In 2007, Glassdoor, a newly launched company feedback and rating site, was brushed off as a place where disgruntled employees go to write bad reviews about their managers and employers. Few, if any, realized it would become the force it is today, gaining so much trust and influence among employees that it’s changing the way companies are run and HR policies are set.

David Mallon
David Mallon

Fast-forward a decade and, in 2017, Glassdoor has around 700,000 companies on its site, 6,200 paying clients, more than 35 million reviews and insights, and is the fastest growing job site, according to comScore. Today, Glassdoor operates sites under the company’s brand in 13 countries. In 2015, it received a $70 million investment by Google Capital, giving it a cool $1 billion valuation.

With its massive reach, companies quickly realized that online reviews about culture, compensation policies and interviewing tactics could cost them a competitive edge for securing new talent. In fact, research published in 2015 by Tom Lakin, director of Career Design Coaching, found that job seekers trust Glassdoor more than they trust company-produced messages.

This level of trust has created what’s called the “Glassdoor effect.” Felt in HR departments all over the world, it’s a kind of phenomenon that happen when current and former employees post their thoughts about working at a specific company, and the employer finds that they’re soon scrambling to change policies in an effort to stay competitive in the war for talent.

Things that were once a secret are out in the open, and every detail can affect culture, employee engagement and retention, all top business challenges today, as found in this research produced by Deloitte. When there’s a problem now, people, especially Millennials, aren’t afraid to go to the head of HR and ask, “What are we going to do about this?” This has likely made a lot of managers cringe.

“Now, it’s very rare that we come across a company that’s opposed in principle to what we do,” said Robert Hohman, CEO and co-founder of Glassdoor. “Nine years ago, there were plenty of companies that were just opposed in principle to what we were doing. The idea that we would collect what people think about their workplace and their leaders and make that public was really provocative and for people to brazenly share their salary for anyone on the internet to see was sort of unthinkable to HR leaders.

“But the world has gotten more transparent,” he added.

Embracing transparency isn’t an option. It’s a necessity.

We can’t talk about Glassdoor’s tremendous growth without talking about today’s age of transparency. It’s a little bit of a chicken-and-the-egg scenario. Sure, today’s need for transparency helped spur Glassdoor’s growth, but the company’s popularity, along with social media platforms like Facebook, LinkedIn and Twitter gaining traction, have prompted many businesses to think about how unfiltered commentary can affect its brand. And hence, the question is no longer whether or not a company should be transparent, but rather, what actions should they take after information is made public.

For instance, consider pay transparency, a hot topic among HR professionals today. While making pay public isn’t anything new (the military and public institutions, like the federal government, make compensation information public), in the private sector, discussing pay has somewhat long been a taboo subject. Some companies even require employees to sign NDA agreements so they can’t discuss pay with their peers. A 2015 Glassdoor survey found that 47 percent of employers don’t share any salary information, despite the general consensus that keeping pay in the dark is a main contributor for wage gaps.

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But with the rise of resources like Glassdoor, companies don’t get the luxury of not having to think about pay structure, or carefully considering why they are paying someone more than someone else anymore.

Kirsten Davidson, former head of employer brand at Glassdoor, shares on a WorkXO podcast that she’ll often come across companies that say to her, “We have this problem happening on Glassdoor … so how do I shut that down.” Davidson always tells them, “You don’t have a Glassdoor problem. You have a problem.”

Instead of challenging Glassdoor, it may make more sense for more companies to embrace the findings, use the information to their advantage. Nonetheless, less than 1 percent of companies listed on Glassdoor pay for the services (subscriptions are customized per the employer based on recruiting or employer branding solutions they want, size of the employer, location and other factors), which would allow them options like receiving demographic details on jobseekers and boosting their job ads. Additionally, 19 percent of companies listed on Glassdoor interact with candidates, even though it’s free to respond to reviews, add photos and write descriptions of their companies.

It could be that some companies reject Glassdoor and the transparency it offers because fear of the short-term downsides in talking openly about uncomfortable topics, like pay. A 2014 Bersin report on transparency titled “Transparent Succession Management: Building a Culture That Fosters Open Dialogue about Talent,” found that top barriers to transparency include a weak company culture that doesn’t have a well-defined set of processes in place to support the changes needed for a transparent workplace. Case in point: not having strong enough managers to give performance feedback, provide good coaching and conduct career discussions.

Leveling the playing field for employees

When Hohman, along with his two co-founders Tim Besse and Rich Barton, started Glassdoor, they did so to bring “more power to the people,” Hohman told Bersin Perspectives. So often, jobseekers are kept in the dark throughout the interviewing process and the three co-founders wanted to help level the playing field for all parties involved, in much the same way they brought transparency to the travel industry with Expedia (all three were part of the founding team) and reshaped the real-estate industry with Zillow, where Barton is also a co-founder.

I would say strategically, we believed early on that hiring was a marketplace, and that it was a quirky marketplace because both sides of the marketplace–jobseekers and companies–were really ill informed about the other,” explained Hohman. “There wasn’t much transparency, and you come together in this hiring event to figure stuff out, but it’s a very short-time frame and you only have a couple of hours to figure out what’s the other person’s story. It’s just really inefficient.”

“So, we’ve been on this long journey to make that whole transaction more transparent, less opaque and therefore, more efficient,” he continued.

Thanks to Glassdoor, candidates from anywhere in the world, working in any industry, can draw on outside resources to determine how their offers stack up compared to their peers. Take for example tools like Glassdoor’s recently launched Know Your Worth which is described on the company’s blog as “patent-pending technology to calculate the estimated market value, or earning potential, of an individual, right now, based on characteristics of his or her current job, work experience and the local job market.”

This kind of data helps make it easier for candidates to see where they stand relative to the market, so they can have a better idea of what they should be asking for. The more people using the tool, the more accurate its real-time market trends.

In short, the Glassdoor effect hasn’t just changed companies; it’s also changed jobseekers. In the age of social proof, buying a new product, eating at a new restaurant and yes, even interviewing with a new company rarely happens without scouring the web to see what’s out there. Glassdoor has worked to help level the playing field for candidates, and as a result, jobseekers are now able to walk into an interview room and have a decent idea of company culture and how much money to ask for.

Why this matters: Being a transparent company takes a lot of work. It demands that companies have the tough conversations, embrace talent mobility, be honest about policies that may not be completely fair at your own company, and finding ways to fix that. Taking action. It also involves a lot of coaching on the management team and established processes on making decisions. For instance, when a company makes a decision to pay an employee a certain amount, they should be clear on how they’ve come to that decision, and then they should communicate that effectively with the employee. Glassdoor has made it so that companies are pushed toward transparency, because top talent tend to flock to brands they believe to be more authentic and they aren’t waiting on brands that are not to catch up.

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David Mallon

David Mallon

Mallon is Bersin’s chief storyteller. He engages directly with Bersin members and the market to bring the Bersin’s insights to life.