It’s repeated to the point that it’s cliché: talent matters.  How you recruit, organize, engage, motivate, and deploy your people matters.  But with constant client demands and a changing landscape, it can be easy to let talent management fall by the wayside.  When recruiting new leaders, many firms recruit superstar individual contributors without thinking about whether those people can lead.  That’s a mistake, and the numbers in our latest research bare it out.

We took a looked at growth and revenue data from the 100 largest PR firms in the world as compiled by the Holmes Report and added in workplace ratings from review site Glassdoor, giving us a total of 75 firms that appeared on both lists.  We then divided the firms into quartiles and looked at the relationship between employee satisfaction and year-over-year growth.

The bottom line: how happy your people are with your firm has a big influence on your growth.

How much?

Firms in the top quartile grew twice as fast as those in the next quartile and four times faster than those in the bottom half.

growth-vs-glassdoor-for-pr-firms

That’s in line with other research showing how employee engagement drives growth, leading the most engaged firms to have earnings per share 147% higher than their peers.

We think these results are the product of three “feedback loops” that bode well for the firms at the top and could spell trouble for the rest.

The Culture Loop

Great firms create great cultures. They provide ongoing feedback to help their employees grow, create career opportunities for them to grow into, and have quality leadership that motivates them to bring their best every day.  Great people come and they want to work in that culture, perpetuating it for everyone.  But toxic cultures are the opposite: they drive out anyone who wants something different, leaving only self-oriented leaders and mediocre performers.  When your culture is toxic, your best people are the first ones to leave, and they’ll usually take others with them.

The Client Loop

A great culture unlocks creativity and innovation, allowing people to do great work.  If you do the best work, you get the best clients.  The best clients create the most interesting work, which attracts the smartest, most creative, and most talented employees.  That helps you do more great work, leading to more great people joining you, leading you to pick up more great clients.  You see where this is going.  When your culture goes sour, your best people leave, client work suffers, taking away new opportunities, and pushing even more great people out the door.

The Employment Branding Loop

Our data didn’t just come from internal surveys: it’s publicly available on Glassdoor.  While we think it correlates to employee engagement, it’s more directly applicable in the world of employment branding.  People who are happy at your firm tell others, and that encourages people to apply and accept offers.  That helps you attract the best people, reinforcing your culture, and leading to more high-level engagements.  But when your culture starts to sour, your people are going to tell the world, and it’ll be even harder to turn things around.

The Rich Get Richer

If you look at these findings and think that the gap between the best and everyone else is only going to grow, you’re not alone.  A study last year from McKinsey and Co. found that across a variety of industries, profits are increasingly going to a smaller number of firms.  Those firms are in turn able to offer better compensation, perks, and benefits, leading more of the best people to work there, and winning more business.

If you’re not creating a winning culture, you need to turn things around fast.  And if you think you’ve figured out the culture game, watch out.  Culture is tenuous, and if you don’t continuously nurture it, things can easily fall apart.  Of course, this is easier said than done.  A cursory glance at the comments attached to Glassdoor reviews show that creative spaces, ping pong tables, or fun conference rooms most firms put in place don’t matter nearly as much as having a clear direction for your firm, opportunities for growth, and effective managers.