from Richard Edelman - 6 A.M. by Richard Edelman - 6 A.M.
Today Glassdoor.com announced that Edelman finished fifth among all US-based companies as “best place to work.” The survey is based on confidential responses by employees to a 20-question survey, rating satisfaction with career opportunities, compensation and benefits, employee morale and recognition/feedback. Edelman finished behind Facebook, Southwest Airlines, Bain & Company and General Mills. I am in a state of mind that can accurately be described as ranging between shock and heaven, because it has not always been this way. In fact, our journey to this happy place might prove instructive to other companies mired in a high-turmoil, high-turnover environment.
It has been a long journey to this place. I remember well Paul Holmes’ review of Edelman in 2000, when he cited our star culture and sweatshop mentality which prompted talented people to get their training at Edelman and then move onto other, more quiescent firms. In my third year as CEO, I asked for an employee survey, our first ever. The results were even worse than I expected, with comments about favoritism, factionalism, and abusive bosses. So step one had to be a recognition that we had a problem. We had somehow confused entrepreneurialism and delivering results for clients with a tolerance for cross-office competition and buccaneering behavior.
Here’s what we did:
• Began a training program to support staff to learn by doing, taught by most experienced leaders using real Edelman clients cases.
• Instituted a mandatory consistent annual review, and made talent development a key performance measure.
• Established a Leadership Academy, a summer school for our most promising employees, where our top executives teach courses on Digital, Creativity, Mentoring Talent and Running a Good Business.
• Created the Living-in-Color program to encourage offices to do pro-bono work in the community. In 2010, 40 offices now participated, donating $2.3 million in money or PR services to good causes.
• We give staff with 10-years of tenure a month off to pursue their individual passions.
But, our change in culture relied on much more than classic HR techniques. We made bold decisions in both the 2001 and 2008 recessions NOT to reduce head count to achieve our historic profit margin. We held onto our staff in those scary times once we achieved a break-even in operating results–one of benefits of being a private firm. In 2009, we postponed the annual salary review in order to preserve jobs. To provide staff with greater incentives and control of their careers, we:
• Instituted a better short-term bonus plan with specific criteria that address behavior as well as profit, so that we now pay out 36% of our pre-tax profit each year.
• Initiated a mandatory Quality program where clients grade Edelman on strategy, creativity and service, with results fed directly back to account team, providing greater transparency and accountability for performance.
• Added formal three year career planning to the annual review process.
We have used our supposed disadvantage in size– compared to the communications holding companies– to be nimble and bold. We recently created a Fellows program and sent our first nine people to the BRIC nations for twelve-to-eighteen month assignments, with nine to come from the BRICs to our large markets starting fall, 2011.
When I went to Harvard Business School, the mandatory first year course in human resources was called HBO, Human Behavior in Organizations, with the unfortunate moniker of HOBO. It was the easiest and most often ignored part of the curriculum, when you could put your feet up and opine about the astronauts working cooperatively to fix the disaster on Apollo 13. I can tell you future MBAs that is the most important course you will take—more than linear programming or cost accounting. It’s no coincidence that during the last ten years—as we were trying to become the industry’s preferred employer—that Edelman gained market share. Edelman is proof that a commitment to a better work environment can change the course of a company.
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