As we've observed every year that Winning Workplaces has sought out and honored small businesses that excel in exemplary people practices, a payoff of employee engagement is strong, year-over-year revenue growth relative to their peers – even (sometimes especially) in down economies.

So we're proud to list below the applicants to our 2010 Top Small Company Workplaces award that our media partner for this project, Inc. Magazine, recently recognized as among the fastest-growing, private, for-profit companies in its annual Inc. 500 List:

Congrats to these amazingly resilient, employee-friendly small businesses!

Click here to join our mailing list for news on our future workplace award programs.  You will start getting value immediately from our weekly, bottom line-improving people practice email (the next one goes out tomorrow).

My thanks to one of the bloggers I follow, Aaron Juckett of The One-Stop ESOP Blog, for pointing me to a new study by Hewitt Associates which uncovers some of the most conclusive evidence I've seen that poor employee engagement leads to an undesirable outcome for the top-priority stakeholder for many companies: shareholders.

As Hewitt explains on their website, since the onset of the economic downturn in July 2008, they have analyzed changes in employee engagement levels by quarter for more than 900 global organizations.  Juckett points to their most recent findings published last month, which show that

Organizations where 65% or more of employees are engaged had total shareholder returns 19% higher than the average total shareholder returns.  Companies with less than 40% of employees engaged had total shareholder returns that were 44% lower than the average.

I find this to be incredibly powerful, especially when I look back to a 2007 study by another leading workplace trends research firm, Towers Perrin (now Towers Watson after merging with Watson Wyatt in January), which we've summarized on our website.  That year-long study of 50 companies found that those with the most engaged employees had a 28% increase in earnings per share, while those with the least engaged workers had an 11% decline in earnings per share.

When we put the results of these two studies back to back, the payoff of employee engagement and team building on shareholders and other investors could not be clearer:

Likely due in part to layoffs and other workforce cuts made after 2007, shareholder returns for companies with the highest engagement – while still above the average – did drop 147%.  But look at the whopping drop of 400% in returns among companies with the least engaged employees.  Ouch, or as my Norwegian ancestors might say, Oofta!

These findings serve to advance the case that it's in companies' best interest to take up, or improve upon, their long-term strategy to motivate employees to create a more harmonious and productive workplace.

Related: Among the best practice articles that those who share their bad workplace experiences with us receive as part of our free, 20-page white paper is one on employee practices that increase competitive advantage.  Get the white paper by sharing your bad experience (and solution) here.

Hat tip to Burt Klein at PortionPac Chemical Corporation – one of our 2010 Top Small Company Workplace award winners – for sharing this post on the Letters of Note blog.

The post is a compilation of memos from the last years of the now-defunct, Texas-based Tiger Oil Company.  The memos, which appear to be real, show a CEO who was far more concerned with finding faults in employees than focusing on what they do well – the latter being a more effective approach to creating a productive workplace culture, to which many of our award winners and finalists can attest.

While we're on the topic of bad bosses, I wanted to point you to a new feature on our blog.  As a service to your fellow readers, if you are facing a bad workplace experience we invite you to share it and, most importantly, what you would do about it if you were king or queen for the day.

Learn more about our call to action regarding bad workplace experiences and solutions here.  Those who share their stories and insights receive a FREE white paper on great people practices that produce a payoff of employee engagement on the bottom line!

What an amazing community of small business leaders Winning Workplaces is fortunate to know!  After I wrote this post last week providing resources to help leaders set their new managers up for success – in which I shared a facet of our honoree Andrew Field's approach to this – the President of PrintingForLess.com emailed me with expanded tactics intended to help you with your own employee leadership development of this pivotal group of workers.

According to Field, here are some things that PFL implemented to grow great first-time managers in a relatively short time:

The critical first step in cultivating new managers is to identify candidates before they are needed in their new positions, and to begin giving them the preparation they need well in advance.  It is critical to have an explicit "leadership pipeline" and to hold yourself and your management team accountable for the development of your future leaders.

At PFL, this looks like having a standing agenda item at our broad monthly management team meeting that involves each person who has direct reports identifying their top and bottom performers, along with what they are doing to grow/reward/engage their top people, and what they are doing to "coach up" their low performers.

The second tool for success that we equip our new managers with is a template for regular (weekly or biweekly) one-on-one conversations with each of their direct reports.  The critical elements are personal connections, specific project updates, and discussion about professional growth plans.

Many entrepreneurs say that they don't need regular, scheduled one-on-ones because they have so much impromptu contact with their teams.  Nice try.

Spur-of-the-moment discussions are important, but they are not a substitute for regular one-on-ones, which encompass deep discussions focused mostly around the employee's work and development plans, rather than just current action items.

Our third support system for new leaders is that we provide them with development paths that include opportunities to expand their experience levels within the company.  In addition to education and mentorship (both of which are structured), we give future and current leaders the opportunity to test themselves in leadership roles, ranging from running a small project to leading a large group of people.  We move them around to different areas of the company in order to broaden their knowledge base, as well as giving them a chance to build robust networks within the organization.  Critical to the success of this OJT ("On the Job Training") is that we structure discussions about learnings and challenges.  We have found that peer-to-peer discussions are every bit as productive as boss-to-employee interactions.

At the end of the day, PFL has grown our best people by identifying potential leaders, modeling good leadership habits, and showering them with resources aimed at nurturing their growth.

Related: Andrew Field clearly knows his stuff when it comes to team building in the workplace – and seeing a payoff of employee engagement.  Learn even more about his employee development strategies on our website.

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?

Winning Workplaces is pleased to announce a new, free benefit for our email subscribers, on top of the ones they already enjoy such as our quarterly IDEAS newsletter, workplace topic surveys, and event and network news.

Last week we started sending out an update we're calling "Your Weekly Bottom Line-Improving People Practice."  The concept is simple: Based on qualitative feedback we've collected from our Top Small Company Workplaces award applications, we choose and send you real world company practices and the subsequent results they've seen that best demonstrate the payoff of employee engagement and team building.

To show you what I mean, here's this week's practice that went out to our subscribers earlier today:

• The Leadership and Learning Center
• Founded 1994
• Salem, Massachusetts
• Consulting

Practice/Result:

"Our employees design our people practices – everything from our benefit structure (employee committees create them) and benefit evaluation (twice annual surveys).  That is why turnover, which had been 30-40% in the late 1990s, has been in low single digits for the past several years."

If you'd like to start getting practice/result updates like this each week to help improve your business, click here.  It's free and you can opt out at any time.

Recently Gabrielle McDonald – who works for PRIZIM, a past finalist for Winning Workplaces' annual workplace award – shared this article by Working Mother magazine on Facebook.  In it, leadership and HR consultant Carrie Stringham shares 5 things that female executives want in their organizations and workplaces, based on her own recent dissertation research.

It's a good read, and it spurred me to take a look at some points of comparison between female CEO/presidents and their male counterparts at the nearly 500 small firms that applied for our 2010 award – to find out what the female executives of the companies we surveyed want, and the extent to which they're getting it.

When it comes to management and people practices, and the payoff of employee engagement, here are 8 ways that the female-led firms (about 13% of our survey sample) are outperforming their male-led counterparts:

1. Company ownership: Female CEOs own 74% of the company on average, compared to 62% owned by male CEOs.
2. Fewer investigations and complaints: 4.5% of female-led firms report being the subject of an investigation by a government body or a civil or criminal complaint, compared to 5.6% of male-led firms.
3. Greater tendency to be profitable: Here's an interesting one, given what I see as an increase in women-themed entrepreneurship and leadership articles of late – 94% of female-led firms were profitable in 2009, compared to 90% of male-led firms.
4. Employing women: Female-led firms employed 54% women in 2009; their male-led counterparts employed 42% women.
5. Employing ethnic minorities: Female-led firms employed slightly more ethnic minorities in 2009 than did male-led firms; 24% to 23%.
6. More low-income workers: 5% of full-time employees at female-led firms earn $20,000 or less per year; 2.5% of FTEs do at male-led firms.
7. Educational assistance: 56% of female-led firms offer educational assistance in the form of tuition reimbursement; 53% of male-led firms do.
8. Flexible work arrangements: This one makes sense since it came up in Stringham's survey – 91% of female-led firms offer flex work options; 80% of male-led firms do so.

What your take on this aspect of our employee engagement research?  Do any of the above takeaways surprise you?

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

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

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

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

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

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

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

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

The person I write for here each day, and occasionally tap great guest writers for, is a small business president or CEO looking to see a payoff of employee engagement.  But based on the depth that we often go into exploring practices that help sustain a productive workplace, I know that many HR professionals also read this blog.

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

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

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

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

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

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

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

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

PortionPac

Selected workplace best practices:

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

Business results:

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

Tasty Catering

Selected workplace best practices:

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

Business results:

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

What are your takeaways from watching this video?

Scott Shane, Professor of Entrepreneurial Studies at Case Western Reserve University, has an illuminating post on Small Business Trends this week in which, based on U.S. Census data of 6-year-old businesses, he shows that the typical (or median) entrepreneur's sales are below the average (or mean) sales in 9 sectors.  Shane writes that this distinction is important for entrepreneurs as well as investors and policy makers because

if average sales are high, while typical sales are zero, then a few entrepreneurs are very successful, but most are not.  Unfortunately, this is the pattern that we tend to see.

I want to take the opportunity to focus on the better numbers – the mean, or average, sales – that are more often used, and represent the "best case scenario."  I wanted to compare this data to our own, employee engagement research on similar small firms: the applicants for our 2010 Top Small Company Workplaces award.

Because Shane looks at 6-year-old businesses, I similarly pulled out only those applicants that were founded in 2004, and were 6 years old when they applied for our award this year.  Also, to compare apples to apples when it comes to sector, I pulled out only the industries we recorded for those applicants founded in 2004 that match up with Shane's table: Manufacturing; Transportation, Communication, Utilities; and Finance, Insurance, Real Estate.

The table below shows what I found:

The multiples of mean sales of our award applicants vs. the similar-age firms measured by the Census range from roughly 9 times (Manufacturing) to 34 times (Finance, Insurance, Real Estate).  When you average the three sectors together, our applicants report 19 times the mean sales of the companies represented in the Census data.

The big difference between the two groups of companies?  Our applicants use smart human capital strategies to drive everything from internal processes and metrics to external performance.

Related: For more evidence of the payoff of employee engagement, read this post which shows how some of this year's award winners compare to their industry when it comes to turnover.

I'm adapting Mark Twain's famous quote in the title of this post because I feel the need to provide a counterpoint to Mike Shipulski's "obituary" of imagination – in an organizational sense – on the Blogging Innovation website today.  Writing as if imagination were a person, Shipulski says,

In recent years (imagination's) health declined as the two new thinking systems, lean and Six Sigma, tricked companies into severely constraining their thinking, and, eventually, there was no longer a place for her.

I'm someone who thinks that regardless of the adoption of a management approach such as the two he lists above, imagination is still alive and well.  I think its vitals are especially strong (in keeping with the obit analogy) in small businesses, where because of wavering if not falling consumer confidence and spending, reduced spending by many of the larger companies they serve and are served by, and in many cases insufficient support by lending institutions and the government, and other factors, firms and their leaders and managers have had to get incredibly imaginative in recent years.

The following articles on our website show how imagination factors into the payoff of employee engagement best practices in terms of a more productive workplace:

Ask An Expert - Vacation Days: Real vs. Perceived Time Off
"The GreenPages example shows that organizations' leadership are only limited by their imagination in how they approach time off for their workforces."

Success Story - JFK Medical Center
"Many of the programs at JFK, which has been widely recognized for its enlightened workplace approach, are beyond the reach of smaller employers.  However, some programs would be feasible for a small workplace with some leadership imagination and sensitivity."

Perhaps more to the point of the current relevancy of imagination, the term showed up several times in the qualitative feedback of applicants for our 2010 Top Small Company Workplaces award.  In response to our question How do leaders in your organization foster a sense of community and collaboration among employees?, TXS Industrial Design in Texas wrote:

On a personal level, with interaction and interest of management, TXS may sometimes resemble "The Office" with humor and humility, sickness and health, birthdays and weddings, celebration of babies and joyous occasions and an occasional party or FoosBall tourney to spark imagination.  Our family of employees feel secure in their jobs and the longevity of the workplace.

In answer to our question asking for an example of an employee learning initiative, Maryand-based Orbit Logic Incorporated wrote:

We do an annual survey to see how employees feel about their job and the work environment.  One of the best suggestions to come out of that survey was an employee lunch and learn.  We really liked the idea, so we ran with it.  The topics are varied, ranging anywhere from benefits overviews to marketing to software development overview for non-developers.  It is very easy for people's imaginations to run wild with information.

Finally, fulfilling our requirement of describing the workplace culture of their organization and the key people practices that support that culture, California-based Perfect Fitness wrote:

Our company, Team PERFECT, is on a mission to serve everyone who desires a life lived to the fullest extent of their imagination, to serve those who realize that's the point of living anything less, and we haven't truly lived.  You have nothing to lose but your own self-imposed limitations, and you can gain anything you dare to imagine.  We believe that by sharing our understanding, you will become as passionate about your potential as we are, this is how we are teammates to all, teachers to some and students of others.  We know of no greater reward in life than helping others unlock their success and achieve their dreams.

Related: The CEO of one of our 2009 award winners, Chicago-based Radio Flyer, explains in this video on our YouTube channel how the company's workplace values of fun and imagination allow them to better resonate with their customers – parents – and foster greater employee commitment and innovation.

In a new post on the Small Business CEO blog, What Works for Business blogger Daniel Kehrer shares 13 mistakes that can jinx your business.  The #8 mistake on Kehrer's list is taking good employees for granted.  He explains that,

High turnover and the departure of valued employees can accelerate troubles.  Rewards and recognition - even small gestures - go a long way to keeping your best people around.  Treat new hires with care.  Provide a mentor, if possible.

These are wise words that have been borne out in the case of the small businesses Winning Workplaces has honored over the last 8 years for their ability to realize a substantial payoff of employee engagement and team building activities.  Based on what we've learned from these high-performing organizations, I wrote the following two posts that should help you when it comes to, respectively, recognizing employees effectively, and cost-effectively; and implementing mentoring initiatives that help both the employee and the company:

Employee Recognition on the Cheap

Two Approaches to Mentoring Employees

If you find the information in these links helpful, I invite you to retweet this post on Twitter using the link at the top of this post, or to share it using the button below.  Thanks!

As Inc. Magazine's profile on our 2010 Top Small Company Workplace award winner PortionPac Chemical Corp got a lot of attention in terms of showing the payoff of employee engagement at a manufacturer – an industry that has been especially hard hit in this economy, and which is not typically known for great workplace practices – today I wanted to share a bit more about another manufacturer: NewAge Industries, one of our 2010 award finalists.

Specifically, I wanted to enlighten you on five practices that leadership of this Pennsylvania-based provider of disposable pharmaceutical processing systems uses to increase competitive advantage.  For 56-year-old NewAge, one solidly quantitative way to define "competitive advantage" is their share price increasing 219% since 2005, while those of their two biggest, publicly traded competitors dropped substantially over the same period.  In addition, the company has never carried debt.

Here are five of NewAge's staff engagement activities that stand out for their revenue-generating and employee retention potential – again, particularly with respect to what other manufacturers are doing right now:

1. Bring on temporary producton employees for up to three months before hiring decisions are made.  This helps NewAge determine if someone is the best cultural fit for the organization, especially when viewed through the lens of employee leadership development potential.
2. Use tough times like these to launch an educational initiative aimed at helping employees understand and address their personal finance concerns.  At NewAge, the CEO in coordination with the accounting department recently hosted five, one-hour sessions with all staff on this.  As a result, many workers have closed the gaps in their personal finances.  This ultimately benefits the company because less financially stressed employees are more productive.
3. Weave cross-training firmly into employee practices and the workplace culture.  Leadership's goal here is to avoid over-hiring in busy times and rampant layoffs in slow times.  They fundamentally believe that this cycle that's so typical of companies is flawed, and they have the numbers to show that their steadier approach works (2009 was their sixth record-breaking year in a row for profits).
4. Pay workers for referrals.  NewAge employees receive a $1,000 bonus for any successful referrals they make.  Management has found that this practice helps to reduce hiring costs and results in higher quality applicants, since employees value the work culture and don't want to be responsible for spoiling it.
5. Put a twist on your tuition reimbursement program and subsidize both work- and non-work-related learning.  NewAge reimburses each employee up to $2,500 annually, and the tuition can be used for any type of learning, whether or not it is directly related to one's job.  Leaders' rationale is that the act of learning anything new and different can spark innovation – not to mention foster employee loyalty.

What people practices, in addition to those mentioned above, do you think directly impact and boost competitive advantage?

In April I blogged about what I perceived to be a direct link between progressive workplace culture practices at Netflix, and the payoff of employee engagement the company enjoys from such forward-thinking product innovations as discs for Internet-connected video game systems that allow their customers to stream movies and TV shows.

Today John Jantsch has a new post on his Duct Tape Marketing blog in which, through photos, he shows why a customer referral package he received from Southwest Airlines is effective for the airline.  It comes down to the package being extremely easy for the customer to understand, and to easily and quickly act upon.

This type of referral program should be no surprise coming from a company that is, as their President Emeritus and our past Top Small Company Workplaces award judge Colleen Barrett says, really in the customer service business, but happens to use airline transportation as a means to win that business.  And as Barrett told us in this Q&A with her on our website, unmatched customer service starts with an unparalleled commitment to building trust in the workplace and empowering employees at all levels to make decisions that benefit the customer (obviously a much different leadership approach than that which exists at most other airlines).

So to review, here's how Southwest Airlines' customer referral program is an example of turning what some would call "squishy" people practices to impossible-to-ignore bottom line results:

• Treat employees with trust, respect, and fairness, and encourage and empower them to think and act like owners (at Southwest, all employees are, in fact, owners).
• More highly engaged employees are more apt to create ideas, individually and as part of teams, that will generate more revenue and are more sustainable.
• The customer referral package Jantsch writes about is a tangible example of this, designed to increase that holy grail of profit margins for businesses, especially small ones: repeat business and referrals.
• More repeat business and referrals is better for everyone: customers, the business and their vendors and suppliers, and, of course, employees and their communities. 

Given the rising unemployment and falling budgets for needed social and educational programs in many states due to the economy, that businesses can have a hand in reversing those trends through the cycle described above is an inspiring proposition – and one that, frankly, I wish the leaders of many more organizations were focused upon.

Related: Read my firsthand perspective on how Southwest Airlines' workforce effectiveness made my first flying experience with them a joy.

Photo credit: John Jantsch

Earlier this month I shared data from our 2010 Top Small Company Workplaces employee engagement research which showed that the 20 winners of our award this year had better (which is to say, lower) average 2009 turnover than the 20 finalists.  But how do the winners compare to their industry?

From the preliminary research we've done into this, they have better turnover than their industries – in some cases dramatically lower.  Here's a table that shows how this breaks down among seven of our 2010 winners, based on the latest (2009) industry benchmarking data:

What's our takeaway from this in terms of cost savings?  Well, given that...

• These two sources say that the average cost to replace a U.S. worker is $17,000 (this obviously includes the whole spectrum from entry-level staff through managers and executives),
• The seven firms above had average 2009 turnover of 11%, 6% of which was voluntary,
• Average turnover for the industries of these seven companies is 23%, and
• The seven companies had an average of 188 employees in 2009

...if these organizations had double the turnover they actually had to match their industries, you could expect that their voluntary turnover should have been double as well – 12% instead of 6%.  This share of their average workforce works out to slightly over 11 full-time employees.  If you accept the average, per-employee replacement cost of $17,000, that works out to an average annual savings, based on better-than-average turnover, of $187,000.

That's a significant payoff of employee engagement in my book.  It's one of the reasons these firms are so intentional about their people practices.

Related: This Ask An Expert column on our website, which discusses in more detail the costs of turnover, contains a retention quiz to help you see if your finger is on the pulse of your organization.

At Winning Workplaces, we sometimes hear from business leaders that while they acknowledge that happier employees are more productive – and that, in turn, affects revenue and profitability – it can be difficult to tie team building strategies such as special employee awards or allowing workers to bring their dogs to work directly to the balance sheet.

It can be hard to pinpoint the payoff of employee engagement.  Even when leaders work off the feedback of a well-executed employee opinion survey to implement more or better engagement activities, getting bottom line returns to match or exceed estimates is not a science.  This is further complicated by down economies like the one we're in now, as well as the fact that almost no employee practice solutions produce overnight returns.

So I appreciated Dr. Anna Erickson's reframing of this issue in her post yesterday on the Good Company Blog.  She asks, "Are Employers Facing a Deficit of Trust?"  This implies that a workplace culture of trust, respect, and fairness is a form of currency.  It also implies that a deficit of this currency is bad for the bottom line, while a surplus of it strengthens the bottom line.

In fact, the data we gather as part of our Top Small Company Workplaces competition verifies this line of thinking.  The 40 winners and finalist organizations for our award this year have better overall trust building activities in place, and as a result they had higher 2009 revenue than the other 457 applicants (average of $42 million vs. $27 million).  In addition, as I explained in this post, a greater share of the winners and finalists were profitable in 2009, and they have longer average employee tenures and lower turnover.

The short of this is that, to the extent you can implement or strengthen staff engagement practices designed to build greater trust in your workforce, the better it will be for your balance sheet in the long run.

Related: This recent post cites evidence from John Jantsch's new book which finds that stronger cultures also tend to increase referrals – a major source of revenue for most businesses.

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