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Even the Best Employers Are Trimming Back

February 17, 2006
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Fortune’s new list of America’s 100 Best Companies to Work For notes an interesting trend: Even the most employee-friendly firms are trimming back benefits. In 2001, for example, 33 companies on the annual list paid 100 percent of employees’ health care premiums. Today, 14 do. Since last year, 27 companies on the list have cut what they pay in health care premiums. And the number of companies on the list offering a defined-benefit pension to new employees has dropped from 40 to 27 in three years.

Fortune attributes the cutbacks to global economic competition. "It’s obvious why being a great employer is getting so hard," the magazine writes. "Globalizing everything creates merciless cost pressures no one can avoid."

Along these lines, Fortune makes an interesting observation: Most of the com­panies on this year’s list are in "place-based" industries such as retailing and construction, which are buffered to some degree against global competition.

Another common attribute among the winners, according to the magazine, is their skill at finding inexpensive, employee-friendly ideas--like personal con­cierge services and flexible work policies. In 1999, just 18 companies on the list allowed telecommuting, compared with 79 today. Only 25 firms on the list in 1999 offered compressed workweeks, such as four 10-hour days with Fridays off. Today, 81 companies do. "Such benefits do make a difference," Fortune writes, "and they’re a lot less expensive than health insurance."

A sense of purpose also matters, according to the magazine. This year’s top employer, biotechnology company Gen­entech, marshals workers to battle diseases. "We are a science-based company, and that is our core," CEO Arthur Levinson said in a statement. "But the real job satisfaction for employees is when great science becomes something that helps patients. Every employee in the company is a part of our continual quest to translate great scientific research from our labs into breakthrough therapies for patients with serious diseases like cancer and blindness."

Even mutual fund firms, apparel com­panies and soda pop sellers can make workers feel like they’re part of a worthy mission, Fortune says. "Timberland is about more than boots," the magazine writes. "It’s about outdoors and the environment; that’s why it gives employees $3,000 to buy a hybrid vehicle."

Trusting employees and recognizing their achievements are two other elements in a great place to work, according to Fortune. Recognition is "probably the fattest pitch managers miss," the magazine writes. "Telling employees they’re doing a great job costs nothing but counts big."

And doing a bit more for employees is easy, according to Fortune: Technology retailer CDW gives employees bagels and doughnuts twice a week; food giant General Mills washes workers’ cars; and Internet company Yahoo takes employees to a movie on Friday.

Being a good employer can translate into a sustainable business and pay off for investors, according to the magazine. The 100 best companies this year, on average, are 85 years old. Fortune says the average American business lasts less than 20 years before it fails or gets bought. And the magazine says a study of shareholder returns of the 56 publicly traded firms on its 2005 list found that Fortune’s best employers "not only consistently beat the S&P 500, but walloped it."

Ed Frauenheim

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