For All Accelerates Performance

So, high-trust workplaces outpace business rivals. But our latest research shows organizations must clear an even higher bar to reach their full potential.

As great as the 100 Best Companies are, they typically have had significant gaps in the employee experience between groups of people. For example, there are sizeable gaps in the work experience between men and women, salaried workers and non-salaried workers, and executives and individual contributors, to name a few of these differences. These gaps mean not everyone is having a positive experience, which means they are not likely to bring the best of what they have to offer to the organization.

Figure 4
High-Trust Hospitals Get Healthier Marks

At the same time, we are entering a new frontier in business. This largely uncharted territory is about developing every ounce of human potential, because every employee matters in an economy that is about connectivity, innovation, and human qualities like passion, character, and collaboration.

Societal and technological changes are creating new opportunities and challenges for organizations in the competition for loyal customers and talented employees. The millennial generation, in particular, is a highly diverse group that expects meaning, growth, and balance at work. A reputation for developing employees and for welcoming people from all backgrounds and walks of life is increasingly crucial to attracting and retaining the best team possible. In short, the emerging business climate compels organizations to create an outstanding culture for everyone.

Our latest research backs the idea that organizations must create Great Places to Work For All to thrive. For one thing, we found Great Places to Work For All leave competitors in the dust. In studying employee surveys from the 2017 100 Best and the non-winning contender companies, we found the more consistent an organization is on metrics related to innovation, leadership effectiveness, and trust, the more likely it is to outperform peers in revenue growth. In particular, companies in the top quartile on these metrics—which we call our For All Score—enjoy more than three times the revenue growth of companies in the bottom quartile (see Figure 5).

We also found Great Places to Work For All grow their revenue faster than companies that simply show high levels of trust on average.

Up until this past year, we measured the employee experience by examining the overall, average response to our Trust Index Employee Survey. This “old” approach—which has been the foundation of our ranking of the FORTUNE 100 Best Companies to Work For list for the past 20 years—didn’t take into account statistically significant gaps that may exist between demographic groups.

Figure 5
Great Places to Work For All Grow Revenue Faster
Part 1

In 2017, the organizations that ranked highest according to the new For All methodology proved to be a different set of companies than those that ranked highest when using the traditional methodology. And the top tier of these new For All companies grew faster than the best companies determined by our traditional methodology. We found 13.7 percent median annual revenue growth for the top quartile of companies on the For All Score ranking. That compares to 12.5 percent annual revenue growth for the top quartile of companies ranked by our traditional way of gauging the employee experience (see Figure 6).

This follows other evidence from us and others that inclusive cultures provide more value to shareholders and all stakeholders:

Figure 6
Great Places to Work For All Grow Revenue Faster
Part 2

In a 2015 report, consulting firm McKinsey examined 366 public companies across a range of industries in Canada, Latin America, the United Kingdom, and the United States, and found companies with more diverse workforces perform better financially. Gender-diverse companies were 15 percent more likely to outperform peers with little gender diversity, while ethnically diverse companies were 35 percent more likely to outperform less-diverse peers.

A 2016 study by the Peterson Institute for International Economics involving nearly 22,000 firms from 91 countries found “the presence of women in corporate leadership positions may improve firm performance” and that “the payoffs of policies that facilitate women rising through the corporate ranks more broadly could be significant.”

Our own research in producing the 2016 Best Workplaces for Diversity list showed that the most inclusive workplaces experienced average annual revenue gains 24 percent higher than their peer companies certified by Great Place to Work.

Our study suggested that just hiring a demographically diverse workforce will not by itself boost results. Simply increasing headcount diversity did not show a strong connection to revenue growth. Instead, our data showed that employees’ experience of genuine workplace inclusion—as seen by high, consistent survey scores in areas such as fair treatment and a caring environment—is a better predictor of revenue growth than diversity alone.

Leading companies, including many FORTUNE 100 Best Companies, are on the path to For All workplaces. They are working to close the gaps in the employee experience. And they are seeing payoffs.

Take software giant Salesforce, a perennial 100 Best Company. CEO Marc Benioff and his team invested $3 million in 2015 to address a gender pay gap at the company. The move, along with a host of other equality efforts, has reaped rewards. Salesforce is becoming a beacon for talented women in technology, and it’s enjoying the fruits of a more fully engaged workforce. The percentage of women employees who say they want to work at Salesforce for a long time jumped from 85 percent in 2014 to 93 percent in 2016. And 92 percent of female employees in 2016 said people look forward to coming to work at Salesforce, up from 85 percent in 2014.

Salesforce has not rested on its laurels on the gender pay issue. It conducted a similar pay equity study in 2017, investing $3 million more to close compensation gaps. Perhaps not surprisingly, the company has been growing faster than its rivals, and it dominates the customer relationship management software market.

But the Golden State Warriors may be the winningest of them all these days—and not just on the court. With its “Strength in Numbers” culture as a foundation, the franchise has been raking in business rewards as well. The value of the team rose an NBA-high 37 percent to $2.6 billion in 2017, leapfrogging from sixth place to third place in the league.

With their season ticket renewal rate at 99.5 percent, the Warriors felt confident enough in 2017 to raise season ticket prices by 15 to 25 percent. And the organization landed a $300 million deal with Chase to name the Warriors’ new stadium—a record price for a U.S. arena.

Warriors co-owner Joe Lacob caught some flak for boasting in a 2016 New York Times profile that the organization, with its “Silicon Valley precepts” such as open communication and collaborative decision making, is superior to its peers. “We’re light-years ahead of probably every other team in structure, in planning, in how we’re going to go about things,” Lacob told the Times. Lacob may be guilty of bravado, but there’s little arguing with the way he and his partners have seen their investment blossom. They bought the team for $450 million in 2010, meaning their ROI as of 2017 was a gain of nearly 500 percent.

The Warriors culture is where businesses must go as well. The business case for a Great Place to Work For All isn’t merely a two-point slam dunk. It’s better. It’s a three-point splash.