How does being a great place to work fit with what we found in our research about what produces great companies over time? I will give two answers to that, one from Good to Great and one from Built to Last.
From Built to Last, what we found is the—actually, let me respond with a story. I often find a story is the best way. It's actually about a company that could be in either Built to Last or Good to Great. Take the company Nucor. Nucor is a company that had been in an industry ranking 81 out of 82 in total returns to shareholders over the years that we looked at, yet Nucor beat the market, I think, seven to one. So, here's a company that by any measure was—I mean, they were a better performer than GE; they were a better performer than most great companies; and yet they were in an industry that was 81st out of 82 industries in terms of returns.
How did they do this? Well, the conventional view is that Nucor is a company that did it by technology, that this was a company that had mini mills and the mini mills beat the integrated-steel companies. But, in fact, what you find is that their breakthrough came ten years before they had the technology.
So, then the question becomes, “Well, what was behind it?” When you really delve into it, what you find was that there was a very peculiar culture at Nucor and it was really their culture that enabled them to prosper in a very difficult industry, just as, say, with Southwest Airlines. It's their culture plus their model, not just their model, which is why, for example, some of the large companies that try to copy Southwest will have a really hard time because the ability to do it is cultural.
Now, in Nucor's case, it became a culture in which the principles have to do with wanting people who love to work hard because they just love to work hard. These are the kinds of kids who worked on farms, and they love to get up at five in the morning, and the idea of being in bed 15 minutes after the light comes up is just anathema. You just never would understand why anybody would sleep when you could be out working. And you want other people who have utter disgust and disdain for those who don't share that, right? Those who don't love the idea of “Well, let's get up and make some steel.” So, they set up their steel mills in farming towns rather than steel towns. Now, there's a moment in Nucor's history such that a person who didn't share this Nucor work ethic—and it is also a very egalitarian culture, for example, foreman aren't allowed to have a different colored hardhat that shows that they're superior—would be chased right out of a factory with an angle iron by his teammates. Was it a great place to work for him? I don't think so.
The reason I tell that story is because what we really found is that it's very binary, that the companies that perform the best over time have cultures that are so tight that we came to call them almost cult-like; and they have such a culture of discipline that those who really fit with that culture and fit with those values find it a great place to work, and those who don't find it a hideous, horrible, awful place to work.
What you find, in fact, is that somebody may find one great company a great place to work and they would be miserable in another great company. You take a company like 3M, which fundamentally values the lone, eccentric, innovative entrepreneur; and you put him in Disney, where basically the idea is to shave personality off everybody into the mouse. It's never going to work. On the other hand this fanatic attention to detail doesn't apply in 3M.
What we learned is that the more you reach this binary sense of either you think it's a great place to work or a hideous place to work correlates with more you than with it being a great company. So, the answer is, it depends on who you are.