Sally Gibson runs Dawleys, a contact center and fulfillment business in Ross-on-Wye, Herefordshire. When she joined Debra and me on Corey-osity Unleashed, she told us Dawleys had picked up Employer of the Year, Business of the Year, and a highly commended in Customer Service.
She didn't set out to win any of them. She set out to line up her people, her purpose, and her business results. The awards showed up afterward.
I love this story. I also think most leaders will take the wrong lesson from it.
The Wrong Lesson
The wrong lesson goes like this: "Dawleys won awards. Awards attract talent. Let's win awards."
So someone in HR finds a list of employer awards. Marketing writes the entry. Leadership picks the best stories, polishes the numbers, and hits submit. If you win, the logo goes on the careers page and in every email signature.
Nothing about the culture changed. You bought a badge.
The quieter version does more damage. A week before the staff survey goes out, a manager mentions how much the ranking means to the company. Nobody gets told what to write. Everybody gets the message. The scores go up, the trophy arrives, and the people who wanted to say something hard learn to keep quiet. You've now paid for an award with the one thing it existed to measure.
Economists have a name for this trap. Goodhart's law, named after British economist Charles Goodhart, says: "When a measure becomes a target, it ceases to be a good measure." An award measures culture. Once you aim at the award, it measures how good you are at writing award entries.
Enron Made the List
Here's the cautionary tale. Enron sat on Fortune's "100 Best Companies to Work For in America" list in 2000. Fortune also named it "America's Most Innovative Company" six years running, from 1996 to 2001. Enron filed for bankruptcy on December 2, 2001.
The staff weren't lying on their surveys. The pensions and benefits were generous, and the offices were famous for their opulence. People liked working there right up until they lost their jobs.
An award sees what you show it. It doesn't see what you hide. If the culture rests on something rotten, the trophy sits on top of the rot and shines.
So Do Awards Mean Anything?
Yes. And this part surprised me.
Finance professor Alex Edmans tracked the companies on the "100 Best Companies to Work For in America" list across 25 years. In his 2011 paper in the Journal of Financial Economics, a value-weighted portfolio of those companies earned an annual four-factor alpha of 3.5% from 1984 to 2009, and beat industry benchmarks by 2.1% a year. The Best Companies also produced more positive earnings surprises.
His conclusion: the stock market doesn't fully value intangibles like employee satisfaction, even when a highly public survey hands investors the answer.
A follow-up study with Lucius Li and Chendi Zhang looked at "Best Companies to Work For" lists in 14 countries. The link to stock returns held in countries with flexible labor markets, such as the US and UK. It didn't hold in places like Germany, where regulation already sets minimum standards for worker welfare. Their reading: where people quit and get hired easily, a good place to work helps you recruit, keep, and motivate people.
So the lists carry real signal. Over decades, across hundreds of companies, the places employees rated highly outperformed their peers.
Think about what this says about your own boardroom. Professional investors, paid to find an edge, missed a public list of well-run employers for 25 years. Your board misses the same thing every quarter. Headcount shows up in the budget. Trust doesn't. If the people who price whole companies for a living undervalue a good place to work, don't expect your finance director to spot it unprompted. Somebody has to make the case, and it's you.
Both things hold at once. On average, the award points at something real. In any single case, it might point at Enron.
Receipt, Not Target
Here's how I square it. Treat the award as a receipt, not a target.
A receipt proves you paid. It doesn't buy you anything on its own. Frame it, wave it at your board, and you still own nothing new.
Sally's awards were receipts. Dawleys did the work first. They paid attention to whether their people would recommend the place, which is why I wrote about how she fixed her eNPS question. Their best people referred their friends, which I covered in Your Best People Refer Your Next Best People. The judges noticed what the staff already knew.
Which One Are You Doing?
Four questions. Answer them honestly.
1. Would you do the work if the award didn't exist?
If the answer is no, you're running a marketing campaign. Fine. Call it a marketing campaign. Don't call it culture.
2. Who decides?
Some awards judge your written submission. Some judge what your staff say. Great Place To Work, for example, says your employees determine whether you earn Certification through its Trust Index survey. I'm not endorsing them. I'm saying pick recognition where your people hold the pen, not your copywriter.
3. Do you read the feedback or frame the trophy?
Every staff survey behind an award produces comments. The low scores tell you more than the headline. If nobody on your leadership team has read them, the award did nothing for you.
4. What happens to bad news?
In August 2001, Enron vice president Sherron Watkins met Kenneth Lay to warn him about the company's accounting. Other executives wanted to dismiss her. The best-employer list had no column for this. I wrote about why it matters in Culture Isn't Perks. It's How Fast Bad News Reaches You. No award survey I know of measures how fast a problem reaches the CEO. You have to test it yourself.
The 99.5% Problem
My research found 99.5% of survey respondents said they've had one or more types of bad boss. Every one of those bosses worked somewhere. I'd bet some of them walked past a plaque in reception every morning.
An award tells a candidate what the average employee said on survey day. It tells them nothing about the boss they'll report to. Only your managers fix this, one conversation at a time.
Build the Thing It Measures
Sally put it well. Awards aren't the goal. They're proof an intentional culture strategy works.
So build the thing the award measures. Line up your people, your purpose, and your results. Listen to bad news. Read the comments. Fix your managers.
Then, if you like, enter the award. If you win, enjoy it and buy the team a cake. If you lose, read the feedback and get back to work.
Here's your test for this week. Pull up your last staff survey and find the lowest-scoring question. What did you change because of it? If the answer is nothing, no trophy will save you.