Did you catch this rare bit of good news about the economy this week?  Reuters reported that based on increased consumer spending, U.S. gross domestic product grew at a 2.5% annual rate in the third quarter, up from a 1.3% in the second quarter.

If a strong or even stronger fourth quarter follows, will companies dip into their historic profits to hire in a manner that will be meaningful in terms of making a dent in the high unemployment rate in early 2012?  That's anyone's guess at this point, but what is known is that eventually -- as the recovery comes or continues to happen, depending on your perspective -- recruiting efforts will need to pick back up.

And, as leadership educator, executive coach, and speaker John Baldoni argues in his new column on BNET this week, companies need to cope presently with a workforce that, in large part, is and has been doing more with less.

He cites a new People Metrics report in making the case that employee engagement best practices matter because they enable workers to feel positive about their organization (the fact that their firm is still in business being a contributing factor in their engagement level).

What's more, as hiring picks up in tandem with an improving economy, it may make an even bigger impact on your current workforce.  Baldoni notes that in this scenario, employees know that their options have expanded, so the extent to which their employer's people practices make them feel integral to the team and chart a tangible path for their growth and development within the organization become "a critical factor in whether an employee stays or leaves."

As Winning Workplaces advised in an editorial on our website in July 2009 -- ironically at the same time that many economists later said we were out of the "Great Recession" -- businesses would do well for their long-term prospects if they purposefully shared the rewards of recovery with their workers as both an acknowledgement of their taking the hard journey with leadership, and as a means of encouraging continued commitment and camaraderie to maintain a productive workplace culture.

Next Step: Whether you are in a hiring mode now or waiting to do so based on how your sales forecast plays out and how the economy as a whole continues to perform, this guest post on our blog provides great tips to motivate your workers, including many that are cost effective.

Some of our past posts have stressed that it's a good idea for you to improve employee engagement and other people practices in your organization by adding a formal social media policy.  Reasons for taking this step include enhancing your ability to engage both existing and potential customers as well as promoting better cross-generational communication among your workforce and avoiding employee litigation.

But what does a comprehensive and effective social media policy look like?  Dr. Sarah Elaine Eaton of Eaton International Consulting shed a lot of light on this last week in a post for Social Media Today.  Based on her review of over 150 such policies for a wide range of firms, including both for- and not-for-profits, she shared 16 dimensions in a "lessons learned" context.

What I find especially noteworthy about a number of Eaton's policy considerations is how they align with the building blocks of a Winning Workplace.  For instance:

• "Encourage honesty and transparency" and "Respect others" promote Trust, Respect and Fairness
• "Encourage a conversational tone" and "Seek permission and ask for help" promote Open Communications and Learning and Development
• "Discourage disputes" promotes Teamwork and Involvement
• "Time allocation" promotes Work/Life Balance

As our research and that of others who study highly productive workplace cultures show, to the extent that companies can reinforce great-workplace characteristics in their policies and procedures, they tend to enjoy better business results as they inform, enrich, and empower their people.  Eaton's social media policy framework is one example of this phenomenon in action.

Related: We recently shared this video by social media marketing expert Laura Roeder on our Facebook page, in which she argues that you will best engage existing and potential customers (and convert that engagement to sales) by turning to current employees.  This approach, of course, hinges on having in place a useful social media policy.

I've written before on the real and significant costs to businesses that fail to put in place people practices to rid their workplace culture of undue stress.  This is something that more owners and leaders are becoming cognizant of, setting up things like EAPs to help their workers cope with the pressures of work, home life, and their other demands.

The conventional wisdom has been that this problem is unique to, and confined to, each organization.  Yet, a study published in this month's issue of the Journal of Organizational Behavior, which I learned about on the TODAY Show's website, shows that once employee stress is severe enough, it can act like a virus:

"This phenomenon jumps workplaces," [study author Merideth Ferguson] says.  "It goes from the workplace to the home to another workplace."

This finding seems particularly alarming for small businesses.  According to the SBA, firms with 500 or fewer employees account for over 99% of all employers and are the leading creators of net new jobs.  Therefore the effect identified in this study spells bad news for our entire economy – at a time when it cannot afford another setback.

Yet, in the silver lining department, these firms' key strengths are their small size and typical lack of silos, which make it easier to implement meaningful change relatively quickly.  This includes employee engagement practices with a fulfillment focus – those that engender caring for people in the totality of their lives and a mutual understanding and appreciation of the responsibilities of leaders and employees toward one another.

Winning Workplaces has written on this extensively.  Check out the selected articles below for practices you can use or adapt to promote a healthy work/life balance among your workforce – and to ensure that "the employee stress buck stops here":

• Feature: How Babies in the Workplace Provide a Win-Win
• Success Story: Barclay Water Management, Inc.
• Success Story: Dealer.com
• Success Story: Guerra DeBerry Coody (GDC)

Congratulations are in order for 15 individuals and organizations that Winning Workplaces has previously pointed to on our website and blog for the value they provide small business executives as everything from examples of hyper-productive workplace team building and improving employee retention, to leading workforce researchers, to purveyors of proven yet cost-effective marketing and brand-building strategies.

The people and firms below were just named 2011 Small Business Influencers by Small Business Trends and Smallbiztechnology.com.  The recognition is sponsored by BlackBerry, Infusionsoft, and Sage, among others.

The list of Champions includes:

• Norm Brodsky
• Jeff Cornwall
• Donna Fenn
• Inc. Magazine
• John Jantsch
• Rieva Lesonsky
• Becky McCray
• oDesk
• Dharmesh Shah
• YoungEntrepreneur.com

Honorable Mentions include:

• 37Signals
• Jonathan Fields
• Ladies Who Launch
• Network Solutions
• John Spence

Go to Small Business Trends for information on the selection process and judging criteria.

Congrats again to these and all of the honorees!

What do you think of their picks?

Business owners attribute competitive advantage to their business model, value proposition, innovation, as well as the "smarts" I mentioned in this post on Patrick Lencioni's session (among others) at our conference last month with Inc. Magazine.  But as a new special report by Workforce Management makes clear, employee engagement is just as much a driver of competitiveness – and thus, revenue growth, market share, and other desired results.

One of my key takeaways from Garry Kranz's great report is the two graphs he shares on the most and least engaged workers by sector, as researched and reported last month by GfK Custom Research North America.  Sectors with the highest levels of engagement, based on GfK's survey of over 5,000 employees, include:

• Construction
• Professional/Business Services
• Information Technology

And those with the lowest engagement (or, conversely, highest disengagement) include:

• Retail
• Real Estate
• Education
• Manufacturing

Is your sector among those above?  (If it is, hopefully it's in the high-engagement group.)

I was curious as to how the sector representation of the recent winners and finalists of Winning Workplaces' 2011 Top Small Company Workplaces award, and the remaining applicants – some 350 firms in total – compare to GfK's high/low engagement sector findings.  Comparing apples to apples (the same sectors in both surveys) here's what I found:

Undoubtedly, part of what made this year's award winners and finalists competitive was that they came from more sectors with typically higher engagement, and fewer sectors with lower engagement, when compared to the remaining applicant pool.

Here's the really interesting thing, though: despite our company research sample's small size relative to many of their marketplace peers – firms eligible for our award have no more than 500 workers – and, therefore, their more limited budgets for employee development strategies, in many cases they are still outperforming their often larger competitors.  For some people practices insight into how they accomplish this, see what Kenexa Research Institute Exeucutive Director Jack Wiley says in the Workforce Management report:

[S]ome organizations say they have managed to sustain engagement levels during the prolonged recession.  Typically, those employers systematically gathered feedback from employees, analyzed responses and implemented changes as needed, Wiley says.  "They measure engagement with the same rigor they apply to customer service or financial data."

This tendency is definitely in effect among the small firms that rise to the top of our award evaluation process each year – not just based on their engagement activities, but on the bottom-line results they bring, including lower turnover and higher average employee tenures.

One more thing: As I discussed in this post based on new university research, spending to cultivate more highly engaged employees is not truly working for you unless it is used to build a career path for them, especially for your top performers.  You should check out this revealing, related research I came across today via WorldatWork.  They share Right Management's new survey finding that 75% of organizations lost high-performing employees they did not want to lose during the past year.

Pay special attention to the last paragraph of the WorldatWork write-up: a Right Management senior exec cited supports the case of providing a career path for top talent to avoid losing these critical assets (at this critical time!).

As Newswise reported two weeks ago, a University of Iowa study found that a good portion of the $134 billion that businesses spend annually on employee development strategies "could be wasted if companies don't assure their employees that they have a promising career with the company."

That's a huge chunk of change – savings that struggling small businesses, especially, would love to see back on their balance sheets.  To it in perspective, Standard & Poor's said Sunday that the U.S. bond market could lose roughly that amount if our economy loses its triple A rating as a result of the debt ceiling not being raised by the Treasury's August 2 deadline.

According to the study's authors at the UI Tippie College of Business, spending on professional development is most effective when it's tied to career advancement opportunities.  In fact, they argue, when it's not, turnover actually increases.

They also say that in addition to employee engagement activities like career counseling, "programs like mentoring and job rotations as well as good relationships with their immediate boss can create the feeling that career opportunities are available."

In fact, tying professional development dollars to career counseling is a practice the small firms that applied for Winning Workplaces' 2011 Top Small Company Workplaces award earlier this year have used to great effect.  And by "great effect," I mean keeping their workers longer, so they end up spending far less recruiting and training new hires to replace those who've left for jobs where they see more long-term career potential.  This, in turn, helps maintain the knowledge base and facilitate the kinds of quality customer and client relationships which generate businesses' favorite revenue, repeat business and referrals.

Check out the charts below.  Among our sample of nearly 350 firms applying for our workplace award this year, those providing career counseling experienced better employee tenure on average than their peers with no professional development approaches.

We also saw that companies providing mentoring programs and/or job rotation – which the study authors also pointed to for the most "lean" spending on employee training – in addition to career counseling earned more average revenue in 2010 vs. who don't fund professional development practices.  And firms providing mentoring and job rotation, but not career counseling, were more likely to be profitable than those who don't fund professional development.

Related: For more workforce effectiveness tactics that are low-cost but high-impact, read this article on our website.

I have written recently about some of the reasons why you should make plans to attend Winning Workplaces and Inc. Magazine's joint 2011 Leadership Conference, which will be held next month in Dallas, Texas.

We hosted this same type of event with Inc. in Denver last year.  What did the small businesses who attended take away from it, in terms of tips and strategies to improve their organizations?  The following is feedback that several key executives from PortionPac Chemical Corporation recently shared with us about their experience at our 2010 conference and subsequent actions taken in their firm:

Two examples from the conference stood out to us as being the most impactful: the employee fitness testing at Gentle Giant Moving Company and the entrepreneurial culture at Tasty Catering.  We have incorporated elements of both approaches in our work.

Gentle Giant Moving Company stands out for testing both the physical fitness and the psychology of potential employees with the famous stadium run test.  We appreciated the advantages of evaluating a potential employee who struggles to complete the stadium run but who takes responsibility for completing it thoroughly.  Since learning about Gentle Giant, our own company has evaluated our onboarding process and made some changes that better measure a person’s spirit in addition to their technical skills.  After all, it is not just the competence that matters – it’s how the person meshes with our culture and whether they demonstrate in subtler ways the degree to which they  take responsibility for their actions.

Tasty Catering inspired us with the way the company cultivates employee-driven ideas.  We applaud Tasty Catering’s culture of identifying and fostering entrepreneurship in its company.  Since the leadership conference we have begun to have regular check-ins with our customer service staff to uncover employee-generated solutions to everyday challenges.  Tasty Catering has demonstrated the value of having a motivated workforce whose ideas are heard, and we have taken their example to heart.

As one of the few manufacturing companies at the conference, we enjoyed comparing challenges and solutions with companies that were so different than us.  Our commitment to producing environmentally responsible, user-centric cleaning products gave us a strong connection to the values held by Winning Workplaces, Inc., and the other conference attendees, and we enjoyed the opportunity to find our common ground as well as identify exciting opportunities for growth.

If you'd like to get value similar to what PortionPac got, and you're free on June 15-17, click here to register for our Leadership Conference.  I'll be there and I'd love to meet you and learn about your firm and how you're investing in your workplace for greater workforce effectiveness.

Last week I was combing CNN.com on my lunch break.  When I first came across author Max Barry's article "Why I fled the office cubicle," I thought it was going to just be about how this 20th century feature of workplace culture and design can hinder employee engagement and ideation from the bottom up.

It is about that, but Barry also takes aim (I think unnecessarily) at human resources professionals:

The difference between people and human resources is that people have brains.  ...  Human resources are basically office equipment with legs.  They're talking furniture.  In fact, they're worse than furniture, because at least furniture stays where you put it.

Ouch.

In stark contrast to how Barry sees HR, here's how I painted this critical business function in the context of our Winning Workplaces in 2009:

For the most part, among the small firms we've honored for their outstanding employee engagement that improves productivity and the bottom line, HR leaders morph from paper pushers to planners and implementation specialists, along with the CEO, of team building activities that fit and reinforce the work culture.

Below are five specific examples of this, among the small firms we've honored and profiled over the years:

1. Leadership Advisor and Key Decision Maker

Ginger Bay Salon & Spa, Kirkwood, MO
HR Representative: Sasha McGuire

"I'm part of the leadership team here, and we meet weekly to collaborate," McGuire says. "My boss, the owner, is very open to my feedback.  For example, I make the decisions around staffing, and she trusts me and consults with me.  I make the recruiting schedule, and make selections.  The owner is involved, but trusts me to do my work well."

2. Self-Directed Workforce Director

New Belgium Brewing Company, Fort Collins, CO
HR Representative: Jenny Briggs

Philosophically, NBB's intention is to develop a workforce that, at all levels, is self directed, makes reasoned decisions and is inspired to pursue their passions at work.  The company provides a menu of opportunities for all staff including: a process for employees to establish their own work objectives, on-site internal training, tuition for external education, a job shadowing program, and participation on one of NBB's committees.  Many of these activities are directed by Briggs and her 10-person staff in Human Resources.

3. Productivity Enhancer

High Performance Technologies, Inc. (HPTi), Reston, VA
HR Representative: Eleni Antoniou

The firm's staff benefit from peer learning through Learning Cafe presentations that are given every two to three weeks. Occurring over the lunch hour in a format akin to brown bags, staff members have the chance to receive in-depth training on a particular computer program or even learn a skill not tied to the workplace.  Antoniou, director of HR, has presented several topics, including goal setting and getting the most out of performance reviews.

4. Relationship Builder

Optimax Systems, Inc., Ontario, NY
HR Representative: Alejandro Mendoza

Mendoza's duties include helping to administer Optimax's successful mentoring program, which is core to the company's developmental process and helps maintain its unique workplace culture.  All new employees are assigned a mentor for a minimum of 90 days and there is a structured timeline of events that are expected to take place during this time period, including: much one-on-one time, monthly lunches, introductions to all staff, orientation to computer systems, understanding the bonus program, etc.  "Instead of a boring HR orientation, this mentoring relationship helps new employees understand our environment and what is expected in a far more effective manner," says Mendoza.

5. Emergency Responder (Culture Maintainer)

Ipswitch, Inc., Lexington, MA
HR Representative: Betty Lang-Holmes

Lang-Holmes had been on the job for one week when tragedy struck her software company, Ipswitch, Inc.  An employee's well known significant other passed away unexpectedly.  As vice president of human resources, she acted quickly.  "We invited a licensed counselor from our EAP to host bereavement seminars the very next day," she says.  "Now, there's no stigma attached to getting help when people need it."  In fact, at only $65 per employee, Ipswitch's EAP investment, and oversight by HR, amounts to just pennies compared to the costs of losing a valued associate.

Related: Our Leadership Conference with Inc. starting June 15 is a fantastic opportunity to learn about cutting-edge employee practices for greater team camaraderie and company productivity – the kinds of practices you can leverage your HR staff to implement, increasing your ROI from them!  Hurry – the $300 early bird disount is only available until May 6.

Citing Edelman PR's 2011 Trust Barometer, yesterday the Whole New Web Blog argued that marketing success cannot be obtained without building trust with your customer base.  A separate, new post by Erik Deckers of Professional Blog Service shares findings from a MarketingPower.com report which show that companies appear to have an opening, in favor of customers' friends, to be the most trusted source for information which leads to a purchase.

Picking up on Deckers' post, the trick to benefiting from a decline in purchasers' trust in "people like themselves" (aka, friends) is that companies must be more visible on, and more savvy with, social media platforms – Facebook, Twitter, LinkedIn, a blog, etc, etc.

In addition to our usual discussion of team building and employee engagement strategies for making your workplace culture more productive, occasionally I've shared here tips and techniques for using these tools in ways that increase your ROI.  In light of the above research findings, I thought it would be helpful to put these insights all in one place.

Without further ado, I invite you to follow the links below to increase your social media cred – and thus build more trust with both past and prospective customers or clients:

1. Tailor your message when sharing links on your Facebook page
2. Put available phone numbers of LinkedIn contacts who belong to your Group into a cold call list, then reach out to them in the best way you see fit
3. Understand why setting up a company blog, or ramping up your blogging, can be just as effective as running typically costlier PPC ads
4. On Twitter, use TweetDeck to grow your follower base
5. Learn how to combine your blog with Twitter to turn listening into reputation building

Related: It's no secret that the younger generations in your workforce – Millennials in particular – are often most on the pulse of the latest technology trends.  Learn how to better engage employees in this workforce demographic with the takeaways in this Executive Learning Series webinar.

As I have written about several times here, including in this post last May, undue employee stress costs companies, big time.  A figure that is often cited is that the lost productivity as a result of it adds up to over $300 billion a year.  Not the kind of backtracking we want to have happen as we work to further our economic recovery.

As many a CEO and HR director know, one of the biggest sources of undue employee stress is bullying, or harassment.  In fact, one incident of bullying can do double damage to the workplace culture; Catherine Mattice has an insightful new post on the No Workplace Bullies blog in which she cites a study finding that 15% of respondents who reported misconduct were bullied as a result of their actions.

Clearly, companies can do themselves the most good in terms of maintaining a good team building atmosphere – and save on related costs of staff time for investigation and resolution of claims – if they're proactive in creating an environment in which it's taboo to engage in such behavior in the first place.  Hiring for attitude and fit is a good start.  But beyond that, here are some approaches for curbing workplace harassment used by applicants for Winning Workplaces' 2010 small workplace award that you can adapt for your organization, once people are on board:

1. Buffalo Exchange - 38-year-old, Arizona-based retail trade firm with 672 employees: "We are serious about having a harassment-free workplace, resulting in a happier, more stable and more productive workforce.  The Predictive Index is a development tool we use that measures the natural talents and motivating needs of employees.  Managers can use the Predictive Index in determining effective methods of management and motivation for individuals based on those needs."
2. Duro Textiles LLC - 9-year-old, Massachusetts-based textiles firm with 239 employees: "We have a learning initiative in which we provide our supervisors and managers training in documentation of employee records and harassment.  We have provided computer training to employees through a Workforce Training Grant."
3. EthicsPoint - 12-year-old, Oregon-based software provider with 128 employees: "In 2008 we launched an online based training platform consisting of two base modules, Code of Conduct and Insider Trading.  In 2009 we incorporated additional modules to be deployed on a monthly basis, including Diversity Training, Preventing Workplace Harassment, Integrity and Careful Communication.  These modules were customized for EthicsPoint and are therefore more engaging to our employee base.  All new employees are provided the two base modules upon hire and then are integrated into the annual training program.  The training supports our core values and culture of compliance and makes ethical conduct an integral part of everyday company practice."
4. Hammer Packaging - 99-year-old, New York-based printer/publisher with 392 employees: "Every three months an outside corporate attorney or consultant is engaged to train associates on a number of potentially incendiary issues.  Over the past year, some of the topics disccussed included Problem Solving, Violence in the Workplace and Sexual Harassment."
5. Harvest Investments, Ltd. - 20-year-old, Illinois-based financial advisory firm with 62 employees: "Harvest provides numerous management and supervisory training programs throughout the year.  These programs focus on goal and objective setting, performance management, open communication, team building, conflict resolution, and diversity and anti-harassment issues."

If you excel in ridding your workplace of bullying and harassment as a means to keep your bottom line strong and maintain competitive advantage, we'd like to hear from you – tell us your story and at the same time apply for our 2011 Top Small Company Workplace award.  Hurry, our 2011 application period closes on January 14.

Yoga as an employee engagement activity and health and wellness benefits offering has been an increasingly common feature among the small and midsize businesses Winning Workplaces evaluates as part of our annual workplace award.  Many companies understand that the physical fitness of their workforce can be tied to the financial fitness of the business.

We see this connection play out among our 2010 Top Small Company Workplaces award applicants:

• 22 (4%) of our 497 total applicants offer some form of yoga.
• A greater share, 5 (13%) of our 40 winners and finalists, do so.  As I noted back in March, these firms can tie this benefit, in part, to their stronger business metrics vs. the rest of the applicants, including a greater overall share that are profitable and lower turnover/longer employee tenures.

As this article on TheMedGuru site reveals based on a new study, participants who underwent 55 hours of yoga practice and theory lectures over a month-long timeframe "reported a marked improvement in their stress levels at the end of the month as opposed to the control group."  With the increasing effects of employee burnout being felt on companies due to the economy (employees who still have a job are working harder than ever) – one example being a rise in bogus sick days – leaders should consider people practices such as yoga to help their workers avoid burnout, and to keep their operations in top-performance mode.

Related Posts:

• 8 Small Businesses That Still Have Summer Fridays, Plus 10 Other Friday Perks
• Small Businesses Pull Their Weight on Wellness Initiatives, Too
• Small Business as a Tool to Curb Obesity

Well before the financial crisis of 2008, companies in manufacturing and many other industries embraced "lean" as a way to conserve cash and resources not needed to create value for the end customer.

On our website we've explored these practices, specifically the team building and other human capital strategies that have fueled their success.  It's a good thing so many firms jumped on the lean bandwagon prior to 2008, or we might be in a lot worse shape today!

Another area of operations that we see undergoing a "lean makeover" is performance management.  Last week I wrote about how performance reviews are being more closely scrutinized than they've been in years for the value they provide companies (click here to take our LinkedIn poll on whether reviews are helpful or harmful to organizations).  Today I want to talk about businesses' increasingly lean focus when it comes to employee engagement tied to performance rewards.

For the past few years, based on workplace culture research from folks like Cindy Ventrice and people practices used by business leaders like Danny Meyer, we've made the case that simply throwing more money at rewards does not necessarily lead to better desired results: greater productivity and commitment and lower turnover.

Workforce Management has a new special report out on this which finds that "With budgets remaining tight, more employers are focusing on nonfinancial rewards and customizing recognition at the local level to motivate and retain top performers."  The bottom line of Leah Shepherd's reporting here, which includes the results of a survey by the Hay Group and WorldatWork, is that the same local, person-to-person engagement that drives innovation and continuous improvement should be the impetus for effective – and at the same time, cost-effective – reward incentives.

Notably, while the two non-workplace consultant, non-governmental firms Shepherd profiles – Great American Insurance Group and The Everett Clinic – are midsized to large businesses (ranging from 1600-5000 employees), lean performance rewards can be just as if not more effective in smaller organizations.  Why?  A smaller staff size and a typically flatter organizational structure mean that managers can more easily know and leverage individual, non-monetary employee reward preferences to meet the goal of continued motivation and peak performance while adhering to a slim budget.

It's my hope that as this meme reaches further and further into more smaller firms, lean performance rewards will transition from management fad to common practice – like what happened in manufacturing.  The money saved over more expensive, less personal reward programs can help companies recover faster.  As the economy improves, this will also assist with hiring and employee leadership development, both means to sorely needed increased job and customer satisfaction.

What's your take?

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.

I would imagine that many of you are familiar with recent employee engagement research finding that one of the ill effects of mass layoffs on companies is an increase in top talent who leave or are looking to do so once the economy picks up a bit more.  I have shared studies attesting to this here since August 2009; Human Resource Executive has a new article on this.

But another worrisome effect that I was not aware of until today is the prospect of a reduced and/or demoralized knowledge base of workers leading companies down a path of a long-term lag versus their industry.  Quoting Wayne Cascio, the Chair in Global Leadership and Management at the University of Colorado Denver Business School, National Public Radio published an article yesterday in which it warns of an industry lag of 9 years for companies that cut their workforce by 20% or more.

NPR frames the issue of significant layoffs as a choice for leaders between short-term financial gain and a deficit in long-term competitiveness:

Extreme downsizers do see an immediate boost in productivity as fewer workers do more.  But it can also lead to burnout and eventually the departure of top performing employees.

It will be very interesting to see what the statistics look like starting in 2017 for companies that have, over the past two years, cut their workforces by 20% or more in terms of revenue, profitability, market share, and turnover and related spending on recruiting/retention.  Not to mention, good team building, the measurement of which has come a long way in the past few years and will surely be even more precise at that time.

Your thoughts?

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?

It takes time, commitment by company leadership, and at least some financial investment to make significant inroads to implement employee development strategies to create more leaders at all levels within an organization.

So why should a firm go down this path?  What's the ROI?

An article on Newswise this week based on a new study published in The Leadership Quarterly provides answers to these questions.  According to the employee engagement research of Kaiser Permanente by faculty at three California-based universities,

the more effective both the CEO and head of a department are perceived to be; the more [employees] supported the change in strategy.  ...   Moreover, the data showed that leaders are more likely to be effective in getting employees to achieve organizational objectives ... when the employees are shown that their leaders are united in supporting the strategy.

In other words, as the title of the Newswise article suggests, the number and competency of leaders in an organization contribute directly to the effectiveness of both senior leadership and the strategies they seek to carry out to achieve desired business outcomes.

With this in mind, I wanted to share the most popular posts among readers of our Employee Leadership Development blog – the ones that have helped them most to think about and act on the process of creating more leaders among their workforces.  Check them out:

1. The Connection of Flexibility and Training to the Bottom Line
2. 10 Best Practices: Transitioning to Work at Home
3. Updates: Resource Interactive's Work Environment, Comment to Our Post on Zappos' 'Leaving Bonus'
4. Employee Engagement: A WorthWHILE Metric
5. 30 Employee Development Strategies to Boost Productivity
6. BNET: Strong Workplace Cultures a Boon for MBO Leaders
7. Five Proven Strategies for Retaining Top Talent
8. Friday Nugget: Don't Underestimate the Importance of Learning
9. How a Small IT Firm Creates Knowledge Leaders, and the Company ROI
10. Job Swapping Extends Beyond Non-Management Employees

How does a focus on developing leaders factor into your overall employee practices?

Photo credit: CAREEREALISM

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

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

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

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

Read his full post here.

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

British Prime Minister Gordon Brown's resignation this week and lightning-fast replacement by David Cameron illustrates an organizational inevitability, writes executive coach and speaker Scott Eblin on his Next Level Blog.  Namely, that your leadership role will end.

One of the tips Eblin offers for CEOs pondering on and strategizing around this is to "Do as much good as you can while you can."  To me this speaks to succession planning – an arrow in the "quiver" of leadership practices that, in my assessment, is rarely used (or maybe I should say, rarely fully and effectively executed), but which can be incredibly powerful in terms of both employee engagement and building trust in the workplace for the long term.

Winning Workplaces has written on succession planning based on lessons learned by both outgoing and incoming leaders of our small honored firms, and others.  Here are the top five related articles on our website you might want to check out:

1. The Changing Face of Succession Planning
2. A Conversation with Helen Johnson-Leipold of the Johnson Family Companies, Part 1 (see the third question and answer)
3. Tips to Best Utilize Older Workers in Your Workforce (see the fourth paragraph down starting with bold text)
4. Succession as a Values Test
5. Casting a Wider Ownership Net

Related: Leaders of two of our award-winning firms get into more detail of their varying succession planning experiences in one of our most popular webinar recordings.  Access it here.

Image credit: Changing Trends in Human Resource Management