Glassdoor’s recent report, Job & Hiring Trends for 2020, offers hope for what lies ahead in workplaces across the country and around the world. Chief Economist Andrew Chamberlain predicts “a new wave of culture-first thinking among business leaders, elevating employee engagement to the status of core business focus for a growing number of companies.”
Even if you’re skeptical, having heard too many failed promises from executives, I have good news for you. A new study from my company, Gapingvoid, shows that executives even have selfish reasons to make this change happen.
When business leaders make their companies more employee-centric, they stand to reap big rewards.
Last year, the members of the Business Roundtable, top executives from nearly 200 companies, sparked a great deal of chatter and speculation when they issued a new “Statement on the Purpose of a Corporation.” They announced an end to their position that “corporations exist principally to serve their shareholders,” and vowed a “fundamental commitment” to all stakeholders, including employees.
The announcement was, naturally, met with some doubt. After all, in this shareholder-obsessed era, CEO compensation has skyrocketed 940% since 1978 while worker compensation increased only 12%.
But our study finds that CEOs of more employee-centric companies do better than their peers, making higher salaries on average. And that’s just one way they come out ahead.
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Our study focuses on businesses with what we call “high-purpose cultures.” These businesses are at once both employee- and customer-focused. They make this clear through their decisions and actions, not just through statements.
When a business aligns around a high-purpose culture, employees know it. It shows up in the ways they describe their daily experiences. Moreover, well-designed cultures act as management systems that work to ensure consistent organizational outcomes. Having spent more than a decade working with businesses across numerous sectors to help them build these kinds of cultures, I’ve seen the night-and-day difference they can make.
I’ve also seen that Glassdoor can serve as a powerful sign of whether or not any given company has a high-purpose culture. To be among Glassdoor’s best-rated companies, a business must be popular with employees. And as Glassdoor’s study shows, employees rank culture as the most important factor in determining their satisfaction. (I’ve found that companies’ own surveys are often inaccurate on such matters due to assessment bias and employees’ fear of repercussions.)
Our analysis found that businesses with high-purpose cultures beat the competition. They experience higher financial returns; better customer satisfaction scores; increased employee retention; greater innovation and greater competitive advantage.
All this makes sense. Research shows that happier, more engaged employees are more productive and innovative, and more likely to stay with the company.
What about the CEOs themselves? When they successfully implement these kinds of cultures, CEOs receive higher compensation as a percentage of corporate revenue. They also get greater numbers of positive media mentions. And they experience increased respect by employees and communities, as often indicated by their presence on lists of the most admired CEOs.
In some cases, we’ve found that privately-held companies are able to more quickly build high-purpose cultures. Their structures can allow for greater leeway in focusing on long-term goals, free from the quarterly view that publicly-traded companies are compelled to take.
But any business, of any size, can make these kinds of changes. In our study, we point to Microsoft, which went from years of stagnation to great growth when new CEO Satya Nadella stepped in and focused on culture. He has a 97% approval rating on Glassdoor. HR Dive recently named Microsoft company of the year, noting that, “Companies that prioritize employees and their communities stand out.”
As you look ahead to the next stage in your career, consider working at a company that shows a genuine commitment to making employees’ welfare a staple of its operations. And when you go for an interview, I recommend that you ask the hiring manager something like this: Where does this company stand on the Roundtable statement, and what steps is it taking to align with that vision?