In 1991, American consultant Robert Levering created The Great Place to Work Institute with the goal of helping companies create a better working climate and increase employees’ loyalty and motivation. Today, companies in 58 different countries apply to be evaluated and 25 countries publish their rankings of “the best companies to work in.” Peru has participated in this study for two years. On both occasions, the security firm J&V Resguardo has topped the list. Yet the company does not offer substantial salaries to its more than 2,000 employees, most of whom are private security guards who put in exhausting days and at times risk their lives in an emergency. So why is the company such an attractive place to work?
According to the model used by a Great Place to Work Institute, the keys to becoming a company with the best working climate are a high level of trust between employees and management, pride in the workplace and team spirit. J&V Resguardo, says the Institute, fulfills those three requirements. Javier Calvo Pérez, the company’s manager, emphasizes that employees rank especially high the fact that J&V Resguardo will be there for them in times of need. The company, for example, has a crisis committee which has, among other things, acquired a prosthesis for the son of an employee and helped two other children get scholarships to study in a school for young people with special needs.
Moreover, Calvo makes an effort to know personally more than 90% of his co-workers who have complete freedom to call or email him about work-related issues. This environment is reinforced by an educational program – between 120 and 180 hours each year – as well as by the company’s emphasis on congratulating people in public for good work and on promoting them from within. Arrangements also exist for training workers and their family members in computer skills and helping them obtain low-cost loans.
The Peruvian rankings comprise 25 companies, of which eight are of Peruvian origin. Three of those are on the top-ten list, including the software giant Microsoft (second position), the hotel chain Marriott (fourth position), the telecom company Nextel (fifth spot), the mining exporter Cormin, which belongs to the Trafigura Group (sixth position), and the cosmetics firm Natura, which is of Brazilian origin (ninth spot). According to El Comercio, the Peruvian daily newspaper, these companies seem to share such key qualities and practices as a relaxed environment, the provision of rewards for good performance – in the form of shares and stock options as well as promotions – and, above all, a leadership style that fosters personal initiative.
In all, 73 companies signed up to be evaluated. Manuel Cubas, coordinator of the master’s program for personnel management at the University of the Pacific, notes that “in Peru there are approximately 10,000 companies. It would be interesting to do a study that is much broader, which includes perhaps 500 or 1,000.” Nevertheless, Cuba stresses that the Great Place to Work study has spawned a system to measure the work environment in Peru and has led to greater awareness of the importance of such an environment to employees.
Methodology and Origin of the Rankings
According to Ana María Gubbins, Great Place to Work’s representative in Peru, the main tool in the study was an anonymous survey with 64 questions applied to a representative sampling of more than 14,000 workers. Robert Levering, the American consultant, designed the method that was used to produce these questions. Because the goal was to find out how employees perceived labor relations in their companies, the questions revolved around five fundamental concepts: Credibility, respect, impartiality, pride and camaraderie. These concepts are related to the definition of an excellent work place that Levering proposed: A place where employees trust in the people for whom they work, feel proud of what they are doing, and enjoy working with their fellow employees.
The origins of this system of evaluation date back to the 1980s when Levering took on the task of working with Milton Moskowitz on a book entitled, The 100 Best Companies to Work For in America. Published in 1984, it rapidly became a best-seller. Six years later, Levering founded the Great Place to Work Institute in San Francisco, which is dedicated to offering advice on topics related to managing human resources. Little by little, the institute has refined its methodology, especially after 1997 when Fortune magazine proposed that it measure results on an annual basis and publish them in its pages.
It didn’t take long for these reports to become internationalized. Today, they are used in 58 countries throughout the world and in the 25 countries where national lists are published. Latin America took the lead over Europe and Asia, with Brazil as the pioneer country. The study debuted there in 1997, and its reception was so warm that about 500 companies now apply to be examined, hoping that they will come out among the 100 best. The next country in the region to join was Chile. Ever since 2001, Capital magazine has been responsible for publishing an annual account of the 25 companies that are especially attractive for workers in that country. Subsequently, Argentina, Mexico and Peru signed up. This year Colombia became the latest country to join the list.
The Rankings: A Relative Value
Roberto Rothschild, head of the department of human resource management at Centrum, the business school at the Pontifical Catholic University of Peru (PUCP), is less enthusiastic about the publication of these rankings. In his opinion, Great Place to Work seems to be trying to sell a myth by presenting worker satisfaction as a value in itself. “Do you join an organization simply to get along well, just to feel happy? Maybe they’re not paying you to get results,” he says.
Rothschild notes that what might be considered “an optimal working environment” is not always the most suitable one for a company. He recalls a study about leadership by psychologist David Goleman which identifies six styles of leadership. One of them is the “coercive” style – the hard hand. According to that study, various types of leadership can be useful for a company depending on its current financial condition. Apart from the leader who tries different approaches – and knows how to combine them as a function of current needs – the coercive leader often gets better business results, notes Rothschild.
You cannot use the same yardsticks to measure every company because an approach that gets positive results for one company does not necessarily work for another, he adds. “Each company defines those competencies that its personnel must have in order to achieve its corporate goals. There’s no reason why they have to be the same [competencies]. By the same token, the company’s strategy for stimulating those competencies can vary.”
Manuel Cubas, a professor at the University of the Pacific, agrees with several of those ideas. “Let us suppose that you have to manage a company that is going through a terrible financial crisis. At a time like that, you must adopt a managerial style that is strong and strict. That’s not the time for asking people how they feel, or what they prefer,” says Cubas. He also agrees that the components of working climates vary from one company to another. “There are companies where it suddenly becomes important to work until 11 every night, including Saturdays and Sundays. Not everyone is going to accept that pace. You will have to hire people who are ready to work long hours, who have lots of energy. Those kinds of people will be happy working until 11,” he says.
Nevertheless, Cubas takes a more optimistic view regarding the impact of worker satisfaction. For him, it is obvious that business people who offer a good working climate do not do so in order to be “good people,” but because this sort of environment has repercussions on business performance. According to Cubas, after drawing up a strategic plan and establishing goals, companies should determine the characteristics of the people responsible for carrying things out. And they should make an effort to find the right people to meet those goals. If I want to have people lining up with the company, I have to be sure that they are happy in their work,” he says.
In general, Cubas observes that those companies that make up the Peruvian list of the Great Place to Work Institute are successful in their respective industries. He believes that this could result from leadership that is efficient and is interested in maintaining a good working environment. For precisely that reason, although Cubas doesn’t mention it, Fortune magazine published an article in May 2002 that confirmed the relationship between labor climate and economic performance. The article alluded to a study by the Frank Russell Company examining the stock market performance of organizations that showed up on the rankings of the “100 Best Companies to Work For in America.” The study found that, beginning in 1998, those companies’ annual profits were about 10.6%, almost double the results obtained over the same period by the 500 largest American companies comprising the Standard & Poor’s Index (S&P 500).
Watson Wyatt Worldwide, a consulting firm, also analyzed the link between human resources practices and company progress since 1999. That survey, which took place two years ago among 500 companies, discovered that stock prices of corporate groups that were “friendly to their employees” grew by 64% from 1996 to 2001, compared with a growth of barely 21% registered by “less friendly” companies during the same period.
This connection probably helps to explain why many leading companies appear on the lists published by Great Place to Work in several countries around the world. One such case is Microsoft. This year, in addition to occupying one of the top spots in the Peruvian rankings, Microsoft also headed the list in Germany. It was among the top-ten companies in the European Union and it was one of the top picks in the United States. Microsoft also occupied the fourth spot in Chile. Something similar happened with Procter & Gamble, which shows up on the lists of the European Union, the United States, Korea, Chile and Colombia. Other names on the Peruvian list that are repeated in many countries include Merck, Sharp & Dohme, Ernst & Young, Merck & Co., and Natura.
Challenges for a Developing Country
For his part, however, Cubas is certain that most Peruvian companies don’t even have a strategic plan, and that the companies that do have such a plan usually don’t share it with their staff. Many Peruvian business leaders are afraid to divulge their strategic plan to their own people because they are afraid that it will be sold to the competition, he says, adding that this shows a great lack of confidence in the honesty of the workers whom they themselves have hired. “If there is no confidence, people become discouraged. In contrast, when people participate in the strategic plan, and when they feel that something belongs to them, they defend it and fight to take it forward,” he suggests. The largest companies in the world communicate not only corporate goals to their employees, but also quarterly results, he states.
In addition to being a professor, Cubas is also vice-president of DBM Peru, a consulting firm specializing in human resources and outplacement. In Peru, says Cubas, business leaders are afraid to reveal the company’s economic transactions to their own workers because they feel that it could trigger demands for higher salaries. He knows of one company where managers are forbidden to congratulate workers for this same reason.
According to Gonzalo Galdos, director of the graduate school of business administration at the Peruvian University of Applied Sciences (UPC), a sponsor of the rankings, Peruvian management has lost credibility among its own personnel in recent years. To recover, he says, companies must be careful to offer more reports about what is going on. They must keep their promises, and they must work on communication. This approach is critical because confidence is a more important factor in the labor climate than salary and compensation, he adds. Precisely for that reason, companies in crisis have no excuse for neglecting the work environment.
Nevertheless, there are signs of progress in these areas. Galdos notes that there has been a significant growth in demand for courses that deal with motivation, leadership and personnel management. Another sign: Manuel Cubas believes that more and more companies are interested in contracting for executive relocation services, a reflection of a desire to improve the work atmosphere for all employees.