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Foreword

The Sunday Times 100 Best Companies to Work For awards provide Britain's most revealing guide to the firms where people go to work with a spring in their step.

For the 2004 list we captured the opinions of 58,000 employees , and the resulting database is the gold standard in mass human resources research. That database holds the secret of a happy working life - one that is rich in challenge and encouragement.

Judith Leary-Joyce has identified the value of the project and used the research to discover precisely how senior managers create environments in which staff can flourish. One of the key factors is trust. It is a credit to the faith of all those chief executives who take part in Best Companies surveys that they allow their staff to express themselves so freely to a third-party research organisation, especially when there are so many competitive pressures.

It is abundantly clear that best companies to work for do not happen by accident . They are created by managers who follow through their decision with a strategy that permeates every part of their organisation. We have much to learn from them. In these pages you will discover some of the secrets of that best practice.

Richard Caseby, Managing Editor, the Sunday Times

Chapter 1: The Business Case

Overview

This chapter could consist of just one statement:

Great companies consistently outperform the FTSE All Share. Over the past five years the best companies would have earned an investor a compounded annual return of 12.1 per cent, compared with a 5.8 per cent decline in the FTSE All Share index as a whole.

Source: Sunday Times 100 Best Companies to Work For list, 2003

Statistics by Frank Russell Company

How interested would your shareholders be in your corporate culture if they knew that? They would really want you to become an employer of choice because it is good for the bottom line.

It is a universal truth of business that no matter how unique or innovative your products and systems are, it is only a matter of time before someone else is doing it as well or better than you. If you are a market leader, you have to keep running hard to stay ahead of the hounds snapping at your heels, and if you are one of the chasing pack, you will get breathless just keeping up.

The only thing your competitors cannot copy - your only truly unique and lasting competitive edge - is your people. That familiar rhetoric of the annual report is true: your people really are your greatest asset. Or they will be, if you build a work environment in which they can shine .

It is not worth worrying that others might pinch your ideas and products - they definitely will, alongside undercutting your price. Better to utilise your people to the full and go right on leading the field, while they struggle to keep up. But how to do that? This book is full of thoughts and ideas from those named as Great Companies. And the facts below and in the draft presentation in Appendix 3 give you even more reason to read on.

The Facts

In short, great company culture will give you:

easy recruitment
powerful retention
high levels of creativity and innovation
improved customer service
a great workplace that customers like too.

Easy recruitment

Once people hear what an exciting workplace you have, they will flock to join you. Those companies that made it into the Sunday Times 100 Best Companies to Work For list have proved this in spades. Timpson is a perfect example of this.

In 2001, prior to the publication of the 50 Best Companies to Work For list, Timpson had 80 per cent employment. After publication this increased to 100 per cent. And by 2002, when named again as one of the 100 Best Companies to Work For , Timpson had a waiting list and was attracting women and graduates for the first time. The end result is a jump in profits from 3 million in 2001 to & pound ;6.5 million in 2003.

Such is the power of great company culture - energetic , dynamic people want to work with you, knowing they will enjoy their work and develop their career into the bargain. The business can choose the best person for the job, providing the very best option for success.

Powerful retention

Once people realise they are in a good workplace, they want to stay. Great companies develop careers in house - growing their own to make sure they keep all the expertise and experience. They also involve colleagues in seeking the best way to run the business, listening to their ideas and concerns from the front line. What young high-potential person can resist that? From the moment they walk through the door, management are paying attention, listening well and looking to three jobs down the line - it is a compelling argument for commitment. Especially when linked to a challenging and honest workplace.

Claridges demonstrate this well. They instigated a major culture change, including consulting colleagues on what changes were necessary in the business, and daily staff briefings. The end result was that staff turnover reduced from 73 per cent to 16 per cent in five years .

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Imagine the bottom-line impact when recruitment costs fall and less time is lost as the outgoing person shifts his or her attention away from the work and the incoming arrival strives to grasp the intricacies of a new job.

High levels of creativity and innovation

Provide challenge and support in appropriate balance and you will stimulate the creative juices. Couple this with a strong feeling of belonging so that people speak of the workplace as ‘their company' and ‘like family' and you have a heady mix for any growing business. Everyone in the organisation takes responsibility and focuses on what will serve the business best. People who feel an attachment to the community watch for pitfalls and have great ideas about how to deal with them.

Hiscox are a prime example. They were part of the syndicate that insured the World Trade Centre, so business took a major hit in 2001. Because their commitment to colleagues includes appreciating the wisdom of experience, they were able to ride the storm and bring the business to a better position within the year.

Improved customer service

The very best customer service operations have excellent people cultures. We can give only as much as we receive. Just like money: if we have it, we can enjoy spending it; when we are broke, we get depressed or borrow - which costs us dear in the long run. It is the same with customer relationships: people cannot give what they do not have, and if they try to give what is not real for them, it will cost everyone dear in the long run.

Take Flight Centre. Strong working relationships encourage colleagues to build equally strong relationships with customers, who then return to them time and again for help. The end result is 23 new shops and businesses opened in 2002, giving a jump in turnover of 36 per cent, leading to a 100 per cent increase in profits.

People who feel cared for, respected and valued give high-quality customer service, building loyal and committed relationships that are more effective than the very best marketing and PR.

Customers like great workplaces

In this day and age, ethics in business has a high profile. People will take their custom away from organisations that do not live up to expected standards, so being known as a great workplace will help differentiate you from competitors . When faced with a choice of provider, people are more likely to go for the company that is known as a fantastic employer. Supporting an organisation that exploits colleagues is not a good option.

TD Industries are known for high trust and integrity by partners ( employees ), suppliers and customers. To quote Jack Lowe Jnr, the CEO:

I am convinced that high trust has allowed us to be agile and aggressive during these difficult economic times and continue to outperform our industry. TD always emerges from difficult times with a strengthened position in our marketplace .

To test his judgement on this, look at the graph on slide number 9 in the business case/evidence (Appendix 3) - it speaks volumes .