The Joy Of Working

A new study of INC. 500 firms reveals the secret of their success: motivated and enthusiastic employees

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THE INC. 500 -- THE FASTEST-GROWING small and midsize private companies in America. Almost every manager worth his salt dreams of starting one someday. And every venture capitalist dreams of backing one. But what is it really like to work for one? Remarkably satisfying, as it turns out.

That is the conclusion of a six-month study just completed by INC. in collaboration with the nationally known management consultants of the Hay Group. Twenty-eight hundred workers were surveyed from more than 100 INC. 500 companies around the country, and focus groups were held in Atlanta, Boston, Chicago, Philadelphia, and Los Angeles. What we found everywhere were employees who were more satisfied with their jobs, and had more respect for their companies, than the employees of Corporate America.

What you notice about these INC. 500 employees is not simply that they are more satisfied, but the ways in which they are more satisfied. In terms of pay and benefits, they lag well behind the employees of large publicly held corporations. But what they miss in hard currency is more than compensated for in the soft currencies of human-resource management. INC. 500 employees find themselves in jobs that offer challenges and a sense of accomplishment. They experience a company culture that values initiative and ideas. And they are confident that they work for companies that put out quality products, treat their employees with respect, and compete effectively in the marketplace (see charts on the following page). In terms of almost all the important indices of employee relations, these are companies with plenty of momentum.

"If I were a Fortune 500 CEO, I'd be worried," says Michael Cooper, president of the Hay Group's Research for Management. "The positive attitudes of their employees give small companies a great competitive advantage." Cooper has found that all employees bring enthusiasm to new jobs, no matter what size the company. "Smaller companies are able to sustain this enthusiasm by empowering workers and giving them a sense of common purpose. To get similar results, large companies have to pay cash -- higher wages and benefits -- and that makes their cost structures just that much less competitive."

Of course, not all small companies have workers as motivated and satisfied as those of the INC. 500. In fact, the circumstantial evidence is that employee motivation is a major force behind the extraordinary growth of these companies, rather than simply the result of it. "These companies are not successful simply because they have a good product or a brilliant founder," says Cooper. "They are also successful because they have managed their people in ways that keep their involvement and sense of partnership high."

Lest you think the employees of the INC. 500 are a naive or uncritical lot, consider how they view American business in general. They are not shy about pointing the finger at other companies for failing to reward employees, skimping on quality, ignoring customers, and thinking short term, but they find much less evidence of these short-comings in their own companies. Only on the issue of managing growth do they find their own firms wanting -- and with many of these businesses nearly doubling in size each year, who would be surprised.

Yet for all their positive feelings, these employees express only slightly more pride in, or loyalty to, their small and growing companies than do the employees of the giant corporations. Part of it is that they have not been locked in by generous salaries and pension benefits. Part of it is that these are people who seem more energized by the type of work they do than by the company they do it for. But there also run unmistakable undercurrents of dissatisfaction within these growing companies -- concerns that favorites are being played, that company plans are too closely guarded, that employees' interests and suggestions are ignored. And although these are successful companies, they are not companies that have gone out of their way to share their success with their employees.

"These are early warning signals that shouldn't just be dismissed as predictable grousing," says Harold Glass, who directs the Hay Group's strategic management practice. "They are extremely accurate predictors of future problems -- not just in terms of employee relations, but in terms of product quality and operating costs, and company profits and growth."

COMPENSATION

Median pay by job class

INC. Large

500 Cos. *

Managers $32,000 $71,000

Professionals 24,000 40,000

Salespeople 26,500 42,000

Hourly workers 10,500 18,500

* INC. estimate

FACTORS BEHIND SATISFACTION

Why small companies are

better places to work

INC. Large

% Favorable 500 Cos.

Challenging, interesting work 59 49

Chance to have ideas adopted 52 35

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