Steroid-Free Blogging

Correlations Between Wins, Payroll, and Attendance Over Time

2011-02-03T07:52:00.000-08:00

The students in my Sport Management class are reading Moneyball. One of the points made in the book is that attendance is more strongly correlated with wins than with payroll. I created the motion chart below to illustrate these relationships. But it looks as though things might have changed over the last 10 years or so. The correlation between wins and attendance is less than the correlation between payroll and attendance. Probably a variety of explanations. And, yes, I know I need to use regression with a bunch of control variables. But, hey, I'm learning Google Motion Charts, so give me a break. Change the horizontal axis to "Time" and change color to "Unique colors" and it makes more sense.

wins, attendance, and payroll

2011-02-03T06:57:00.001-08:00

New MBTI Types

2011-01-17T07:17:00.000-08:00

The web is buzzing with news of the changes in the Zodiac signs. But the gravitational pull of the moon has produced another change as well. "Changes in the astrological signs will be accompanied by similar changes in personality and people's MBTI codes", says Buzz Flewhart, PPD. The world's most popular measure of personality, the Myers Briggs Type Indicator, assigns people to one of 16 types. And just as a 13th astrological sign has been added, a 17th MBTI type has been added: PENG. "PENG is the label for people who act like penguins," says Flewhart. "It may take a few months for these changes to really show up. If people do not observe changes in their personalities by April 1, 2011, they should see their doctor, therapist, shaman, or state representative."

Old MBTI Type	New MBTI Type
ISTJ	ENFJ
ISFJ	ENFP
INFJ	ENTJ
INTJ	ENTP
ISTP	ESFJ
ISFP	ESFP
INFP	ESTJ
INTP	ESTP
ESTP	INFJ
ESFP	INFP
ENFP	INTJ
ENTP	INTP
ESTJ	ISFJ
ESFJ	ISFP
ENFJ	ISTJ
ENTJ	ISTP
New Type: PENG	Penguins

The Total Bedroom Makeover

2009-07-29T15:08:00.000-07:00

The Internet has opened up amazing opportunities for people all over the world. I love the fact that people with very meager resources can put up a website and compete on a level playing field with larger retailers. The one who offers the best value will win.

Over the last week, I've discovered a couple of these businesses that will fall by the wayside. Their founders will be baffled because they aren't aware (or aren't involved enough to care) of the terrible customer service offered by their hired help.

A few months ago my wife and I decided to surprise my son with a "Total Room Makeover" while he was away at his grandparents. This handily coincided with his birthday. We decided on a Cincinnati Reds theme and planned ahead so that we could order everything we needed and be ready to spring into action as soon as he left with his grandparents.

The Furniture

A local furniture store advertised a "Going Out of Business Sale" so we stopped in there about one month ago. We saw a perfect baseball-themed bedroom suit, but we didn't really like the dresser it came with and the price seemed a little high. So I whispered to my wife "Let's see if we can find it online." I did.

TheBedroomSpace.com advertised the bed and 5-drawer chest (which we preferred over the dresser in the picture), so we placed our order on July 6. Man was I proud of myself for ordering so far in advance!

On July 14 I received an email from Elaine Hogan who told me that the trundle unit we ordered would not fit under the full-size bed. That seemed odd since the one on display I saw was a full bed with a twin-size trundle. I told her to go ahead and send the trundle anyway. Now we're getting excited because they must be preparing the shipment!

Wrong.

On July 22, I contacted Elaine to find out if they had an estimated arrival date. TJ is due back home on July 29. Elaine responded that day:

I have just received word from the manufacturer that this bed has been discontinued and there is no stock available. Please check our website and see if there is something else that you would want to order in place of the Holland H0use Alex’s Room Youth Four Post Bedroom Set. I apologize for any inconvenience this may have caused. I will understand if you want to cancel the order completely. In either case, please let me know via return email.

Needless to say, I was not happy. I thanked her for the offer to order something else from them, but passed and asked for the CEO's email address. She referred me to corporate@rjdstores.com Looking around on the Internet I found three people listed as the founders: Joel Kornbluth, David Fingerer, & Raffe Lahav. I sent an email to the corporate address with a request that it be forwarded to these three. I never received any sort of response.

The next day we went furniture shopping again, trying to find something before TJ returned. Interestingly, we stopped at a Badcock store and found the same baseball-themed set in their 2008 catalog. I asked if they had it available even though the manufacturer had discontinued it. It took 30 seconds for the guy to find out that they had three beds in their warehouse, but no chests. It took him 30 seconds to do something that TheBedroomSpace.com couldn't do in two weeks.

Eventually we went back to the "Going Out of Business" store and bought their set.

Lesson learned: Buy local. And whatever you do, don't order from TheBedroomSpace.com

The Comforter and Valances

If it didn't have something to do with sports, I would never order a comforter or valances. But we thought it would look cool, so we looked around for a Cincinnati Reds comforter and valance. If you do a Google search, you'll find the same Reds comforter and valance advertised everywhere. I finally ordered both from http://www.domesticbin.com/ on July 11. On July 13, they informed me that the valances were not available, but the comforter was shipping that day. Not a big problem because I still had plenty of time to order the valances elsewhere. I would definitely order from domesticbin.com again.

On July 13, I looked around and found the valances at http://www.sportskids.com/. Just to make sure, I emailed help@sportskids.com to ask if the valances were in stock. I received a quick reply from priyankainfo@sportskids.com that the valances were in stock, so I placed an order. They were nice enough to provide an "estimated shipping date" of July 20-22. Perfect timing.

Wrong again.

On July 27, I emailed priyankainfo to inquire about shipping. No response. On July 28, I sent another message to help@sportskids.com. No response. I tried their live online chat-based help. No response. I called the toll free number. No answer.

On July 28, I tried the online help again and actually got a response. They "checked with the manufacturer" and discovered (you guessed it), the item is no longer available from the manufacturer. When I told the entity on the other side of the chat what I had been told, it quit the chat session. So I called the toll free number and actually talked to a live person. He wouldn't tell me his name, so I'll call him "Surfer Dude". Surfer Dude also "checked with the manufacturer" and told me the same thing as the chat entity. When I expressed my displeasure, he kept to the script: "I'm very sorry. It's the manufacturer's fault." Eventually he hung up on me.

Lesson learned: Never order from www.sportskids.com

Exceeding Customer Expectations

2008-08-07T08:31:00.000-07:00

Originally published Aug. 10, 2008

In my last column I wrote about the family trip to Pigeon Forge. When the hotel staff was unwilling to change a light bulb, it didn't ruin our trip, but it did leave a bad taste in my mouth.

I had a very different experience in Pigeon Forge a few years ago. Within minutes of arriving at Splash Country, I lost my keys.

As an aside, the locker rental they offer is a pretty good deal after all.

I lost my keys in the landing pool at the bottom of one of the water slides. I asked one of the 16 year old life guards if there was any hope of recovering them. He told me they would have to close down the slide and dive for them. If they turned up, he would take them to the lost-and-found office.

To be honest, he sounded as interested in finding my keys as I would have been at 16 - not very. I spent the rest of the day wondering how I would replace each key.

Late in the day I decided to visit lost-and-found, just in case.

When I told them I was looking for lost keys, someone opened a desk drawer with about 20 sets of keys. Much to my amazement, my keys were there.

I really don't know who found the keys, but I was pretty impressed for several reasons. First, I know it was my own fault, but Splash Country had a plan in place for handling customer mistakes. The light bulb incident was frustrating because the hotel did not have a plan for dealing with its own very simple problems.

I was also impressed that the teenagers who run Splash Country actually used the plan. I know it's wrong to stereotype, but I really didn't expect much help from anyone at Splash Country. At the hotel, however, the staff looked grandmotherly. When I asked for a new bulb, I almost expected them to bring some homemade cookies along with the bulb.

In these two simple examples, there's a pretty important message for companies. Research on customer service shows that customers are satisfied when their expectations are met. When their expectations are exceeded, however, customers become loyal devotees of the company. When customer expectations are not met, they become ex-customers.

At the hotel, I felt like my very low expectations were not met. At Splash Country, I also had pretty low expectations, but they were exceeded.

Several companies have become very successful by exceeding customer expectations. Every day, employees at Ritz-Carlton hotels around the world gather before their shifts to hear "Wow" stories. These are stories about hotel staffers who go above and beyond the call of duty to help customers.

But you don't have to be the Ritz-Carlton to make use of this principle. Most people have pretty low expectations when they go into a fast food restaurant. On a visit to the Ritz-Carlton, Chick-fil-A founder Truett Cathy noticed that when he thanked anyone on the hotel staff, they always replied, "My pleasure." That's why you get the same response and outstanding service from Chick-fil-A employees.

In the last year, Chick-fil-A has been recognized by Zagat's and Business Week for their outstanding service that exceeds customer expectations.

It's interesting to think about what might have happened at my hotel if Chick-fil-A employees had been working there. I'm pretty sure the response would have been, "It's my pleasure to change your light bulb."

Customer Service Matters

2008-07-24T09:52:00.000-07:00

Customer Service Matters

I probably shouldn't admit this, but I spent last week trying to take advantage of the alleged economic recession. The Timmerman family packed up and headed to Pigeon Forge. I assumed that, since the American economy is collapsing, we would be the only ones at Dollywood.

It seemed like half the people in the US were in line ahead of us at the Old Mill Restaurant. Apparently, when the going gets tough, the tough go out to eat $18 fried chicken.

I was especially amazed at the number of out-of-state license plates I saw in the parking lots. Pigeon Forge isn't just a recession destination for Tennesseans. People are coming from all over the United States.

But this trip will be memorable for another reason. It was a small incident, but one that will stick with me.

After spending the day standing in lines, we returned to the hotel about 5:30. When we turned on the light switch, it seemed as though we were in a disco from the 1970s. The fluorescent light bulbs in the room were going bad and flickering like a bad strobe light.

No problem, I thought. I'll just call the front desk and ask them to send someone to fix it. But the person at the front desk simply said, "Sorry, we won't have anyone available to fix it until tomorrow morning."

I wasn't sure what to say. Is this hotel incapable of changing a light bulb at 5:30 on a Monday afternoon? I offered to fix it myself if she could simply find the bulbs. She told me that she would see if she could find them and let me know.

About thirty minutes later, I was walking near the front desk, so I decided to stop in and check on the search. That's actually when the search began. Both the receptionist and someone in an office behind the desk said that they didn't know where the bulbs were stored. That's when she looked at me like I was supposed to go away.

I was still baffled, so I offered to remove bulbs from an unoccupied room. The receptionist told me that they only had two empty rooms and they really weren't supposed to swap bulbs like that.

That's when I went from bewilderment to disappointment. I was the one coming up with possible solutions to the problem. They were making up excuses that really didn't make sense.

Finally, when I didn't go away, she offered to call "Walt" and find out where the bulbs were stored. A little while later, someone who obviously wasn't very happy with me showed up to change the bulbs.

I'm glad that the problem was fixed, but it still left me with a bad taste in my mouth. Obviously, my problem could be fixed. But until I persisted, no one wanted to help.

This incident stands out because customer service is something that can really separate any company from its competitors. There are 10,000 hotel and motel rooms in Pigeon Forge and to me they're all pretty much the same. I've stayed at this hotel many times, but this tiny incident has pushed me to shop around on our next visit.

I wonder if there's a hotel that offers room service from the Old Mill?

The Value of Freedom

2008-07-15T12:10:00.000-07:00

Originally published July 13, 2008

Like most good red-blooded Americans, I spent last weekend celebrating freedom by shooting fireworks made in China. We celebrate freedom because it is one of the foundations upon which our country was founded. Freedom is still one of the pillars that separates good countries from oppressive ones.

Oddly enough, freedom is also one of the things that often separates good organizations from bad ones. For the last two years, Fortune magazine has named Google as America's Best Company to Work For. Aside from their free food, one of the hallmarks of Google's culture is known as 20-percent time.

Google expects all of their engineers to spend 20 percent of their time working on projects of their own choosing. These projects are usually creative ideas that an engineer simply finds interesting. Some of Google's most successful products, like Gmail and AdSense, are the result of this freedom to experiment.

Another company on Fortune's list of Best Companies is the convenience store chain QuikTrip. Convenience stores tend to be quite dangerous places to work. So I don't typically think of them as being great places to work. At QuikTrip, however, employees report that the company provides them with the resources they need to be successful, and then they are left alone and trusted to do their jobs.

The value of freedom can be seen in non-profit organizations as well. In a nationwide survey of public school teachers, researchers from the National Center for Education Statistics searched for the strongest predictors of job satisfaction. They examined background characteristics like demographics, experience, and school size. They also looked at working conditions that might be under the control of school administrators.

The background characteristics had virtually no relationship with job satisfaction. Higher paid teachers were only slightly more satisfied than lower paid teachers. Two of the strongest predictors of job satisfaction were the teacher's influence over school policy and the teacher's control in the classroom.

In other words, teachers (like everyone else) are more satisfied when they are given more freedom to make decisions that influence their work.

So if organizational leaders want to offer more autonomy, where should they begin? Pretty much anywhere. One idea floating around lately is that employers should offer four-day work weeks. Aside from saving on gas, moving to a four-day week can offer a number of advantages.

Back when I worked at the underwear factory in South Carolina, we moved to a four-day work week only after the employees voted on it. Even though they were still working the same number of hours, this one move produced the biggest morale boost I've ever seen.

I'm still convinced that the morale boost came more from the vote than from the outcome. They simply appreciated being asked and having an influence.

You can probably come up with a number of reasons why a four-day work week won't work in your company. Sounds like another great opportunity for employee involvement. Ask your employees to overcome your reservations.

Any leader worth their salt should be able to come up with other opportunities for employee autonomy.

Organizational leaders then face the following choice. They can either provide their employees with some good ol' all-American freedom and reap the benefits. Or they can rule their company with the iron fist of a Communist fireworks manufacturer.

The Joy of Entrepreneurship

2008-07-15T12:07:00.000-07:00

Originally published June 22, 2008

Two weeks ago I had more fun than I’ve had in a long time. My son and I packed our van with baseball cards, World Series programs, and autographs and set up a table at a sports card show in Nashville.

I was first bitten by the baseball card bug in high school. I started buying cases of cards, pulling out the cards I wanted, and selling the leftovers to dealers. When I was a sophomore in college, I got my very own table at a card show and was hooked.

That was the point when I changed my major from chemistry to psychology. I became convinced that I could make a career out of buying and selling baseball cards. I changed my major from something hard to something interesting so that I could concentrate on my emerging card business.

Thankfully, the baseball card market took a sharp turn for the worse just before I graduated. That downturn gave me just enough time to come up with a Plan B that turned out to provide a slightly more stable career path.

Over the years, I’ve held on to a few cards and will occasionally set up at a show. Ebay, however, has largely made card shows obsolete. I decided to do the show in Nashville because I wanted to expose my 9-year-old son to the joy of entrepreneurship.

T.J. helped prepare everything leading up to the show. At the show, he decided how to set up his half of the table. He handled his own sales and did his own negotiating.

Just like I preach in my classes, I offered him a profit-sharing deal. At the end of the day, we counted up our revenue, deducted our expenses, and split the profit 50-50. I asked if he wanted to stop at Outback for dinner on the way home. He asked if it would count as an expense. When I told him that it would, he opted for Chick-fil-A instead.

Entrepreneurship is not only fun; it’s also one of the most important things parents need to teach their children. I honestly believe that my children will see completely different employment relationships twenty years from now. I believe more people will be self-employed and entrepreneurial skills will be critical.

FedEx provides a good example of what companies are likely to move toward. Did you know that the FedEx Ground deliveries to your house are made by self-employed independent contractors?

They look like FedEx employees, but they buy their own trucks, pay their own expenses, and don’t get paid overtime. FedEx likes this arrangement because it provides them with endless flexibility. If there’s a downturn in business, they don’t have trucks or employee benefits to pay for.

About 15,000 drivers apparently find this arrangement attractive. They have the freedom to buy multiple routes and hire employees to help them with deliveries. They’re free to take a vacation as long as they find someone to cover their routes.
FedEx, like many other organizations, is asking the question: Do we really need employees?

I’m not sure if this is a great long-term strategy, but companies that are driven by short-term results will certainly ask the same question and make a similar decision.

Even if he doesn’t end up self-employed, T.J. will definitely know how to increase profit for his employer. And he’ll actually do it if he gets to share the profit.

Old Managers' Tales

2008-07-15T12:04:00.000-07:00

Originally published June 1, 2008

Over the last few weeks, Jennie Ivey was courageous enough to discuss old wives’ tales in her column. This takes courage because one person’s old wives’ tale is another person’s parenting wisdom. People don’t really like having their wisdom challenged.

I’ve never really liked the term “old wives’ tale.” It seems to imply that old husbands are immune from false beliefs. But I’m pretty sure husbands have a few of these as well.

One of my favorite tales is that more babies are born during a full moon. One of my children was born during a full moon and I remember the nurse commenting about how busy the maternity ward was that night. My other two children were born during other moon phases. Those were busy nights too, but I guess it was because of something other than the moon.

This tale is pretty easy to test. All we have to do is count the number of babies born during each moon phase and we get the right answer. Most recently, a group of researchers examined the moon phase of every birth in Austria over 30 years. What was their conclusion? There is absolutely no evidence that more babies are born during a full moon (or any other moon phase).

Beyond babies, at least 100 other studies have confirmed that the full moon has no effect on homicides, traffic accidents, suicides, psychiatric admissions, or any other human behavior.

So what does this have to do with business management? Last summer, England’s Sussex Police Department announced that they would increase patrols during full moons. One of their inspectors looked at the data from 2006 and found that more crime occurred around full moons.

Apparently he didn’t notice that, during 2006, five of the twelve full moons just happened to fall on weekends. Full moon or not, more crime occurs on weekends for reasons that have nothing to do with the moon. So the police force in Sussex is being managed by myth.

But the inspector’s study is backed up by his 19 years of experience. And that’s exactly why the full moon myth has implications far beyond police staffing practices.

Among the general population, about half of us believe that human behavior changes during a full moon. Among doctors, it’s over sixty percent and among nurses it’s over eighty percent.

In other words, the people with the most experience in this area are actually more likely to believe something that isn’t true. Experience is supposed to make us more accurate.

But this myth (like most myths) persists because of two things that are more powerful than evidence. First, we tend to notice things that confirm what we already believe. A busy night in the maternity ward during a full moon proves we’re right. Other busy nights are just dumb luck and we ignore the slow nights.

Second, these beliefs are passed down by people we respect like more experienced nurses, police officers, and old wives.

So what’s your managerial myth? Are happy workers really more productive? Is money really the best way to motivate employees? Are layoffs the best way to cut costs? Are women incapable of being good leaders?

The first step in avoiding management-by-myth is being willing to admit that your deeply held beliefs could be wrong.

I should also thank Jennie for an inspiration. I finished this column a full day before my deadline by putting a bar of soap under my keyboard.

Please Buy More Stuff

2008-07-15T12:03:00.000-07:00

Originally published May 18, 2008

Please Buy More Stuff

Well it’s looking more and more like my TTU colleagues and I will be receiving pay cuts this year. Our salaries aren’t decreasing, but the cost of living is going up and our salaries are staying the same. The net effect is that we lose buying power and we effectively receive a cut in pay.

So why are we receiving pay cuts? Did we do our jobs poorly last year? I don’t think so. We manufactured more student credit hours than ever before. We produced more degrees than ever before. And we attracted the largest freshman class ever.

We’re receiving pay cuts because the citizens of Tennessee aren’t buying enough stuff.

At TTU, we mainly receive raises when the state’s elected officials find enough extra money in the budget for us. In Tennessee, of course, the state’s revenue comes primarily from the sales tax. So I receive a raise when Tennesseans buy more stuff.
I’m not going to propose a solution to the state’s budget problems, but I think this is a pretty good example of the difficulty organizations have when it comes to compensation. Most organizations are not very good at using compensation to pursue organizational goals.

The problem is not limited to state governments. The news is full of companies where pay is not aligned with organizational performance.

In 2007, for example, Citigroup’s stock lost about half of its value and the company’s losses from the credit mess are approaching $40 billion.
Citigroup’s CEO, Charles Prince, “retired” in November of 2007 when the losses began piling up. He left with a severance package worth $40 million. He will also receive an office, secretary, car and driver for the next five years. Perhaps Prince will hire one of the 30,000 Citigroup employees who are being laid off because of his “leadership.”

Countrywide’s CEO, Angelo Mozilo, cashed out $400 million in stock options when the stock was doing well between 2003 and 2007. Mozilo’s options were awarded based on the company’s earnings. The company’s earnings, of course, were built on selling increasingly risky loans.

Now that the house of cards has collapsed and the stock price has fallen by 90 percent, Mozilo is doing pretty well while stockholders, employees, and customers are suffering.

Oddly enough, Mozilo was on the board of directors at Home Depot when their CEO, Bob Nardelli, was ousted because of the company’s poor performance. Nardelli left with a package worth $210 million.

And therein lies the problem with CEO compensation. CEO pay is determined by the board of directors. The board is supposed to act in the best interest of the shareholders. But most board members are selected in ways that guarantee CEO-friendly boards.

Most boards have adopted some form of performance-based pay for the CEOs, but their performance goals are either too easy to meet or actually counterproductive to the long-term health of the organization.

I’m the last one in the world that wants any sort of government regulation of CEO pay, but presidential candidates are proposing this very idea. The CEOs are bringing it on themselves.

All organizational leaders need to understand the kinds of things that foster the long-term health of the organization. Then they need to pay people for doing those things.

Until we learn that lesson, please buy more stuff.

Advice for Graduates

2008-07-15T12:01:00.000-07:00

Originally published May 4, 2008

The week after I graduated from high school, I went to work at the underwear factory where my father worked. On my first day as a member of the labor force, I found a newspaper clipping next to my breakfast plate. I believe the clipping was a Dear Abby column. The column contained advice for graduates and I've always remembered one of the pearls of wisdom: If you don't like your job, quit. Otherwise shut up.

Yesterday, nearly 1200 students graduated from Tennessee Tech. I've attended many graduation ceremonies over the years. To be honest, I can't remember any of the advice given by the commencement speakers. But, for some reason, that newspaper column has stayed with me for over 20 years. Today I'd like to share some bits of wisdom I've picked up over the years. Feel free to share them with your favorite graduate tomorrow at breakfast.

On average, a college graduate will earn about one million dollars more than a high school graduate over the course of their career. Your degree doesn't make you worth a million dollars. It helps you produce value. Your employers will pay you according to your value, not your degree.

In college, you probably had teachers that allowed you to earn optional extra credit, drop your lowest quiz grade, and skip class the day before hunting season began.

In the real world, working extra hard is expected, your worst performance will count more than the others, and you might actually have to work on Saturday.

Your employer is your customer. They are buying labor from you. Keep your customer happy or they will shop elsewhere.

Your employer is not legally required to offer health insurance, a retirement plan, or paid vacation. Some employers offer these benefits to attract and retain great employees. If your employer offers these, they deserve greatness in return.

If you stop on the way to work and spend two dollars a day on coffee (or anything else), that's about five hundred dollars per year. If, instead, you invest five hundred dollars a year in a good mutual fund, you'll end up with over two hundred thousand dollars in forty years. Which would you rather have?

Want an investment with a guaranteed return of eighteen percent? Pay off your credit cards.

Do what you love. But if you love playing video games, don't expect to get paid the same as someone who loves doing brain surgery.

Just because you've finished college doesn't mean you've finished learning. You're just beginning.

Twenty years ago, Google's founders were in high school. Today their company is worth more than Boeing and McDonalds combined. Twenty years from now we'll be just as amazed by some other company. You can start it.

Finally, college graduates should know that Kenneth Lay, Andrew Fastow, and Jeffrey Skilling also graduated from college. Lay, Fastow, and Skilling were the brains behind the rise and fall of Enron. Lay died before he was sentenced, but Fastow and Skilling are in prison serving sentences for conspiracy, securities fraud, and insider trading. Thousands of employees and investors were hurt by the criminal behavior of these men.

Your education will allow you access to some great opportunities. But with opportunity comes great responsibility. So before you make a decision, ask yourself how it will look as a newspaper headline.

Coping With a Recession

2008-07-15T11:57:00.000-07:00

Originally published April 20, 2008

Nationwide, business news has been pretty depressing lately. Gas and oil prices are at all-time highs. The record-breaking foreclosure rate means that people are losing their homes and mortgage lenders are going bankrupt. Food prices are rising faster than they have in twenty years and the stock market’s daily fluctuations make the scariest roller coaster look like a Kansas highway.

It’s looking more and more like the country is in a recession – just in time for the election.

So how should people and organizations cope with turbulent economic times?

This may sound trite, but the answer is to think about the future.

This recession won’t be the first. We’ve had many of them in the last hundred years. The interesting thing about recessions is that we’ve recovered from every single one of them.

The average recession lasts about one year. By the time we realize we’re in one, it’s about halfway over.

So how do people and organizations respond in these situations? Individuals often decide to cash out their investments. Unfortunately, by the time they make this move, the market has reached its low point. So they sell low and buy high when the market recovers.

If the stock market recovers like it has following every other recession, now would seem to be a great time to buy. Since the 2001 recession, over 800 stocks have tripled in value.

Organizational reactions are even more interesting. During recessions, organizations often lay off employees and cut back on “unnecessary” expenses like employee training and other human resource functions. These actions cut costs in the short term. But their long-term effects can be devastating.

Home Depot, for example, recently announced that they were eliminating 1200 store-level human resource management positions. Their plan is to add more sales people to deal with the slowing economy.

Just 10 years ago, however, Home Depot spent $100 million to settle a class action discrimination lawsuit. The judge blamed the discrimination on the lack of competent human resource leadership throughout the organization. So Home Depot is now firing the professionals who were hired to help the organization make better decisions.

Good companies take advantage of these mistakes. During the recession of 2001, companies like Southwest Airlines and SAS went on hiring sprees because they knew that talented people were being laid off by other companies.

These good companies also realize that a recession is a great time to increase training. During slower times, employees are not as busy and have more time to learn new things. They also have more time for brainstorming and coming up with ways for the company to run more efficiently.

When the inevitable economic recovery comes, good companies will have talented well-trained employees ready to respond.

The companies that cut employees and training will be understaffed and behind the curve when demand picks up.

These suggestions probably make sense, but they require something that is hard to find during a recession – money! Companies like Southwest and SAS were able to make the moves they made because they had set aside cash for a rainy day. When the hard times came, they were able to spend (wisely) while their competitors made rash mistakes.

The current recession means that spending will be tight around the Timmerman household this summer. But I’m not planning on laying off the kids to cut costs.

Servant Leadership

2008-07-15T10:57:00.000-07:00

Originally published March 30, 2008

Servant Leadership

In a previous column I mentioned a company called TDIndustries. The company is based in Dallas and makes heating, plumbing, and electrical systems for commercial buildings. The company is one of only fourteen that has appeared on Fortune Magazine’s list of Best Companies to Work For every year since 1998.

The company doesn't have the outlandish perks of Google, but it does have some unusual practices. No one's salary, for example, is more than ten times the salary of anyone else's. So the only way the president can receive a raise is if the lowest paid employees receive one.

The company is also owned by its employees. No individual owns more than three percent of the stock and the entire management team owns less than 25%.

It's also interesting that the CEO does not have an open-door policy. The reason he has no open door policy is because he doesn't have a door. The reason he doesn't have a door is because the CEO works in a cubicle that is exactly the same size as everyone else's.

The really interesting thing about these practices is the underlying philosophy in which they are based. Everything the company does revolves around the principles of servant leadership. The company formally adopted this philosophy in the 1970s, but the seeds were sown from the start.

Jack Lowe, Sr. started the company in 1946. Within one year, he had established a profit-sharing plan. He recognized from the very beginning that employees who helped make the profit deserved to share it. Two years later, Lowe offered employees the opportunity to buy stock in the company.

Over the years, the company faced the same struggles as any other company. Like most founders, Lowe found it difficult to give up control. As the company prospered and grew, however, he gradually came to see the company as a tool that could be used to genuinely improve the lives of his growing band of employees.

In the 1970s, Lowe discovered the writings of Robert Greenleaf. After 40 years at AT&T, Greenleaf left the company with the belief that America was suffering a leadership crisis. His 1970 essay "The Servant as Leader" began a movement that a few brave leaders are joining.

Greenleaf's primary argument is that true leaders are servants first. According to Greenleaf, the success of a leader is measured by the growth and well-being of his or her followers.

As Lowe's company continued to grow, Lowe did something that I probably would not have done. Just between you and me, I would have used this success as an opportunity to take it easy and work on my golf game.

Instead, Jack Lowe realized that his corporate success provided him with tremendous influence and opportunities for improving his community.

At the height of the country's school desegregation battles, Lowe led the multi-racial Dallas Alliance Task Force to develop an acceptable plan for integrating the schools in Dallas.

As president of the Dallas Council of Churches, Lowe began a city-wide counseling service and a prison ministry.

Jack Lowe, Sr. died in 1980 and his son picked up where dad left off. Today, the company has over 1600 employees generating $300 million in sales. And every one of those employees has attended servant leadership training.

That sounds like the kind of training they should offer at Jack Lowe, Sr. Elementary School, which opened in 2006.

Celebrating Mistakes

2008-07-15T10:54:00.000-07:00

Originally published March 16, 2008

Springtime around the Timmerman household gets more exciting each year. My son is now old enough to play in the kids-pitch baseball league. Just like every other kid on the team, he wants to pitch.

So we go outside for a practice session and I squat with my back to the garage door. I have a funny feeling that we're going to need a backstop.

He does pretty well. Eventually, however, he gets a little too excited and tries to throw too hard. The ball sails past me and slams into the garage door with a loud bang.

Here I have a tough situation to handle. My natural inclination is to get angry about the wild pitches and damage to the door. But I also hear the wisdom of Bob Sutton ringing in my head.

Bob Sutton is a professor at Stanford and one of my favorite business gurus. According to Sutton, the best single question for testing an organization's character is: What happens when people make mistakes?

In some organizations, leaders forgive and forget mistakes. This approach makes everyone feel better, but it also means that the same mistakes are likely to occur again and again.

In other organizations, leaders search for someone to blame and humiliate. This approach teaches everyone not to make mistakes. And the best way to avoid mistakes is to try absolutely nothing new or innovative.

This approach also teaches people to cover up their mistakes. Several years ago, Harvard professor Amy Edmondson conducted a study on the relationship between leadership in nursing units and medical errors. She expected to find that teams with better leadership would have fewer errors. Common sense, right?

Instead, she found just the opposite.

Teams with better leadership reported 10 times more errors. When she examined the issue further, she found that teams with poor leadership were more likely to hide errors out of fear. Teams with good leadership, on the other hand, recognized that errors needed to be reported and studied so that they could be prevented in the future.

In rare organizations, leaders forgive and remember mistakes. They recognize that most errors are not committed with the intent to harm the organization. Instead, mistakes represent an opportunity to learn and improve future performance.

Mistakes are especially critical for creativity and innovation to occur. The most innovative companies in the world like 3M and Intuit celebrate mistakes that ultimately lead to better ideas.

One of the most famous mistakes in history was committed by 3M scientist Spencer Silver. He discovered an adhesive that wasn’t very sticky. Instead of hiding this embarrassing mistake, the culture at 3M encouraged him to share his failure with other employees. Another 3M employee wanted a bookmark that wouldn’t fall out of his hymn book and the Post-it Note was born.

There’s an old story that is often attributed to auto maker Henry Ford. One of his vice presidents made an error that cost the company over one million dollars. Assuming that he would be fired, the vice president handed Mr. Ford his resignation letter.

According to the legend, Mr. Ford responded: “I’ve just invested one million dollars in your education. Now get back to work.”

I guess if my son ever thinks he should give up pitching, I’ll tell him: “I’ve invested a garage door in your pitching career. Now grab your glove and let’s play.”

Great Places to Work

2008-07-15T10:50:00.000-07:00

Originally published March 2, 2008

Great Places to Work

Once again, Fortune Magazine has released their annual list of the Best Companies to Work For. And once again, Google leads the list.

Last year the company created over 3,000 new jobs and received almost 800,000 applications. Google has become legendary for their free food and stock options. But they also offer a wide array of other valuable benefits. New mothers, for example, may receive up to 18 weeks of paid maternity leave. New fathers receive up to 7 weeks of paid leave.

My favorite thing about the list is the wide variety of industries represented. The top ten includes a grocery store chain, an online mortgage lender, and Starbucks. Companies from any industry can be great places to work.

The list also includes fourteen companies that have been on the list every year since it began in 1998. The interesting thing about these companies is that they are made great by enduring values instead of by unique perks.

TDIndustries, for example, builds heating, plumbing, and electrical systems for commercial buildings. Based in Texas, the entire company is owned by the employees and no single individual owns more than 3 percent of the stock.

The founder of the company believed very strongly in the concept of servant leadership. Today, every employee is trained in servant leadership so that they can serve others and know what kind of leadership to expect from their leaders.

When Fortune’s list was published last year, I began searching for great companies in the Upper Cumberland. One company kept popping up on my radar: Flexial Corporation.

Coincidentally, I had the pleasure of touring Flexial last week. It was easy to see why the company has been so successful.

Flexial manufactures welded bellows. This doesn’t sound very exciting until you talk with company president, Rick Larsen.

Larsen’s innovative team of engineers and technicians continuously develops new applications. Flexial’s products can be found in US fighter jets, the International Space Station, and the Mars Rover.

Before touring the plant, I received a tour of the company’s management control system. Even though I only received a brief glimpse, two enduring values were obvious.

First, the company strongly believes in making information available to everyone in the company. Every employee has online access to anything they need to perform their job. Beyond this, however, every employee also has access to real-time data regarding the company’s productivity, efficiency, and even sales.

This amazing system has drawn accolades from everyone who interacts with it. But the system itself is the result of an employee’s suggestion several years ago.

Not surprisingly, the system also includes an improvement recommendation process. Larsen describes this as a “suggestion box on steroids.”

Any employee can request an improvement that they think might help the company. The request might be for a new piece of equipment or for access to information. Unlike a traditional suggestion box, every request at Flexial is evaluated by the management team and rated in terms of its costs and benefits. Hundreds of these recommendations have been made over the last few years and the vast majority of them have been implemented by the company.

On my tour of Flexial, I didn’t see any free food, pets at work, or free massages like you find at Google. Instead, I found a culture where employees are truly seen as valuable partners.

America's Biggest Threat

2008-07-15T10:39:00.000-07:00

My "Running for President" column sparked quite a reaction from local businessman Loren Aschbrenner. You can read it here. I also received two thoughtful responses. One from Flexial President Rick Larsen was posted in the Comments section below. The other was from my TTU colleague Mohamed Abdelrahman. This is my response that was published in the Herald Citizen on February 17.

America’s Biggest Threat

I’ve been asked several times if I was going to respond to Loren Aschbrenner’s letter regarding my last column. I didn’t really think it was necessary. Mr. Aschbrenner believes that defense-related manufacturing needs to remain in the United States.

I agree and never said anything differently. My point was that all manufacturing (regardless of what it is or where it’s done) will gradually require fewer people. America will therefore have fewer manufacturing jobs. That’s what we need to prepare for.

It was a simple misunderstanding and easily clarified.

But one part of his letter nagged me all week. Mr. Aschbrenner wrote: “I guess the old adage is true…Those who can’t do, teach.”

Yes, I find this personally offensive, but I’ve been called much worse on RateMyProfessors.com.

What bothered me the most about his comment was that he didn’t just insult me. He insulted all teachers, so I decided to respond on their behalf.

Besides being insulting, the old adage is just plain wrong. A study published just last August found that companies managed by former business school professors perform better than similar companies without former educators.

Another study found that finance professors did a better job predicting loan defaults than professional loan officers.

There are many other examples, but the old adage is simply a myth.
Besides insulting and wrong, however, I believe the old adage is also dangerous. It’s dangerous because of its underlying message.

If teachers are people who lack the competence to perform what they teach, then the education they provide obviously has very little value.

If I were an enemy of the United States, what would I want American citizens to believe? I would want them to believe that education is not valuable.

A good educational system doesn’t simply train people to operate machines.

Instead, a good educational system equips and inspires people to create, design, and innovate. This type of educational system inspires innovation that leads to economic prosperity (even defense-related).

If I were an enemy of the US, I would want its citizens to believe that the best use of their time and energy is to spend 40 hours a week stamping metal, sewing underwear, assembling bombs, and watching TV. Not only does this activity keep millions of people from innovating, but it also makes them economically dependent on the people who own the metal stamping machines.

Mr. Aschbrenner’s idea that education is not valuable is not shared by the Chinese. Between 1998 and 2004, the number of Chinese enrolled in college jumped by 4300 percent. In the US, the number increased by about 19 percent.

Mr. Aschbrenner’s myth is apparently alive and well in Tennessee. We rank in the bottom 10 with respect to the percentage of our population with a college degree. Is it just a coincidence that the gap between the wealthiest Tennesseans and the poorest Tennesseans is the 6th largest gap in the country?

The warped idea that I teach my students is that they can either spend their lives making the metal stamping machine owner wealthier, or they can spend their lives creating their own opportunities and wealth.

So I can understand why Mr. Aschbrenner would want to perpetuate the myth. But my suggestion that the loss of bad jobs wouldn’t be so bad is far less dangerous than the idea that “Those who can’t do, teach.”

Running for President

2008-02-05T10:46:00.001-08:00

I hope I’m not too late. This week I’d like to announce my candidacy for President of the United States.

I think I have an economic plan that will save the country from its impending doom. As president, my first act will be to outlaw bulldozers. Yes, bulldozers.

I’m not sure why bulldozers have been allowed in the United States for so long. But it’s time to put a stop to their destructive effects.

How do bulldozers hurt America? My guess is that a single bulldozer can do the work of at least one hundred people. So my plan is to replace every bulldozer with a hundred Americans with shovels.

Not only will this plan create thousands of shoveling jobs, it will also stimulate the demand for shovels, work gloves, massage therapy, and Band-Aids. I can’t believe no one else has thought of this.

So where did this brilliant plan come from? I was inspired by the other presidential candidates’ visits to South Carolina. When politicians visit South Carolina, they usually talk about the textile jobs that have moved overseas. They usually have some sort of plan to protect American jobs. Some politicians want to punish companies for moving jobs overseas.

These politicians are misguided, of course, because technological advances (like bulldozers, sewing machines, and computers) have taken many more American jobs than overseas relocation. So if we really want to save American jobs, we should focus on the biggest culprit and do everything we can to stifle innovation.

If you haven’t guessed by now, I don’t really believe that we should outlaw innovation. Instead, I think this argument refutes the idea that the government should protect American jobs by punishing companies who move jobs overseas.

This is a sensitive topic, especially in Cookeville. But we can’t really blame the companies. Companies that don’t increase efficiency will be shut down by companies (in the US or abroad) that do.

Personally, I’ve always thought that the US would be better off without the jobs that can be done by 12 year-old Sri Lankans. For every one of these jobs that America loses, that means that one more American brain becomes available to design, create, and innovate.

When I look back at my family’s history, they were all farmers until the early 1900s. In fact, about forty percent of Americans were farmers around the turn of the century. Now, because of technological innovations, less than two percent of the US working population is employed in farming. Thank God for innovation! Without these advances I would probably be following a team of donkeys with a plow this morning instead of enjoying my coffee and reading the Herald-Citizen.

Manufacturing may be following the same path as farming. Would that really be so bad? It sounds bad because most people (including me) are afraid of change and uncertainty.

But as our reliance on farming decreased, people learned new skills and ultimately increased their standard of living. It’s time once again for Americans to learn new skills. These new skills will likely require greater educational efforts in math, science, creativity, and entrepreneurship.

I’m guessing that neither banning bulldozers nor sending more jobs to Sri Lanka will help me get elected. But I’ve got as much chance of winning as Mike Gravel, so campaign donations will be happily accepted.

Southern Civility

2008-01-21T08:06:00.000-08:00

Originally published 1/20/08

Have you ever been the victim of an abusive boss? A recent survey by the Employment Law Alliance found that nearly 45% of us have had (or have seen) a boss that engages in cruel behavior aimed at their subordinates.
The survey defined abusive behavior in a way that captures a wide variety of actions including criticizing an employee in front of co-workers, spreading rumors, and inappropriate physical contact.
It doesn’t take a rocket scientist to realize the negative effects of abusive behavior in the workplace. But, scientists have indeed studied the consequences of abusive supervision.
As you would expect, subordinates working for abusive bosses have lower job satisfaction, lower commitment to the organization, greater intent to leave the company, lower job performance, greater psychological distress, and more work-family conflict.
The most interesting part of the Employment Law Alliance survey, however, was the observation that abusive bosses were less common in the South and more common in the Northeast.
When we talk about cultural diversity in business management, we’re usually not talking about this kind of diversity. But I certainly think there are regional differences in how people interact with their co-workers that are worth understanding.
Having grown up in the South, surveys like this one make me proud; but they also remind me of the “other side” of Southern civility.
Several years ago, social scientists Dov Cohen and Richard Nisbett conducted a number of studies that also confirmed the general courtesy shown by people in the South. In a variety of different ways, however, they also found that Southerners were actually more abusive toward others when they had been insulted or challenged.
Cohen and Nisbett explain this through the “culture of honor.” They argue that Southerners are taught from an early age that violence against others is perfectly acceptable when one’s honor has been challenged.
I decided to conduct my own investigation of this phenomenon in a setting that I use for much of my research: professional baseball.
I wondered if major league pitchers born in the South were more likely to hit batters in situations that might be threatening to their identities.
Sure enough, pitchers from the South were not more likely, overall, to hit batters. But in a few situations, pitchers from the South were more likely to hit batters than were pitchers born in other regions of the US.
Pitchers from the South, for example, were more likely to hit batters after their own teammates had been hit by the opposing pitcher. If you’re from the South, you’re probably thinking that this is an admirable show of loyalty to one’s teammates.
Pitchers from the South were also more likely, however, to hit a batter immediately after giving up a homerun. They were also more likely to hit a homerun hitter the next time he came up to bat. This kind of retaliation isn’t quite as admirable.
So what’s the point? I think our lessons about cultural diversity in the workplace are missing an important aspect of culture. There’s enough evidence to suggest that people in the South (including your co-workers) are more sensitive to insults and challenges than are people in other parts of the country.
This means that abusive bosses are even more dangerous to your company in the South than they are anywhere else.

Are happy workers productive workers?

2008-01-21T08:04:00.000-08:00

Originally published 1/06/08

I first became interested in human resource management while working at an underwear factory in South Carolina. Throughout my high school years, I spent my summers and vacations loading trucks with boxer shorts headed for Wal-Mart, K-Mart, Sears, Target and other stores around the country.
Most people wouldn’t describe this experience as fascinating, but I was intrigued by the fact that common sense was violated on a daily basis. Common sense, for example, tells us that happy workers are productive workers. Managers who believe this tend to think that they can squeeze more productivity out of people by making them happier.
At the underwear factory, however, the people who were the happiest were happy precisely because they could get away with being unproductive. The people I worked with in the warehouse were often absent and spent much of their time at work talking or sitting around listening to music.
The most productive employees, on the other hand, were usually the least satisfied. We worked harder because it made the time go by faster and we couldn’t wait to get away from that place.
Because of this experience, I’ve always questioned common sense approaches to management. In fourteen years of teaching, I don’t think I’ve ever told students that they could increase productivity by making people happy.
When I got to graduate school, I discovered that many people had studied the connection between job satisfaction and job performance. Most of those studies show a small positive relationship between the two. In other words, on average, satisfied people tend to be slightly more productive.
Most people interpret that to mean that an increase in satisfaction causes a (small) increase in performance.
It could also mean, however, that people who are more productive end up more satisfied. People who are more productive tend to receive more recognition, praise, bonuses, and the other kinds of things that might make someone more satisfied. If this is true, it really wouldn’t make much sense to try and directly increase satisfaction in order to increase productivity.
A recent study by Wright State Professor Nathan Bowling offered another explanation for the small relationship between satisfaction and performance. He found that the reason satisfaction and performance are related is because they are both caused by similar kinds of personality characteristics.
In other words, the personality traits that make someone a productive employee are the same traits that make someone view their job positively.
The most important implication of this finding is that employee productivity and satisfaction begin during the selection process. It’s highly unlikely that any company can take a person with low ability and a poor work ethic and turn them into a productive employee by making them happy.
The second implication of this study is that companies are not likely to make anyone more productive just by making them happy. Each semester I ask my students if they will work harder during the semester if I make them happy by promising them A’s no matter how much they learn. Even they are willing to admit it won’t work.
This doesn’t mean that job satisfaction isn’t important. Satisfied employees are more likely to remain with the organization and do other things that help the organization succeed. But if you’re hoping that a Christmas turkey will make your employees sew underwear faster, you’re barking up the wrong tree.

Handling Layoffs

2008-01-21T08:02:00.000-08:00

Originally published 12/23/07

The recent closing of Toot’s came as quite a surprise to employees and customers alike. But companies come and go. Toot’s isn’t the first restaurant that has closed down in Cookeville. And it won’t be the last.

The thing that shocked us, however, was the way in which employees found out that they had no jobs less than a month before Christmas.

Apparently, employees showed up to find new locks and a note that read: “We have done our best to provide an atmosphere of integrity and fun.”

The ex-employees who were interviewed by WTVF did not seem impressed.

But the purpose of this column is not to beat up on owners Rob and Tanya Holcomb. Instead the purpose is to show why other organizational leaders should handle things differently when faced with layoff or closure decisions.

When faced with a struggling business, many organizational leaders use layoffs to lower their labor costs hoping that this move will help the business survive.

So how well does this strategy work? Unfortunately, not very well.

In Responsible Restructuring, Professor Wayne Cascio explains that layoffs rarely result in positive financial turnarounds. Instead, the short-term savings are overwhelmed by the direct and indirect long-term costs of the layoffs.

Cascio’s book describes a number of companies that survived tough times because they decided not to use layoffs. One manufacturing company, for example, was ready to close one of its plants. Before going through with the closure, however, they decided to ask the employees for cost-saving ideas. Within six months the plant was one of the most profitable in the entire company.
This is a pretty good example of why companies hire people to start with; because they have brains and can think. Employees are less likely to help you come up with business-saving ideas if they’re locked out and being interviewed on television.

The networking giant Cisco Systems avoided layoffs by paying employees one third of their salary in exchange for working temporarily at a non-profit organization.
The possibilities are endless, but too many organizational leaders buy into the myth that layoffs will save a business.

But sometimes, layoffs are necessary. When layoffs are necessary, organizational leaders often believe another myth. They believe that nothing can be done to minimize people’s negative reactions.

Some amazing research shows that layoff victims, as well as layoff survivors, react much more positively to layoffs when they feel as if they are treated fairly during the process. Companies can drastically minimize negative reactions by carefully explaining the rationale for the layoffs and doing so in a sensitive face-to-face way.

But why should companies care if the layoff victims react positively or negatively to a layoff?
First, if business does improve, the company may want to rehire the ones who were laid off. Second, the layoff survivors, as well as the general public, react to the company according to how they treat the layoff victims. Finally, the layoff victims are much more likely to pursue legal action and favor government intervention if they believe they were treated unfairly during the process (even if they were treated legally).

There is one bright spot in all of this. In a free market, organizations with bad management will fail. The market appears to be working just fine on South Willow.

Christmas Wishes

2008-01-21T08:00:00.000-08:00

Originally published 12/2/07

The sounds of Christmas are in the air. At every toy commercial, my four-year old says “I want that for Christmas.” She probably won’t be getting everything. I hope she has the attitude of her brother when he was four. When my son opened his football tee, he said, with tears in his eyes, “I would have been happy with just this for Christmas.”

I’ve learned some other good lessons around Christmas as well. One year I received my first ten-speed bike. I went outside to give it a test drive and found that it didn’t change gears exactly like it was supposed to.

I went inside and pitched a fit to my dad, who had stayed up half the night putting it together. After getting very little sleep, dad wasn’t exactly in the mood to hear my complaining. That was the day I deserved a good spanking, but didn’t get one.

After reflecting on that episode for a while, I finally realized that parents aren’t required by law to buy their children anything for Christmas. Any gift I received meant that the family had less money for something else. Therefore, I should be grateful for anything I received.

This lesson of contentment has come in handy throughout life. Some employees think of their employers as their parents at Christmas. Some employees think they are entitled to annual raises, bonuses, health insurance, or other expensive “presents.” There’s no law, however, that requires employers to provide these things. That’s why I’m grateful for every raise I receive and every benefit I have.

In spite of my general contentment, there are still a few things on my wishlist. Here’s what I want the most.

I wish the Upper Cumberland economy depended more on people being creative and innovative and less on people being sick.

I wish there was a store in Cookeville that carried all of the merchandise that is on display, but not in stock, at all of the other stores in Cookeville.

I wish there were more service-oriented businesses in Cookeville that could accomplish something even when “the person that does that” is out to lunch or out of the office.

I wish restaurants would stop selling bacon by the slice. Bacon should come in big baskets, like rolls, with free refills.

I wish I had the money to buy a tract of land now before the county buys it all.

I wish Cookeville had a new movie theater. Sorry, that one’s been on the list for so long that I can’t get it off.

I wish Cookeville had a few more nail salons and payday loan establishments. Just kidding about that one.

I wish I had the 1933 Goudey Lou Gehrig baseball card ending tonight on eBay (just in case my wife actually reads this).

I wish fewer of my students would ask “Do I need to know that for the test?”

I wish more of my students would ask “Where can I find out more about that?”

Finally, I wish a merry and contented Christmas to everyone in the Upper Cumberland.

Giving Thanks

2008-01-21T07:58:00.000-08:00

Originally published 11/18/07

Are you thankful?

I have this funny feeling that we’re going to hear a lot this week about being thankful. I’m certainly thankful for many things. I’m thankful, of course, for my family and friends.

I’m also thankful that my wife and I both hate to shop. And I’m thankful that my kids have low expectations when it comes to Christmas gifts. I’ve convinced them that overloading Santa’s sleigh requires more fuel, which contributes to global warming.

But I’d like to ask business owners and organizational leaders if you’re thankful for the work done by your employees. If so, do they know it?

In 2004, the J.M. Smucker company was named by Fortune Magazine as the Best Company to Work For. Yes, J.M. Smucker is that glamorous high-tech company that makes jelly in Orrville, Ohio (population 9,000).

Founded in 1897, the company has expanded into a few more products and brands. In 2006, they sold over two billion dollars worth of jelly, peanut butter, and baking mixes.

So what makes J.M. Smucker a great place to work? They don’t offer pet insurance or free massages like Google. They don’t have artists on staff to personally decorate employee offices like SAS. Their employees don’t even get a fifteen percent discount at the TTU bookstore like I get (except for computer software and sale items).

J.M. Smucker wasn’t chosen as a great place to work because of their benefits. Instead, they were chosen because of the culture created by the founder’s great-grandsons and co-CEOs, Tim and Richard Smucker.

Before their father died, he wrote down four principles that he said should be used to lead the company. Thank others for a job well done. Look for the good in others. Listen with your full attention. And keep a sense of humor.

When Fortune surveyed Smucker employees, the feature that stood out the most was how often employees felt appreciated. Employees are thanked with gift cards, meals, holiday turkeys, and other small tokens.

The employees report that it’s not the value of the gift that matters. What matters is that someone noticed they were doing a good job and took time to recognize it.

In other words, being thankful for their employees landed J.M. Smucker at the top of the list of best companies to work for.

My columns are usually aimed at organizational leaders and I could probably stop here. But I also think it’s worth pointing out that employees have much to be thankful for as well.

As much as you may hate to admit it, your employer is your customer. They are buying your labor. There are over six billion people on the planet, but your employer decided to buy your services.

Most businesses are thankful for their customers and will bend over backwards to make them satisfied. Is that the way you think about your employer? Are you willing to go the extra mile to keep your customer happy?

I admit it’s a hard concept to grasp, but look at all of the companies choosing to shop for labor in other countries. I’m in the same boat. I teach courses that could easily be outsourced to professors in India or Mexico. But I’m thankful that my employer has decided to buy from me.

Whether you’re an employee or an employer, this week would be a good time to say “Thanks!”

Building Trust

2007-11-15T07:23:00.000-08:00

In many ways, the employment relationship is like any other kind of relationship. Trust, for example, is at the heart of healthy marriages, friendships, partnerships, and employee-employer relationships.

From the employer's perspective, the million dollar question is: How does a company build trust with its employees?

There is no simple formula for building trust, but company policies can certainly play an important role. SAS Institute provides a great example.

SAS is the world's largest privately-held software company. Based in Cary, NC, the company had nearly two billion dollars in sales last year. SAS is well-known for their family-friendly culture. One thing that stands out is their sick-leave policy. Their policy is simple: If you're sick, don't report to work and they'll pay you anyway. That's it.

It doesn't matter if you're sick for a day or a week or a month. They will keep paying you. Most of us would assume that employees would take advantage of such a policy. At SAS, however, the average number of sick days actually used is less than 2 days per year.

The policy at SAS allows sick employees all the time they need to recover. More importantly, however, the policy communicates the fact that SAS trusts their employees not to abuse the freedom. Because of this trust, employees act in trustworthy ways.

Now let's consider a company at the other extreme. In October of 2001, managers at the Jim Beam plant in Clermont, KY decided that employees were abusing their freedom to use the restroom. They believed that employees were going to the restroom too often and staying too long.

I'm no managerial genius, but the first question I would ask in this situation is: What's so bad about the job that makes hiding in the restroom a more attractive alternative?

Instead of asking this question, the managers at Jim Beam adopted a policy specifying that employees would be allowed to use the restroom during three pre-determined break times each day and once at a time of their choice.

Supervisors were responsible for tracking restroom use and reporting the information to the human resources department each day. Six unscheduled visits could result in termination.

Within a year, this policy had attracted national attention. Connie Chung interviewed a Jim Beam employee on CNN and asked, "Are there a bunch of pinheads running Jim Beam?"

Because of the public outcry (and a citation from the Kentucky Department of Labor) Jim Beam abolished the policy, but the damage had been done. What kind of message did the policy send to employees (or potential employees)? The message was clear: At Jim Beam, we don't even trust you to use the restroom responsibly, so we're going to control your behavior with a policy.

Even after the policy was abolished I wouldn’t be surprised to find out that employee resentment remained. I also wouldn’t be surprised to find out that employees acted in less trustworthy ways while the policy was in place and after it was abandoned.

I’m not suggesting that employees should engage in this tit-for-tat behavior, but I do believe that employees (just like anyone else in a relationship) will act according to their treatment.

Many policies are intended to solve organizational problems. The danger, however, is that the unintended consequences may earn you the label of “pinhead.”

Attitudes at Work

2007-10-18T10:23:00.001-07:00

I had an interesting revelation this week. I realized that the happiest and most pleasant people in my building at TTU are the people with some of the least desirable jobs.

Our custodians, for example, are responsible for keeping the building clean despite the fact that hundreds of students, faculty, and staff are apparently working hard to make the building dirty each day. Nevertheless, Linda and Rosemary are always smiling and always willing to help when needed.

The secretary in my department spends a great deal of time dealing with student problems, putting out fires, and fixing other people’s mistakes. But I’ve never seen Rachel without a smile and she always asks what more she can do to help.

So why is this a revelation? Because the conventional wisdom in human resource management is that people’s attitudes are driven by the work they do and the money they make. In my building, it appears to be just the opposite.

To be honest this shouldn’t be so surprising. We all know people who would be satisfied in any job and we all know people who would be dissatisfied in any job. What is surprising is the fact that so few organizations realize it and take advantage of it.

Southwest Airlines is one exception to this rule. If you’ve ever flown on Southwest, you know that there’s something different about their flight attendants. They seem like they’re actually having fun at work.

The employees at Southwest are different because of the company’s hiring philosophy. The company readily admits that they “Hire for attitude and train for skills.”

Southwest realizes that they can teach someone the safety procedures they need to know and they can train someone to hand out drinks and peanuts. But they also realize that they can’t train someone to be happy. So the entire selection process is driven towards finding fun, team-oriented people.

In service-oriented companies like Southwest, employee attitudes rub off on customers. Happy, entertaining flight attendants make customers happy. Happy customers make Southwest one of the few continuously profitable airlines.

So how can companies predict which job applicants will be happy and satisfied on the job? There’s some amazing (and perhaps frightening) research that shows that our adult job attitudes are actually correlated with our childhood personality characteristics.

In other words, grumpy children are more likely to grow up into grumpy employees.

Other research shows that our job attitudes tend to be pretty stable even as we move from job to job.

All of this evidence leads to the unpleasant conclusion that some people will be dissatisfied no matter what their organization does for them or to them. So if an organization wants pleasant people, the hiring process may be as important as the compensation practices.

The more I think about it, the more I realize that the most important things an organization needs from its employees are things that can’t be trained. Things like attitude, integrity, and the ability to learn need to be part of the selection process.

I’m not sure if TTU had this in mind when they hired Linda, Rosemary, and Rachel. I think we just got lucky.

My First Boss

2007-09-30T14:27:00.000-07:00

Passing through my hometown of Chapin, S.C. always makes me nostalgic for the good ol’ days. This summer I passed through and remembered my first boss, Mr. Wicker.

Believe it or not, my first job was as a school bus driver. Until 1987, the legal age to drive a school bus in South Carolina was 16. I started driving as soon as I turned 16 in the tenth grade. Don’t worry, this isn’t one of my “dangerous idea” columns. Instead, it’s about the leadership lessons I learned from Mr. Wicker.

Although it seems bizarre now, the system actually worked pretty well. The student drivers got paid to drive to school and a great parking spot. The school got cheap labor that didn’t know what unions were.

But the brain behind it all was Mr. Wicker. Each year, Mr. Wicker hand-picked about 30 students to go through the testing and training process.

He was pretty good at this task because he was also the vice principal in charge of discipline. Everyone had a healthy fear of Mr. Wicker. Rumors abounded about the implements of torture hidden in his office.

This responsibility, however, allowed him to know just about everyone in town and he had a pretty good idea about which students were responsible enough to handle a bus full of K-12 students.

Mr. Wicker chose drivers from every walk of life: black and white, male and female, athletes and artists. He also liked to keep busses within families. My older brother drove as did my younger sister.

After putting us through the ringer to make sure we were able to safely perform our duties, Mr. Wicker trusted us and supported us. When any conflict arose, he assumed that the bus driver was in the right. If I thought a student needed to be suspended from the bus, he (or she) was suspended. My recommendations carried the same weight as any teacher’s.

I never abused this trust because I knew that it had to be earned. Mr. Wicker’s trust in us caused us to act in trustworthy ways.

With this trust, however, came great responsibility. Mr. Wicker was in the parking lot every afternoon as the busses left. One day I pulled out of the lot when a car was in my blind spot. The car had time to stop before we collided, but Mr. Wicker was waiting for me the next day with a stern warning.

When necessary, Mr. Wicker was willing to go beyond stern warnings. Most of the full-time drivers were seniors and the juniors and sophomores served as substitutes. I received a full-time route as a junior, however, because one of the senior drivers was allowing his friend to stand in the stairwell along the route. Mr. Wicker didn’t tolerate blatant disregard for safety procedures and the senior was fired and replaced by a junior.

I learned a lot more from Mr. Wicker, but these simple lessons would seem to be relevant in any organization. Leaders should select employees carefully, make sure they’re trained well, and then trust them to do their job.

If Mr. Wicker was able to trust a bunch of high school kids with the lives of hundreds of children, I wonder why so many organizational leaders have trouble trusting their grown employees.

Organizational Commitment

2007-09-14T09:39:00.001-07:00

One thing that most employers want is a committed workforce. If employees are committed to the organization, they should work harder and stick around longer. Replacing employees is expensive, so organizational commitment is a good thing.

What most organizations don’t realize, however, is that there are different types of commitment.
Some people, for example, are committed to their organization because they truly want to be part of the organization. These people strongly believe in the values and goals of the organization.

Some people are committed to their organization because they believe that they ought to be part of the organization. This type of commitment is common in family-owned businesses where someone wants to leave, but feels a moral obligation to stay.

Finally, some people are committed to their organization because they feel like they have to be part of the organization. These people may believe that they can’t find any better option or that it would be too costly to leave.

Many managers believe that it doesn’t really matter what kind of commitment they generate, as long as their employees feel some type of commitment that makes them reluctant to leave.
But is any commitment good commitment?

Let’s answer that question by looking at a different type of relationship. It turns out that people who study marital commitment have identified the same three types of commitment in marriages.

Some people are committed to their spouse because of common goals and values. Others are committed to their spouse because they believe that they have a moral obligation to preserve the relationship. Finally, and you can see where this is going, some people are committed to their spouse because they don’t believe they can do any better or they believe that it would be too costly to leave.

Which kind of marriage seems like the most fulfilling and productive? It’s pretty obvious that people with the “want to” kind of commitment will have better relationships. On the other end of the spectrum, marriages that are based on the “have to” kind of commitment seem rather pathetic, if not dangerous.

Someone who wants to leave a marriage, but feels like they can’t, will rarely act in the best interest of the spouse. And, in fact, a person in this predicament may act in ways that harm the spouse out of resentment.

I think the same danger exists when organizations cultivate the “have to” kind of commitment among their employees. Employees who want to leave a company, but feel as though they can’t, will rarely act in the best interest of the company.

Unfortunately, out of the three types of commitment, the “have to” kind is probably the easiest to generate. All you have to do is offer high pay or expensive benefits.

People with high salaries and miserable work environments often end up feeling trapped. They want to leave, but are trapped by mortgages and car payments. These people will do enough to get by at work, but not much more.

The most difficult kind of commitment to generate is also the most valuable. The “want to” kind of commitment begins with organizational values and goals that employees are proud to help the organization pursue. The next step is a very carefully designed employee selection process. Finally, just like any spouse, employees want to feel appreciated and they want to have a voice in decisions that affect them.

Are benefits beneficial?

2007-09-14T09:35:00.000-07:00

In my last column I proposed the dangerous idea that job experience is overrated. I have a few more dangerous ideas and was planning to save them for later, but one of these dangerous ideas seems especially relevant now.

Let me preface this idea by stating that I’m not taking sides in the current school budget dilemma. Most organizations are facing the same situation, but the school budget allows us to view the problem with some numbers.

Let’s start with a thought experiment. Let’s imagine that we’re starting a brand new school system. We have 68 million dollars to use to educate approximately 11,000 students. How should the money be used to best accomplish the goal?

We could probably come up with a nice long list of ways to spend the money. My list would start with good teachers, books, computers, supplies, furniture, utilities, and building maintenance.

But if we were starting from scratch, how long would it take for someone to suggest that we should spend $200,000 of the money on dental care for teachers’ spouses? That’s not in my top ten and probably wouldn’t be in my top hundred.

Again, I’m not taking sides in the current debate, I’m simply offering this “dangerous” idea: I think employee benefits are a bad way to accomplish what most organizations want to accomplish.

Most organizations use employee benefits to help attract and retain the best employees. They keep people happy. But what if that’s not true? Let’s follow the logic.

Do the best teachers tend to have spouses with bad teeth? We can see the same kind of problem as we examine the most popular employee benefits. On average, companies spend an amount equal to 40 percent of their payroll on employee benefits. Companies spend the most on health insurance, retirement savings, and paid time off.

If a space alien landed in the US and observed this pattern, I’m sure they would ask why we pay so much to attract sickly people who want to get paid for not working.

The idea that benefits help to attract and retain the best employees is certainly debatable. But even if we accept the fact that good employees expect the most popular benefits, we still need to ask: Are benefits the most cost-effective way to “buy” employee loyalty?

The school budget for next year includes about $7.5 million for health insurance. I wonder how many teachers would rather just divide up that pool and take the cash?

Here’s the part where the benefits expert points out that taxes must be paid on the cash but not on the insurance. And the whole idea behind a group plan is to buy insurance at a discount.
That’s true, but I believe that most families can buy perfectly acceptable health insurance plans for much less and would still have some left over to supplement their salaries.

The problem is that we (employees) never shop around. So the cost of the group plan continues to rise, employers continue to pay the premiums because they don’t believe they have a choice, and money gets diverted from the organization’s real goals.

I’m almost to the bottom of the page, but I feel obligated to also point out that I’ve never met an employee who preferred spousal dental care over a positive and supportive work environment.

Dangerous Ideas

2007-08-02T10:43:00.000-07:00

This week I found a new book entitled “What is your dangerous idea?” Over one hundred scientists were asked to describe an idea that, if true, would have profound, and probably unpopular, effects on society. David Lykken, for example, suggested that parenting, like driving, should require a license. Sam Harris suggested that science must destroy religion.

The main point of the book is that dangerous ideas are worth considering, even if they are unpopular and even if they turn out to be wrong.

This book got me thinking about dangerous ideas around the workplace. I’d like to go ahead and throw out one of my own. I believe that experience is overrated.

Employers place a great deal of value on experience. Take a look at today’s employment ads and you’ll see that most job openings require some level of experience. Employers pay more to hire experienced workers and they give raises to employees as they accumulate experience. All of this is based on the assumption that experienced workers are more valuable than less experienced.

What if that’s not true?

I’d like to suggest that experience, per se, offers very little value. And just to add fuel to the fire, I’ll also argue that, in some cases, experienced workers actually perform worse than those with little or no experience.

Evidence supporting this idea comes from a variety of areas, but I have a few favorite examples. One deals with the ability to detect deception. Many studies have been done on the ability of people to determine if another person is lying. Some of those studies compare the accuracy of different groups. In a recent summary of this research, college students were found to have an average accuracy rate of 54%. Police officers and detectives, who presumably have more experience detecting deception, had an average accuracy rate of 53%.

In the realm of employment interviews, research shows that experienced interviewers exhibit the same types of biases as inexperienced interviewers.

A study in the United Kingdom found that experienced loan officers performed worse than college students at predicting loan defaults.

In sports, there is no evidence that coaches with more experience lead their teams to greater success. Major League Baseball’s most experienced manager, Tony LaRussa, has a losing record this season despite having a team loaded with talent.

The underlying problem with valuing experience is that we tend to equate experience with knowledge and knowledge with job performance. I do believe that more job knowledge usually leads to better performance. But I don’t believe that people automatically learn more just by existing in their jobs.

Instead, learning requires active effort and deliberate practice. Some people do this and can learn new things about their jobs very quickly. Others, however, do not make an active effort to learn and are able to survive in their jobs by doing just enough to get by.

If this dangerous idea turns out to be true, there are three primary things that organizations should do differently. First, they should rely less on experience during the selection process and rely more on applicant intelligence or ability to learn. Second, organizations should attempt to create more deliberate learning experiences. Finally, organizations should reward learning more and reward hanging around less.

This idea won’t be popular. But at least I’m not suggesting that we destroy religion.

Sheriff Taylor on Leadership

2007-07-20T08:57:00.000-07:00

One of these days I’m going to get around to writing a book. My first book will be entitled The Leadership Secrets of Sheriff Andy Taylor. Like most red-blooded Americans, I’m a huge fan of The Andy Griffith Show. One of the things I love about the show is the fact that Andy demonstrates many of the qualities of a great leader.

The first episode that comes to mind is Barney and the Cave Rescue. Deputy Barney Fife starts his day off by mistakenly trying to arrest the bank president going into the bank. Fortunately the town picnic is later that day so Barney can forget this embarrassing mistake.

At the picnic, Andy takes his girlfriend, Helen, to explore an old abandoned mine. Barney and his girlfriend, Thelma Lou, follow some time later. When they enter the cave, Barney and Thelma Lou hear the rumbling of a slide and escape just in time. Then they realize that Andy and Helen must be trapped inside. Barney immediately organizes the town into a huge rescue effort.

Unbeknownst to Barney, Andy and Helen are able to escape through another opening and head home to change out of their dirty clothes. While at home, Andy turns on the radio and finds out that the town is frantically trying to rescue them from the cave.

Here’s where the leadership starts. If I were Andy in this situation, I probably would have returned to the picnic and announced that I was able to save myself and my damsel in distress.
Instead, Andy and Helen crawl back in the cave and allow Barney to rescue them. Andy helps Barney be successful. In my mind, this is one of the most important things leaders do. Leaders should help followers be successful.

Some may argue that Barney doesn’t deserve to be successful in this situation. Barney was wrong, just like he was wrong earlier that day. On the other hand, in both situations, Barney was acting on the only information he had. He saw a problem and took action.

So what do leaders gain by helping followers be successful? In this case, Barney was able to recover credibility in the eyes of those who saw him mess up earlier in the day. Both leaders and followers are better off when the followers are respected by others.

Another thing that Andy gains by helping Barney succeed is a more confident follower. Barney’s confidence had taken a hit earlier in the day. Discovering that Andy didn’t really need to be rescued would have been an even bigger hit. There’s actually a fair amount of research showing that confidence raises the level of future job performance.

Yes, this is just a TV show and cave rescues are dangerous and expensive. So I’m not recommending that anyone should stage such an elaborate emergency. But I think leaders have similar kinds of opportunities every day.

Why don’t more leaders “crawl back in the cave”? Crawling back in the cave means that leaders will receive less credit. Crawling back in the cave means that leaders will have to humble themselves a bit. Crawling back in the cave means that leaders must realize that their followers are also critical to their success. That’s also the kind of leader that most of us would gladly follow.

Small Companies Can Be Great Too

2007-07-20T08:53:00.000-07:00

I’ve written before about Fortune Magazine’s annual list of the Best Companies to Work For. Google, Inc. won the latest award by offering an innovative atmosphere and unique benefits like free meals.
Companies in the Upper Cumberland may find it difficult to identify with companies like Google. Fortune’s list only includes companies with at least 1000 employees.

Smaller companies simply can’t afford to provide the kinds of environments provided by such large companies. Or can they?

Four years ago, the Society for Human Resource Management began a similar contest aimed at small and medium-sized companies. The most recent winners were announced at SHRM’s annual conference in June.

This year’s winner in the small company division was Badger Mining Corporation of Berlin, Wisconsin. What immediately stands out about this company is that mining is widely regarded as one of the dirtiest and most dangerous industries in the world. Yet this company finds a way to turn the worst working environment into the best.

The 180 employees at Badger Mining make sand. Sounds pretty glamorous doesn’t it?

Badger Mining didn’t end up at the top of the list by offering the same kinds of perks as Google. They offer paid time off and retirement benefits that are pretty normal. The things that make Badger Mining unique are things that reflect an underlying culture that values each employee.

Employee health is protected in this dangerous industry through award-winning safety programs, health insurance, and a comprehensive wellness program. Family priorities are protected by allowing employees to work flexible schedules and take time off to attend to family matters. The financial needs of employees are met by a generous profit-sharing plan. For some reason, employees who get to share the profit make more of it.

Any new initiative at Badger Mining seeks the advice and input of everyone who will be affected. This practice takes advantage of the expertise in the company. It also increases acceptance of change when the organization must adapt to new challenges.

Aside from Badger Mining, one other company stood out on the list of best small and medium-sized companies to work for. The Right Thing, Inc. is a company with 286 employees based in Findlay, Ohio. They help other companies outsource human resource functions like recruiting and selection. Their practices speak volumes about their values.

Everyone in the company reports to the CEO. Everyone works in the same-sized cubicle. Everyone meets with the CEO every other month. And fifty percent of the profit is divided among the full-time and part-time employees.

On average, employees at The Right Thing spend 220 hours per year in training and professional development. They also receive unlimited paid sick days.

So how do Badger Mining and The Right Thing prevent employees from abusing the flexibility and freedom? Both companies believe in the same philosophy: Hire good people. Give them a reason for wanting the company to succeed and then help them succeed. Amazingly enough, these kinds of companies have no trouble finding good people.

I’m sure we have great places to work in the Upper Cumberland. In fact, I’d love to learn more about them. If you have a great place to work, let me hear about it. Contact me at ttimmerman@tntech.edu.

Tough Times at Wal-Mart

2007-06-21T22:49:00.000-07:00

Cynthia Haddad worked as a pharmacist at Wal-Mart for ten years before the retail giant fired her. Wal-Mart claimed that she violated company policies. She claimed that male managers were never fired for the same mistakes. She also had the gall to ask for the same pay as males doing the same job.

Last week, a jury in Massachusetts believed Haddad’s side of the story and awarded her two million dollars.

Also in the news last week, state courts in New Mexico, Missouri, and New Jersey agreed that lawsuits against Wal-Mart could proceed as class-action suits. Thousands of current and former Wal-Mart employees are claiming that they were forced to work off the clock without pay. Workers in Pennsylvania, California, and Colorado have already won millions of dollars from Wal-Mart for similar claims.

These cases are small potatoes, however, compared to the sex discrimination case Wal-Mart faces. Filed in June, 2001, the largest ever civil rights class action lawsuit asserts that Wal-Mart discriminated against women in a variety of ways. In this case, the class includes 1.6 million current and former female employees.

I’ve seen some of the data from this case and the evidence is pretty overwhelming. In every job from cashier to regional vice president, women made less than men. Wal-Mart defended itself by claiming that pay was based on performance and experience. Unfortunately, Wal-Mart’s own data showed that female employees had higher performance and more experience, on average, than male employees.

If you had invested $100 in Wal-Mart stock on June 1, 2001, you would have about $95 today. This seems pretty bizarre considering the fact that Wal-Mart has reported record profit levels every year during this time period.

Personally, I believe that Wal-Mart’s stock price is being held back by the uncertainty associated with these lawsuits. What would happen if a jury decided that 1.6 million women deserved the same award as Cynthia Haddad? That’s 3.2 trillion dollars.

Surely the judgment couldn’t reach that figure, but what if each plaintiff is awarded an average of ten thousand dollars? That’s still 16 billion dollars. Even for Wal-Mart, that’s a huge hit.
Wal-Mart does so many things well, how could they possibly allow such basic human resource blunders? I think the root of the problem was revealed in a 2004 Workforce Magazine article (People Problems on Every Aisle). In that article, a former Wal-Mart human resource manager explained that store-level human resource managers were typically hired off the street with little concern for professionalism. They typically had very little knowledge of human resource practices or employment law.

With little expertise they would also have little power over store managers who were pressured to lower labor costs. You mix it all together and you have people working off the clock and incompetent manager favorites being promoted.

One might still wonder why Wal-Mart’s corporate leaders would allow this to happen. The larger problem at Wal-Mart, and lots of other companies, is that they do not believe in the value of a strong human resource function.

Since they don’t believe in its value, they don’t invest in it. Since they don’t invest in it, they don’t receive any value from it. Then they’ve convinced themselves they were right from the beginning.

I’m not sure if these lawsuits will end up costing Wal-Mart billions or trillions of dollars; but I do know that competent and professionally trained human resource professionals make a positive impact on organizations.

The Workplace Smoking Ban

2007-06-07T13:16:00.000-07:00

October 1 should be an interesting day in workplaces around Tennessee. That’s the day that the Non-Smoker Protection Act goes into effect. This act was passed last week by the Tennessee House and Senate. The governor will sign it soon.

The Non-Smoker Protection Act will effectively ban smoking in any enclosed work environment. That includes restaurants, company break rooms, and restrooms. There are a few exceptions. Smoking will still be allowed, for example, in businesses with less than four employees, age-restricted venues, and areas with open garage-type doors.

Personally, I’m okay with the ban. My father died of smoking-related cancer at the age of 58. I’ve never smoked and will enjoy going to restaurants and not coming out smelling like an ashtray.

On the other hand, I’m still a fan of the free market and probably would have preferred no ban. Business owners are free to ban smoking in the workplace anytime they want. Likewise, customers and employees are free to patronize and work for companies that fit their preferences.

The name of the act implies that non-smokers will be protected by it. I suppose there’s also some hope that smokers might smoke less, or even quit smoking, if they can’t smoke in the workplace.

Following this logic, I began to wonder if companies might be better off without any smokers. As it turns out, I’m not the first to wonder this. One of the most recent studies found that the average smoker costs their company $4,430 per year in lost productivity. This figure only includes absenteeism and does not include the costs of higher health care expenses and early retirement due to smoking-related health problems.

Before you decide to go out and fire all of your smokers, it’s time for the bad news. You can’t. Approximately twenty-nine states have laws that specifically protect smokers from discrimination. Twenty-one states, on the other hand, allow business owners the freedom to lower their costs by firing smokers.

Tennessee is one of the twenty-nine. Maybe that means that Tennessee is an enlightened state that seeks to protect everyone from cruel forms of discrimination. I don’t think so.

As far as I know, only Michigan protects employees from discrimination on the basis of height and weight. Only Washington, D.C. protects employees on the basis of personal appearance.

In other words, private employers in most states are generally free to fire people who are unattractive, overweight, underweight, or fans of the New York Yankees. Employers who choose to make these bad decisions, however, must also suffer the consequences.

But twenty-nine states have decided that smokers cannot be fired. Oddly enough, these states tend to be tobacco-producing states with very powerful tobacco lobbyists.

Interestingly, Tennessee’s statute only prevents the firing of smokers. That wording seems to imply that Tennessee employers could refuse to hire smokers.

By this point it probably sounds as if I’m being too tough on smokers. But smokers need jobs too; especially if they’re going to be able to pay the new 42 cent per pack tax.

I would actually prefer to see employers actively encouraging their smokers to quit. Many companies offer free smoking cessation programs, but very few go as far as providing incentives to participate.

Everyone would benefit from less smoking. Employers would get lower labor costs. Taxpayers would pay less to programs like Medicaid. And more grandkids would get to meet their grandparents.

Should we legislate prices?

2007-05-23T13:03:00.001-07:00

I can't say that I'm all that politically active, but occasionally a bill comes along that grabs my interest. This week I heard about a bill that has already passed the Tennessee House and will be voted on soon in the Senate. This bill requires state colleges to develop policies to lower the cost of college textbooks. This bill appears to have good intentions, but I believe it has dangerous implications for our state and perhaps our country.

First let me say that I completely sympathize with students and I agree that textbooks add a substantial burden to the cost of education. I also don't blame those who introduced the bill. They're responding to their constituents. The problem I have with this bill is that it sends the wrong message to our students (and future leaders). This bill suggests that high prices should be dealt with by the government.

If I were an economist, I would argue that lower textbook prices will ultimately lead to fewer incentives for textbook authors and publishers to create quality products. As a professor, I can choose cheaper textbooks now. But you typically get what you pay for.

If I taught personal finance, I might suggest that this problem deals more with student budgeting than with textbooks. I'm not sure if it's still true, but in the late 1990s, a study by the Harvard School of Public Health found that the average college student spent more on alcohol than on textbooks and all other drinks combined.

I know there are a few students who don't buy alcohol, but I'd bet most of my students have cell phone bills that easily surpass their annual textbook budgets. I just got my first cell phone a month ago. And don't get me started about the cars students drive. The difference between a $10,000 car and a $5,000 car will pay for all of your books for your entire collegiate career.

I suppose it's also worth pointing out that, unlike cars, beer, and cell phone use, many textbooks have value that far surpasses their cost. I choose textbooks that I think will help students create value for their organizations after they graduate.

But there's a much bigger point to be made here. The high cost of textbooks is not a new problem and not a problem unique to Tennessee students. I faced the same problem 20 years ago. But instead of asking the government to fix the problem, students at my university came up with an entrepreneurial solution. One of our student organizations began a student book exchange where students could sell books to each other. If eBay had been around, I think I could have paid my entire tuition by buying and selling textbooks.

That's not the only possible solution, but I think this problem offers a tremendous opportunity for students to be creative, innovative, and entrepreneurial. So the question is this: When faced with similar problems, do we want our future leaders to seek government intervention? Or do we want them to see these problems as opportunities for value creation?

I mentioned earlier that this seemingly harmless bill may have national implications. The rest of the world is becoming more entrepreneurial. If we're becoming less so, what will happen to the American economy?

But as long as we're asking our legislators to help lower prices, I wonder if they can do anything about the prices at Outback?

How Fair Are You?

2007-05-23T13:02:00.001-07:00

Did you know that there are no bad drivers in Cookeville? There are also no bad parents. I know this because whenever I speak in front of groups, I usually ask: Are there any bad drivers in here? What about bad parents? No one ever speaks up.

Maybe they’re just reluctant to confess in front of their peers or co-workers. At least one survey, however, shows that 90% of the population believes they are above average drivers. Statistically, of course, it’s impossible for 90% of the population to be above average.

This kind of overconfidence is not restricted to driving. Research also shows that most people think they are fairer, luckier, and better investors than the average person. I guess that explains why so many people play the lottery.
The larger point here is that most people tend to overestimate their competence in a variety of areas. Most of these areas have profound implications for business management.

A few years ago, a manufacturing company in Ohio lost some key contracts and the CEO decided that a temporary pay cut would be the best way for the company to deal with the lost revenue. The 15 percent pay cut would be applied to everyone at two of the company’s plants and would only last ten weeks.

The CEO was concerned about the possible reactions to the pay cut. He knew that people would probably be unhappy. Would employees quit? Would they slack off? Would they steal from the company? What could he do to minimize the negative reactions?

The CEO contacted Jerald Greenberg, a professor at Ohio State University and an expert in the area of workplace fairness. Greenberg, being an academic, proposed an experiment in which he would write the pay cut announcement for one of the plants. The CEO would write the announcement for the other.

Honestly, the CEO’s announcement sounded like something I would have written. It was simple, straightforward, and conveyed only the necessary information. Greenberg’s announcement, however, was filled with regret, apologies, and detailed financial information justifying the pay cut. So how did people respond?

In the plant that received the professor’s announcement, theft increased by 54% during the ten-week pay cut period. That’s a lot. In the plant that received the CEO’s announcement, theft increased by 141%. That’s a lot more.
With respect to turnover, only one person (out of 64 employees) left the plant that received the professor’s announcement. In the plant that received the CEO’s announcement, 23% of the employees quit.

Without the experiment, we might have concluded that the pay cut was responsible for the huge increases in theft and turnover. The experiment reveals, however, that it wasn’t the pay cut. It was the announcement that produced the biggest effects.

I’ll bet if we asked the CEO if he thought his announcement was as sensitive and informative as it could be, he would say that it was. After all, he wasn’t trying to increase theft and turnover. He was trying to prevent it. But just like the majority of us who think we are above average drivers, most managers believe that they are above average when it comes to fairness and communicating with employees.

The best thing about the professor’s announcement is that it cost absolutely nothing to be more sensitive and provide more information. The financial effects, however, were huge. The only way to reap these benefits is to realize that you might not be as good as you think you are.

Who's to Blame for Poor Performance

2007-05-23T13:00:00.000-07:00

It’s that time of year again. Final exams. Grading. More grading. Some students make me proud of how much I taught them. Those are the ones who convince me that I’m a great teacher. But then there are the others.
Why didn’t they try harder? Why didn’t they pay attention in class? Why did their parents bother sending them to college? Did you notice how I took credit for the successful students and shifted the blame for the others?
I see a lot of this behavior among organizational leaders as well. For that matter, I see a lot of this among parents, students, and politicians too. I think we’re probably born with the tendency to take credit for success and avoid blame for failure.

When teachers abandon all responsibility for student failure, we ignore the possibility that we could have done something differently to motivate more students or inspire greater interest. When students do it, they convince themselves that the teacher was unfair or incompetent. The truth is often somewhere in the middle.

This is a great lesson for managers to learn as well. I once asked one of my professors in graduate school why he did so little management consulting. He told me that he often got calls from managers and business owners asking if he could “fix” their unmotivated employees. My professor’s first response to this question was always: “What will you do if I find out you’re the problem?” This question made him very unpopular as a management consultant.

Anyone who wants to improve their performance as a teacher, as a manager, or as anything else, must be honest with themselves. They must be willing to face the possibility that they need to do something differently.
This possibility is why it’s so important for teachers to give accurate feedback to students throughout the semester. This feedback should help students figure out what they need to change. Likewise, teachers should seek feedback throughout the semester to find out what they might need to change.

The same is true in any organization. In many organizations, feedback is supposed to occur during the performance appraisal process. Unfortunately, performance appraisal is hated by most managers because it is also used to make administrative decisions. Research shows that most managers give employees higher ratings than they deserve. They do this to avoid conflict and avoid acknowledging that their own performance may have been below par. In education we call this grade inflation.

Inaccurate performance feedback, however, helps no one. Inflated feedback perpetuates mediocre or poor performance. It also perpetuates overconfidence that can be dangerous in a variety of ways.
Would you go to a doctor who deserved to fail medical school, but was passed because his professors wanted to avoid conflict? Neither would I. That’s why I don’t pass students who deserve to fail. That’s also why I constantly give and seek feedback to try and keep students from failing.

I wonder what the world would be like if teachers, students, parents, managers, politicians, spouses, and drivers received accurate feedback about their performance and honest advice to help them improve.

Intrinsic Motivation

2007-05-23T12:58:00.000-07:00

I have a confession that might make me seem strange. In fact, it might destroy any credibility I may have. Well, here it is: I like to mow the lawn. That horrible task that most normal people hate doing throughout the spring and summer is one of my favorite things to do.

I’m sure it wouldn’t be as much fun with a push mower, but I have a riding mower and about one acre to mow. Once a week I hop on and take a two-hour ride to happiness.

So why would such a distasteful task be the source of such joy for anyone? The more I think about it, the more I realize that the things that motivate me to mow the grass are the same things that motivate people to enjoy any job.
One great thing about mowing the grass, for example, is that you can easily see yourself making progress. That patch of tall ugly grass gradually becomes smaller and smaller until you make that final pass. Within two hours I’ve converted an unsightly mess into something I’m quite proud of. People enjoy jobs when they can vividly experience a sense of accomplishment.

But there must be more to it than that. After all, many people hate their jobs even though they receive the same type of immediate feedback. There’s one more thing that makes mowing the lawn enjoyable. I’m choosing to do it.

I was never forced to mow the lawn when I was younger. Today, I can afford to pay someone else to do it for me. A huge amount of the enjoyment comes from the fact that I decide if, when and how to mow.

My guess is that most people who hate to mow were forced to when they were younger. Or they may have mowed in order to make money. A fair amount of psychological research shows that people lose their intrinsic motivation for a task when they feel like they are being controlled by external motivators (like money).

You can see the same thing among professional athletes. The game they played for fun as a youngster is less fun when they do it to fulfill a contractual obligation.

These two insights might be pretty useful to business owners and managers. Why do your employees have a hard time making it to work at 8:00am but have no trouble waking up at 4:00am to go hunting? Sitting perfectly still in the cold woods hoping that a deer wanders by sounds about as fun as mowing grass. Yet people pay for the privilege. Why? Because a successful hunting trip inspires a sense of autonomy and accomplishment.

Another reason I like mowing is because it’s appreciated. My wife appreciates it. My kids can find their toys lost in the tall grass. My neighbors probably appreciate it. I probably get more thanks after I mow than at any other time during the week.

The only bad thing is that my eight-year old son has discovered the joys of mowing. It’s as close as he’s going to get to a go-kart for awhile, so he thinks it’s fun too. Maybe I’ll start forcing him to do it, paying him to do it, and then forget to thank him for doing it. Then he’ll start to hate his job like normal people are supposed to! In the process he might even learn how not to manage people.

Investing in Health

2007-05-23T12:57:00.001-07:00

Today I faced a tough decision. My employer is having its annual “Health Fair” in April and today I had to decide if I should spend $20 to have my cholesterol checked. My other option was spending that $20 at Outback on a steak and cheese fries. Ultimately I caved in and decided to go for the blood work. That makes two cholesterol checks and four steaks over my six years at TTU.

The last time I participated in the Health Fair, my report told me that I had high cholesterol and I should talk it over with my doctor. Unfortunately, I’ve never met my primary care physician, so it’s never come up. I’ll get around to it some day.

I’m not sure how many TTU employees participate in the health risk assessment offered during the Health Fair. I suppose most of them are like me. I’d prefer to be healthy, but my employer has offered to absorb the cost of my medical treatment. So if I continue eating lots of cheese fries and survive the heart attack, I know that my health insurance will pay the humongous hospital bill. Maybe after that I’ll start taking my health seriously.

If I owned a business and provided health insurance to my employees, attitudes like my own would horrify me. Attitudes like mine contribute to the phenomenal increase in employer health care costs each year. That’s why many organizations are taking drastic steps to force employees to take responsibility for their own health. Johnson & Johnson is a great example.

In 1995, Johnson & Johnson decided to offer the same kind of health risk assessment that many employers (including TTU) offer. They decided, however, to make it available for free. That way, employees did not have to choose between the blood work and the cheese fries. They were slightly disappointed when only 26% of their employees participated.

In 1996, Johnson & Johnson decided to try and increase participation by giving employees a $500 reduction in their health insurance premium if they participated. That year, 90% of their employees participated. With over 40,000 employees, that’s quite an investment. How could it possibly pay off?

The health risk assessment done by Johnson & Johnson identified over 4000 employees who were at risk for developing heart disease, diabetes, cancer, and a variety of other conditions. Those high risk employees were then asked to participate in a program called Pathways to Change. This program provided employees with education and other types of encouragement to improve their health.

Over the first three years of the program, participants in Pathways to Change were more likely to exercise and less likely to have high cholesterol and high blood pressure. For all of their efforts to improve the health of their employees, Johnson & Johnson realized a net savings of $225 per employee per year over the first four years of their health and wellness initiative. That’s $225 after paying the $500 to everyone tested and all other expenses of the program.
To boil it all down, Johnson & Johnson discovered that paying people $500 each to participate in a health risk assessment was cheaper than treating the heart attacks lurking in that group.

For $500 I would show up for the health risk assessment and promise not to eat cheese fries for a whole year!

Affirmative Action - Part 2

2007-05-23T12:55:00.002-07:00

The phrase “affirmative action” evokes strong emotions from supporters and opponents. The 1947 Brooklyn Dodgers, however, provide a perfect example of how affirmative action is supposed to work and how affirmative action helps organizations excel. The president of the Dodgers, Branch Rickey, recognized that he was fishing for employees from the same pond as every other baseball team. The more that pond is fished, the harder it is to find good talent. If you find another pond where no one else is fishing, however, it’s much easier to find talented employees.

If Branch Rickey were alive today and president of any organization, what would he do? First, he would actively pursue talented people from diverse backgrounds. Rickey didn’t wait for Jackie Robinson to beat down his door. Instead, Rickey sent scouts into the Negro Leagues to find the most talented players. I can’t count the number of times I’ve heard someone say “I’m willing to hire minorities, they’re just not applying.” There’s an easy solution to this problem…it’s called recruiting.

If Rickey were alive today, he would also willingly pursue talented people from diverse backgrounds. One of my favorite parts of the Jackie Robinson story is that Rickey voluntarily pursued Robinson. In other words, there was no government intervention requiring Rickey to do so. In fact, I love the freedom most organizations have to not use affirmative action. That makes it easier for companies like the Dodgers to beat companies like the Red Sox (who didn’t integrate until 1959 and never finished above third place during the 1950s).

Branch Rickey also demonstrated the first-mover advantage. By being the first team to integrate, the Dodgers established a reputation as an organization that valued talented employees regardless of their skin color. This reputation allowed them to quickly recruit other talented African-Americans like Roy Campanella and Don Newcombe. If Rickey were alive today, he would love finding untapped pools of talent where he could be the first.

These principles are probably not surprising to anyone. What is surprising, however, is the number of organizations that are not practicing these principles. I wonder what would happen to the U.S. economy if every company actively and willingly recruited, hired, and promoted the most talented individuals instead of friends, relatives, fraternity brothers, and people that make us comfortable. I’m pretty sure we would have fewer companies like Enron and more companies like Southwest Airlines. I’m also pretty sure there would be more than 10 female CEOs leading Fortune 500 companies.

I honestly don’t believe that most companies consciously and willfully exclude females and minorities from leadership positions. Instead, I think the evidence is pretty overwhelming that discrimination can occur accidentally and unconsciously. The assumptions and stereotypes that drive discrimination are so deeply ingrained that even the best of us are not aware when it’s happening. The fact that it can happen accidentally makes it all the more important for leaders to actively and willingly pursue talent in undertapped pools before our competitors do.

Victims of Affirmative Action - Part 1

2007-05-23T12:55:00.001-07:00

Most people don’t recognize the names of Ed Stevens or Sid Gordon. These were two of the first victims of affirmative action in the United States. The saddest of these might be Gordon. He had 11 years of experience when he was replaced with a less-experienced minority. Most people, however, do recognize the names of those who replaced Stevens and Gordon. Sid Gordon lost his job to Hank Aaron. Stevens lost his job to Jackie Robinson. For those who don’t recognize Aaron or Robinson, they are two of the greatest baseball players who ever played and both are enshrined in the Baseball Hall of Fame.

In 1947, Branch Rickey (president of the Brooklyn Dodgers) discovered an amazing truth. A vast pool of talent was not being tapped. Rickey realized that the best players in the Negro Leagues were certainly better than the worst players in the Major Leagues. Any team willing to recruit the most talented players from the Negro Leagues would certainly improve the team’s talent level. The rest, as they say, is history. Over the next ten years, the Dodgers made it to the World Series six times.

It may seem hard to believe, but some teams were reluctant to pursue African-Americans players. They had perfectly “rational” explanations for their reluctance. Some teams thought that attendance would fall when they added African-Americans to their teams. Other teams did not want to disturb team “chemistry”. All of these strawmen eventually fell and other teams began to pursue talented African-Americans.

The story in Boston, however, is a bit more complicated. The Red Sox were unable to find an African-American good enough for their team until 1959. By that time, there was a tremendous amount of social and political pressure for the Red Sox to integrate. Finally, the team caved in and signed Pumpsie Green to play second base. Never heard of Pumpsie? That’s because the Red Sox did affirmative action the wrong way. They decided to pursue diversity instead of pursuing talent in diverse pools.

So what lesson does this story have for modern organizations? Surely we’re more enlightened today. Sadly, there’s a great deal of evidence this isn’t true. In 2001, researchers Marianne Bertrand and Sendhil Mullainathan mailed 5,000 resumes to companies advertising entry-level jobs in Chicago and Boston. Half of the resumes were labeled with African-American names (Tyrone or Latoya). The other half received names that are more common among Whites (Emily or Matthew). The researchers set up voice mail accounts to find out which names were more likely to receive invitations for interviews. Sadly, resumes with White names were 50 percent more likely to receive interviews than resumes with African-American names and the same qualifications.

Even more disturbing about this study is the fact that some of the resumes were written to be a good fit for the advertised position. Others were designed to be a poor fit. Resumes from unqualified Whites were 26 percent more likely to receive interviews than highly qualified African-Americans. In other words, even today Ed Stevens is more likely to get an interview than Hank Aaron.

Evidence-Based Management

2007-05-23T12:53:00.000-07:00

The field of medicine may have a cure for business ills. In 2003, the Midwest Business Group on Health (MBGH) published a report estimating that 30% of the $1.4 trillion spent on health care in the U.S. was wasted. So where does $420 billion go? The report argues that providers overuse some procedures and treatments, underuse others, and misuse still more. The total cost of overtreating, undertreating, and mistreating is somewhere around $420 billion. An underlying theme in the report is that billions of dollars could be saved if health care providers relied more on evidence-based medicine. Evidence-based medicine is medical care that relies on the best available evidence for diagnosis and treatment.

This may sound like a condemnation of the medical profession. On the contrary, I believe that the vast majority of health-care providers are truly well-intentioned. I also believe that they’re a pretty smart bunch. After all, they passed organic chemistry (unlike yours truly). The opening paragraph may also sound like I’m about to argue that evidence-based care can cut the cost of health care paid by employers. That may be true (and it’s certainly the argument made in the MBGH report), but I think evidence-based medicine has even greater lessons for the business world.
How much money are companies losing by not using evidence-based management? What’s the total cost of overmanaging, undermanaging, and mismanaging? This figure may be impossible to calculate, but it has to be in the billions if not trillions of dollars. Is there even any such thing as “evidence-based management”? That’s the same question asked by Carnegie Mellon professor Denise Rousseau in her presidential address to the Academy of Management in 2005. She argued that evidence-based management does exist and evidence-based medicine provides a good role model for the field of business management.

There are many reasons that health care providers may not provide evidence-based care. The biggest reason is probably the fact that it is physically impossible for providers to keep up with the enormous amount of medical research being published on a daily basis. The same thing happens in management. Managers are further disadvantaged, however, by the fact that most health care providers are trained (at some point in their education) to find, read, and evaluate new scientific evidence. In other words, they learn how to learn. Business managers, unfortunately, rarely receive this training. As a result, managers often rely on their “gut”, “instinct”, or “experience”.
Here’s a simple example. We’ve known for decades that hiring managers make better hiring decisions when they use structured interviews instead of unstructured interviews. Unstructured interviews, however, remain more popular. That’s why you might be asked during an interview: “If you were a tree, what kind of tree would you be?” This interviewer has no evidence that “oaks” make better employees than “willows”. Instead, the interviewer thinks they have some sort of super-power that allows them to derive meaning from the answer. How many good employees are lost through this type of decision-making?

The evidence-based medicine movement is nearly 30 years old, but only beginning to have a major impact. Management education and training need a major overhaul that encourages managers to value evidence and learn where to find it. A recent book by Stanford professors Jeffrey Pfeffer and Robert Sutton (Hard Facts, Dangerous Half-Truths and Total Nonsense: Profiting from Evidence-Based Management) is a good place to start.

Personally, I think I would be a St. Helena Gumwood.

Best Companies to Work For

2007-05-23T12:52:00.000-07:00

One of the few things I look forward to in January is Fortune magazine’s list of the “100 Best Companies to Work For.” As someone who teaches human resource management, I’m always relieved to see that Catbert is not the role model for all human resource managers. This year’s winner is Google, Inc. The work environment at Google is becoming legendary as the source of creativity and productivity that has propelled Google to its current market value of nearly $150 billion.

The perks of being a Googler are beyond amazing. Need to see a doctor or dentist? They’re available onsite along with the carwash, gyms, free laundry machines, and masseur. Hungry? Breakfast, lunch, and dinner are available in eleven cafeterias. But it will be tough to find a bacon cheeseburger at Google. You’re more likely to find shrimp scampi, steak Milanese, or fresh sushi. Did I mention that all of the food is free?

It’s tempting to think that Google makes these perks available because they have nearly $4 billion in cash sitting around. Founders Larry Page and Sergey Brin, however, will argue that the work environment is the reason they’ve been able to accumulate this stash. Google and other companies on Fortune’s list support the idea that an employee-friendly work environment is a sound investment. So how can expenses like blackened sea bass and ping pong tables produce a positive return-on-investment?

One advantage of such a culture is the recruitment value. Google received over 1,000,000 applications last year for less than 3,000 openings. With more than 300 applicants for each opening, Google can choose talented trustworthy employees. Google then sets them free to use their brains and do their jobs with little interference. In fact, Google expects engineers to spend 20% of their time on projects of their own interest.

Another common element among the companies on Fortune’s list is that they all try to make it as easy as possible for employees to be productive and successful. The carwash, food, and easily-accessible childcare relieve employees of daily burdens that distract employees from their work. Eighty-two of the companies on this year’s list allow employees the flexibility of working from home at least 20% of the time.

A final common element among the Best Companies is that they share the fruit with the farmers. Thousands of Googlers are millionaires because the company rewards employees with stock options. The employees who make the company valuable are able to share in the bounty.

Is this type of culture possible only in internet companies? The best thing about Fortune’s list is the diversity of industries represented. Number 3 on this year’s list (and former Number 1) is Wegmans Food Markets, a supermarket chain concentrated in Pennsylvania and New York. QuikTrip (the convenience store chain) is Number 20 this year. All full-time QuikTrip employees are eligible for monthly bonuses based on store profitability and customer-service ratings. South Carolina-based Milliken provides an excellent example of a textile manufacturer determined to stay in the United States. They’re cutting costs by investing in training that will make employees more productive and competitive with international labor.

The Best Companies to Work For have discovered an amazing principle. Employees will do unto the company as the company does unto them.