Comparing Apples to Apples on Glassdoor
Robert Hohman is co-founder and CEO of Glassdoor, an online community where employees and job-seekers post anonymous information on salaries, company reviews, interview questions, and more, providing a valuable insider's glimpse of what it's like to work at a company. Hohman was on Expedia's original team, and helped take it public in 1999. He most recently served as president of Expedia's discount division, Hotwire.
In this video segment Hohman discusses the differences in Glassdoor ratings for large companies versus small ones, public companies versus private ones, and the importance of comparing ratings within a given industry. He points out that while tech companies are sometimes able to create extremely high employee loyalty, other industries, such as airlines, have lower employee satisfaction ratings overall.
A full transcript follows the video.
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love.
Tom Gardner: We're here at the offices of Glassdoor in Sausalito. You may hear some background noise occasionally because people are working right around us, and it's great to be here in the environment.
I'm curious whether you've observed this to be true. I think I'm saying something that's pretty simplistic and obvious, but I just want to see if you've seen it to be true -- that the larger you are as a company, the harder it is to have a high rating. That the ratings come down as you add your 1,000th or 3,000th or 5,000th employee because it's harder to see the individual, and that individual can give you a rating.
That would be question number one. Do you observe that to be true or not?
Robert Hohman: I am thinking it would be interesting to go and look if, statistically, that is true. I'm thinking of some well-known exceptions to that rule, those being Google , Facebook ... VMware is also very highly rated. There are some very large companies that are growing very, very rapidly, and have managed to maintain that strong sense of identity and that high rating, so I don't think it has to be the case.
Gardner: But on an average basis.
Hohman: I would bet on an average basis, it is. It'd be interesting to go and look at that data. I would bet it would be true.
I think what's underneath that is the reality that I think you and I both have seen numerous times, which is if a company doesn't have culture -- front and center and crystal clear, about who they are and what they stand for and what they believe in and what they're here to do -- when you then lay thousands of people with differing ideas and opinions on top of that shaky ground, you do revert to the mean on CEO approval rating, on what the company believes. And when that happens, people tend to be very confused and frustrated.
Gardner: Very well said. I'd say I've observed a second thing. I wonder if you think this might be true or is true in your observation, that if you're public versus private. It is harder to sustain or earn a high rating if you're public, because there are different regulatory communication limitations, etc. Private/small looks like it has higher ratings out there on Glassdoor than public/large.
Hohman: I think that there is some truth to that, there's no doubt about it. Again, there are some very notable exceptions. Certainly, being public ties some hands on communications. But the types of communications that employees tend to find most important are, again, around just plain, "What are we here to do?"
And it's long term. It's not necessarily things that the market is going to respond to. It's not next three month, next six month things that employees really care about. They really care about, what is the five-year ... how are we going to change the world here? Our little corner of the world?
Gardner: Two companies that I love, in and of themselves, and then confirmed by the rating, are Facebook and Whole Foods . So, my third question about ratings is, I have observed that the more you're in technology and intellectual property, the easier it is to have a higher rating. The more you're in service like fast food ... Companies like Chipotle are going to have naturally lower ratings because there is, in that business, a higher turnover among employees, etc.
Gardner: So, it's not fair to compare. You've got to look at them within an industry, maybe within a size, and maybe public versus private, and then you're getting a slightly clearer read.
Hohman: For sure. That's absolutely the case, that we see a different swing across industries. Again, some notable exceptions; Southwest Airlines at one time had an extremely high rating. You almost have to look at it by that specific an industry -- airlines. If you just look at airlines, you can't even compare them to any others because morale in the airlines -- because of what they went through around 9/11 and everything else -- tends to be relatively low, Southwest being an exception.
The rest of hospitality didn't suffer quite as much as that. And then yes, service in general is lower than tech.
The other thing that happens in tech is they frequently have these iconic leaders, which do tend to affect the culture overall. Also, in tech the companies tend to be able to grow disproportionately faster than non-tech, when they really explode. And when that happens, and there's a strong culture there -- both -- it can create a perfect storm of goodness.
The article Comparing Apples to Apples on Glassdoor originally appeared on Fool.com.The Motley Fool recommends Chipotle Mexican Grill, Facebook, Google, VMware, and Whole Foods Market. The Motley Fool owns shares of Chipotle Mexican Grill, Facebook, Google, VMware, and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.