Palle Ellemann - How to Be a Great Company in Any Country or Economy

Steve

Hi, this is Steve Hunt with People Performance Radio. The interview that we did this week was with Palle Elleman, who's the Managing Director of Great Place to Work Institute in Europe, and Great Place to Work Institute, if you don't know, is a company that has been studying basically what makes companies great places to work, and they come out with this list every year. Actually they do it in multiple countries, I learned from Palle. Interesting review talking about some of the similarities and differences in terms of what makes a company a great place to work, how do you fully engage and get the commitment of employees, and emphasis on how you create trust, create a sense of pride and a build a sense of camaraderie, and how that's similar and different across different countries, as well as how the shift is changing as we're going to a down economy to become a great place to work, and maintain that. Really it sounded to me, and I'm paraphrasing a little bit from the interview, and you can decide when you listen yourself to the interview, that the shift really says, you really need to focus on trust in a down economy, that's really the building block. In an up economy, pride and camaraderie play greater roles in defining a great place to work, but when things are really tight, people are nervous, trust becomes really really paramount, so very interesting interview with Palle Elleman, so please give it a listen.

Happy New Year everyone, you're back here with People Performance Radio, this is Steve Hunt, I am with Palle Elleman today who's the Managing Director of Great Place to Work Europe, and we're starting the podcast off I think on a really interesting topic, which is a good way to start the New Year, which is talking about making your work environment a great place, which has a positive, optimistic view towards it against a dark, foreboding financial background that we're facing this year, so Palle, thank you very much for joining us on People Performance Radio. Maybe you can just quickly introduce yourself, tell us a little bit about what Great Place to Work Europe does, and then say, what are some of the things you guys are working on?

Palle

Well thank you Steve, thank you very much for the invitation to join this broadcast. Great Place to Work Europe is the umbrella of an organization for all European offices in the Great Place to Work Institute, and currently we have 17 European offices, globally we have 33, particularly known for, the list of the best workplaces and best companies that we publish in all these 33 countries, and actually in more countries than where we're located. We recognize best, so there's a list process where we analyze and evaluate all the companies sign up for us, and then we recognize the best companies, and we also provide a different tool, so that companies can actively work with this, and try and transform their workplaces to become great workplaces.

Steve

Thank you, so what you're saying is, one, that you're well-known for that list, and where does that list typically appear?—I can't remember the different places it appears?

Palle

We work with the local media partners all over, but in the US it is clear, it is the Fortune magazine publishing the US list, and in Europe we have multiple media partners in every country, so in the US it's known as "The Best Companies to Work For", and throughout Europe we use "The Best Workplaces" brand, it's all within the same category, and the same methodology that we actually apply worldwide, so it's about 40 countries that we are carrying out the list process in, and it's all based on the exact same methodology.

Steve

I guess two questions that come to mind immediately—one is what makes a company a great place to work in one country, the same thing in another country? That'll be our first topic, then also I'd really like us to talk a little bit about the financial situation, because I think that is another big thing, is that change in what companies are doing to stay great places to work, so that first question, is it the same as what makes a company a great place to work in Europe the same thing that makes it a great place to work in the United States?

Palle

We have developed a methodology, a basic model finalizing the workplaces, this is our trust model, so it's focusing a lot on the trust, in particular on the trust and relationship between employees and management, but it's also looking at pride and camaraderie, so these three relationships are trust, pride and camaraderie within the workplace, and actually, even though this model was developed in an American context, we have implemented in all these 40 countries, and every time we go to a new country, we do it in a very humble way, testing the survey instruments, and also working with local people to see if this actually works, and so far the basic survey tool and the basic understanding, because we're talking about very basic elements of human behavior, trust, between different people, it's actually surprisingly similar from country to country.

But on top of that we also use what we call a "culture audit", which is an analysis of the practices and policies of the companies, and this part, we do have some differences, because we do see that a company's applied different practices, but essentially when we talk with employees, and this is our approach, we are an employee-centered, it is an employee-centered mythology, and when we talk with the employees, it comes down to trust, and so the basic elements are completely similar from country to country, but we do make some local adjustments in terms of the additional analytical tools that we apply.

Steve

So maybe you could say, what it sounds like is, and I totally agree that people are people the world over, and what most employees are looking for is, they want a workplace where they can trust, they feel a sense of trust and respect with the leadership, pride in what they're doing, and a sense of friendship and camaraderie with the people they work with, but how companies achieve that, that might be different, so how you establish trust with employees in one country might be different than another country, but what employees are expecting is the same, they're just totally different expectations of how you achieve it.

Can you give some of the more interesting examples, comparing different countries, maybe especially something that might work in the United States that wouldn't work in another country, in terms of becoming a great place to work?

Palle

I think there's a couple of key examples here about one of the key areas where we have some significant differences, and particularly when I've been looking at work/life balance in different countries, I think there's a very different concept and expectations around that. We see very different perceptions of what should be the use of your time in the workplace, in terms of, for instance in the US, and also UK, Ireland, some parts of Europe, the southern part of Europe as well, they spend a lot of hours in the workplace compared with for instance Scandinavia and Germany as well, and this is because there is huge social part of the workplace as well, it's much bigger than in these countries, and there's a different concept around, a different perception of time, while in Scandinavian countries, you can see the other extreme will be Scandinavia, where you'll see much more, will be much more efficient in terms of how to get the work done, as they will have more time to also balance our private lives.

So the balance is in a different place, it's the same all over, that the best companies are encouraging companies, employees, to find the balance, but the balance is different, it's different where people find the balance, and I think that's quite interesting, and as far as I can see it comes down to a different perception of time, and how much time work should be in a life.

Steve

Or how much time, what I've seen a little maybe is a difference, so not so much how time you should spend working, but how much time you should spend at work, so in the US you're saying, things like office parties, and clubs and social events in the United States, it might build camaraderie, and people would appreciate them, because they're at the office anyhow; in Scandinavia they're like, look, I'm at the office to work, that's all I want to do is work so I can get back to my real friends, which are not the people I necessarily work with!—partially as a joke, but partially seriously. In the United States, it's very common to meet people at work and get married to them, that's very common, a lot of the friendships are made through work, it sounds like in other countries people don't expect to make social friendships through work, it's really viewed as a very business thing—is that an accurate statement I'm making, or am I going too far with this?

Palle

I think that's definitely a good explanation, I think in terms of you'll also see in Scandinavia, many people meeting new friends, making friends at work, but they will bring that out of the workplace to some extent, so they might meet there at work, but they go out afterwards, so it's a different way of, there's different expectations of when their work will end and of course in the southern part of Europe, you'll also see that, for instance, the mid-day habits, with long lunches, definitely a social part of their life, and they would probably see that as their free time and leisure, but in Scandinavia and Germany there'll be much shorter lunches, to just get on with their work, so they get on with it in the afternoon.

Steve

I guess one last question before we move to the topic about the economy, I guess I'm looking at the cultural differences—are there any things, and I think probably in this case most of our listeners are probably in the United States, with People Performance Radio—are there any things that might work well in the United States as far as leadership styles or management practices, talent management strategies, that absolutely don't work in other countries?

Palle

I think one very specific example where we see that some of the American and Anglo-Saxon practices, typical practices in general don't work in many parts of Europe, and other areas are the practices, very local practices for appreciation, kind of the public appreciation that people use in the US, I see in many European based and based in other countries outside Europe, companies where these very public appreciation practices, they don't really work, and people would rather have a pat on the shoulder from the immediate manager, and that would be mean much more to them compared with the public appreciation that is typically done.

Steve

So quiet recognition and support as opposed to big awards celebrations and banquets and stuff like that?

Palle

Yes, exactly, I think those kind of small things, and particularly the personal touch. I know that many of the best companies in the US do that at well, but they also put a lot of emphasis, and I know the employees as well, put a lot of emphasis on the public recognitions, and it doesn't seem like they're as important in many other countries.

Steve

That's interesting, that's a good observation. Do you think that ties into some of the reasons why there's such big pay differences in the US and other countries, where here in the United States I remember famously when Daimler bought Chrysler, and sort of comparing the executive salaries of Daimler versus Chrysler, and a lot of discussion about why, in the United States, are people, high performers, paid so much more compared to Europe—do you think it has something to do with this cultural aspect, people are less comfortable being singled out that way?—or is it just that Americans like money more?

Palle

Well, I don't know, I think it's definitely, in general you can say that in the US they focus more on the individual contribution, it is the cowboy, the lonely cowboy who does it who becomes the hero in the workplace because he's achieving a lot, while there will be much more focus on the collective achievements in other countries. I think that's a very broad, very general observation to make.

Steve

It's the classic, I think it was at Hofstede, the collective versus individualistic culture of the US is an extremely individualistic culture, as I recall.

Palle

Exactly.

Steve

So switching gears, I want to talk a little bit about this financial situation, I think one of the things about making a great place to work, I think it's easier to be a great place to work when you can throw a lot of money at the problem, but now with companies, I won't necessarily do it per se, but it's easier to do recognition programs and work/life balance when you can spend money to support those programs. Now as companies are suddenly having to cut back on everything except for what's essential to run the business, how is this affecting companies that are considered a great place to work?

Palle

Well, the best companies, they are able, despite the challenging times, because this is hitting them as well, this is clearly a downturn that is hitting everybody, so they will have to make lay-offs as well, they are making lay-offs as well because of the market conditions, but they're doing it in a way where they are showing so much respect for people, that despite having to lay off people, it is fully understood by both those who have to go, but also understood by those who will stay, and I think part of the reasons how they're achieving this is definitely related to the communication, if communication was important before, it's definitely also important now, everybody is asking themselves, well what is this going to mean for me as an employee in this company, what is going to happen with the company, with our team, etc?—and the best companies are, and have been, practically addressing that concern. Even thought the response might be, or the information might be, well at this point we don't know, this looks very much different from what we've seen before, we don't know, but in starting to communicate and starting the dialog, addressing concerns, is extremely important, and also it's part of the solution, because when you're starting that dialog, you're also involving people, and this is what maybe separating the best from the rest the most is how they're involving people, involving people early in finding solutions for how to, if not eliminate, to reduce their lay-offs, and several of the best companies, what they're able to, during these processes, are to come up with solutions where, maybe on a temporary, or maybe for a couple of months, cut down on their working time in order to try to weather through the storm, so that they can avoid lay-offs, and if these solutions are coming from the employees themselves, this is a very very powerful story that is evolving within the company, because if they're able to weather a storm like that by pulling together and share some of the pain, this will be incredibly important for the culture of the company, and this will be something that they will talk about for years that will define that culture, so involving people in this kind of way, and finding solutions, is extremely important, and what we've seen the best companies do.

Steve

So I think what you're saying is, the focus here is really in, when the economy's doing well, a lot of what's going to differentiate some of the great places to work companies are the pride, the camaraderie, we're doing great things, more sort of showy, social events. When things are bad, it's really, I want to work for somebody that I have a really strong, trusting relationship with, and maybe the focus through this is more really establishing, trying to have that communication with employees, are you really spending time talking to employees, it's not so much what are you doing for them, but are you talking to them and making them feel they can trust you?—I think that's an interesting comment.

The Great Place to Work Institute has been doing these studies of companies for, I want to say 15—20 years now, is that right?

Palle

Yes, that's right.

Steve

Did you, have you ever gone back and looked at the list and how it went through the last recession, because I remember during the last, the dot.com bubble, where there were a lot of companies that were on the list in 2000 that weren't on the list in 2002. A lot of the companies didn't even exist any more in 2002. Have you ever looked over, at the different companies on that list and seen which are the ones which seem to weather these economic downturns better?

Palle

Well, Russell Investment Services, they have tracked the stock performance of the best companies compared with the market since the beginning of when we started publishing the annual list, and the best companies, yes the stockmarket performance was getting, well it was not growing as much as before, but it was not falling down to the bottom that the market in general did, so the best, even during these difficult times, the best companies, they outperformed the stock market, or indeed the stocks of the market, and they've done that consistently every year since the beginning, so it's difficult for companies staying within the 100 best, or the 50 best in some countries, when they have to do lay-offs and they have to make significant changes, but we see them come back. You're right that some companies really disappear, that's right, or they were merged with others, etcetera, but only in the IT sector, but we've seen them come back, those who are truly great, and companies like, particularly in Europe, a company like Microsoft has been spectacular in having great culture, great results all over Europe, and also very consistent.

Steve

So what I hear is, when you go through this downturn, it's going to affect you, and it's very hard to keep people feeling upbeat when you're having to let people go, that's just the reality of people, they don't like to get fired, it's not fun, but you, by persisting on these companies, even when they drop off for a while, they do come back, and relative to others, yeah, they're hurt economically, as everyone is, but they're not hurt as much, if they've established this trust and this bond.

I guess just one last question before we go, Palle—do you have any advice, any one specific thing that you would share with people saying, as you're going into these troubled times, as you're bracing for it, if you are a leader in a company, what is the one thing you should make sure you are doing, and you are doing frequently?

Palle

Well, I think two things, but we're also touched upon them before: communication, start talking about and addressing the concerns, tell people what you are doing to get better information and addressing the insecurity, and in that sense you've already starting involving people, but also start to involve people in a much more concrete way in terms of finding solutions for how to address changes, because if they feel that they're involved, they also feel that they're gaining more control of the process, so start communicating, but a dialog, so I think that would be, essentially it needs to come out of the whole conversation that you're having with employees as a leader, is that they understand that lay-offs is the last resort. I think people understand, if they have the information during the process, they've been involved, they know you've been trying to solve the problems, then they understand that sometimes lay-offs have to happen, because of the changes in the marketplace, and that time you can actually make sure to let people go in a way where they'll accept it and they'll still recommend the company to others.

Steve

I think a lot of times companies find that when they do involve their employees, their employees come up with very creative ways to save money, and to make money.

Well, Palle, I want to thank you very much for spending time with People Performance Radio, I hope that we have a chance to talk to you again in the future. We will have a link to the Great Place to Work Institute on our podcast website, and any last things you'd like to say, Palle, before we sign off?

Palle

Well I wish everybody a Happy New Year, and let's focus on weathering this storm and get out of it creating better workplaces still.

Steve

Great, well thank you very much.

Speaker

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