How The Workplace Was Won In which we trace the lineage of our Best Companies by revisiting some great moments in workplace history.
By Matthew Boyle

(FORTUNE Magazine) – By now you've looked ahead at our list of the 100 Best Companies to Work For. You've probably noticed that many of the companies are the same as last year's, which raises the question, "Has anything changed over the years?" Or to paraphrase the Talking Heads, How did we get here? Here's how. In the following pages we chronicle the people, places, and policies that made the workplace what it is today. You may think of the story of the workplace as early Workingman creeping, caveman-like, out of the dingy factory and into the lighted cubicle, but it's a bit more complicated than that. Even in the old days, back when profit sharing was deemed a radical concept and paid vacations were considered an unattainable luxury, there were great places to work. No, they didn't offer massages to pieceworkers or sabbaticals to stevedores, but these companies did make the fascinating discovery that improving working conditions and treating employees like human beings actually paid dividends (and kept union rabble-rousers at bay in the bargain). At four companies--Procter & Gamble, IBM, Hewlett-Packard, and Wal-Mart--enlightened leaders created workplaces that stood out during various epochs of the 20th century. Of course, we didn't discover a century of uninterrupted progress--even each of our fab four, and their workers, have had their tough times. So hold on to your ergonomic chair, because it's going to be a bumpy ride.


Founded in 1837 as a soap and candle maker, Procter & Gamble was a model of exemplary employee relations at the turn of the 20th century. The driving force behind many of its pioneering policies was William Cooper Procter, grandson of a co-founder, who joined P&G as a low-level factory worker and quickly rose up the ranks. In 1887 he persuaded his father and uncles to introduce a profit-sharing plan to foster company loyalty. The plan was improved in 1903 by tying it to the purchase of company stock, and it stands today as the oldest known profit-sharing plan in continuous operation. In 1915, P&G workers were introduced to an "employee disability and death benefit plan," one of the first of its kind. After World War I the company gave factory workers an eight-hour day--long before any federal law required it--and in 1923 it guaranteed 48 weeks of work per year. Barney Krieger, the first man hired by P&G, stayed for 47 years. While many employees have shown similar devotion, the rigid P&G bureaucracy that developed over the years--with its emphasis on controlling information, its obsession with memos, and the occasional snooping operation--has invited comparisons to the Kremlin. One sign of perestroika: P&G employees can now wear casual dress.


IBM didn't become a corporate giant until the 1950s, but the ideals that built Big Blue took hold in 1914, when 40-year-old Thomas Watson Sr. (shown here in 1947) joined a failing conglomerate called the Computing-Tabulating-Recording Co. Other manufacturers of the era emphasized reducing tasks to repetitive functions, but Watson made people the focus of his corporate culture. He borrowed money to fund in-house education programs, abolished piecework, spruced up factories, and paid above-average wages at all levels. Bereft of funds for generous benefit plans, he staged picnics (complete with band and theme song) to concoct company spirit. In 1934, IBM launched a group life insurance plan, and survivor benefits and paid vacations were added soon thereafter. Paramount within Watson's "human relations" mantra was his "open door" policy, whereby any employee could take a complaint to Watson himself. And since workers were ensured lifetime employment, even during the Depression, they were less afraid to speak their minds. But nothing good lasts forever: Watson's cherished no-layoff practice died in IBM's massive work force cuts of the early 1990s.


Dave Packard and Bill Hewlett started their company in 1938, keenly influenced by the Depression and the importance of job security. Hewlett-Packard grew slowly--by 1951 it had just 215 employees--so Dave and Bill (they insisted on first names) got to know everyone personally. Maintaining those values as the company grew helped shape the now famous HP Way, a management style (codified in 1957) focused on sensitivity to employees. HP eschewed offices for cubicles, which allowed managers to manage by "walking around," as Packard demonstrates, above, in the 1970s. The company's benefits plan was the envy of workers everywhere, and in 1973 HP became the first large American company to offer flextime, a policy that Packard called the "essence of respect for and trust in people." Former CEO Lewis Platt once told FORTUNE that "in the HP environment, you really can't order people to do anything." That also meant it was hard to move the whole company in one direction--one reason Platt sought out Carly Fiorina from Lucent to succeed him as CEO. Fiorina has whipped up a whirlwind at HP, but she knows the HP Way is something she can't reinvent. The folks at HP call her Carly, proof that some things never change.


When Sam Walton joined J.C. Penney as a management trainee in 1940, he noticed that all the employees were called associates, a practice that dated back to 1902. Always quick to borrow from others, Walton instituted the policy at his growing discount chain in the 1960s. He also embraced Tom Watson Sr.'s open-door policy, and did HP's "management by walking around" one better by visiting every store. Where Walton broke new ground was by opening Wal-Mart's books to all associates, a strategy that made the corny Wal-Mart mantra--"Our people make the difference"--credible. Walton was notoriously chintzy on salaries, and his associates worked like dogs. But as at P&G years before, compensation included carrots like profit-sharing and stock-ownership plans for everyone. The company faltered after Walton's death in 1992, but it's back on track, and one visit to a Saturday morning meeting--a raucous business meeting-cum-pep-rally--proves that Mr. Sam's legacy lives on.


1901 Norwegian inventor Johan Vaaler receives a U.S. patent for his paper clip, saving fingers across the land from vicious stickpins.

1902 James Cash Penney, 26, opens his first Golden Rule Store in Wyoming and gives his workers the genteel title "associates."

1911 Wisconsin is the first state to establish a worker's compensation program.

1914 Henry Ford institutes a $5 daily wage, roughly double the going rate at the time.

1917 J.C. Penney launches The Dynamo, the first in-house organ, replete with inspirational tales and tips to increase sales.

1918 One of the earliest known water coolers--made from cast iron and holding 80 pounds of ice--is sold by Halsey Taylor.

1929 Jeweler Maritz markets gold watches to corporations to give to employees as rewards for sales and service.

1930 Torn memo? No problem. Young 3M engineer Richard Drew invents Scotch tape.

1933 Elton Mayo writes about his experiments at Western Electric's Hawthorne Works. He argues that paying attention to workers dramatically increases their productivity.

1936 The Wisconsin Industrial Commission issues the first-ever unemployment check (for $15) to Neils B. Ruud of Madison.

1937 Office lighting as we know it: General Electric starts selling fluorescent lamps.

1941 United Electrical Radio & Machine Workers' union wins one week paid vacation for GE workers.

1943 Johnson & Johnson adopts an early company credo, pledging to "respect the dignity and recognize the merit" of employees.

1945 New York passes the first state law prohibiting racial discrimination in private employment.

1948 The United Auto Workers and GM sign the first contract containing an "escalator clause," which protects workers from cost-of-living increases.

1955 George Meany's AFL and Walter Reuther's CIO set aside decades of bickering and merge.

1956 Bette Nesmith Graham markets Mistake Out, later known as Liquid Paper, to secretaries in her office.

1959 Continuing strides for secretaries: Haloid Xerox introduces the Model 914, the first fully automated copier.

1963 Baptist Hospital of Miami opens its own day-care center, one of the first employers in the country to do so.

1964 The Civil Rights Act of 1964 prohibits discrimination by both employers and unions.

1967 The Age Discrimination in Employment Act prohibits bias against persons over 40.

1970 The Occupational Safety and Health Act gives the federal government the power to set and enforce safety and health standards for most workers.

1973 Motorola develops the first cellular phone, ensuring that you're never out of touch with work.

1975 AT&T bans discrimination against gays and lesbians.

John T. Molloy's Dress for Success is published.

1980 3M introduces Post-it notes A new standard protocol for sending faxes more quickly is adopted and sparks a surge in office fax use.

1985 A company called cc:Mail ships its first electronic mail product, creating a new forum for workplace gossip.

Ben & Jerry's states that its CEO can be paid no more than five times the salary of the lowest-paid employee (the policy is abolished in 1994).

1986 Bright Horizons is founded to run corporate day-care centers.

1990 Saturn unveils its first car--a model built in a partnership between General Motors and the UAW in which the union has a say in the running of the business.

The Americans With Disabilities Act requires employers to accommodate the disabled.

1991 In The Overworked American, Juliet Schor argues that the average American works about a month more a year than he did 20 years earlier.

1994 Starbucks goes nationwide, caffeinating workers in New York, Boston, Atlanta, and Dallas.

1995 In a major blow to the starch industry, IBM workers are allowed go casual.

2000 Despite vigorous opposition from business groups, OSHA issues a far-reaching ergonomics statute covering the vast majority of workplaces.