BEST TALENT? THE ANSWER IS SIMPLE. THEY KNOW HOW TO FOSTER STRONG, REWARDING RELATIONSHIPS … AMONG THEIR EMPLOYEES. By Geoff Colvin THE ONE THING absolutely everyone knows about working at Google is that you get free, gourmet-quality food all day long. Stuffed quail, lavender pecan cornbread, aloo gobi, fresh fruits and vegetables, Gruyere mac and cheese-just go get it. Many know also that Google provides free gyms, free massages, and generous parental leave, plus cash bonuses when a baby is born; dogs are welcome.

Beautiful offices are about to be upgraded in a spectacular planned new headquarters in Mountain View, Calif., the New York Times reported in late February (though details on the campus were sketchy at presstime). So when people see that Google is No.1 on Fortune’s new ranking of America’s Best Companies to Work For-for the sixth time-they understandably figure the reason must be those incredible employee perks. If But that isn’t why. Knockout perks aren’t the reason any company makes this list. The essence of a great workplace is just that: an essence, an indispensable quality that determines its character. Understanding that quality-understanding it well enough to build a corporate organization around it-has long been a goal of great companies. And it’s getting rapidly more valuable too. That’s because as the economy changes, employers who don’t know the secret will be at a deepening disadvantage to those who do.

Which brings us back to those famous Google perks. The truth is, while the most sought-after talent doesn’t generally flock to a company because of certain benefits and giveaways (nice as they may be), the perks themselves can teach us about the company’s essence-why, that is, some employers are such super-powerful magnets for the world’s best employees year after year. Listen to what an ex-Googler told Quora.com about Google’s nonstop free buffet: It “helps me build relationships with my colleagues.”

Hold on-food helps build relationships? It does when it’s used right. Data-obsessed Google measures the length of the cafeteria lines to make sure people have to wait a while (optimally three to four minutes) and have time to talk. It makes people sit at long tables, where they’re likelier to be next to or across from someone they don’t know, and it puts those tables a little too close together so you might hit someone when you push your chair back and thus meet someone new-the Google bump, employees call it. And now we begin to see the real reason Google offers all that fantastic free fare: to make sure workers will come to the cafeterias, where they’ll start and strengthen personal relationships.

That is, the food is just a tool for reaching a goal, and the goal is strong, numerous, rewarding personal relationships. Success obviously requires more than free food, but we’re glimpsing the explanation of workplace greatness. That same Googler said, “The best perk of working at Google is working at Google,” and the No.1 reason he gave was the people: “We are surrounded by smart, driven people who provide the. Best environment for learning I’ve ever experienced.” (For more on the company’s people strategy, see “Google’s 10 Things to Transform Your Team and Your Workplace” in this issue.)

Here’s the simple secret of every great place to work: It’s personal-not perk-onal. It’s relationship-based, not transaction-based. Astoundingly, many employers still don’t get that, though it was the central insight of Robert Levering and Milton Moskowitz when they assembled the first 100 Best list in the early 1980s. (For their insights into this year’s ranking, see their introduction to the list.) “The key to creating a great workplace,” they said, “was not a prescriptive set of employee benefits, programs, and practices, but the building of high-quality relationships in the workplace:’ Reaching far deeper into people than corporate benefits and cool offices ever can, those relationships are why some workers love their employers and hate to leave and why job applicants will crawl over broken glass to work at those places.

In the past, of course, plenty of non-great places to work have managed to succeed without mastering this understanding. And many, no doubt, will continue to thrive. But all evidence suggests that this track is about to get much harder. Big, deep structural changes in the economy are likely to boost the advantages that great employers already enjoy in the marketplace and penalize even more the companies that fall behind.

It isn’t just because human capital is growing more valuable in every business. That trend has been going on for decades as ever fewer workers function as low-maintenance machines-turning a wrench in a factory, for example-and more become thinkers and creators. The remarkable thing is that while most trends eventually peter out, this one just keeps going. Intangible assets, mostly derived from human capital, have rocketed from 17%of the S&P 500’s market value in 1975 to 84% in 2015, says the advisory firm Ocean Tomo. Even a manufacturer like Stryker gets 70% of its value from intangibles; it makes replacement knees, hips, and other joints loaded with intellectual capital.

Companies will continue to gain a competitive advantage by attracting and keeping the most valuable workers, which is reason enough to become a great workplace. But interestingly, there’s a shift here as well-namely, in who is considered valuable. For decades-since Peter Drucker coined the term in the late 1950s-the MVPs were the so-called knowledge workers. But that term is no longer an apt description of the most prized personnel. The straightforward reason is that knowledge is becoming commoditized. Information, simple or complex, is instantly available online, Knowledge skills that must be learned-corporate finance, trigonometry, electrical engineering, coding-can be learned by anyone worldwide through online courses, many of them free. They can even be performed by a clever algorithm, Knowledge remains hugely important, but it’s gradually becoming less of a competitive advantage.

As technology takes over more of the fact-based, rules-based, left-brain skills-knowledge-worker skills-employees who excel at human relationships are emerging as the new “it” men and women.

More and more major employers are recognizing that they need workers who are good at team building, collaboration, and cultural sensitivity, according to global forecasting firm Oxford Economics. Other research shows that the most effective teams are not those whose members boast the highest IQ,s, but rather those whose members are most sensitive to the thoughts and feelings of others. MIT professor Alex “Sandy” Pentland, a renowned data scientist who directs that institution’s Human Dynamics Laboratory, has aptly summed up the new reality: “It is not simply the brightest who have the best ideas; it is those who are best at harvesting them from others. It is not only the most determined who drive change; it is those who most fully engage with like-minded people.

And it is not wealth or prestige that best motivates people; it is respect and help from peers. Yup, these are the new corporate MVPs.

Many companies will struggle with finding and luring these top workers-as well as employing them in ways that get the most out of their interpersonal skills. But the best companies to work for are, mostly, already there. Creating and building relationships is the essence of what they do.


March 15, 2015