Why Should You Treat Employees Better? It’s Actually Pretty Simple

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Mar 11, 2015

Fortune’s Best Companies to Work For list is out once again. What makes these companies special?

The Negative Nellies will say it’s because of perks – free food, foosball, nap rooms, etc. – offered by the well-funded tech companies that tend to top the list.

But that’s not true. The list is also populated with retail outlets famous for slim margins and manufacturing companies not often known for their splurges on employees.

What “Best” companies do better

But these companies do have one thing in common. They understand the value of their workforce.

  1. Better stock performance – Companies on the Best Companies to Work For list, outperform the S&P 500 by a ratio of 2 to 1. Even more dramatically, companies in the Parnassus Workforce Fund include many of the 100 Best Companies To Work For as well as others that “genuinely cared about their employees as people, not just hired hands.” The results are indisputable: In eight years, the fund has had a 9.63 percent annualized return (as compared to the S&P Index earnings of 5.58 percent in the same period).
  2. Retain top employees on staff longer – Why leave when you know your work is appreciated and how it contributes to a bigger mission? That’s a consistent theme in companies on the list – employees are quite clear on the value and importance their own contributions and roles. And when that’s your reputation in the market, you also find it much easier to recruit top talent from people fighting to join your team.
  3. Increase employee energy – The link at the beginning of this post goes to a Huffington Post article that quotes Tony Schwartz, “The simplest measure of a great place to work is how it makes employees feel to work there, day-in and day-out. That requires meeting the four core needs of their employees: physical, emotional, mental and spiritual.” Those four drivers give employees the energy they need to continually outperform expectations.

They stay when they’re appreciated

People don’t leave where they are appreciated. Given the right tools and energy to do their work, they engage more deeply and do that work better, more efficiently and with more innovative thinking.

Investing in resources that clearly communicate to employees, “Your efforts are important and valued. We see the work you’re doing and we appreciate your contributions. More importantly, we value and appreciate you as an important member of our workforce.

Is your company a “best company to work for” – whether you made the official list or not? What makes it great?

This was originally published at the Compensation Café blog, where you can find a daily dose of caffeinated conversation on everything compensation.

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