Employee Development Strategies

This post from last week on Canada's Axiom News site caught my attention.  In it, Jennifer Higgs cites the Vermont Employee Ownership Center – and our 2007-09 Top Small Workplaces – in making the case that companies that are employee owned have "disproportionate excellence" relative to their peers that are not.

Higgs' evidence to support this case includes the fact that a third of our winners the last three years thrive with the help of a true culture of ownership, and that, at least in Vermont, employee-owned firms have tended to win more awards.   She also cites employee engagement research compiled by the National Center for Employee Ownership (NCEO) which finds that, as we've shared here, employee-owned firms "tend to grow faster and are more profitable with higher productivity than non-employee-owned companies."

But, while desirable, do these business outcomes equate to "disproportionate" excellence, or success?  One firsthand perspective I can offer might shed some light on this question.

This year I had the opportunity to read and score a batch of our Top Small Company Workplaces applications.  I looked at the following factors for success, as assessed in our extensive application:

• *Business structure & growth
• Employee metrics
• Benefits
• Learning & development
• Workplace culture & people practices
• Impact of people practices
• Employee participation
• Impact of economy & company response
• Fostering community & collaboration
• Goals & sustainability

I put an asterisk (*) next to the first bullet above because this is the area that asks about employee ownership.  It is only one of 10 areas I, and the rest of our reading teams, are looking at.  I personally put as much or more weight into applicants' benefit offerings, employee development strategies, and responses to the essay questions that make up the last six areas listed above as I put into their business structure/growth.

For me and surely for others now reviewing applications, employee ownership by itself is not a guarantee of moving on to the next round (where our judging panel – of a caliber on par with our 2009 roster, TBA – will select the winners that will be featured in the June issue of Inc. Magazine).  Because employee ownership has historically been viewed similarly relative to many other success factors by our final judging panel, you get the majority of our winners over the last three years that are not employee owned.  This includes such excellent organizations as Healthwise (2007 Winner), Lundberg Family Farms (2008), and Anthony Wilder Design/Build (2009).

So in terms of addressing the claim that employee ownership equals "disproportionate excellence," I stick by what I wrote here last month: While employee ownership is not essential for creating a Winning Workplace, it is often tied to the ability to do so.

How much weight do YOU give employee ownership, as compared with other factors, to achieving excellence (defined as long-term success and sustainability)?

At some point, your CEO will want to step down.  Then the question, possibly for your board of directors, will be: Do we hire someone from outside or promote from within to fill this role?

Hiring CEOs from within has been the pinnacle of the employee leadership development strategies of the small businesses Winning Workplaces has honored with our Top Small Company Workplace award.  In fact, among our almost 500 award applicants for 2010, close to one in four job openings last year was filled from within.

As Administaff's HRTools site reports, new research from Rice University's Jones Graduate School of Business finds that this tack when it comes to filling the CEO position is better for businesses in the long term, versus tapping a qualified candidate from outside.

Here's how this looks in terms of outcomes, according to HRTools:

[A]fter three years, it’s clear that inside CEOs fare better than outside CEOs....  As tenure increases, obvious opportunities for cost cutting and divestment dry up.  Inside CEOs, because of their deep knowledge and root in the firm, are more likely to initiate and implement strategic changes that can build the firm’s long-term competitive advantage....

One of the researchers involved in this study of close to 200 CEOs over a five-year period went so far as to warn company boards that hiring a CEO from outside poses "greater risks" to the firm's performance.

Related: Read what we have to say on succession planning as part of employee engagement at work by accessing our relevant posts here.

I've blogged several times to make the case – because I don't think it can be stressed enough – that using people practices that may seem "squishy," with the goal of producing more highly engaged employees, is in fact a productive long-term business strategy.  Here's one recent example of this.

InnovationTools is one of the most recent resources to underscore this case.  This quick read on the site by strategy expert Roy Luebke argues that something as simple as management's persistent effort to show their supervisees respect (one of our six building blocks for creating a Winning Workplace) can improve a company's innovation.  Greater innovation, of course, fuels customer satisfaction and growth, leading to higher revenues and profitability.

The small organizations that just finished applying for our 2010 Top Small Company Workplace award bear out this case in the real world.  Of the record-setting 496 firms that completed an application this year,

• 450, or 91%, were profitable in 2009
• They had average 2009 revenues of $28.3 million
• They grew revenues 12% over 2008 – in a very tough economy!

How do these impressive business results tie back to respectful employee engagement?  When I review these applicants' answers to our qualitative questions that run the gamut from unique workplace culture practices to employee leadership development strategies, the word "respect" came up 331 times.  That averages out to two-thirds of a reference per company.

So it's obvious that creating a culture of respect is top of mind for these firms, and they actively design their trust building activities to support the attainment of key organizational goals.

What are your thoughts on the relationship between respect in the workplace and achieving desired bottom-line outcomes?

Late last year I shared a grid that shows the nine most common employee development initiatives used by our 2009 Top Small Workplaces.  One of these employee development strategies is a mentoring or coaching program.

Over 80% of these winning organizations use this practice to spur greater innovation and productivity among their management team, and over 70% do the same for all their salaried employees.

But what shape do these programs take?  In response to this question by a journalist this week, we answered as follows:

Broadly defined, we see two different kinds of mentoring programs.  The first is the mentoring of a brand new employee – they might refer to this as onboarding.  Companies that have great people practices make sure that new employees are "indoctrinated" right away.  Because their workplace culture is so important to them, they don’t want to risk the wrong acclimation.  Instead, they purposefully and proactively assign the new person to one or two leaders in the company.  The majority of the time, the leader/CEO is involved in some way because it is so much about the "tone at the top." 

The second kind of mentoring we see is the more traditional approach of connecting a senior person with a junior person for the purposes of helping the junior person be more successful.  Though we don’t see it in all our finalists and winners, it isn’t unusual.  This setup is the perfect example of what smaller companies can do without spending a lot of money.

Some pitfalls to consider:

• Not having clear goals for the mentor/mentee relationship.
• Not choosing partners who have the right chemistry.
• Not building the groundwork necessary for a productive relationship (building trust and rapport so they can really work well together).
• Not providing true organizational support to set up the partnership for success.  In other words, not treating the relationship as a priority including letting too many other priorities override the time that was set aside for the relationship.

What's the state of mentoring in your organization?  How does it improve your bottom line?

What have your fellow readers found most helpful when it comes to the workplace culture strategies covered here?  On the last day of 2009, I can share with you the following posts, in descending order of popularity.  Enjoy, and see you in 2010....

1. 20 Proven Workplace Team Building Strategies
2. Friday Nugget: Transparency is a Business Model
3. Three Benefits of Virtual Team Building
4. Google Employees Can't Get No Satisfaction?
5. Inclusiveness, Multiculturalism, Employee Engagement the Norm at Phenomenex
6. 12 Ways to Save on Your Holiday Party This Year
7. 30 Reasons Jack Welch is Wrong on Work-Life Balance
8. 10 Ways to Motivate Employees
9. Top 10 Influential Small Business Thought Leaders
10. 10 Small Business People to Follow on Twitter
11. Six Ways to Measure the ROI of Employee Engagement
12. 30 Employee Development Strategies to Boost Productivity
13. Fair Treatment of Employees Counteracts Fear of Pro-Labor Bill
14. Two Inspiring Stories of Team Building
15. Toyota Leads Again, This Time in Team Building During Down Times
16. 10 Best Practices: Offering Vacation Days
17. 10 Company-Building Lessons Learned by a Successful Entrepreneur (Plus 2 Bonus Lessons)
18. Rackspace's Graham Weston: 'No Voicemail Jail for You!'
19. The Crisis of Employee Engagement Among Top Performers
20. 10 Team Building Strategies of the 2009 Top Small Workplaces Finalists

There's a saying my dad got from somewhere, which my brother, Dan, put in the book on networking for young people he wrote a couple years ago when he was in college:

Even the Super Bowl champions the previous year go back to training camp to work on the fundamentals.

Going back to basics also factors prominently in one of my favorite books, Zen Guitar.  (That's my playing on all our Top Small Workplace leader videos.)

As we look back on 2009 and prepare to turn our ideal 2010 into reality, including in the people practices realm, going back to square one bears repeating in business news outlets.  I recommend, for example, you check out this article on the Financial Post.

To help you when it comes to assessing and tweaking your team building and employee engagement best practices, here are a few recommended posts:

• Two Employee Development Strategies from a 2010 Top Small Company Workplaces Applicant Firm
• Six Ways to Shake Up Your Leadership
• Seven Sets of Company Core Values to Adapt for Your Business
• Nine Resources for Becoming an Employer of Choice
• 10 Company-Building Lessons Learned by a Successful Entrepreneur (Plus 2 Bonus Lessons)

Image credit: e-gineer

(This post was inspired by this article on TheStreet.com)

Since I have often pointed to our small business honorees like Guerra DeBerry Coody and Lundberg Family Farms that play up their family-friendly employee engagement practices, including benefits, one might come to the conclusion that Winning Workplaces favors small companies that put employees with children ahead of those without them.

While we like to see small firms walk the talk when it comes to family-friendly benefits, we also recognize that these firms should be equally mindful of those workers without children.  See for instance, this list of benefits that we ask whether companies have in place in our Top Small Company Workplaces award application – benefits that in many cases can be better suited to recruiting childless employees:

• Medical insurance
• Health savings account (HSA)
• Dental insurance
• Vision insurance
• Employee assistance program (EAP)
• Life insurance
• Long-term disability
• Short-term disability
• Long-term care insurance
• Domestic partner benefits
• Employee stock purchase or other shared ownership plan
• Retirement plan
• Pre-tax spending benefits
• Transportation assistance
• Paid time off/vacation/holidays/personal time
• Sabbaticals
• Educational assistance
• Employee wellness/fitness program

Digging deeper: I thought you'd find it interesting to see the percentage of applicants* for our 2010 Top Small Company Workplaces competition that use each of the above benefits as part of their retention and employee development strategies.  Click on the thumbnail below to open a pdf (2.7 MB) showing the breakdown of "Yes" vs. "No" answers to our online questionnaire:

*Among firms that have completed the application as of Dec. 29, 2009.  Application window closes Jan. 22, 2010.

How does your organization compare for each of these benefits?

You've seen me say here many times some form of the statement, It's important to use employee engagement to keep morale high, to boost productivity and ultimately profitability.  This is all well and good, you may be thinking, but you might also rightly be wondering, OK, but what are the steps involved to do this?

I came across a good (read: short and easy to adopt) set of tips on MSN, via the Who Needs Employees Anyway? blog to answer this question.  Citing workplace thought leaders, Toddi Gutner, a writer on career management issues for The Wall Street Journal, shares the following suggestions which have helped many companies raise morale:

• Spend time with employees
• Implement recognition programs
• Provide meaningful performance feedback

Related: Want to dig even deeper under these three ideas?  Check out our post on 30 employee development strategies to boost productivity – all in use right now at the 35 organizations that were Winners and Finalists of Winning Workplaces' 2009 Top Small Workplace award.

To help get the word out about Winning Workplaces' 2010 Top Small Company Workplaces award with our media partner, Inc. Magazine, we naturally reached out to the cream of the crop of small business, leadership, employee engagement, HR, and other relevant websites and blogs.  One of these was Punk Rock HR.

Today I noticed that on this site Laurie Ruettimann mentioned our competition and even linked to our online application, which we greatly appreciate.  However, she referenced the news of our extended application deadline to make her case that

Scrappy, entrepreneurial people who are running a business and making money don’t have time to futz around with lists.  Thoughtful people who are influencing in this world aren’t lobbying to make list-makers aware of their efforts.  They’re just doing great work.

Playing devil's advocate, I need to make a couple of points in response to this:

1. I doubt that most of our current and past applicants were on the hunt for recognition.  We were just lucky enough to get on their radar screen.
2. The roughly 1,200 small firms that have applied for our award over the past three years – not counting those that are doing so right now for 2010 – definitely do great work, but they have also viewed our recognition as a priority.  Therefore, even with core business goals that have a deadline of yesterday, they've still carved out time to apply for our award.  (It helps that we allow applicants to enter their workplace data little by little, as they have time, over a two-month window.)
3. Finally, perhaps the most important refutation: Our end product is not just a list!  From 2007-2009 we were fortunate to have the talents of Kelly Spors at The Wall Street Journal, who turned the massive amount of data we collected on our winners' team building and employee development strategies into a digestible narrative.  You can read the three winner announcement articles she penned, which are chock full of actionable workplace best practices, here, here, and here.  It's going to work much the same way for the June 2010 winners announcement in Inc. Magazine.

One more point: Another way this project goes above and beyond being a mere list is that we ask questions in our online application that are so wide ranging when it comes to the success of people practices that the process of applying helps participating firms think about them in new, formal ways.  Two pieces of feedback we received from the owners of current applicants, which we posted on our application start page, underscore this.

Winning Workplaces often stresses the need to build an inclusive workplace culture.  But as the Ashdown Group shared last week based on employee engagement research by consultancy firm A&DC, the paths to inclusiveness – what folks want or need to feel a sense of belonging that improves communication, camaraderie, and therefore productivity – vary by gender.

Extrapolating from A&DC,

• In a female-dominated workforce, the most effective employee development strategies are "practical and down to earth."
• In a male-dominated workforce, "conceptual and academically focused development" is most effective.

It appears the latter type of training would be most effective in the organizations that applied for Winning Workplaces' 2009 Top Small Workplaces competition: They're male dominated – 53.5% men to 46.5% women.

It's too soon to tell the gender breakdown of applicants for our current small business competition with Inc. magazine, Top Small Company Workplaces 2010.  You can add your firm's gender breakdown to the mix we'll be studying next year by applying for this contest here.  Winners will be featured in Inc.'s June 2010 issue.

Have you found that you need to vary your employee training based on gender?  If so, what are some of your lessons learned?

Photo credit: The Non-Consumer Advocate

As you may know, this week Winning Workplaces and Inc. launched our joint 2010 Top Small Company Workplaces competition.  Online applications are coming in, and as they do we get the great opportunity to study, as they relate to current business challenges, particularly effective employee development strategies.

I'll share two with you that I thought were strong.  For the sake of privacy, I'll just say they're being used by an advertising firm – which makes sense given the content of the employee engagement ideas presented.

In answer to our question "Please give one example of a learning initiative that you have found particularly effective or innovative," this company said:

• Every new employee is required to go through an extensive 3 month training process prior to assisting to manage any client efforts.  In this process they learn the basics about our industry as well as our internal process.  Each new hire is trained by two designated staff members at the same time.
• Additionally, each new hire is required to become certified in paid search via Google, Yahoo and Microsoft.  We have found this particularly effective even if the team member is not directly involved in search marketing – it helps with an understanding of digital media, tracking, analytics and overall granularity of our business.

Think your business is doing better employee leadership development than this one?  Give 'em some competition!  Click here to apply now.  The prize for the winning organizations is being featured in the June 2010 issue of Inc. magazine!

Lending, especially to small businesses that make up more than 99% of all employer firms, is a hot topic of conversation these days.  In fact, I addressed it in my last post.

Yet, the always insightful Anita Campbell at Small Business Trends has a different take: more vital to small businesses right now than lending is customers.  The resulting sales, she says, pump sorely needed capital into the economy and fuel (also sorely needed) job growth.

Campbell's post got me thinking: If customers are what small business needs most – and I think she's absolutely right here – how can these firms use employee engagement and team building strategies to attract new customers and keep existing customers enthused enough to keep coming back?

The posts below provide real-world examples of employee activities geared toward improving the customer experience.  Check them out:

1. 'Happy Employees Translate Into Happy Customers'
2. Customer Evangelism Begins with Employees
3. All Employee Recognition Roads Lead to Greater Company Productivity
4. Employee Development ROI: 80 Percent of Revenues from Return Business or Referrals
5. The Golden Rule: Not Typical of B-School Curricula, But Necessary for Successful Small Businesses
6. Rackspace's Graham Weston: 'No Voicemail Jail for You!'
7. 10 Company-Building Lessons Learned by a Successful Entrepreneur (Plus 2 Bonus Lessons)
8. Airline Customer Service: The Difference Employee Engagement Makes
9. What the Luxury Brands Are Doing That You Should, Too
10. The Power of Saying or Showing Thanks

Do you have any tips you'd like to share with your fellow readers?  Please add them in the comments below.

Perhaps it's no surprise that, given the apex in our work lives today where flexibility, technology, and productivity meet, slowing things down a bit to take the time to gather a greater perspective – not to mention, to avoid burnout – has taken hold as a bonafide movement.

The recently formed Huffington Post Book Club's first pick, announced last month, is Carl Honoré's In Praise of Slowness.  Another source that is all about slowness related to employee engagement and building a productive workplace is the (sadly recently folded) site Slow Leadership.

And if well-regarded marketing guru Seth Godin had only hinted in the past about his respect for taking it slow to win the business race, he left no doubt about his opinion on the topic on his blog today.  Contrasting against the flashy pitch for the quick buck today, Godin advises,

Or you can win with consistent benefits, delivered over time.  You win by incrementally earning share, attention and trust.  This might take years.

This slower, longer-term tack is by and large what Winning Workplaces' small business honorees take to win the race.  And by winning, I mean getting and keeping the best people on the bus; creating meaningful employee development strategies that result in stronger innovation and teams that last to execute it; and unsurpassed, head-turning customer service that keeps sales from both new and returning customers strong.

These posts on our blog address the slow approach from several business perspectives:

• Hiring
• Business model ideation/execution
• Customer satisfaction/growth

Do you have employee engagement practices that promote the slow and steady approach?  Have you formally thought about this?

Photo credit: FreeDigitalPhotos.net

Leslie Battiste writes a poignant and convincing editorial in the Tallahassee Democrat this week that takes aim at companies that frown upon hiring and nurturing employees with disabilities because of preconceived notions that they're less productive than workers without disabilities.

Battiste cites six reasons Goodwill Industries International gives as to why hiring someone with a disability makes sense:

1. "Just because someone has a disability doesn't mean he or she is defined by that disability.  People with disabilities have a variety of skills and talents."
2. She points to a A 30-year DuPont study which found that employees with disabilities have above-average job performance, attendance, dependability and safety.
3. It won't affect your insurance premium.
4. Most workers with disabilities need little or no accommodations to perform their jobs, and nearly half of all job accommodations cost nothing to implement.
5. "Technological advances are leading to increases in productivity for all kinds of workers, including those with disabilities."
6. "Workers with disabilities often have distinctive perspectives on life based on their own unique experiences, adding to the diversity and vitality of the workplace."

Providing further evidence that companies can be just as productive, and profitable, with workers with disabilities are two of Winning Workplaces' honored small firms: Clearbrook in Illinois and Pinnacle Services in Minnesota.  You can read about Clearbrook's workplace culture and employee engagement best practices in our Success Story on them.  You can also read about Pinnacle on our website, though author Donna Fenn does a fantastic job profiling the firm's employee development strategies in her book Upstarts!

Does your company employ any persons with a disability?  What are your observations about their performance relative to other employees?

Last week I included 2009 Top Small Workplace Mike's Carwash on a list of 10 small businesses that Winning Workplaces has honored over the years, that use the element of surprise to increase their customer base and deliver value to them in unexpected ways.

This week on Human Resource Executive magazine's website, Wharton School Center for Human Resources Director – and Top Small Workplaces judge – Peter Cappelli provides more insight into the management and resulting employee engagement practices of this Indiana-based retail outfit.

Framing Mike's as a success story in an industry known for "bad jobs," Cappelli provides three quantitative data points that show why this is no standard-issue "Mom and Pop operation":

• Turnover of around 10% (if you're a big company you're considered to be doing well if you're at better than 33%).
• Great, uncommon benefits including paid vacation, tuition reimbursement, and 401(k) plans (yes, even for hourly employees).
• Lots of training hours (90 for entry-level workers) and individual development plans as part of the firm's employee development strategies.

Cappelli continues with lots of numbers-based meat for small business leaders who are looking to increase their competitive advantage through rare-in-industry team building strategies.  Read more here.

Because of the dubious role a number of Wall Street-based investment management firms played in the financial crisis starting last fall – not to mention lone wolves like Bernie Madoff – the industry's reputation has taken a beating.

However, not all companies in this space are out to bilk investors or the public.  2009 Top Small Workplace Bailard Inc., based in Foster City, CA, has used a smart, long-term strategic approach to continue to deliver for their customers.  In return, their customers stay with them – at an astounding rate of 97% even in a bad year like 2008.

Tom Bailard, the firm's Co-Founder, explains the link between investing in your workplace through employee development strategies, and benchmark-beating customer satisfaction and retention in the following video, which I just added to our Facebook page.

Check it out (if you're viewing this in an RSS reader click here):

Become a fan of Winning Workplaces on Facebook and view our other videos featuring leaders of successful small businesses.

Winning Workplaces often talks about how crucial training and development are within a framework of team building and employee engagement practices.  If you search for "training" on our website, for instance, you'll find 95 related articles.

But that's our take – what are successful small businesses actually doing when it comes to employee learning and development programs?  The table below shows nine of them in use in varying degrees at our recently named 2009 Top Small Workplaces:

We've broken them down by percentage among management as well as salaried, hourly, and part-time employees.  The salmon-colored cells show which of these employee types get the greatest share of time devoted to a particular strategy.

You can see that salaried workers at all of the 15 winning companies benefit from on-site workshops and training.  At the other end of the spectrum, 40% of firms provide career counseling and leadership development training to their part-timers (that's still pretty good, IMO).

Use the button below to bookmark this table or share it with your team, so you can benchmark your organization with the Top Small Workplaces when it comes to employee development strategies.

FORTUNE Small Business just came out with a list of the best places in the U.S. to launch a small business.  A subset of this list, the Top 10 large places, are shown here.

Winning Workplaces' Top Small Workplaces are decently represented in these large, business-friendly metro areas, as shown in the table below:

Click on a company to learn more about its specific employee development strategies to create a more productive workplace.

Related: Go here for a Google Map that shows where all 45 of our Top Small Workplaces are located.

Photo credit: Wikimedia Commons

A sobering article published this week in Human Resource Executive paints the picture of nothing less than a crisis when it comes to employee engagement of top performers.

The magazine, citing the latest Watson Wyatt/WorldatWork Strategic Rewards Survey, reports that employee engagement levels dropped 25% among top performers in 2008.  By comparison, engagement levels dropped only 9% for all workers at the surveyed companies.

The steep decline among top performers appears to be linked to their perception of leadership's ability to both weather the economic storm and maintain pay and benefits that entice them to continue to deliver superior service.

What does this mean?  Spending money to recruit and especially to retain and develop top performers is not just a nice thing to do – it's crucial to keeping them with your firm and not jumping ship to the competition.  It's also essential to spurring the innovation needed to help companies maintain competitive advantage.

I've written recently about how the 2009 Wall Street Journal/Winning Workplaces Top Small Workplaces are keeping spending the same and in some cases increasing it when it comes to employee development strategies, including benefits.  They see the connection of this to achieving bottom-line results including:

• average annual revenue growth over the past year of 18%,
• average annual revenues of $36 million,
• average employee tenure of 5 years, and
• average turnover of just 10%.

I think the moral of the story here is that, as with many things in life, you get what you pay for.  When it comes to top talent, the importance of team building and providing competitive benefits – yes, even in a tough economy that is still largely framed as favoring employers – cannot be overstated.

Thinking about keeping top talent at your firm, would you describe the struggle as a "crisis" or in another way?

Photo credit: Avant Gareth Studios

Even if Wall Street says otherwise, we're still clearly in an era of companies becoming leaner as they struggle to survive.  In no area of management is this more apparent, perhaps, than employee benefits.  Here are three news articles I picked up from Google News today, among many, that reflect this trend.

Which may be why The Wall Street Journal's reporting on our 2009 Top Small Workplaces from yesterday already ranks on page one of Google News results for "employee benefits cuts" – because these companies are bucking the trend.

This chart, comparing the 2009 winning organizations to the 2008 winners, shows that while they are paying on average a good deal less of medical premiums for employees' dependents, when it comes to employees themselves there is a slight increase in the share of premiums for which the companies pay:

Also, in a theme we have seen play out in the employee development strategies our past Top Small Workplaces have shared with our network, preparing workers to be leaders in their organizations continues to be a central leadership focus – one leaders and HR folks see having a direct impact on productivity and employee retention.  The amount that our winning firms reimburse for annual tuition assistance has gone up a whopping 17%, on average, over the past year:

I also compared winner data from 2009 to 2008 on annual paid time off, wellness programs, and flexible work arrangements, but they are statistically even.  Maybe keeping dollars toward these three benefits the same, instead of reducing them given the economic climate, is saying something.

How does your business compare to the 2009 Top Small Workplaces when it comes to employee medical premiums paid and tuition assistance?  Do you have any strategies to improve employee engagement when it comes to implementing benefits?