What’s the first thing to get cut when companies are economizing?  It’s always training.  In the last three years, training budgets have fallen by nearly a quarter.  It’s stupid.  ...  Because when you’re battling for customers and trying to do more with less, your most valuable asset is your staff.  And they can do more and better if you train them more.

These are the wise words of "serial CEO" Margaret Heffernan on BNET this week.  If you found our blog searching for employee engagement or employee development strategies, I'm sure you're already on the same page as Heffernan (and us).

But having the willpower and carving out a budget for training is one thing – implementing tactics that work (eg, have yielded results for other businesses your size or in your sector) is another.

Fortunately, I'm happy to share the five resources below to get your started, or help you improve upon your current efforts to keep employees engaged...and ever more productive:

1. 21 articles on our website covering "training program" in leading workplace research we've synthesized, and successful small businesses we've profiled.
2. Our blog post: 20 Effective Employee Learning Initiatives for Small Businesses
3. Our blog post: People Practices ROI of the 2010 Top Small Company Workplaces
4. Our blog post: How a Small IT Firm Creates Knowledge Leaders, and the Company ROI
5. And new from WorkAwesome: 11 Tips from Training People at Work

If you are already systematic about employee training, what have been your successes and lessons learned?  Please share in the comments for the benefit of your fellow readers.

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).

Last week I enjoyed a week off with my family in Canada, specifically Nova Scotia and Prince Edward Island.  But before I had even left the states, I was reminded of an important lesson when it comes to hiring for fit as well as employee engagement and workplace team building.

My wife and I flew from LAX to Newark Liberty International Airport before connecting on a flight from there to Halifax.  Between our arrival and second departure gate was a small, '50s-style diner.  Not having much time and knowing there'd be at least a snack on our second-leg flight, we sat down there to split a plate of fries.  We wanted to keep ourselves hydrated, so we each opted for free glasses of water instead of sodas (you'll see why this is important in a second).

When we arrived the place was maybe a third full – not too busy for the one waiter to serve us, as I can say with authority from my high school days as a waiter.  Yet it was immediately apparent that he preferred to favor tables with more people who were ordering more items.  That's understandable because, in theory, that's where the bigger tips were.

What he shouldn't have assumed, though, is that we would leave a proportionally smaller tip.  It so happened that we had bills and no change so, proportionally, had he done an even passable job, he would have gotten a very nice tip for his time involved.  But he initially ignored us, literally rolled his eyes when we asked for a plate of fries and two waters, didn't check on us once he delivered our order, and, worst of all when it comes to waiting etiquette, took our check and tip before we had left!

On our way out, when my wife shared that his tip could have been a lot higher if he had treated us better, the waiter said lazily, "Well, you only ordered fries."  Since when does amount spent dictate the service level received!?  (This is an equation that doesn't factor into the business models of our Top Small Company Workplaces, BTW.)

If you run a company, especially in the hospitality industry, you might be thinking that this experience reflects more on the individual employee and doesn't impact the business as much.  Not necessarily; on our return visit to the same airport en route from Halifax to Los Angeles, we noticed the same waiter in the same restaurant – steering clear of both and getting our food on elsewhere in the terminal.  A different customer-employee experience could have meant repeat business for that diner.

The takeaway?  When you have a more or less stable, captive audience such as in an airport or mall, people practices including hiring for fit and using employee development strategies to deliver excellent service can make a huge difference on your bottom line.

Related: In this webinar recording on our website, two of our award-winning small business CEOs share proven tips for creating a fantastic customer service culture.

Photo credit: Maurice Prather

Given this blog's focus on how employee retention tips and other people practices lead to a more productive workplace culture – and how leadership strategies such as succession planning reduce dependency of the business on key people if they leave or are otherwise taken out of the equation – a reader might conclude that decisions made in the C-suite matter less now than they once did.

This conclusion would be wrong, however, argues Tyler Leverty, assistant professor of finance in the University of Iowa's Tippie College of Business.  According to this Newswise article, which references Leverty's paper "Dupes or Incompetents: An Examination of Management’s Impact on Firm Distress," some CEOs significantly improve a firm’s performance, while others hurt it.

Writes Newswise,

[Leverty] found ... good CEOs can remove their firms from regulatory scrutiny 8 to 16 percent faster than a poor manager.  And in insurance companies that are going out of business, a more talented CEO can get a better return on the firm’s assets by up to 10 cents on the dollar.

The takeaway is that events and other learning opportunities that deliver a good ROI for leaders are worth the investment – even in tough times.  This is why Winning Workplaces is excited to partner with Inc. Magazine to host the Creating Competitive Cultures (C3) Conference in Denver on October 27-29, 2010.  As Inc. says on their C3 website, CEOs and other attendees can expect to learn "the newest leadership strategies for developing the best possible company culture, one that results in a loyal, motivated, inspired, and focused team."

Click here to learn more about this event.  You'll want to register by tomorrow, August 31, to get the early bird rate, a $300 savings.

SmartBrief on Leadership was one of the sources I noticed that touched upon what appears to be a relatively new employee engagement approach: allowing workers to take unlimited paid vacations.  Recently they linked to this NPR article on the trend.

But then last week they raised the topic again; linking to this article by Chris Grams, SmartBrief wrote:

An increasing number of companies are taking a relaxed approach to worker management, letting staff decide for themselves when they take vacations and how they spend their time at work.

The emphasis on the word "relaxed" above is mine.  It's only one word, but in my opinion in terms of leaders taking something away from their summary, it's an important one.  "Relaxed" can imply "quick and easy."  In fact, getting your workplace culture and productivity to a place in which your organization can truly succeed with a "no policy" vacation policy requires a lot of time and, especially, buy in and long-term commitment from leadership.

I think of the pinnacle of an unlimited vacation policy as the visible part of an iceberg – there's a whole lot more going on under the surface than what's apparent:

What's your take on this trend, and on the team building progress and other people practices work that needs to happen before it's feasible to jump on it?

On August 4 I told you about our new feature for email subscribers, a weekly people practices email geared toward improving your company's bottom line.  Tom Walter, CEO of our 2010 Top Small Company Workplace Tasty Catering, commented on that post saying it's a great idea.

This week he shared specifics with me on exactly why he thinks business leaders should sign up for this free email (emphasis mine):

The Weekly Bottom Line-Improving People Practice email should benefit all business leaders.  The world has become commoditized.  The true marketplace differentiator is human capital.  I enjoy learning the Best Practices other companies use with their most valuable asset - their people.

An engaged workforce is typically harmonious, productive and profitable.  These Best Practices eliminate the need to manage.  We have replaced management with effective leaders armed with Best Practices, and the difference has been remarkable.

While Winning Workplaces surely plays only a small part in Tasty Catering's success, you can't argue that they're not doing a lot of things right in their staff engagement that comprises their highly productive workplace culture: As we shared in the company's award profile, in a very tough year broadly and certainly in their industry (2009), their employee leadership development and other strategies helped them earn above-average revenues.

Register now to start getting our weekly, bottom line-improving people practices email FREE in your inbox.

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!

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?

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?

One of the reasons I'm excited to add the new email communication I wrote about yesterday to the mix of our subscriber offerings is because it's a win for us in terms of expanding our dialogue with the small business leaders and other folks in our network.

After I sent out this week's bottom line-improving people practices email yesterday, Collaboration King Founder Brandon Klein replied saying thanks, and shared a link to an interactive presentation he created that highlights employee engagement best practices for holding town hall meetings – a common theme among the small firms that have won our annual workplace award.

I've embedded Brandon's presentation below:

If you can't see it in your RSS feed, click here.

It may take you a few minutes to get the hang of moving around in it, but it is to your benefit to do so: he places many common town hall initiatives in a matrix that weighs cost vs. interactivity with workers – so you can find the initiative(s) that strike the right balance for your organization.  Additionally, Brandon places several of the same initiatives in a timeline, representing one scenario of a systematic approach to using town halls to keep employees engaged.

Related: As I am now following Brandon's Collaboration King blog, I added it to my Twitter list of the blogs I follow.  Check out my current list of 88 blog authors/business experts for both networking and insights.

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.

When it comes to staff engagement activities for a more productive workplace culture, how important are newly promoted managers?

VERY (so important, I put the answer to my question in its own paragraph).

In fact, the CEO of one of the most successful small businesses we've honored for their bottom line-enhancing people practices – Andrew Field of Montana-based PrintingForLess.com – told us a few years ago that he doesn't blink at spending half of his time mentoring and modeling tasks with his new managers.  He sees their success as that important to his business' ability to satisfy existing customers and attract new ones, as well as improve internal processes.

If you're reading this, you likely understand and value this connection.  With that in mind, here are three resources to help you make the most of the new managers in your organization:

1. Dan Rockwell's post on succeeding when you’re new - 8 hints for new supervisors on his Leadership Freak blog
2. Our editorial on the importance of new manager training
3. Wally Bock's guest article for us on 10 steps to improve your bosses' performance

Are there any good books or other resources you have turned to and would recommend to other business leaders?  Please share your picks in the comments.

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?

Last month on TIME magazine's Curious Capitalist blog, Barbara Kiviat, citing the New York Times, argued that because

Hundreds of thousands of Americans have enrolled in federally financed training programs in recent years, only to remain out of work ... job retraining is a wash.

This position may make sense from a policymaker or an economist's point of view – and in fact the Curious Capitalist blog carries a tagline saying it's about the economy and markets as much as it is business.

Yet, based on the evidence we see from the applications for our 2010 Top Small Company Workplaces award, small business leaders don't view retraining as a wash.  However, most* do keep tabs on it as a measurement of their failure to attract and retain the best people while aligning those people with the company's needs and deploying effective employee leadership development strategies.

In other words, while they value retraining, they see it as an employee educational investment of last resort.

Consider the responses to our essay question on how people practices contribute to the top line revenue and bottom line profitability from the following three companies:

KeyLogic Systems, Inc., West Virginia:
"At KeyLogic our product IS our people; which we hire through strong recruitment and employee referral programs.  We have a low turnover ratio which has impacted both the top line revenue (allowing for employee to customer continuity) and bottom line profitability by allowing us to focus more on developing our current employee resources through professional training as opposed to the high cost of recruiting, re-training and developing new employees."

Prenova, Georgia:
"Since our managers and executives interact with lower-level employees, they can impart much of their knowledge and information on an as-needed basis, rather than waiting for issues to be discovered (often because of a costly emergency) and spending large amounts of time and labor developing ways to distribute that information. Conversely, employees can quickly and easily access other team members capable of discussing issues, and receive retraining when necessary."

Pro CNC Inc., Washington State:
"Being very thorough in our hiring practices has also led to extremely low turn-over which certainly has an effect on profitability and revenue.  We don't spend a lot of time retraining new hires and can focus on the business of serving our customers."

*I should note that a few firms we've come across – as part of our workplace award as well as our consulting and speaking engagements – don't view retraining as an if-needed effort.  These rare enterprises actively budget for this as part of their staff engagement activities, looking to help those who want to continue working for the company, but in a different area.  They see retraining as a means to hold onto this talent and keep using them to drive results.

Related: Read our review of A Manager's Guide to Coaching, which is aimed at helping organizations decrease their time and money spent on recruiting in addition to retraining.

In a recent post on The Wall Street Journal's The Juggle blog, Jennifer Merritt asked if Summer Fridays still exist.  The "still" part of her question is informed by the realities of the economy forcing companies to cut benefits such as a part or full workday off, and companies that are tight on staff (again because of the economy) needing all the time they can get to best serve the customer or client.

In response to Merritt's question, Summer Fridays do, in fact, still exist.  Among the nearly 500 applicants for our 2010 Top Small Company Workplaces award, 8 specifically referred to reduced hours or a full day off on Fridays during the summer in their applications:

1. The Leadership and Learning Center - consulting firm in Salem, MA
2. Sonoma Partners - software firm in Chicago, IL
3. McGraw Wentworth* - insurance benefits provider in Troy, MI
4. Family Heritage Life Insurance Company - financial services firm in Cleveland, OH
5. NogginLabs Inc - software firm in Chicago, IL
6. Maxons Restorations, Inc. - property damage restoration services provider in New York, NY
7. Rauxa Direct - advertising firm in Costa Mesa, CA
8. Affect Strategies - PR/marketing firm in New York, NY

*This company is a 2010 award finalist

In addition, a review of our 2010 applicants shows that many of them offer the following activities for employee engagement and team building on Fridays (in all seasons):

1. Happy hour
2. Healthy breakfast items – most commonly fruits and bagels
3. Staff lunch
4. Casual dress
5. Yoga
6. Massages
7. Fun run
8. "Praise Box" – measure to reward hard work with awards and prizes
9. Staff outings during sport seasons – most commonly football
10. Friday night movies

Think these Friday-themed people practices are just a waste of money?  Consider that another 2010 applicant, B2B sales training services firm Vorsight in Arlington, VA, told us that, "When we put in place our Friday company lunch and one on one coaching, top line revenue jumped 20%."

What other Friday practices do you do, or have you heard about?

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.

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?

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?

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

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

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

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

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

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

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

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

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

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

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

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.