essence of a great workplace is just that: an essence, an indispensable quality that determines its character.”
Personally, I’m always thrilled to see the “Best Companies” list. I never stop being impressed that a publication like Fortune, which for decades has tracked companies based on “how much” (revenue, market capitalization, etc.), also makes such a sustained effort to measure the more human virtues of workplace quality.
Being the “best” on Fortune’s list (or just aspiring to one day make it) means you’re on the right track. It shows you care about your people, appreciate their passions and want to make them comfortable in the workplace. Every yoga class and gourmet meal is an investment in doing business in a more human way, a big step toward having the right corporate culture.
Merriam Webster’s 2014 “Word of the Year” – the most searched term on the dictionary’s website – was “culture.” Examining culture is deeply tied to the current moment. Why? In our era of ever-growing interconnection, we can peer deeply into an organization better than ever, learn about its past and present, discuss its behaviors and even advocate for change.
Think about the way we react when something goes wrong within an organization today. People no longer tend to accept surface-level explanations. When a student is sexually assaulted on a college campus or an unarmed man is killed by police, people now talk about “rape culture” and “police culture.” We want to know about the larger context that’s informing individual thinking and the forces that animate individual behavior. We’ve come to understand that attitudes, actions, mindsets and beliefs come from a deep place in our collective character.
We’ve grown less interested in bad apples and much more interested in the trees that create them. “Culture” is our word of the year because we want the deepest explanation possible. Although we don’t automatically ask the same questions when something goes spectacularly well, we ought to. In some realms, like sports, this shift has already started.
The San Antonio Spurs have demonstrated an incredible and rare record of long-term success in professional basketball. Though other franchises want to imitate this, instead of rushing to poach the Spurs’ star players, smart teams are doing their best to reinvent their entire team system (e.g. how they hire, scout, coach, budget, train, play, recruit free agents, etc.) to emulate the Spurs culture, which values unselfish play above all else. While it’s impossible to duplicate the Spurs’ exact culture, learning from the Spurs is already paying off for this year’s regular season leader, the Atlanta Hawks.
Organizational culture runs just as deep as individual human character. And character, in the words of Heraclitus, determines fate. Just as one family can never duplicate another family, no business can exactly replicate another company’s culture. Business is about gaining proprietary advantage by doing that which you can’t copy, right? Since culture is potentially the most differentiated asset a company owns, shouldn’t leaders get a lot more intentional and deliberate about shaping, nurturing and scaling it? Too often, we get stuck on shaping and managing the things – benefits, perks and workplaces – that exist only on the very surface of culture.
That said, any emphasis on culture is a promising sign. The “Best Companies to Work For” list chronicles companies that care about their people and have taken immense strides toward humanity. But those of us in the corporate world have far more progress – and difficult culture-building work – ahead of us.
The first step in this work is cleaning house and getting rid of the ghosts of old and outdated thinking.
The words “how much” have always haunted business, politics and our personal lives: How much revenue can we squeeze into this quarter? How much debt can we tolerate? How much growth can we generate?
But “how much” questions aren’t the right questions – not in an ever changing, increasingly interconnected world, and not in a business realm where competitive advantage cannot be sustained via out-producing, outspending or out-selling. Instead of reflexively asking “how much,” we should examine “how”. Not just “How much square footage can we afford for the new nap room?” but “How transparent is our company?” or “How fair is our decision making process?” If your company is really the “right” place to work, you don’t just measure “how much”, your measure “how” to create organizations, societies, institutions and businesses that mirror our deepest values: trust, collaboration, resiliency, and freedom.
A growing body of research shows us that it is exactly the sort of work that is now more important than ever.
In his article, Colvin points to a Wharton analysis showing that a portfolio of publicly listed organizations on Fortune’s Best Companies list (from 1984 until 2009) surpassed its expected rate of risk-adjusted return by 3.5 percent annually. My own firm LRN’s research into “How” metrics, indicates that 93% of employees at businesses with high-trust and values-based cultures observe financial performance greater than their competitors; only 48% of those at low-trust organizations observe the same.
I appreciate that so many different entities—Big 4 accounting firms, tech giants, top B-schools, business publications and even dictionary publishers— are beginning to point to the importance of workplace environment and culture. But recognizing the importance of a great workplace is comparatively easy. Anyone can buy a Ping-Pong table for the break room or bring in a beer cart on Fridays. Building the right culture in your business takes years of hard work, because you have to build every facet of it for yourself— from the ground up. Leaders who commit to building the right culture better prepare to take their lumps: it isn’t easy, and it isn’t or the faint of heart.
But we can, and need to, go deeper. Most of our collective thinking and doing has barely scratched culture’s surface; it focuses primarily on the relationship between employee and company. A great workplace does not guarantee that the company has great relationships with its customers, investors, communities or the environment. Nor does a high work/life quality (something nearly all of us would very much want) necessarily bring about a high-quality employee-employer relationship. For that, deep, uncomfortable questions need to be asked: how trustworthy is our company? How do we convey and instill a sense of values throughout our organization?
Efforts like Fortune’s “Best Companies to Work For” list have helped show us that we can measure organizations in ways that extend beyond revenue, shareholder value and market share. Now that we’re doing this, we might as well go all the way to the core. Building the “right” kind of organizational culture requires us to recognize and measure the “right” foundational elements, such as:
• An organizational purpose that inspires employees and animates the culture;
• Leaders who also inspire employees and elevate their behavior;
• The most human and sustainable organizational values that recognize business as a deeply human endeavor and that call for employees and stakeholders to endeavor together in a healthy and long-standing way;
• Behaviors that generate trust;
• A recognition that building the right kind of culture requires a journey, one worthy of the dedication and loyalty we ask of the humans who work for our companies.
Managing culture in an intentional, strategic and deliberate way requires us to get to the human core: that which fundamentally and enduringly gets us out of bed in the morning and guides us through our days and lives. There is no short cut for building or rebuilding a corporate culture. You can’t just hold a seminar or put up a poster and call the problem solved. What Aristotle said about an individual’s excellence – that it is not a single act, but a habit – applies to organizations as well. The ultimate winners will start developing and strengthening these habits because most companies now know how to make great workplaces. What distinguishes the best organizations from the rest of the pack, are leaders who understand the depth that separates a great place to work from the right place to work.
Originally published on Fortune.com.