By: Jack & Suzy Welch

What are the three most critical factors that turn a company into a preferred employer ? And what’s a realistic time frame for getting there?

----Jan & Mel Welch Russellville, AR

You ask for three factors, but you need twice that many “gold stars” to earn the grand prize of being a preferred employer.

And it is a grand prize, because when you build a company where people really want to work, you’ve got your hands on one of the very most powerful competitive advantages in the game: the ability to hire and field the best team.

But before we give you our six steps to arriving at that fortunate place, let’s talk about about how long it takes to become a preferred employer.

          The answer is: years. And it can be decades or more.

That’s just the way it is with corporate reputations. They’re built annual report by annual report, career by career, crisis by crisis (because every company has one or two of them) , and recovery by recovery. It took IBM about 30 years to earn its gold-standard reputation in the 1970s, less than a decade to stumble and lose it, and probably a decade more to rebuild to where it is today.

In today’s media-saturated world, however, there is a major exception to the more generally slow pace of reputation-building. Companies can become preferred employers virtually overnight thanks to the “buzz factor,” which is as potent as it is fast-acting. In a technology-based company, buzz usually comes with an exciting break through or paradigm-altering product or service. Google, eBay, and Apple are perfect examples. Buzz, however, can also come from having a glamorous or prestigious brand, like Chanel or Ferrari.

But the buzz factor is as rare as it is precarious. Apple had it with the Mac, lost it when other PC makers leap-frogged ahead of the company, then recaptured it (plus some) with the iPod. This entirely common story explains why most companies have to achieve preferred employer status the old-fashioned way, grinding it out over time. Here’s a checklist to assess your company’s progress:

1. Preferred employers demonstrate a real commitment to continuous learning. No lip service. These companies invest in the development of their people through classes, training programs, and off-site experiences, all sending the message that the organization is eager to facilitate a steady path to personal growth.

2. Preferred employers are meritocracies. Pay and promotions are tightly linked to performance, and rigorous appraisal systems consistently make people aware of where they stand. As at every company, the people you know and the school you went to might help get you in the door. But after that, it’s all about results. Now, why does all this make a company a preferred employer? Very simply, because people with brains, self-confidence, and competitive spirit are always attracted to such environments.

3. Preferred employers not only allow people to take risks but also celebrate those who do. And they don’t shoot those who try but fail. As with meritocracies, a culture of risk-taking attracts exactly the kind of creative, bold employees companies want and need in a global marketplace where innovation is the single best defense against unrelenting cost competition.

4. Preferred employers understand that what is good for society is also good for business . Gender, race, and nationality are never limitations; everyone’s ideas matter. Preferred employers are diverse and global in their outlook and also environmentally sensitive in their practices. They offer flexibility in their work schedules to those who earn it with performance. In a word, preferred companies are enlightened.

5. Preferred employers keep their hiring standards tight. They make candidates work hard to join the ranks by meeting strict criteria that center around intelligence and previous experience and by undergoing an arduous interview process. Admittedly, this factor is somewhat of a catch-22 since it’s difficult to be picky before you become an employer of choice. But it’s worth the effort. Talent has an uncanny way of attracting other talent.

6. Preferred companies are profitable and growing. A rising stock price is a hiring and retention magnet. But beyond that, only thriving companies can promise you a future with career mobility and the potential of increased financial rewards. Indeed, one of the most intoxicating things a company can say to a potential employee is: “Join us for the ride of your life.”

As we said at the outset, the best thing about being a preferred employer is that it gets you good people, and this launches a virtuous cycle. The best team attracts the best team, and winning often leads to more winning. That’s a ride that you and your employees will never want to get off.

* * * * * *

                    Jack and Suzy Welch look forward to answering your questions about business, company or career challenges. Please e-mail them at

                            For their weekly podcast, go to



BusinessWeek Magazine

September 11, 2006 (Pg. 124)

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