Culture Clubs

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While working in the accounts-receivables department of a local equipment distributor, Melissa Price wanted to expand her skills by learning IT during her lunch breaks. When her boss questioned why she wanted to do such a thing, Price knew it was time to leave. “It was a terrible, stifling culture with constant turnover, no communication, low energy, drab offices, and a place where everybody was out the door at 5,” she recalls.

Seven years after tendering her resignation, Price couldn’t be happier. At 32, she’s the director of facilities and purchasing at Livonia-based Quicken Loans, the nation’s largest online mortgage lender, which, for the sixth year in a row, was cited on Fortune magazine’s “100 Best Places to Work for in America” list (No. 29). Southfield-based accounting and business-consulting firm Plante & Moran (No. 42) and Zeeland-based office-furniture manufacturer Herman Miller (No. 89) are the only other Michigan companies cited in 2009 by Fortune and its project partner, the Great Place to Work Institute.*

With an increasingly competitive global market mired in a severe economic downturn, many companies are struggling to survive while also facing the need to retain and attract talented employees for the next economic expansion. Yet despite the current economic challenges, companies that have painstakingly cultivated a more positive, humanistic corporate culture, such as Quicken Loans, Plante & Moran, Herman Miller, and numerous other Michigan companies, are expanding or holding their own while buried in résumés from eager job-seekers looking for a “great place to work.”

So what’s the magic formula for a successful corporate culture? Experts and leaders from several progressive-minded companies offer explanations and examples that should open the eyes of corporate leaders and human-resource departments eager to attract and retain highly productive and innovative employees.

It’s clear that just offering a great place to work, where architects design slick offices complemented by well-appointed break rooms and gathering places, doesn’t mean that talented workers will bust down the doors to get in. Progressive places to work need to be complemented by a strong corporate culture that instills trust and responsibility. Need proof? Just ask the national experts.

Up until the 1980s, most businesses in America were fairly drab places to work (a somewhat natural extension of the Industrial Age). But as baby boomers began to move up the corporate ladder and tap their managerial powers, they began examining their work surroundings and coming away unimpressed. This undertow for workplace improvement was finally substantiated in 1984, when The 100 Best Companies to Work for in America quickly became a bestseller and caught the attention of corporate leaders, job applicants, business schools, and people like Amy Lyman, who, in 1991, co-founded the Great Place to Work Institute.

“When I was attending the University of Pennsylvania in the 1980s, there was this intense focus on making as much as you can and ‘don’t worry about anyone else,’” says Lyman, the institute’s director of corporate research. “But even then, there were some high-trust companies that treated their employees well and were financially successful but didn’t always get the recognition they deserved. So we’ve provided a platform.”

According to Lyman, the common thread among the 100 Best Companies to Work For is that they’ve established a “trust-based culture.”

“These organizations have developed mutual trust and respect between the management and employees and a spirit of cooperation,” Lyman says.

“Typically you’ll find fair hiring and promotion practices, pay equity, training and development opportunities, and other benefits.”

The rewards for the organizations are plentiful. “Our survey and financial-performance data demonstrates that great workplaces with high levels of trust outperform their peer organizations as a group,” Lyman says. “There’s a stronger, long-term financial performance, lower turnover, more job applications, and an integrated workforce in which diverse groups of people create and contribute to a common workplace culture of benefit to all.”

Recent empirical evidence bolsters those claims. An annual analysis by Russell Investment Group found that, from 1998 to 2008, a hypothetical portfolio of publicly traded 100 Best Companies outperformed — over time — both the S&P 500 and the Russell 3000.

That’s music to the ears of Bill Hermann, managing partner of Plante & Moran, which has made Fortune’s Best Companies list for 11 consecutive years. “It’s reaffirming that we’re doing the right thing within the firm,” he says, “but in my 38 years with Plante & Moran, I’ve never known it to be any different. There’s no question that there’s a direct correlation between our … culture and our success in tripling revenue and doubling staff over the [last] 11 years.”

Plante & Moran’s business philosophy, Hermann says, is based on the golden rule — and on a culture defined in two simple words: “We care.”

The firm also isn’t afraid to let down its hair once in a while. For example, its Web site proclaims it has a “relatively jerk-free” environment. (“Because anybody can have a bad day once in a while,” Hermann says.) To help avoid hiring “jerks,” Plante & Moran uses behavior-based interviewing techniques. To help retain “team members,” the firm offers numerous perks, including reimbursement for half of an athletic-club program, free financial consulting, an annual staff conference, generous paid time-off benefits, and numerous tax-season relievers such as massages, partner-prepared breakfasts, and miniature golf in the office.

“We have the lowest turnover rate of any major public accounting firm, which allows us to be consistent with our client service delivery,” Hermann says. “And our clients have said, ‘If they treat their staff so well, they’ll probably treat us as well.’ We also typically get 25,000 applications for maybe 200 to 250 openings per year, which gives us a pretty nice recruitment selection option.”

To help spread the word, a few noteworthy colleges have begun promoting a positive corporate culture. Kim Cameron, a professor of management and organizations at the University of Michigan’s Ross School of Business in Ann Arbor, has closely studied the efficacy of positive corporate cultures since the mid-1990s, after researching the effects of corporate downsizing.

“The key finding was that most organizations that downsize deteriorate in performance as quality goes down, morale tanks, innovation deteriorates, conflicts go up, and the best leaders leave,” says Cameron, co-founder of the school’s Center for Positive Organizational Scholarship. “But I discovered that 15 percent to 20 percent of organizations that downsize don’t deteriorate, so the question was, why not?”

Cameron found that those companies most often had a positive corporate culture.

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