This new post on the Business Pundit blog caught my attention: Citing data from Wall St. Cheat Sheet, it contains a map of the U.S. showing the scope of business closures in FY 2009.  The number of closures are given for states suffering from the highest number of them, including New York, California, Texas, Georgia, and Florida.

This is across-the-board data, representing all businesses, large and small.  But what about just small businesses?  And more specifically, as a point of discussion relative to the findings from Wall St. Cheat Sheet, how many of them are expanding or planning to expand in this environment?

Our employee engagement research from our 2010 Top Small Company Workplaces award sheds some light here.  We asked our 497 applicant firms about their future organizational goals; 101 of them, or 20.3%, used terms describing expansion in the immediate future including "new location," "new office," and "new facility."

I thought it would be illuminating to juxtapose the map of U.S. business closures from Wall St. Cheat Sheet with a map I created showing the breakdown of our 101 small business award applicants expanding or looking to expand soon:

Click on our map in blue to view a larger version.

Besides company size – our applicants have no more than 750 employees – what else is different in the survey samples comprising these two maps?  We know that our award applicants understand the payoff of employee engagement and team building on their bottom line, and accordingly develop people practices to leverage this.  This enhances their ability to invest in the business, including expansion – even in a tough economy.

Can we say that about the much larger company sample in Wall St. Cheat Sheet's research?  Not necessarily.

What's your reaction to these two maps?

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.

The following is a guest post on workplace team building and employee engagement by Steve Ritter.  Ritter, the Founder and CEO of Team Clock Institute, is the former Director of HR at Leaders Bank, which was named the #1 Best Place to Work in Illinois in 2006, and was a finalist for Winning Workplaces' Top Small Workplaces award in 2008.

Growing up, most of us are taught how to succeed as individuals.  Unfortunately, individual talent and dedication alone are not nearly enough to ensure a team’s success.  Teams are messy.  Conflict is unavoidable. Team dynamics are fluid.  Despite these challenges, working in teams is fundamental to most endeavors.

Twenty-five years ago, I began the quest of understanding the complexities of teams following a happenstance opportunity with the Chicago White Sox.  At the time, a seemingly strong team was underperforming for reasons beyond the grasp of their leadership.  Unexpectedly, a complex situation ended up having a simple solution.  Since then, identifying the recipe for healthy and effective teams has been my passion giving rise to the founding of the Team Clock Institute, a research and training consultancy specializing in breakthrough teams.  Recently, the Team Clock Institute responded to a unique challenge.

The Issue: Early in 2010, I received a call from a FORTUNE 500 company facing the integration of disparate cultures following the acquisition of a prominent player in the industry.  All of the expectable merger/acquisition politics were underway and the leadership team was seeking a simple model to anchor the transition.  What began as a casual conversation on a commuter train grew into an opportunity to assess the integration effort and provide recommendations to enhance successful business outcomes.

The Response: Accordingly, the Team Clock model was introduced to key players on the leadership team. The Team Clock model mirrors the face of a clock where each hour represents a stage along the path of team development.  In a nutshell, strong teams begin with an investment in common norms and direction.  Based on this foundation, team members test trust as they become more cohesive.  This platform supports their efforts to be innovative and take risks.  This activity inevitably leads to change and a repositioning of people and functions.  Healthy teams find a way to refocus following such growth and cycle begins again. 

The Impact: Over the next six months, the Team Clock Institute assessed a series of key business units to determine opportunities for greater effectiveness.  Results were analyzed revealing the strengths, vulnerabilities, areas of congruence and discord on the team.  Debriefing sessions were facilitated to discuss results and targeted actions were identified that would bring measurable change in team engagement and productivity.

Typical examples of diagnostic vulnerabilities included:

• Mired in loss: too depleted to re-invest.
• Inability to manage conflict/differences respectfully.
• Indulgence in the comfort zone: afraid to take risks and explore new ideas.
• Adherence to the status quo: unwilling to accept the consequences of change.

From a strengths perspective, the Team Clock Institute identified key anchors to healthy team interactions based on the diagnostic results for each team.  Goals were established in each of the core areas of vulnerability and business metrics were assigned to determine ROI.  The goal areas included:

• Investment infrastructure

- Consensus philosophy/mission/values/vision

• Trust and interactional dynamics

- Effective management of conflict

• Innovation and team effectiveness

- Measureable productivity/efficiency shifts

• Distancing to leverage change for growth

- Functional repositioning and identification of new opportunities/methodologies

The business case for effective teaming is simple.  Healthy teams are more productive and adaptable.  Anticipating the 4th quarter of the calendar year, the organization is poised to re-assess their team effectiveness metrics mapped to their productivity results.  Pending the quantitative impact, the qualitative result is clear: the emotional journey of a healthy team provides opportunities for positive workplace culture that struggling teams rarely experience.  Where is your team on the Team Clock?

Learn more about all of the resources at the Team Clock Institute at www.team-clock.com.

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

The business justification for employee engagement focused on their continued, on-the-job learning is easy to understand.  It's a win for employees who increase their skills and become more marketable in their careers; and the company wins because their talent has a greater ability to perform at top levels and to innovate, and it's less of a risk and more of an opportunity to promote from within (saving money on recruiting from outside).

Yet, there are myriad options when it comes to educational employee development strategies.  Where should a small business start?  Maybe a more important question is: Considering each investment in this economy needs to generate several times its amount back in returns, what learning initiatives are most effective for small firms?

Luckily, Winning Workplaces has some real-world answers to these questions to share with you to help you decide how to invest when it comes to this important area of human capital strategies.  Our 2010 Top Small Company Workplaces award application asked applicant companies to give an example of a learning initiative they found to be particularly effective.  Here's how our 20 winners this year responded:

1. A Yard & A Half Landscaping: We spend the equivalent of 1-2 weeks per year offering paid training days for field employees.  Because of the democratic educational setting, by the end of the day, people were helping each other across work crews, and on two occasions, younger employees stepped in to coach crew leaders on machinery that was still unfamiliar to them.
2. All4: For our staff that are in the beginning of their careers and are developing their core consulting and technical skills, we have developed a skills matrix which allows them to know exactly what metrics must be met in order to be promoted to the next position. 
3. Alternative Solutions HomeCare: One interesting program ASH put into place in 2009 was the Dream Manager Program.  Tackling head-on the growing problem of employee disengagement, the program explores the dynamic collaboration that is unleashed when people work together to achieve company objectives and personal dreams.  We had so much positive reaction to this program that we will be continuing it in 2010.
4. Biomark: A couple of years ago we did a several-day team building training.  The effect is that when we employ an idea or theory from this training in our everyday work environment, everyone knows what we are trying to accomplish and is engaged in the process.  This has paid dividends in workplace happiness, turnover, and job performance.
5. Chroma Technology Corp: A few years ago Chroma underwent a full company Lean Manufacturing initiative.  Every employee attended a 2-day workshop and seminar about the fundamentals of Lean Manufacturing.  In addition, 25% of the company was directly involved in two different Lean Mapping and Value Stream courses and projects.  This resulted in $1 million material savings in the first year.
6. Daphne Utilities: We include a large number of our employees in public events involving interaction with our customers.  Here, they work side by side with upper management in events like street festivals and charity fundraisers.  This helps them hear the message being put out from the highest levels, allows top management to get to know each employee a little better, and helps to motivate our workers to take public pride in their work and their company.
7. Dealer.com: We launched uFuel in 2009, a customized online learning management system that was implemented over a 14-month period.  uFuel contains interactive simulations, measures success and knowledge gaps, and creates training programs for areas of improvement.  This learning initiative has been extremely effective at keeping all employees at the leading edge of online marketing best practices and ensuring consistent service for clients.
8. Dixon Schwabl: Our employee development includes an initiative launched by our CEO in 1998 to enhance overall employee communications and allow employees to appreciate each other's differences.  Based on Myers Briggs indicators, it helps frame leadership development, coaching, internal training opportunities, and cross-training.
9. Ginger Bay Salon & Spa: Beginning in 2008 and throughout 2009, we spent significant time with our leadership team opening our books and helping employees understand our financial statements and review our financial performance.  We believe that Open Book Management is likely the main reason that we were able to post results that were not only stronger than our competition, but reflect growth in all areas of our business.
10. MAYA Design: Teaching – many of our employees teach at local universities and we find that allowing this as a paid benefit helps employees learn more about their jobs, how to manage and work with others, and better communication skills.
11. NY Jets: In 2008, the Jets embarked on a first of its kind management development initiative entitled "Take It or Lead It".  Both Business and Football managers partcipated in the sessions.  When this program started, the Jets were in the planning stages of our relocation from Long Island to New Jersey.  HR was able to add in a special section on managing change that prepared mangers for the huge changes employees faced with our relocation.
12. Optimax Systems: The implementation of Job Instruction Training which ensures direction provided from internal trainers is consistent and measurable for effectiveness.  This has allowed us to make sure that people "get it" when instructed on a specific task.
13. Patagonia: Our Employee Development Program temporarily assigns employees to other positions in circumstances where an employee may be out on an extended leave (e.g., maternity leave, an environmental internship, etc.).  Employees participating in this program attain new job skills, have the opportunity to meet more people in the Patagonia community at a new location, and significantly ease the transition back to work for the employee they've replaced.
14. PortionPac Chemical Corp: For 22 years we have held a "Front to Back Day".  Management, office and sales staff spend the day working in the factory.  The "Front" staff gains an appreciation for the skills, talent and physical work that go into making PortionPac, while the factory staff are able to showcase their accomplishments and the attention to detail that goes into making each Pac perfect.  The event fosters communication and suggestions that go back and forth as to how our products can be made better and how the "Front" staff can make life easier for the "Back".
15. Red Door Interactive: We believe that promoting opportunity to change your role at Red Door has prevented talented employees from leaving the company to pursue interests and additional responsibility elsewhere.  Emergent practice areas such as social media and search marketing now comprise over 30% of our total service revenue, and those practice areas are led by people who identified new opportunities and invested in becoming experts by playing to their strengths.
16. Return Path: Most recently our CEO developed and delivered an "Effective Presentations" course.  Content is broken down into small, easily absorbed chunks and reinforced to create a solid foundation that is common for all new hires.  This builds not only a shared vocabulary in our unique business, it builds a shared context.
17. Tarlton Corporation: Our most innovative training program is called Increasing Human Effectives (IHE).  The philosophy behind this training is to help our employees grow personally through this process, which will allow growth professionally.  If they believe in themselves, anything is possible!  Happy employees are productive employees.
18. Tasty Catering: We have 11 advisors/consultants that work with our teams.  Advisors are in the following areas: Banker, Financial, CPA, HR, PR, Marketing, Legal (one for the company and one for the shareholders), IT, Culinary, Dietician and Sales.  The staff benefits by receiving advice from a recognized expert in the field who has larger and smaller clients.
19. The Sky Factory: To further our understanding and experience of the creative process as it applies to our daily work and to the building of the company, we prepared an all-company course with an art historian.  After viewing hundreds of art images and engaging in extensive dialogue it became evident that the process of building a company can (and should) be the same as that of creating a beautiful and lasting work of art.  This notion became practical when a designer aptly observed the skill of a production worker's multiple LED solders.  The fine quality of his work was especially significant because of a recent multi-million dollar fire caused by sloppy work from a competitor's LED system.
20. Van Meter Industrial: One effective learning initiative in our organization is our Foundations training program.  New employees attend this day-and-a-half course near their 90-day milestone anniversary with our company.  Feedback from employees has shown this is fun, interactive, and important training that provides a true insight to our culture, gives the basis for understanding what is important to our company, and sets the tone for who we are and what we represent.

Related: Dive even further into learning activities that will benefit your workplace culture, and your bottom line, by reading our Success Story on ShoreBank.

Image credit: Wikimedia Commons

Trust building activities may register high on the radar screens of the organizations Winning Workplaces named as 2010 Top Small Company Workplaces in the latest issue of Inc. Magazine, but on the whole among the roughly 27 million small businesses across the U.S., they do not.  These and other human capital strategies are considered by many leaders to be "soft," and therefore, in a down economy, not worth leadership's time and energy compared with other areas of the business.

But as Greg Harris noted on The Science of Work blog yesterday, and as I subsequently tweeted about, Harvard Business Review – long a barometer on where business is and where it's headed – has seemed to focus of late even more on the "fundamentals" of people management.  This means employee engagement strategies to build a more productive workplace culture.

Harris mentioned the May HBR headline "How to Keep Your Star Talent."  Is it a coincidence that this month the AP reported on employment data which show that more employees are jumping ship as the economy improves?

I think not.  Yes, we always see the cycle that in tough economic times, employers don't have to worry as much about retention because people are thankful to have a job, and that in better times they need to pay more attention to it because workers sense a job-seeking advantage and are more apt to leave.  But we are coming out of the Worst Recession Since the Great Depression® – a time when many employers' first reaction was to let go of staff and ask for a great deal of concessions from their remaining workforces.

It's no wonder, then, that employees, feeling beaten down in many cases, are looking for the exits.  This is especially true of top performers, who have a good understanding from their latest performance reviews that they're a strong commodity.

What can keep these folks from leaving?  At a base level, a work environment of trust, respect, and fairness – qualities we point to as one of six building blocks of a winning workplace.

It will be interesting to see how many more leaders and managers put activities designed to maximize trust, such as investment in employee leadership development, at the top of their to-do lists.  And by doing so, moving people practices from the "soft measures" to the "hard measures" column to maintain their competitive advantage.

Your thoughts?

Since Monday I've been blogging about our big news of the year (so far): the announcement of Winning Workplaces' 2010 Top Small Company Workplaces in the new, June issue of Inc. Magazine.  On Monday I shared ROI metrics that support their investment in innovative people practices.  And yesterday I discussed two quantitative data points where the winners clearly stood above the finalists: employee tenure and turnover.

Today I want to shift the focus to what our media partner, Inc. Magazine, has for reader value-adds, related to their coverage of our 2010 winners, when it comes to best practices for a more productive workplace.  Click through below to access:

• An audio slideshow about PortionPac Chemical Corporation, which is based in our hometown of Chicago
• A graphic of effective office perks Inc. compiled from their Twitter followers and Facebook fans
• And (I think best of all) a quiz to help you determine your workplace culture

While I'm talking about Inc., I want to take a moment to thank their staff for being such great partners.  The above offerings that they went above and beyond to produce – not at our behest – in connection with their June issue, and the feedback of their lead writer on what stood out about this year's honorees as she was writing the articles for the issue, show that they really get the payoff of employee engagement for small employers.

Stay tuned for more posts to follow on powerful employee practices and trends of this year's winners.  You can help this blog have more impact by sharing it with your colleagues and friends using the Share button below.

For months I've been sharing employee engagement research trends of Winning Workplaces' 2010 Top Small Company Workplaces award finalists – the 40 organizations out of nearly 500 that applied for our award this year.  Many of those blog posts ended with a reminder to look for the June issue of Inc., which would feature the winners of our award.

Well, now the issue is out, as is our press release on the 2010 winners!  Actually, most if not all subscribers already have the issue in their hands; it will be available on newsstands starting tomorrow, June 8.

So now that news of the winners is out, I'm excited to provide more value for you here, in the form of both trends when it comes to the payoff of employee engagement that the winners see, and – perhaps even better for your company – specific best practices that you can learn from and adapt to help grow your business.

In that vein, below are ROI metrics for each of the 20 winners.  Click on a company name for more information about the firm on our website.

• A Yard & a Half (landscaper, Waltham, MA): employee development strategies helped reduce the company's indirect expenses.
• All4, Inc. (air quality consultancy, Kimberton, PA): training and a flat organizational structure have helped the company grow its market share in a down economy.
• Alternate Solutions HomeCare (home health care services for the elderly, Kettering, OH): A focus on creating highly individual employee development plans has helped ASH consistently score higher than the average EBITDA of four of the largest publicly owned home healthcare agencies in the country.
• Biomark, Inc. (electronic ID technology supplier, Boise, ID): Funding growth using internal methods while keeping debt to a minimum has helped Biomark grow while their competitors are shrinking.
• Chroma Technology Corp. (precision optical filter manufacturer, Bellows Falls, VT): The company's focus on customer service and creating outperforming products has helped it grow revenues in a tough economy.
• Daphne Utilities (water and natural gas service provider to the City of Daphne, AL): A pay for performance system, cross training, and coaching have had a triple bottom line impact on the company.
• Dealer.com (online marketing solutions provider for the automotive industry, Burlington, VT): Employee practices such as job rotaton and internal mentoring have increased customer satisfaction, and have also led to awards like Deloitte's Technology Fast 500, which have aided recruiting.
• Dixon Schwabl (Advertising and PR services, Victor, NY): A focus on identifying new hires that will best fit their workplace culture and a strategic talent management program has helped the company to earn a profit in a challenging economy.
• Ginger Bay Salon & Spa (salon and day spa, Kirkwood, MO): Leadership's reliance on employees to revise its service offerings based on declining customer visits helped the firm realize continued revenue growth, and with no layoffs.
• MAYA Design, Inc. (design consultancy, Pittsburgh, PA): Innovative benefits including funding viable, employee-created, complimentary companies has kept productivity high and turnover low.
• NY Jets (NFL member franchise, Florham Park, NJ): Strong benefits and a skills-training program for both business and football managers has increased performance on the fan side (four playoff appearances in 10 years) as well as advertising, merchandising, and other sales.
• Optimax Systems, Inc. (prototype optics manufacturer, Ontario, NY): A strong focus on continuous improvement and other workforce investments helped Optimax to achieve its higest number of bookings ever in 2009.
• Patagonia (technical outdoor clothing and travel gear designer/distributor, Ventura, CA): Though the economy worsened and competition increased in 2009, Patagonia grew revenue thanks partly to people practices including job shadowing, promoting from within, and open-book management.
• PortionPac Chemical Corp (industrial packager/marketer of environmentally sustainable liquid cleaning detergents, Chicago, IL): Practices including executives working on the factory floor and giving workers autonomy helped the company to grow revenue and keep all staff in 2009, while competitors suffered losses and shed jobs.
• Red Door Interactive (Internet/e-business strategy solutions provider, San Diego, CA): An investment in employee development geared toward learning new competencies and practices in emerging technologies helped the firm win related business representing a third of their revenue in 2009.
• Return Path, Inc. (spam-avoidance solutions provider for email senders, New York, NY): Practices including an extensive on-boarding program and learning and team building activities in the workplace have helped Return Path achieve a 70% market share in their sector.
• Tarlton Corp (general contractor and construction management, St. Louis, MO): Extensive training and open-book management helped Tarlton to finish 2009 with a Safety Total Incident Rate below the industry average.
• Tasty Catering (Corporate catering solutions provider, Elk Grove Village, IL): A focus on promoting from within and communicating business performance and activities via weekly, bilingual newsletters were factors in Tasty Catering earning revenues above the industry average in 2009.
• The Sky Factory (factory-direct product manufacturer/distributor, Fairfield, IA): Team building strategies including, most notably, involving all employees in all major decisions contributed to revenue growth in 2008 and 2009, when domestic markets experienced major declines in new construction.
• Van Meter Industrial (wholesale products distributor, Cedar Rapids, IA): Practices such as a program that encourages staff to make small changes in work habits to improve processes as well as incentives including performance bonuses have helped the company consistently rank in the upper quartile performance of financial measurements.

You can learn more about how to build a profitable and productive workplace at the Creating Competitive Cultures (C3) conference that Inc. Magazine is hosting in Denver in October.  Go here for more info on this event.

One of my favorite qualitative questions that Winning Workplaces asked applicants of our 2010 Top Small Company Workplaces award is, How have your organization's people practices contributed to your top line revenue and bottom line profitability?

Naturally, we received some stellar answers from our 497 applicants, and especially from our 40 finalist organizations.  I pulled out some of the best ways that the latter group, this year's finalists, use to assess their payoff of employee engagement.

They appear below.  Enjoy, and feel free to share them with your colleagues and friends using the Share button below.

1. Employees on average more likely to give 110% in tough times.
2. More employee referrals.
3. Reputation as a great employer (including industry or other accolades) results in more qualified job applicants for open positions.
4. More satisfied employees = lower turnover.
5. Less lost productivity due to employee stress.
6. Greater innovation and creativity.
7. Greater customer satisfaction and loyalty.
8. Healthy and manageable year-over-year growth.
9. Ability to hire more staff that are directly tasked with generating revenue.
10. Company in the top percentile nationally for quality, financial (gross margin, EBITDA), and/or improvement metrics.
11. Regular employee payouts whose dollars are increasing as part of a performance bonus program.
12. Greater share of projects employees undertake as part of a Google-style "20 percent" program result in new, bottom line-enhancing initiatives.
13. Creating a workplace culture of ownership in which employees don't just act like owners, but like owners that care about customers.  This helps the company to deliver on service, quality, and professionalism, rather than on price, which can undercut the bottom line.
14. Better relationships with vendors, which helps control costs.
15. More customer "wow" moments that turn them into evangelists for your brand.  The result of this on revenue and profitability can be measured with the Net Promoter Score.
16. Over 50% of business from repeat customers and/or referrals.
17. Increase in safe working man-hours, which can lower or keep steady health insurance premiums.
18. Focus on cross-training provides supervisors with additional manpower when needed, helping to maintain customer service delivery.
19. More involvement from the bottom-up in process improvement and identifying cost-saving opportunities.
20. Greater ability to fill open positions from within decreases recruiting costs.
21. Sales teams more open to team building strategies such as contests designed to increase competencies and, ultimately, close rates.
22. Internship programs tend to be more meaningful for interns, which help them grow as the company benefits in terms of labor costs and productivity.
23. Ability to benefit from bad economies by hiring top talent laid off from competing organizations.
24. Increased ability to enlist employees and even outside stakeholders (suppliers) in cutting inventory.  The increased cash that results is particularly helpful in an economic climate in which lending is tight.
25. Better customer support infrastructure in place to respond if a product/service launch or revamp is not received on par with company standards.
26. Increased ability to scale up customers at a greater rate than employees.
27. Greater tendency for employees to represent their companies while "off the clock," which can lead to new business and referrals.  One company added 2% in annual sales from the associated effort of just one employee.
28. Much more likely that all staff will agree to pay cuts or other short-term, cost-cutting measures to keep the company afloat in tough times, versus the alternative of layoffs and losing that talent for when conditions improve.
29. The development of new, in-house competencies reduces the risk and costs of mis-hires and turnover due to employees seeking growth and opportunity elsewhere.
30. More effective internal recruitment function reduces external recruiter costs.

Related: The June issue of Inc. Magazine will reveal the winners of this year's Top Small Company Workplaces competition.  It will be out next week – don't miss it!

Image credit: Best Way To Invest

I've written before taking the counterpoint position to those who argue that investing in your workplace to create a robust workplace culture of employee engagement is a waste of time and money.  I think it's important for people who share my view – that it's just as good if not better for businesses as it is for employees – to speak up about it, given the economy and companies' resultant tendency to reduce spending on initiatives designed to keep employees engaged in favor of those that seem to translate more readily to bottom-line returns.

One small business advisor who shares my view is Lonnie Sciambi.  On his Entrepreneur's Yoda blog yesterday, he wrote about how employee engagement, when done well, can lead to better, longer-term results from key stakeholders including:

• Employees – keeping them in the loop of how the business is doing and their role in that increases productivity.
• Customers or clients – "The more you know, engage and motivate your prospect ... the more comfortable that prospect will feel [sic] about your company and the more successful you will be."
• Suppliers – Sciambi touches upon a small business trend: connecting with a supplier's leadership like never before to incentivize both parties' markets and reap collective returns.  How well each company's workforce is engaged quickly becomes a factor for success.

Read his full post here.

Related: Sciambi writes from the point of view of leadership engaging employees, which echoes Winning Workplaces' advice that the most effective engagement is shaped by the "tone at the top."  This post from Wally Bock, warning of a middle-management crisis when it comes to supervision of current employees and promotion from within to management posts, underscores even more why engagement should start with the CEO.

After being a longtime reader of Mike Michalowicz's Toilet Paper Entrepreneur Blog – named for his 2008 business book – lately I've taken to submitting responses to some of his queries for tips for his readers along the lines of workplace team building and employee engagement.

Last week, for example, I responded to Mike's query of a great way to give employee recognition.  I offered the following:

We have several successful small businesses in our network that have formed employee committees whose purpose is solely to select and reward employees who perform above and beyond; the most successful of these programs reward based on exemplifying company values.  In one case, a CEO comes "Publisher's Clearinghouse"-style to a winning employee's workstation, with balloons and gives a gift certificate.  Even if a CEO does this, the main thing is that workers be the ones to select a fellow coworker.

I was talking, of course, about SmartPak, the Massachusetts-based business of Winning Workplaces Best Boss Paal Gisholt.  I described SmartPak's innovative employee recognition program in more detail in this post.

I was impressed by the 75 other responses to Mike's query on effective employee recognition, which you can read on his blog.  In addition, I wanted to share one more, which I came across this morning.  Cindy Ventrice, whom we've interviewed for our website, describes the "Dirty Job Award" here on her own blog.

What do you do for recognition as part of your people practices strategy?  What's your investment, and how do you measure the return on it?

Will this week go down as a low point for performance reviews?  Since The New York Times asked on one of its blogs on Monday if it's "Time to Review Workplace Reviews," workplace researchers and business leaders alike have jumped on the bandwagon of questioning their effectiveness, and even their place among other, common employee development strategies.

The main criticisms of performance reviews, as Palo Alto Software Founder and President Tim Berry echoes from the NYT article on Small Business Trends, are that:

• They add signficantly to employee stress, and
• They can be so subjective in some cases as to render them meaningless.

Winning Workplaces' own employee engagement research shows that, at least in small businesses (which is to say, most businesses), performance reviews are not only an integral part of the people practices strategy, but they're delivering results.  The term "performance review" showed up 71 times in the 497 company applications we received for our 2010 Top Small Company Workplaces award competition; 9 out of 10 of these firms are profitable, they've managed to stay in business for an average of 16 years, and they save on recruiting costs by filling 1 out of 5 of open positions from within (contributing to respectable average employee tenure of 4 years) (source).

So in playing devil's advocate and working under the assumption that performance reviews are a worthwhile investment for an organization, here are 10 ways to make them meaningful, for employees and especially for the company.  These tactics are drawn from reporting on our award-winning firms on our website, presentations leaders of some of these firms have given at our past annual conferences, and other posts on this blog.

1. A goal of the review should be to build a relationship between managers and subordinates.
2. SMART goals – especially the Measurable and Attainable attributes – help make managers' feedback more objective and less subjective.
3. If employees' expectations of a raise following a review are causing stress, separate the pay element from the review.  If you plan for and communicate regular, periodic (normally once a year) salary adjustments, the persistent question of "When will I get a raise?" will disappear.
4. The more closely an individual's goals can be connected to an organization's performance goals, the more significant they become to the employee.
5. Too many companies fall into the habit of having reviews be the main one-on-one, in-depth dialogue between managers and subordinates.  Ideally, managers should be having far more frequent conversations with subordinates that address progress toward key goals.  This makes the feedback in a review setting much more palatable and less surprising for the employee.
6. Along the lines of "no surprises" for the employee as mentioned above, if you do tie reviews to compensation and/or bonuses, using open-book management – in which employees see the company's financial statements and, in many cases, are trained to know what the numbers mean – delivers value come review time, insofar as employees will have a much better idea whether a pay increase or bonus is fair; and also why they're not getting one, if that's the case depending on company performance.
7. Put employees in the driver's seat: empower and train managers to task employees with setting their own individual goals at the end of a performance review, when planning ahead for the next one.  While the goals employees present to managers will probably not be good to go straight away, even if they're adjusted, the sense of self-empowerment employees feel from being actively involved in their role will not diminish, and in fact it can make them more committed and productive.
8. An alternative to the above tip that's also proven to work well is to use a mix of individual, deparment, and overall organizational goals.  At Illinois-based ShoreBank their "magic ratio" for this is 70%/20%/10%.
9. Another approach is to move from individual reviews to group-based reviews.  Our 2010 Top Small Company Workplaces award finalist Cargas Systems, based in Pennsylvania, does monthly "stop light" reviews, allowing groups to gauge areas in need of improvement and provide an outlet for all to share opinions and stay involved.  This can be particularly effective when combined with tip #3 above.
10. If your company core values emphasize the greater community in some way, try incorporating the related value(s) in a goal in your reviews.  You may find the extra productivity that comes with an employee seeing his employer as caring about him as a whole person, and not just as a business asset, produces more revenue than a more traditional, numbers-based goal.

How do you approach performance reviews as a means to create a more productive workplace culture?

Photo credit: Chief Happiness Officer blog

The elements that make up a productive workplace culture should be known.  What's more, they should be known by more folks in a company than just its leaders – they should be known by all.

This is my takeaway from the video below, featuring employees of Rackspace Hosting in Texas.  Winning Workplaces Best Boss Graham Weston, Rackspace's Chairman, even makes an appearance.  Check it out (click here if you can't see the video in your blog feed):

Another takeaway I get from this video is that short of, or perhaps in addition to, investing in your workplace through a formal employee opinion survey, simply bringing workers together for food and drinks and posting a big banner that asks "What does culture mean to YOU?" can get people thinking and talking about what the company means to them, and how it can mean even more if leaders take steps A, B, and C.  Leaders need only to bring their ears with them (although an audio recorder or video camera – heck, just use a smart phone – would be helpful as well to reap maximum returns from this type of gathering).

Do you engage employees together creatively to stay on the pulse of what matters to them, as a means to improve your productivity and innovation?  If so, please share your best related strategies below.

Thanks to workplace consultant Mark Hirschfeld for bringing this video to my attention by posting it on his blog.

Since the current recession began, there has been steadily more press attempting to answer the question, Is the middle class American dream still within reach?

It's a highly relevant question.  Studies have shown that low-income workers face rampant wage violations, as well as higher than average instances of defined-benefit plan freezes.  Of greater concern to many economists, though, is a shrinking middle class's effect on things ranging from a country's budget and inflation to job creation and unemployment.

In short, what's good for low-income workers is good for all of us.  Given the current U.S. unemployment rate of just under 10%, the more these workers are employed, the sooner we can get back on the track of sustained economic growth.

So it's comforting to know there's an employee engagement/productive workplace culture element at work here.  In Winning Workplaces' 2010 Top Small Company Workplace award application, we asked applicant firms to share their percentage of full-time employees (FTEs) who earn $20,000 or less per year, and also the percentage of FTEs who earn between $20,000 and 40,000 per year.  Here's how these percentages break down among all of our nearly 500 applicants, including the 40 companies we announced as our finalists in March:

My takeaway is that our award finalists this year seem to have "cracked the code" on not breaking the bank on talent investment, while reaping better average returns than their fellow applicants.  That spells resourceful in my book, and gives me hope for a quicker economic recovery.

When it comes to your own team building strategies, how purposeful are you in bringing on and leveraging the potential of low-income workers?

Last week WorldBlu announced its fourth annual list of the Most Democratic Workplaces for 2010.  Among the 44 honorees are three from Winning Workplaces' own network of honored small organizations:

• Chroma Technology Corp. - 2010 Top Small Company Workplaces Finalist
• Menlo Innovations - 2010 TSCW Finalist; 2008, 2007 Top Small Workplaces Finalist
• New Belgium Brewing - 2008 TSW Winner

Congratulations to these firms for being named to WorldBlu's list this year.  I think their short profile on New Belgium sums up very well the payoff of investing in your workplace to strengthen workforce effectiveness:

CEO Kim Jordan of the Fort Collins, CO-based 340-person company that makes the popular "Fat Tire" beer believes, "Businesses that are open to organizational democracy are usually nimble, resourceful and actively maximizing their human potential."

Related: Read about how consensus decision making is the rule at S.C. Johnson, from our interview with executive Helen Johnson-Leipold.

Citing several studies which show that, at least in Australia, working men use little if any paternity leave after their child is born, Management Line's Leon Gettler asked today if we even need paternity leave.

When it comes to employee engagement and team building activities to build a more productive workplace, I must offer a counterpoint view and say, Yes.  Here's why:

1. It lowers turnover among male employees, as has been the case at our Success Story firm Tom's of Maine.
2. It empowers employees, increasing their respect for and commitment to the company.  See our Success Story on Stellar Solutions.
3. It helps companies walk the talk of their dedication to the greater community.  Read how this works in our Success Story on Healthwise.

I think the takeaway here is that, while some studies may show that paternity leave is an underused benefit, its inclusion in a company's employee benefits package shows both new and current employees that their employer takes their work/life balance as seriously as they do.  This show (and investment) of good will has a ROI regardless of the practice's actual usage in the form of greater employee trust and commitment, which leads to lower turnover and longer tenures.

This, in turn, helps keep recruiting costs down and the knowledge base intact to maintain high service levels for customers.  And as we know, top-notch service that leaves more customers highly satisfied results in more repeat business and referrals – primary revenue drivers.

Related: Another organization in our network, Top Small Workplace Guerra DeBerry Coody (GDC), has benefited handsomely from its investment in family-friendly workplace practices including paternity leave.  Learn about GDC's ROI from these practices and tips on implementing or tweaking them in your business by accessing this webinar their CEO co-hosted for Winning Workplaces.

Photo credit: PregnancyRights.com

This week on Fast Company's FC Expert Blog, change leadership specialist Seth Kahan offers 11 lessons for scaling up your organization.  When I looked over his list I noticed how dependent it is on a workplace culture characterized by strong team engagement activities.

For example, Kahan says scaling up must be people and community focused.  "Every plan," he writes, "regardless of its logical excellence relies on engagement, support, and contribution, or it will fail."

Later he urges leaders interested in scaling up to create a Steering Group.  While he describes this group as made up of members "outside the day-to-day activity of the scale-up effort," it would seem that CEOs who have found success forming one or more employee committees to tackle broad as well as niche organizational issues would be ahead of the curve here – especially if the Steering Group does include one or more company employees.

I echo my comment above for Kahan's suggestion to also create a Collaborative Leadership Team.  Put simply, firms that invest in employee leadership development can see a return when they look to organize this type of group that can play such a key role in a major step forward for the organization.

Later on still, in lessons 9 and 11, Kahan stresses the abilities of a leader to really listen to his or her people and engage employees in a team capacity as also critical to scaling up.  As with all of the above leadership traits, these are staples of the most successful small businesses in North America that we know about – our Top Small Workplaces.

Related: Earlier in his career, one of our 2010 Top Small Company Workplaces judges, Bart Houlahan of B Lab, led a successful effort at a basketball apparel and entertainment company that scaled up the business from $4 to $250 million in revenues in just over a decade.  Read more about Bart and our other seven judges here.

Mike Michalowicz has a new, informative post on his Toilet Paper Entrepreneur blog on 12 ways that entrepreneurs are wasting money.  The tips he provides for things to avoid, culled from small business leaders in his network, include obvious ones such as hiring a web designer who can't deliver from the end-user perspective, and ones that are less obvious or might even spur outright controversy such as attending trade shows and investing in billboard ads.

No matter how you feel about the 12 tips offered, their overall savings potential is undeniable.  Still, when I reviewed them all I noticed they address efforts largely on the customer end, and not necessarily on the employee side – ie, workplace team building and employee engagement strategies.

Therefore, I thought it would be stimulating to put together a list of 12 people practices – or more accurately, the absence of which – that leave entrepreneurs ultimately at a disadvantage when it comes to attracting and retaining top talent, and leveraging them to deliver continually better results for customers and the business.

The table below links to our blog posts and website articles for more information on each best practice listed.  And while it's almost impossible to attach a dollar value to each one – because industries, missions, target markets, and products/services vary so significantly – I attempted to rate them on a relative scale of financial impact on an organization with a dollar sign ($) scale.

Check it out:

What do you think of this list?  Which employee engagement practices are you using, and which are you not?  I'd especially appreciate your feedback on where you think each of these rates in terms of financial impact – do I have one or more out of place based on the scale I used?

In a telling new study of 7,000 small businesses by email solutions provider Constant Contact, only 12% of respondents were able to secure additional financing in the past year.  (Showing the poor state of the credit market, a remarkable 72% of those surveyed didn't even try to seek additional funding in the past 12 months.)

Whether these organizations would be more apt to try if they placed more stock in fostering a workplace culture of ownership – as our Top Small Workplace honorees do – is one thing.  But our employee engagement research shows that, at least to a small degree, they would be more likely to succeed if they did try.

One of the questions we ask our award applicants is: Has the company raised or received investment from outside investors?  While 17% of all 497 of our applicants in 2010 said Yes to this question, 20% of our 40 finalists said Yes.

I think there are two major factors going on that give our finalists a slight edge here:

1. As Brian Boorstein of private investment firm Cranite Creek Partners hinted at in the first of a series of guest articles for Winning Workplaces, there is a virtuous cycle that can greatly benefit firms in which better informed financial decision making helps create stronger team building and work environments, which through the bottom-line outcomes that produces gives leaders more leverage at the bank (or with VCs or other financiers).
2. There's also a whole dynamic – almost a psychology unto itself – of leaders being successful in representing their businesses to banks, and personally dealing with bankers, for maximum benefit in securing additional financing, and how much they can get.  Synthesis Solutions President Jim Stoynoff provided 7 tips in these two posts for leaders to use; our honorees are putting many of them to good use.

Related: One or our most recent Executive Learning Series Webinars featured the CEOs of two of our award-winning small banks talking about even more ways to deal with your bankers and financial institutions.  Access it here.

Today on The One-Stop ESOP Blog, Aaron Juckett shares highlights of the National Center for Employee Ownership's (NCEO) Statistical Profile of Employee Ownership for 2009.  Juckett's first bullet is:

The number of "ESOPs, stock bonus plans, & profit sharing plans primarily invested in employer stock" declined from 10,800 in 2007 and 2008 to 10,500 in 2009.

If you follow his post to NCEO's report, their table on Growth of ESOPs and Equivalent Plans shows that this is not the first time that the minimum number of companies with these plans has fallen.  Probably coinciding with the 2000 tech bubble burst and events of 9/11, the number of plans dropped for several years in the last decade, picking up again in 2004.

So the state of the economy appears to play a role.  The government may also be a contributing factor to the latest drop from 2008 to 2009: Nancy Dittmer shared an ESOP Association press release last week on the RSM McGladrey ESOP Blog that seems to support an assault by the Department of Labor on "Congressional wishes since 1974 to encourage employee ownership through ESOPs" with respect to the Employee Retirement Income Security Act (ERISA).

If this is true, I think the government should back off in this case.  I have explored in several past posts how going ESOP leads to bottom-line benefits that include:

• Greater productivity, leading to
• Stronger sales, as well as
• A tendency to outperform the stock market long term.

The 40 finalists for our 2010 Top Small Company Workplace award – the winners of which will be announced in Inc. Magazine in June – exemplify this trend.  The table below shows how those that have ESOPs compare to those that don't on 2009 revenue, three-year revenue growth, and profitability:

If more of the estimated 27 million small businesses in the U.S. were encouraged to explore ESOPs, they might see their results pick up by a similar proportion – and of course that would have direct implications on job creation and hiring.  Not to mention, the communication that's often par for the course with ESOPs would improve employee engagement and workplace team building to help further boost the bottom line.

What's your answer to the question that's the title of this post?