On her blog last week, Harvard Business School's Rosabeth Moss Kanter identified setting clear expectations about everything as one of four things groups want that leaders can't provide.  She writes,

No matter how much leaders try to define expectations, lay out the nature of likely events, or describe the steps that the group will be going through, it's not enough.

My question is, while it may not be enough to fully satisfy groups of employees for ideal workforce effectiveness – is it enough to move the business forward in a meaningful way (even if that means not sliding backward in a recession)?

The workplace team building and employee engagement experiences of 8 small businesses that applied for our Top Small Company Workplaces award this year – including 2 winners – show that building clear employee expectations from leaders into the strategy contributes to organizational success.  Consider that the companies I'll tell you a bit more about below:

• Have been in business an average of 13 years,
• Grew revenue more than $5 million on average from 2008 to 2009,
• Went from 50% being profitable in 2008 to 75% being profitable in 2009, and
• Decreased average turnover by close to 3% from 2008 to 2009.

Specifically, here's who the firms are and how they maintain their success, in part, by being intentional about setting clear expectations:

Awarepoint - Real-time awareness technologies to monitor equipment and people - San Diego, CA
"Awarepoint helps managers get the best out of our staff.  The in-depth performance review helps managers and employees have better conversations, set clear expectations and build useful development plans.  This method also helps our leaders learn to identify poor performance so that it can be dealt with quickly, while developing the solid performers and building the business."

Enhanced Recovery Corporation - Financial Services - Jacksonville, FL
"The Owners, VPs, Directors, Department Heads, and Operations Management Team are all committed to the continued success of all ERC employees.  From Peer to Peer feedback to our Open Door Policy, employees of ERC always have clear expectations and development opportunities.  All departments at ERC are committed to ensuring constant development of employees at all levels within the organization."

FMYI - Software - Portland, OR
"We have done a lot more than what's expected of a small company such as providing medical benefits from day one with only a couple of employees even though it wasn't required by Oregon law.  We also want to be more authentic and fully integrated with our sustainability commitment.  We will sustain employee culture through ongoing sustainability discussions (via Northwest Earth Institute courses), clear expectations written into job descriptions and reviews about our doer/helper culture."

NouvEON - Consulting - Charlotte, NC
"NouvEON's Talent Management and People Care Division has several platforms that allow us to set goals, dialogue throughout the year, establish clear expectations, and perform 360 reviews, as well as measure and track potential.  We map Performance AND Potential and communicate to our employees where we see strengths and gaps.  It is through open communication and candid conversation that we help individuals grow in their jobs."

NY Jets (Winner) - Professional football team - Florham Park, NJ
"When our current management development initiative started, the Jets were in the planning stages of our relocation from Long Island to NJ.  HR was able to add in a special section on managing change that prepared mangers for the huge changes employees faced with our relocation.  The training sessions consisted of 6 modules: The Role of the Manager, Setting Clear Expectations, Feedback Skills, Delegation and Motivation, Handling Performance Issues, and Managing Change. The initiative proved to be highly successful for all managers; the learnings from the trainings are still used by the managers today."

Portico Systems Inc. - Software - Blue Bell, PA
"People succeed when they care share their ideas, build their skills, collaborate with others, and move into the realm of confidence that comes with mastery.  The masters become mentors and guide others with wisdom and a desire to enable others with positive reinforcement.  This is the environment that Portico is cultivating as we grow the organization and the people who are working to succeed.  Employees are provided with clear expectations, direction and feedback from supervisors, and opportunities and monetary and non-monetary ways incentives to succeed."

Red Door Interactive (Winner) - Advertising - San Diego, CA
"Our culture has been one of open dialogue, learning and progression since the company was formed eight years ago.  The family and team oriented environment at Red Door Interactive fosters open communication, leadership, clear expectations and teamwork.  A visit to Red Door Interactive will clearly display the open environment since the office is completely devoid of doors; even the CEO. Internal committees encourage feedback and collaboration to maintain our culture and engagement."

Sierra w/o Wires - Computer systems and related services - Pittsburgh, PA
"Regular and real communication is essential to establishing any corporate culture, community and collaboration.  In our organization this type of communication ranges involving employees in the project planning and estimating, to regular team and one-on-one update meetings, and also establishing clear expectations for each employee on what needs to be done, when."

How clear are the expectations in your organization?  Do your people practices help or hinder this?

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 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

Some of the most (and most vociferous) comments I've seen related to the announcement of our 2010 Top Small Company Workplaces last week in the June issue of Inc. Magazine – firms whose human capital strategies contribute to their revenue growth and profitability – appear in response to this post by Manish Mehta on The Jets Stream blog, on NYDailyNews.com.

There are 87 comments to Mehta's post on the NY Jets as of this writing.  Here's what Bob from garfield had to say:

Evidently, no one at Inc. is a Jet season ticket holder.  If Inc. really wants to see how the Jets PSL sales staff do their job, they should view the movie “THE BOILER ROOM”

I've seen that movie and the Jets' sales environment is about as far from what's depicated in it as can be.  For one thing, the salesmen (I don't recall seeing any women in the workplace in the film) were given zero autonomy in their work.  In contrast, here's how the Jets answered the question in our award application, How does the organization encourage employees to participate in important business decisions?

The Jets culture, which is very employee centric and collaborative, enables the senior management of football and business to encourage all employees to share ideas and contribute even in important business decisions.  There are number of ways that we foster this participation.  The most important way is actually in the design of our new facility.  Before we moved to NJ, we had two offices in NYC and Long Island.  The distance between the offices made communication and collaboration challenging.  In the layout of our new building, open workspaces and open door policies reign supreme. The results have been phenomenal.  Managers and employees from different departments can work in small or large groups to develop creative ideas and solutions to important business issues.  A great example of an idea generated from this workspace collaboration is the "Opportunity Knocks" sales campaign for our season tickets and seat licenses.  With such a well known brand, the Jets needed to let the public know of the rare opportunity available to buy season tickets in our new stadium.  Opportunity Knocks was the result.  In the football world, our General Manager encourages his staff from pro personnel assistants to the Assistant General Manager to be actively involved in player decisions.  The scouts, as they are called, study players from college and other professional teams to develop suggestions and recommendations on who should be drafted on Draft Day or who should be signed as a free agent.  There have been many times that an employee will feel passionately about a player that they feel is worthy of the Jets uniform and the decision will be made to go after that player even if the GM is lukewarm on that particular player.  On both sides of our business and both sides of the ball, we would not be able to be as successful a football team if the employees were not encouraged to voice their opinions, share their creative ideas or be enabled to think "outside the box".

Further down in the comments to Mehta's post, greenjohnny wrote:

Sounds nice, should look good on a belt buckle but who really cares.  It's [sic] pretty good that they can make all their employees take two weeks off without pay and still get an award for best place to work for.

This relates to the Jets' answer to another, topical question in our application, Over the last year, what kind of impact has the economy had on your business? Please briefly explain how your company has responded?  Here's how the NFL franchise responded:

Football is not immune from the economic downturn and recession that has gripped the entire country.  Our local revenue comes primarily from ticket sales and sponsorships.  Our fans (customers) have been affected by layoffs, salary freezes and reductions in work hours.  Our sponsors have seen a dramatic decrease in budgets for spending on advertising.  Consequently, the Jets have been affected by a slowdown in revenue generated by ticket sales and sponsorship deals.  Over the course of 2009, we were challenged to find ways to decrease spending and cut costs.  Since our employees are the key to our success, this exercise needed to be done with layoffs as an extreme last measure.  Many teams around the NFL in the early part of 2009 were laying off their employees to save money.  ...  We froze salaries for the year.  Since we still needed to find extra savings, we made a crucial decision to furlough business employees for 2 weeks versus eliminating positions.  The furloughs were scheduled for the slowest time in our year at the end of June and beginning of July.  Employees had to choose 2 out of 4 weeks to take their furlough.  The response from employees was positive.  They were extremely grateful that they didn't have to say goodbye to a friend.  Our senior management participated as well, which made the program very credible.  It was tough for our employees to lose 2 weeks of pay, but overall the furlough program worked successfully.

In short, the Jets took a page from several of our previous honorees faced with tough decisions and chose to share the pain rather than lay anyone off.  The fact that senior leadership participated speaks volumes and, as you can see, helped maintain their productive workplace culture of ownership and high employee engagement.

I should mention that as part of our employee engagement research for our award, we conducted interviews with staff from different levels within the Jets' organization, and everything they told us about their employee practices, including what's excerpted above, checks out.  Especially for their industry, they are truly a Winning Workplace.

Related: For more on the Jets' new workplace environment, including some great pictures, check out this feature from the June Inc. Magazine.

Photo credit: Nikolas Koenig/Inc.

In Winning Workplaces' Top Small Company Workplaces award application, we ask small businesses whether they engage employees as part of a wellness and fitness program and, if yes, to tell us about how this program works in their organization.

Tasty Catering, a Chicago area provider of corporate catering solutions that's one of our just-announced winners of this award for 2010, provides such a program.  I thought their essay on how this program works was great because it shows how the 54-employee firm has created a virtuous cycle that is good for employees and, at the same time, good for the business.

Here it is:

All full time staff are entitled to company paid health club membership at the local fitness center.  They must attend 26 times a quarter (twice a week) or pay $5 for each time missed.  This encourages use and fitness.  TC also has a consultant who is a registered/licensed dietician and designs healthy menu programs for staff and for clients.  Free meals are provided to staff every day.  These meals include salads, fresh fruits, lean proteins and other such healthy foods.  Each meal has a heart healthy, vegetarian and vegan offering.  After work sports teams which contain a majority of Tasty Catering staff are sponsored by the company.  These aforementioned programs have led to healthier staff and lower priced insurance premiums.  Insurance are paid at 33% because the majority of the staff have insurance policies provided by their significant others.  The savings from having to contribute a larger portion of insurance for a few staff has allowed the company to spend more money for all staff in the form of health club membership, healthy meals and sports sponsorships.

Do you see what's going on here?  In brief:

• The company makes an initial investment in a set of health- and wellness-themed employee engagement best practices.
• Healthier staff as a result of these practices are less dependent on the features of a typical medical insurance plan, which lowers future company premiums.
• Some companies might add the savings to their cash reserves, or invest it in some other part of the business, so it's beneficial no matter what.  In Tasty Catering's case, they reinvest it in the same area so they can encourage even better participation in health/wellness initiatives – which further lowers medical insurance premiums.

As with all of our award winners for 2010 – and our past honorees, for that matter – this cycle implies open and honest communications team building.  How else could the company get a sense of how many of their staff are covered by significant others' plans, for leadership to know how they should renew with their provider for direct employee coverage?

Related: This post shares 16 common features of wellness programs as used by three-fourths of the winners and finalists of our 2010 small business award.

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.

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

Longtime readers of this blog who remember posts like this one understand that the leadership practices that make up a thriving, productive workplace culture – including employee engagement and team building strategies – greatly increase the likelihood of benefiting from repeat business and referrals.

I was happy to see this connection reiterated in marketing expert John Jantsch's guest post on social media guru Chris Brogan's blog today.  Drawing from his new book The Referral Engine, which is based on his study of "the habits of numerous organizations that generated most of their business by way of referral," Jantsch says common traits of these companies include:

• Building a culture of trust (as in the Winning Workplaces building block of Trust, Respect, and Fairness).
• Employees as customers – just wrote about this aspect here on Tuesday.
• Hiring for attitude and fit over skills.
• Openly communicating the business financials to all employees – Jantsch references ESOPs, but many of our honored small firms go further by practicing open-book management and even doing financial literacy training so employees really understand what's behind the numbers, and how their work impacts them.
• "Give to get mentality" – another way to say, operating by the Golden Rule.

One more trait of successful, "referral engine" businesses, Jantsch says, is offering products or services at a premium price.  As we have written about in conjunction with our small business award winners, they share this tendency to compete on service rather than price.  Rackspace Hosting and Gentle Giant Moving are great examples of this.

Interested in using The Referral Engine to tweak your business practices to improve your results?  Get 55% off your copy at Amazon.

Last week on the Blogging Innovation site, business speaker and strategic advisor Stefan Lindegaard suggested that,

Perhaps we do not have to break down silos to drive more innovation.  Perhaps we should just accept the silos and work around the issues they can create on innovation.

I think there are some instances where working around silos, which can hamper communications team building, is warranted.  However, if your business is on the smaller side – especially if it has 100 or fewer employees – you really should be working to completely break them down and prevent them from being built back up.

Why?  Winning Workplaces has seen in our employee engagement research and consulting and training work inside small firms that getting rid of silos promotes stronger employee engagement.  This, in turn, helps organizations achieve desirable, bottom line-enhancing metrics like those listed here.

There are two major strategies that I've seen companies use, sometimes in tandem, to break down silos:

1. Purposeful workspace design, and
2. Innovative workplace team building.

What follows is brief descriptions of how seven small firms in our network succeeded in breaking down silos in their workplaces, organized under the above two strategies for doing so:

Workspace Design

Decagon Devices
Office doors are seldom closed and work spaces are grouped together without barriers at this Washington-based firm, which facilitates more of a free-flowing brainstorming atmosphere into the work itself.  However, Decagon takes it to the next level.  They believe that leading departments and work groups should be a rotating assignment, not a permanent title with an attached office.  Their structure is much more fluid and open because it leads to greater ingenuity, and risk taking.

Jackson’s Hardware
This California-based company, which has grown from 5,000 square feet and five employees to 50,000 square feet and 63 employees, operates with a totally open office floor plan.  Every manager including the President and CEO has his or her desk in the open platform office.  With this type of floor plan, Jackson's managers are able to give guidance and support for almost every project or task instantly.  This allows them to draw upon the unique talents and strengths of all of the different managers and results in efficient problem solving.

Jump Associates
Another California-based company, Jump's work environment, known as JumpSpace, provides dozens of different work spaces, such as Zen Rooms, Project Rooms and a black-box theater Performance Space, that support a wide variety of interactions and working styles.  Employees comment that this kind of playful, open-hearted space makes it safe to explore, because everyone who works there is committed to each other’s success.

Phenomenex
Yet another California-based firm, Phenomenex’s work environment is designed to breed familiarity, comfort and collaboration.  All work areas have stimulating and comfortable open floor plan designs filled with color, antiques and modern art.  They have an on-site gym and game room that are in constant use.  In addition, to relieve stress and recharge their hardworking employees, the firm has set aside a quiet room for them to
take naps, read or meditate.

Resource Interactive
This Ohio-based firm with 261 employees demands constant collaboration among staff.  Their employees express a great deal of pride in their work environment, in large part because it was designed with a considerable amount of their input.  Among other things, their workplace is dog friendly and is dotted with skateboards and satellite radios.

Team Building

American Speech-Language-Hearing Association (ASHA)
A decade and a half ago, the staff at Maryland-based ASHA was struggling to work as a cohesive team.  Executive Director Frederick Spahr referred to the silos that had developed as "fiefdoms."  Spahr and his associates developed a facilitating team composed of him and five chief staff officers to oversee the office.  Employees regrouped into teams and clusters led by coaches instead of managers.  These changes created a flattened hierarchy with no more than three layers to the top.

The Redwoods Group
According to an employee of this North Carolina-based firm, "The traditional insurance industry is known for working in silos of underwriting, claims, loss control and actuarial services. But at Redwoods, it’s all about the team.  We intentionally formed regional multifunctional teams reporting to regional vice presidents, instead of technical vice presidents, to break down barriers.  The result is common ownership of results and compensation based on company results.”

Has breaking down silos improved your workplace culture and productivity?  I invite you to share your experience by commenting below.

This new article on the Knowledge@Wharton site caught my eye.  In it Charles "Ed" Haldeman, Jr., Freddie Mac's CEO for close to a year, shares facets of the management style he's using to try to turn around the federal home loan mortgage corporation that, along with Fannie Mae, were propped up by the government in fall 2008 as a result of the subprime mortgage crisis.

If you scroll about halfway down the article, you'll see points from Haldeman's "template" for what he sees as effective management – for any organization.  Note how many Winning Workplaces building blocks it includes:

• Open Communications
• Teamwork & Involvement
• Trust, Respect & Fairness

At least three of our six building blocks are represented.  Digging a bit deeper, Haldeman stresses a number of hallmarks of a productive workplace culture that we often echo, including constantly communicating the mission and making sure employees understand it, empowering people to make decisions at lower levels, and managers practicing MBWA.

Could Freddie Mac join the ranks of our award-winning small businesses?  In some sense, they already have – they've historically offered strong employee benefits, prompting Working Mother magazine to name it among the 100 Best Companies for Working Mothers in 2004.

The real trick, I think, will be getting this midsize-to-large company (in 2008 it had over 5,200 employees, according to Wikipedia) to act even more like one of our honored small firms in terms of further breaking down silos and building trust in the workplace as a means to make it more nimble, which will help it keep pace with consumer demands and trends.

Related: We've written Success Stories on more than a dozen real estate businesses, tapping into how they see a payoff of employee engagement.  Check them out here.

These days, with the economy being where it is, one of small business leaders' big pursuits is getting their arms around innovation and using it to grow sales and the bottom line.

But as John P. Benfield wrote on Blogging Innovation last week, innovative strides that are less tangible in terms of your balance sheet can be powerful because they reflect the payoff of employee engagement – or more specifically, your ability to create a highly productive workplace culture.

Open communication, fast failure, driven-down decision making to build a culture of ownership – all of these traits of a Top Small Workplace can come to the fore, Benfield writes, when leaders drill down to the next level, below profits, when tackling innovation.  Concluding, he advises that

even if your innovation program isn't delivering the next game changer, the existence of a formal, supported program can provide significant value by developing, growing and maturing your workforce, culture and company as a whole.

Read Benfield's full article here.

Like anyone, entrepreneurs can lie – to their friends and family, and certainly to their employees.  But Harvard Business Review asked last week, is it in business leaders' best interest to twist or outright ignore the truth when it comes to employee engagement for a most productive workplace?

"I don't have the right answers," Babson College management professor Daniel J. Isenberg writes on the HBR website, "but I do know that entrepreneurial lying (whether we call it marketing or raising capital or negotiating or selling the vision) is more prevalent than we care to admit."

Not only do I think Isenberg is right, but I would argue that the weakened economy over the past few years has been a major contributing factor here.  However, not every entrepreneur is guilty of lying to his or her employees.  Valuing the Winning Workplace building blocks of Trust, Respect & Fairness and Open Communications, on the whole leaders of our award-winning small organizations opt for the truth when presented between that choice and being misleading.

In the majority of these firms, the practice of open-book management (OBM) goes hand in hand with truth telling, since by nature it involves showing employees what the numbers look like (except salaries, in most cases).  OBM helped our Best Boss David Pierce be brutally honest about where his firm, ENA, was and what he needed his people to do to overcome a potentially devastating obstacle shortly after he assumed leadership of it in 2002.  You can read more about how truth telling helped ENA rebound in our Success Story on the company.

But with the right workplace culture in place, any firm – OBM or not – can benefit from a leader who tells his or her people the truth, in both good and especially in tough times.  Our 2007 Top Small Workplace Corporate Ink bears this out.  We explained in our Success Story on the business, which does not use OBM, how Founder and President Amy Bermar was able to see a substantial ROI – nothing less than the survival of her PR firm – after she was truthful with her employees that they either had to let someone go or take a collective pay cut.  The team chose the latter, and it was the right decision because when business improved a short time later, Bermar had her talent in place to tap for new client engagements.

Where do you stand on business leaders lying to their employees?  Do you think a gray area of truth-bending is OK?  And what effect do you think this has on workforce effectiveness?

Your organization is more than a collection of business and human assets and numbers on a P&L.  It's more than the sum of its parts.

According to Art Kleiner on strategy+business, those parts form a living, breathing entity.  He wrote at length last week about the "four basic circulatory systems, analogous to the channels of communication in a living body" which, he argues, must be understood for leaders to be able to change a workplace culture and create more highly engaged employees.

Based largely on what employees, customers, and advisors tell us as part of our Top Small Workplaces recognition project, Winning Workplaces has sometimes referenced biology to describe the dynamic nature of our productive workplace honorees.  For example, check out our write-up on Flair Communications, a 2008 finalist for our award:

While the marketing industry has become increasingly consolidated over the years, Flair Communications, a 64-employee marketing firm based in Chicago, has remained passionately independent.  Lee Flaherty chose an 1883 mansion to set up shop when he began the agency in 1964, and his dedication to the tenets of independent entrepreneurship continue to infuse the business, fostering a culture described by clients as "a living breathing organism."  A veritable gallery of fine art and past projects, the workspace itself reflects the company's vibrant and dynamic character.  In an industry that sees an almost annual reshuffling of talent between agencies, the average tenure at Flair is over a decade.  Staff enjoy the lack of bureaucracy and a policy of open dialogue and debate, while seminars, programs and lectures by outside sources keep employees knowledgeable with the newest twists in marketing.  Flexible work arrangements, sponsored participation in local sporting events and opportunities to experience the rich culture of Chicago all add to the appeal of working at this impressive agency.

Does thinking of your company as being its own, living entity reframe your thinking of the potential of team building in the workplace?

Last week's blog asked you the important question: How is your decision-making style impacting your organization's results?  I asked you to think about your style and how it affects employee engagement, team building, and open communication in the workplace.  As many of you know, these things have a direct impact on your business results.

Last time I reviewed two of the four main decision-making styles: Autocratic and Democratic.  Participative and Consensus are next.

The participative style of decision making is when the leader involves the other members of the organization in the process.  Participative decision making is a way of building engagement making people feel good about their involvement.  This style can foster open communication and positively impact the culture.  This style won't improve the culture of ownership; that is because it still leaves the final decision in the hands of the leader.  How do you think this style would impact YOUR business results?  Do you see both right and wrong situations to engage this style?

The last decision-making style is consensus.  Here the leader gives up complete control of the decision; the full group is totally involved in the decision.  While this style would certainly help build a sense of ownership, I have to tell you that this is my least favorite style.  Not because I have a problem giving up control but, rather, because of the incredible amount of time it takes and secondarily the fact that many people may not have the knowledge or experience to "vote" on the decision.

Having said that, there are situations where a consensus approach makes sense.  The benefits can include building trust in the workplace, team building, increased employee engagement, and a more productive workplace because people feel so much ownership for the decision.

Clearly, no one style is right for all the situations leaders face in the workplace.  Have I gotten you thinking, though?  Are you wondering how your decision-making style is impacting your people?  Your business results?  I'd love to hear some of your stories.

The goal of this week's blog is to get you thinking about your decision-making style and, more importantly, what that style means to your workplace culture and workforce effectiveness.  Said another way, how is your decision making style impacting your organization's results? 

As a leader, have you ever thought about the number and types of decisions you make every day?  Have you considered how you make those decisions?  What about the implications of your decision-making style on employee engagement, team building, and open communication in the workplace? 

Most of us probably remember this from Management 101: The most commonly used styles are Autocratic, Democratic, Participative, and Consensus.

"I'll make the decision and you go get it done."  "No, I don't need any input; I know everything I need to know to make the right decision."  "I'll handle it; I always do and it turns out fine."  To be fair, the autocratic style is appropriate when a fast decision is required.  Otherwise, this approach ignores the importance of engaging employees and the possibility that "two heads are better than one."  It also has a dampening effect on building trust.  Do you think overusing this style might affect your business results? 

"Let's vote on it; the majority rules."  "I know we are doing it, but I didn't vote for it."  This democratic style has some advantages including building trust in the workplace and supporting open communication.  But who really "owns" the outcome?  It is easy for employees to claim, "I didn't support that" or "I thought he was doing it because he voted for it."  That reaction to the democratic style eats away at a culture of ownership and hinders your effectiveness.  Do you think overusing this style might affect your business results? 

What decision-making style do you use and how is it affecting your bottom line?

Did you see Adam Bryant's interview with Container Store CEO Kip Tindell in Friday's New York Times?  Early on Bryant asked Tindell about his most important leadership lessons to create a thriving and productive workplace culture.  Here's what Tindell said:

The way we create a place where people do want to come to work is primarily through two key points.  One of our foundation principles is that leadership and communication are the same thing.  Communication is leadership.  So we believe in just relentlessly trying to communicate everything to every single employee at all times, and we’re very open.  We share everything.  We believe in complete transparency.  There’s never a reason, we believe, to keep the information from an employee, except for individual salaries.

There's a lot to absorb in the leader's answer when it comes to communications team building.  But it boils down to creating a culture of ownership and accountability that is based on mutual trust – workers' trust in the leadership to engage them and provide a nice place to work, and leaders' and managers' trust that a payoff of employee engagement is increased commitment, including offering more ideas to improve processes and ultimately customer satisfaction (and sales).

It is this foundation of trust that has allowed the Container Store to reach true midsize status, with over 4,000 employees, while expanding from 38 locations when I blogged about them in 2007 to 48 today (yes, during this recession).

Related: One of our most popular posts is this one that's also about transparency.

In my last post I mentioned the employee satisfaction level (45%) recently reported by The Conference Board and concluded by asking "whose fault is this anyway?"

When I've asked similar questions, I get a range of answers.  Some are adamant that it is the leader's fault.  Some say the employee should switch jobs if they are so dissatisfied.  Others can't come up with an answer.

Here's the answer: It is the leader's fault and the employee's fault.  In organizations with an effective workplace culture, all parties have a sense of ownership. 

In creating a culture of ownership and in turn a productive workplace, we often write about what leaders should do.  I'm going to look at the flip side of the coin and point out what leaders shouldn't do if they want to contribute to a culture of trust, employee engagement, or team building.

1. As your organization's leader, DON'T be so intensely focused on results that you forget people are your most important means of getting to those results.  A quick story: Years ago, during the first six months of becoming a CEO, I learned this the hard way.   I overused the phrase "I expect" and the majority of my interactions with my team were about what they were doing to deliver the numbers.  Thank goodness a combination of my own experience, an executive coach, and feedback from a couple people on my team helped me realize that the intense focus on results was backfiring.  Clearly, a productive workforce requires building engaged employees. 
2. DON'T ask for input and then ignore it.  This approach squashes open communication in the workplace.  This approach says "I don't care about your ideas or expertise."  Without communication and caring, building trust is unlikely. Guess what?  Poor communication + minimal trust = less than optimal results.
3. DON'T decide that you are going to launch an initiative (large or small) to improve employee engagement unless you plan to follow through.  Not surprisingly, this reinforces a perception that you as the leader really don't care about employees and you can't be counted upon to do what you say you will do.  And that goes back to one of my beginning points: In a great workplace, the culture of ownership contributes to results. 

This list of "don'ts" is endless.  Have you been on the receiving end of a don't?  As a leader, have you learned a valuable lesson from a don't?  Those of us at Winning Workplaces would love to hear your story.

Every day I hear another story that indicates so many leaders don’t get the strong connection between people and results.  When I first moved into a CEO role, I admit I didn’t always see the connection as clearly as I do now.  I was so focused on results, I neglected to pay as much attention to people.  Now that I have seen the research and gotten to know dozens of extraordinary companies who have great workplaces, I am ramping up my focus on employee engagement. 

Our mission here at Winning Workplaces is to inspire and assist organizations that want to create great workplaces that are better for business, better for people, and better for society.   These organizations have workplace cultures that include open communication, trust, team building, and...fun!  

Given the results of the recent Conference Board study, I’d say Winning Workplaces still has a lot of work to do.  In fact, that is an understatement.  The Conference Board reports that only 45% of employees are satisfied with their jobs.  Moreover, I was astounded to learn that the employees rate the best part of their day as the commute.  Yes, the commute.

As more and more baby boomers retire, I wonder if dissatisfaction will increase.  Why?  The most dissatisfied generation is Generation Y. 

Clearly, this situation says we have not only a lot of dissatisfied employees but, in turn, a productivity level that isn’t nearly where it could or should be. 

So whose fault is this grim situation?  The leader's?  The boss's?  The employee's?  More importantly, what do we do about it?  These will be the topics of future blogs. 

Let me know what you think.

I'm excited because I just tweeted with Mark Hirschfeld, the co-author of the new book Re-Engage: How America's Best Places to Work Inspire Extra Effort Through Extraordinary Engagement, and we're getting a copy that I'll review for you in an upcoming issue of our IDEAS newsletter.

I learned about Hirschfeld's book through his blog, Engaged Employees, Remarkable Results!  His latest post contrasts "dirty, rotten scoundrel"-type leaders – if you close your eyes, I'm sure you can picture at least one that qualifies – with those at the opposite end of the spectrum who leave highly engaged employees in their wake.

He says these leaders are similar in that they:

1. Use their personal power to engage and are committed to creating a great workplace,
2. Inspire confidence in their decisions and direction,
3. Build trust through their honesty and integrity,
4. Practice open, two-way communication,
5. Shun the temptations of executive greed and strive to pay fairly,
6. Genuinely value employees as people, and
7. Lead with respect, not coercion, control, fear, or intimidation.

This list sounds a lot like our building blocks for creating a Winning Workplace, doesn't it?  That's one of the reasons I'm looking forward to digging into this book when it arrives....

Related: Check out the key business results our 2010 Top Small Company Workplace award applicants have seen by embracing the leadership traits Hirschfeld writes about and ramping up their team building in the workplace.

In Denise O'Berry's post on Small Business Trends, "Protect Your Cash or Lose Your Business," the author of Small Business Cash Flow shares six employee engagement strategies for protecting this resource that owners are guarding like their life depends on it (and often in this economy, theirs and those of their workers do).

Among O'Berry's recommendations are:

• Hiring properly
• Fostering open communication
• Helping employees strike a balance between work and life by requiring they take vacation time (resistors could be a red flag of fraud)
• Building trust in the workplace

These tips on O'Berry's list are reflective of our building blocks for creating a Winning Workplace in general – not just when it comes to generating and increasing your positive cash flow and profitability, but also reducing inefficiencies and satisfying employees so they stay longer (reducing turnover) and provide steadily better service to the customer.

Related: Check out these two guest posts, which together highlight 7 ways to work with your banker in good times and bad to stay on great financial footing to run your business.