What Makes a Workplace Great?

Every year for the past 14 years, Fortune Magazine has teamed up with the Great Place to Work Institute on a list of the 100 best companies to work for in the United States. This year, a third of the top 15 employers on the list were tech firms. Cisco, Microsoft and SAS are list veterans, having been on it for each of its 14 years. Google, SAS and NetApp have made it to the list’s top rungs the past three years.

So what makes a company a great place to work? Good pay definitely helps. But it’s outstanding perks that tip the scale. Fitness centers and bagel breakfasts are the stuff of mere good employers. These 100 best workplaces earn their “great” badge by offering some pretty unusual benefits.

SAS, for instance, offers high-quality daycare for US $410 a month, unlimited sick days, and its own medical center. The software firm also pulls out all the stops at its Cary, NC campus: tailor, manicurist, summer camps for kids, and car detailing. Cisco offers excellent day-care and brings a car care company to the office twice a week. Microsoft’s Redmond Campus, meanwhile, has a shopping mall called The Commons, with two-dozen shops and restaurants.

What do the companies get out of this? Good reputation for one, says Marcus Erb, a senior research partner at the Great Place to Work Institute, with current employees, potential job seekers, and with customers and supply chain firms. “Reputation is a powerful marketing tool especially if you’re in a very competitive field for talent. Engineers are always in high demand for firms competing for talent. So these companies build a great workplace to attract top-quality recent grads and pull in mid-level professionals.”

Good benefits also make for happier employees who stick around longer. And that means big savings. It takes a lot of money to hire and train someone, not to mention the cost of lost knowledge and time. SAS has a turnover rate of 2 percent compared to their peers’ 22 percent, Erb points out. The company saves $100 million annually in turnover costs. And it has never had layoffs.

Over 500,000 companies nominated themselves for a place on the list this year, says Erb. A survey of hundreds of employees at each company accounts for two-thirds of the score. The other third are based on what the companies say about things such as pay, benefits, hiring practices, and diversity efforts.

So why don’t more employers get in on the game? Erb says sometimes it’s just not a priority. Firms that are already good know the importance of becoming great, but they don’t necessarily act on it. Other times, he says, “it’s a question of aptitude. Some of the companies on the list have always been great. They have built-in leadership DNA. Other companies have learned how to do it over the years. But some just don’t have that aptitude.”