When the six building blocks of a Winning Workplace are in place and supported by a company’s leadership, the results are magical.  I spelled out some of these results in this post, and even more are summarized from leading research studies here on our website.

These results are possible when a workplace culture is not based on fear.  Scott Eblin has a new post on his Next Level Blog for executives that describes, in almost scary detail, seven factors that can come together to create a "perfect storm" of fear that can cripple the camaraderie and productivity in your organization.

Of course, Eblin’s post is an exercise in what to avoid when you work to better engage employees and execute effective team building strategies.  For the opposite perspective – tips to get and keep fear out of your workplace – see this Ask An Expert column on our website.

How have you worked to keep fear from becoming a cancer in your business?

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Last July, when Amazon.com was on the verge of acquiring Zappos.com, I questioned if the move would lead to the demise of the unique – and uniquely powerful in terms of buzz and sales – productive workplace culture Tony Hsieh built within his retail business.

A year later, I’m happy to note that just the opposite seems to be true.  Hsieh has remained in place as CEO and, more importantly from an employee engagement perspective, he’s become even more visible as a "chief culture officer": I was one of many bloggers and reporters to pick up on his New York Times Q&A in January in which he shared the benefits of attracting and retaining offbeat workers.  Last month, Hsieh went even further in sharing his workplace culture beliefs, practices, and successes with the release of his book Delivering Happiness.

Through it all, Zappos continues to wow customers with its incredible service, helping to maintain sales in a tough economy.  What’s more, the company serves as a beacon of hope to job seekers and a vital source of tax revenues in hard hit Las Vegas.

Honest Tea, a finalist for our 2010 Top Small Company Workplaces award, appears to be following in Zappos’ footsteps.

After seeing this post last week on the Triple Pundit blog, which spells out the dilemma for the 12-year-old, Maryland-based organic tea bottler – staying true to its "no high-fructose corn syrup" label, and thus its customer base, with a Coca-Cola minority stake that’s set to become more significant next year – I decided to dig into Honest Tea’s application for our award for clues to their next moves.

Here’s how they answered our question on their key long-term strategic goals for the organization and the workplace (my emphasis is in bold):

A critical strategic goal is to maintain our mission-driven, entrepreneurial culture as we grow alongside the world’s largest beverage company, and to mentor other mission-driven companies.  We will continue our tradition of including all employees on crew drives, a vital way of instilling the Honest Tea culture.  Rapid expansion in 2010 will demand participation from everyone in the company.  Crew drives enable employees from every department to experience selling and marketing our beverages and directly invests them in our business fundamentals.  Another key goal is to maintain and build our position as a leading, innovative organic beverage company.  In 2010 we introduce Honest Kombucha, a unique, sparkling tea beverage based on live, organic cultures.  Even as we grow nationally, we are determined to sustain our role as a leader in the local community.  Honest Tea is a founding sponsor of a local environmental non-profit, Bethesda Green, supporting a healthy economy and sustainable living.  The company’s visibility in the community is a source of pride for our employees and a key part of our identity.  Finally, the company’s commitment to transparency, the accessibility of our President and TeaEO and the rest of the management team, are important ways in which Honest Tea will continue to be steeped in its entrepreneurial, mission-driven culture.

Like Zappos, Honest Tea is placing a premium on maintaining its human capital strategies and core values that have contributed to its massive success while it negotiates with a much larger company that has a sizable interest in it.

Related: For more on how Honest Tea’s employee development strategies led it to become an industry leader, read our award profile on the firm.

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I enjoyed this post by Susan Fronk on the America’s Best Business Practices blog.  In it she argues that the one thing that can most positively impact your small business – over and above measures to grow revenue, cut costs, and deliver excellent customer service – is finding and keeping great employees.

She provides more value later in her article by sharing three ways small businesses can build a more productive workplace culture by attracting and retaining great employees:

• Do a good job of recruiting and hiring,
• Create a great working environment, and
• Build relationships with your employees and foster relationships among employees.

I thought I would expand upon Fronk’s informative post by sharing with you some specific ways that Winning Workplaces’ 2010 Top Small Company Workplace award winners find and keep great employees:

1. Hire slow.  It’s not uncommon for job candidates to go through as many as 8 interviews before a hiring decision is made.
2. Hire for cultural fit.  This includes not just when a position is open, but generally when someone looks like a good fit for the organization; a number of firms prefer to keep their feelers out and plug someone in when they come across that person.
3. Grab top talent from competing firms.  Top talent is top talent, and our winning small companies are unabashed about leveraging a bad economy that has forced competing firms to shed staff to their advantage.
4. Systematize the orientation/onboarding process.  Many companies do a good job during the middle period of an employee’s tenure, but few are exceptional at the beginning, a critical time for new hires.  Our Top Small Company Workplaces really excel here by doing things like mentoring and scheduling meetings with the CEO to ramp up the new employee’s understanding of and commitment to the organization.
5. Managers have frequent contact with their subordinates.  For many small companies, managers only interact one on one with employees, to review performance and also their top concerns/hurdles, every three months.  Our award-winning firms typically do this every two weeks to a month.  This helps better engage employees for greater commitment, and also helps firms react to emerging issues sooner.
6. Invest in employee leadership development.  The Top Small Company Workplaces share a belief that they are best served when their top talent stays to fill and create roles of increasing responsibility, and they have seen results from their action on it including process improvement, product innovation, and better customer service – not to mention mid- and top-level employees who stay longer, keeping recruiting and training costs down.  As far as their specific leadership development strategies, see this post.
7. Give employees a voice in the decision making.  Lots of companies have an open door policy, but this no longer cuts it if you want to foster two-way communication that results in greater employee engagement and productivity.  Our award winners give their employees a voice by holding daily huddles and frequent (at least once a month) all-hands meetings.  In addition, many of them open up their books and explain the company finances so people gain a crystal clear understanding of how their role affects the top and bottom line.
8. Do employee recognition.  I’ve blogged before about how recognizing your staff can be meaningful and still inexpensive.  Often times a simple, face-to-face thank you or small gift personalized to the employee can make a powerful impact.
9. Be generous in providing time off.  More employers need to come to the realization that being flexible around employees’ personal and family obligations makes for a more committed and productive worker.  Paid time off should be a primary consideration, but if that’s not in the budget, being flexible – especially for unanticipated obligations – through measures like cross training will help immensely with retention.
10. Empower workers down to the lowest levels to make good spot decisions.  This involves a lot of trust from leaders and some additional training, but when it works it makes a dramatic impact on business results.  Just think how much happier you’ve been when you’ve called a vendor and you didn’t need to be transferred up the phone/responsibility chain to have your issue resolved.  The same sense of satisfaction can mean the difference in whether your customers or clients come back to you and refer you to others.

Is there a measure you think should be in this list?  If so, I welcome your comment on it below.

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Did you know that in late October, Denver will be a mecca for workplace team building and employee engagement practices that improve both business results and job satisfaction? 

It’s true – that’s when Winning Workplaces will join with our Top Small Company Workplaces award media partner, Inc. Magazine, to host Creating Competitive Cultures (C3): New Leadership Strategies for Building Great Companies.  The event will be held Oct. 27-29 at the Denver Marriott City Center.

If you’re looking for reasons to save the date, you need look no further than at the current speaker roster.  It includes some impressive entrepreneurs, including several from companies we have honored with our workplace award over the past 8 years:

1. Jill Blashack Strahan, CEO of Tastefully Simple
2. Mike Faith, founder of Headsets.com
3. Kenneth Feld, CEO of Feld Entertainment (Ringling Bros. and Barnum & Bailey)
4. Donna Fenn, Inc. contributing editor and author of Upstarts
5. Leigh Buchanan, Inc. editor-at-large
6. Bo Burlingham, Inc. editor-at-large
7. Norm Brodsky, Inc. columnist and founder of CitiStorage
8. Ted Freeman, principal at Praxis Consulting Group
9. Jeffrey A. Hollender, Chief Inspired Protagonist, co-founder, and Executive Chairperson of Seventh Generation
10. Bart Houlahan, founder of B Lab
11. Selina Lo, founder of Ruckus Wireless
12. Paul Silvis, founder of Restek
13. Larry O’Toole, founder of Gentle Giant
14. Bob Rosner, author of The Boss’s Survival Guide
15. Paul Spiegelman, founder of Beryl
16. Gail Sussman Miller
17. Tom Walter, CEO of Tasty Catering
18. Steve Voigt, President and CEO of King Arthur Flour

To learn more about this event or to register, visit the C3 website.  Through August 31, you can save $300 by registering at the early bird rate.

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Incoming search terms for the article:

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Back in March I wrote this post, which expanded on a point made by Marisa Keegan at Fistful of Talent to argue that employers should draw a line in the sand and hire for attitude and fit over skills.  The justification for doing so is a greater tendency for your employees and teams to create customer evangelists who can increase your repeat business and referrals.

This reasoning was reiterated in an unlikely place: a guitar magazine.  Last week I picked up the September issue of Guitar Player at my local grocery store, and in it I found the following poll and results:

In the ranking of the best qualities for fellow band members, GP readers – whom you can think of as entrepreneurs (bandleaders) and independent contractors (musicians seeking live gigs and session work) – rate team building capacity above skills by more than 5 to 1.

Does this shift your thinking when it comes to recruiting to cultivate highly engaged employees, especially when industry is the variable?

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Today I shared with our Twitter followers a how-to series of posts the Young Entrepreneur blog is running on starting a business.  One of these posts I found interesting is Adam Toren’s piece on choosing a business legal/tax structure.  He helps budding entrepreneurs greatly by rating the pros and cons of structures including Sole Proprietorship, Joint Venture, Limited Partnership, Limited Liability Company, and C and S Corporations.

Reading Toren’s post inspired me to take a look at the data Winning Workplaces has on the small business applicants for our 2010 Top Small Company Workplaces award, in terms of revenue and profitability for the legal/tax structures we looked at under our criteria of evaluating privately held and not-for-profit organizations.  The legal/tax structures of the firms we assessed included:

• C Corporation (roughly 3/10 firms)
• S Corporation (roughly 5/10 firms)
• Partnership/Proprietorship (roughly 2/10 firms)

Here’s how they break down by structure for both average 2009 revenue and percentage that were profitable in 2009:

*Assumes the firm has been in business at least 3 years

The key takeaway is that while C Corps edged out the other two structures in revenue, a greater share of Partnership/Proprietorships are profitable.

You may be asking, What makes this survey sample a good one to use these metrics for benchmarking purposes?  Well, beyond the size of the sample (497 organizations) and the fact that they have all crossed the Dun & Bradstreet threshold of surviving after the first three years, most of these enterprises understand the payoff of employee engagement and team building strategies on the bottom line.  So they post better revenue and profitability numbers to shoot for than a survey sample in which employees are more likely to be actively disengaged.

What’s your take on the above?  How do you see strong people practices factoring into the equation?

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So I was honored to learn last week that we were named a 2010 Top 40 Human Resources Blog by AwardingTheWeb and Online MBA.  You can view the other 39 honorees here – I am humbled that we join the company of blogs that I follow and admire such as All Things Workplace, Bob Sutton’s Work Matters, and Leading Blog.

My thanks to AwardingTheWeb and Online MBA for this honor; it is truly appreciated.

Related: View other awards our blog and our website have won over the past few years.

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If you have 90 minutes to spare, I have something that’s a great use of your time when it comes to expanding your understanding of the payoff of employee engagement and workplace team building activities.

Below is a video of our President’s presentation last month at an Entrepreneurial Roundtable hosted by the University of Chicago Booth School of Business.

If you can’t see the video in your RSS reader, click here.

The presentation kicks off with our own Gaye van den Hombergh explaining why companies should care about creating great workplaces (starting at 7:30) and the qualities we see as critical to Winning Workplaces, along with some of the people practices used by winners of our 2010 Top Small Company Workplaces award, which were featured in the June issue of Inc. Magazine (starting at 29:00).

Starting at 44:00, Gaye led a panel featuring leaders of this year’s two Chicago area winners: Marvin Klein, Founder, PortionPac Chemical Corporation; and Tom Walter, President & CEO and Tasty Catering.  As you absorb the lessons learned and insights of these two leaders, consider their workplace culture practices, which I’ve listed below respectively, that have led them to success – even in this tough economy:

PortionPac

Selected workplace best practices:

• Offers personal and financial support for employees on a case by case basis
• "Front to Back Day"
• Offers experience to improve personal confidence and communication skills
• Employees have a high degree of autonomy

Business results:

• 2009 revenue up 7% from 2008
• Over the same period their competitors suffered double digit losses

Tasty Catering

Selected workplace best practices:

• Personal financial crisis fund fed into by employees
• Healthy free meals provided to staff on a daily basis
• If an employee comes up with idea and is willing to put in the effort, the company will help finance and support the endeavor

Business results:

• While sales fell in 2009 vs. 2008, it experienced only half the decrease of its industry and remains profitable
• High average employee tenure of 7.5 years

What are your takeaways from watching this video?

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In a post on the Business Insider blog re-posted from his own blog, GRP Partners’ Mark Suster argues that leaders should solve problems and drive innovation from the top.  He writes,

I challenge you to consider whether you’re top-down or bottom up.  In analysis there are always circumstances for each approach.  But in leadership and entrepreneurism the top-down approach will be the right solution more often than not.

Now, I get that Suster is not saying that leaders should engage employees from the top down 100% of the time, but he is saying it should happen this way the majority of the time.

However, in our experience conducting employee engagement research of small businesses as part of our annual workplace award program, we see that management and decision making can happen in many different ways to lead companies to success in the metrics that ultimately matter: sales and profitability.  Our President detailed four decision-making approaches that run this gamut in these two posts.

Three of the four approaches she wrote about involve bottom-up decision making in some capacity.  And in fact, in the applications we received for our 2010 Top Small Company Workplaces award, we saw bottom-up engagement factor prominently in the qualitative feedback of some firms that are performing quite well, even in this tough economy. 

Check out four case studies that bear this out below.  All four companies have been profitable in the last three years.

Application Question: How have your organization’s people practices contributed to your top line revenue and bottom line profitability?
Response by Bronto Software
8-year-old software firm from North Carolina
2009 sales: $5.1 million; 132% 3-year sales growth
At Bronto we have a sales team who is instrumental to our success.  Because of our organic funding, growth comes from bottom up.  Employees have directly influenced consistent new client growth along with amazing client retention.

Application Question: How does the organization encourage employees to participate in important business decisions?
Response by Barhorst Insurance Group
17-year-old financial services firm from Texas
2009 sales: $6.9 million; 16% 3-year sales growth
Our organization is built on a foundation of bottom up planning!  Every year we have the branch managers provide a sales and expense plan that is fed into our annual corporate plan.  In 2008 and 2009 we completed or long term 2020 strategy to grow from 50 million in sales to 1 billion in sales.  The strategy team was comprised of 10 mid level associates from each department.  The team received feedback from their peers and developed a strategic road map for the future.  This plan includes monthly and quarterly progress reports to the leadership team.  The strategy team will begin rotating new team members through in 2010.  By using a bottom up method employees take ownership for the company’s success and failure.

Response by Intermark Media
11-year-old advertising firm from New York
2009 sales: $92.7 million; 161% 3-year sales growth
At Intermark Media we believe changes in the company should be driven from the bottom up.  The employees who are interacting with our clients everyday have valuable insight into what processes work well and what changes need to be made to better meet the needs of our customers.  We encourage all employees to be a part of our decision making process at Intermark Media.  Weekly team meetings allow employees to voice opinions, discuss new ideas and solve problems.  Team leaders encourage input from each and every team member.  In addition to weekly meetings, leaders communicate daily through their email group to vote on awards, discuss ideas and concerns and get feedback.

Application Question: Over the last year, what kind of impact has the economy had on your business?
Response by Man-Machine Systems Assessment
20-year-old consulting firm from the District of Columbia
2009 sales: $8.6 million; 5% 3-year sales growth
The economy has little effect on our business.  We have continued to grow in spite of the economy and I truly believe this is because of the way we operate our business and the culture we have created.  MSA employees feel safe, and know that the owners will do everything within their power to provide work, support their needs, and care for them and their families.  This kind of loyalty is earned, and not bought.  The MSA family is strong and the support we have for one another from the top down to the bottom up allows for strength and faith as we face challenges, like the economy.

Related: We tackled bottom-up staff engagement activities in greater detail with the help of CEOs from two of our previously honored small firms in this webinar.

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It takes time, commitment by company leadership, and at least some financial investment to make significant inroads to implement employee development strategies to create more leaders at all levels within an organization.

So why should a firm go down this path?  What’s the ROI?

An article on Newswise this week based on a new study published in The Leadership Quarterly provides answers to these questions.  According to the employee engagement research of Kaiser Permanente by faculty at three California-based universities,

the more effective both the CEO and head of a department are perceived to be; the more [employees] supported the change in strategy.  …   Moreover, the data showed that leaders are more likely to be effective in getting employees to achieve organizational objectives … when the employees are shown that their leaders are united in supporting the strategy.

In other words, as the title of the Newswise article suggests, the number and competency of leaders in an organization contribute directly to the effectiveness of both senior leadership and the strategies they seek to carry out to achieve desired business outcomes.

With this in mind, I wanted to share the most popular posts among readers of our Employee Leadership Development blog – the ones that have helped them most to think about and act on the process of creating more leaders among their workforces.  Check them out:

1. The Connection of Flexibility and Training to the Bottom Line
2. 10 Best Practices: Transitioning to Work at Home
3. Updates: Resource Interactive’s Work Environment, Comment to Our Post on Zappos’ ‘Leaving Bonus’
4. Employee Engagement: A WorthWHILE Metric
5. 30 Employee Development Strategies to Boost Productivity
6. BNET: Strong Workplace Cultures a Boon for MBO Leaders
7. Five Proven Strategies for Retaining Top Talent
8. Friday Nugget: Don’t Underestimate the Importance of Learning
9. How a Small IT Firm Creates Knowledge Leaders, and the Company ROI
10. Job Swapping Extends Beyond Non-Management Employees

How does a focus on developing leaders factor into your overall employee practices?

Photo credit: CAREEREALISM

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