employee engagement – Page 18

September 10, 2009June 29, 2023

Bring Back Classical Management

When the first Model T rolled off the Ford assembly line in Detroit in 1908, it was more than just a car.

The Model T represented a new sacred bond between the autoworkers, the owners and managers of Ford, and the American consumer. Ford promised that he would “initiate the greatest revolution in the matter of rewards for its workers ever known to the industrial world.” In 1914, he doubled workers’ pay from an average of $2.34 to $5 a day and shortened the workday from nine hours to eight. At the same time, the cost of the Model T went from $850 in 1908 to $440 in 1915, an unheard-of approach to business (so much that his peers called him a traitor).

Today, we may not fully appreciate the magnitude of what Henry Ford accomplished more than 100 years ago, but we should. Most likely, we don’t appreciate it because what he did fits the definition of “classical management,” a concept that originated in 1908 and flourished until the mid-20th century but can rarely be found today. But in the current recessionary and highly competitive business environment, human resources managers would benefit from having an understanding of this largely defunct concept in order to restore its principles for the betterment of their companies.

The concept of classical management is simple to understand: It is a leadership function that seeks to optimize benefits for the worker, investor and consumer to fair and consistent levels. Back in 1908, Henry Ford accomplished this objective by pricing the Model T lower than what his competitors charged for their cars. He also increased workers’ wages to twice what the market paid. According to Ford, “Every time I lower the price a dollar, we gain a thousand new buyers.” This approach is the primary reason for the real productivity gains that occurred in the U.S. economy from the start of the 20th century until the middle of it. However, as the U.S. became the most prosperous economic superpower of all time during the middle of the 20th century, these principles started to disappear from the U.S. corporation in favor of competing interests within the corporate structure.

The waning use of classical management didn’t present itself as a problem until the 1960s and ’70s, when other national economies began to recover and compete in the U.S. consumer marketplace. Eventually, U.S. corporate leaders began to realize that they had a competitiveness problem, but often responded with approaches that were the antithesis of classical management: quick-hit schemes, such as financial engineering and accounting routines, rather than the creation of real productivity and value.

After decades of such gimmicks, the sacred bond between a workforce and its manager is no longer typical and valued. Instead, the relationship has been marginalized and the labor model has effectively been globalized. But now, after years of being a non-strategic entity within the walls of a corporation, the human resources manager can play a critical role in helping the corporation’s leadership understand classical management as a key business strategy for its future. I truly believe that an organization needs to follow the precepts and discipline of classical management to be competitive in the 21st century.

An interesting aspect of classical management is that effective human resources management is critical to its successful implementation. Look at a few corporations where classical management exists today:

Nucor Steel is a successful corporation winning in a sector that most Americans believe is a relic: U.S. steel production. Nucor is the largest steel producer in the U.S. with $6.2 billion in sales. It is the nation’s largest recycler and competes head to head with Chinese companies that are often the beneficiaries of an unfair advantage on the open global market.

How does Nucor do it? If you ask its leadership, they will tell you that they do it through the productivity that is achieved through an optimal balance among its workforce, consumers and investors. Nucor has never laid off a worker, pays all of its employees incentive bonuses (which can be up to 150 percent of an employee’s pay) and has a policy of egalitarian benefits beyond belief. For example, there are some benefits that workers get that senior executives don’t qualify for—but not vice versa.

Also, the management team’s base pay is purposely lower than that paid by competitors. If the organization doesn’t perform well, managers feel the pain in their wallets. I also believe that Nucor’s managers—like others who embrace classical management—place value on the company for which they work. It isn’t all about the dollars.

Another example can be found at Costco, where CEO Jim Sinegal runs the business from the retail floor, answers his own phone, pays his employees almost 50 percent more than his competitors and contributes twice as much for health benefits. In the past, when Wall Street analysts have chastised him for such practices, he was quoted as saying that such actions aren’t philanthropic, but rather are sound business practices. Since Costco has a faster pace of earnings growth than its top competitor, maybe Wall Street and others should pay attention.

Lastly, the world’s largest single-site brewery is in Golden, Colorado, part of the MillerCoors Brewing Co. (which, incidentally, is where I work). This operation also has a sacred relationship with its highly tenured hourly workers, some of whom have up to 40 years of service. This workforce receives incentive bonuses, and the open relationship between these workers and management is responsible for levels of productivity that have been necessary to support a rapidly growing brand of products.

Are these companies different from yours, and if so, how are they different? Here are some points of comparison to consider:

Does your company have a business strategy to drive revenue and profit growth through optimizing the results for consumers, workers and investors? Or are some of these stakeholders being squeezed by quick-hit schemes and accounting gimmickry? In particular, is the workforce being marginalized by such practices?

For the past few decades, the role of human resources has been marginalized as well, viewed as something unnecessary to competition in a global market. Today, in the midst of a widespread recession, HR has the opportunity to present a real long-term strategy that will lead to productivity and sustained growth. It’s not a strategy that will take hold overnight. Classical management died slowly, and it will take time to revive. Today’s HR manager must start by building a new discipline and culture within management that understands what classical management is, and why it is a critical alternative to today’s conventional approaches. Companies including Nucor Steel, Costco and MillerCoors have found a way to lead their industries by leading and managing their workforces. Can your company be next?

May 6, 2009June 29, 2023

Employee Engagement in Tough Times, Part One

Amid periods of economic uncertainty, engaging and retaining valued employees is particularly critical if organizations are to maintain quality in their products and services and lay a foundation for future growth. Yet while challenging economic environments make employee engagement more critical, they also make it more difficult to achieve. Belt-tightening often results in organizational retrenching, reduced staffing levels, increased workloads and constrained compensation budgets.

The present economy may leave organizations feeling as if they are being squeezed in a vise. But there is opportunity amid the economic uncertainty. Careful attention to positioning individuals and teams to succeed will not only allow organizations to weather the storm, but also to emerge from the downturn in a stronger competitive position.

All organizations will be changed by the downturn
In the present economy, there will certainly be winners and losers, as there are in any period. But while some organizations may fare better than others, outcomes will be consistent in at least one respect: All companies can be expected to emerge from the downturn as changed organizations. In some cases, the changes may be fundamental, owing to mergers, acquisitions, restructurings, or shifts in market focus or positioning. In other cases, the changes may be more modest. Cost-cutting efforts, layoffs and shifts in priorities may simply result in new ways of addressing existing goals and objectives.

Also read: Employee Engagement in Tough Times, Part Two

However, regardless of the magnitude of the downturn’s impact on your organization, it’s important that you recognize that this time will bring changes, and with them come immediate challenges and longer-term opportunities. The immediate challenge is to minimize the disruptive aspects of organizational transitions on employees and customers. The longer-term opportunity is to ensure that once the downturn ends, your organization will be not only different but better.

Disruptive events, such as recessions, cause organizations to re-examine taken-for-granted ways of working. In these periods, there is a unique opening to restructure working relationships in more productive ways—before managers and employees once again settle into more stable patterns. And therein lies the opportunity to leverage a downturn to create positive changes that can serve your organization well—now and in the future.

Lessons from the past
In understanding organizational responses to periods of economic uncertainty, we can draw some lessons from the 2001-2002 downturn. Near the end of the recession, Hay Group surveyed executives from organizations appearing on Fortune’s Most Admired Companies list and from peer companies, as part of our ongoing partnership with the magazine. Nearly all respondents (86 percent) agreed that the economic environment was more challenging for their organizations than it was two years prior to the recession. With respect to motivating employees, however, respondents in the most admired companies generally reported that their organizations were in a better position post-recession than pre-recession. They also reported enhanced levels of employee loyalty and reduced concern about losing key talent. For the peer companies, by contrast, the downturn was perceived to have had a net negative effect in each of these areas.

The 2001-02 downturn was a transforming event for the most admired companies and peer companies alike, involving widespread changes in operations. While the most admired organizations and their peers exited the downturn in different places with respect to employee motivation and commitment, all came away with an enhanced appreciation for the impact on business success of employees’ performance and engagement. Fifty-seven percent of all respondents viewed the impact as greater or much greater than two years prior, whereas just 7 percent saw the impact declining.

A perspective from the vice president of human resources for a Fortune 500 building products manufacturer highlights the particular importance of employee performance in a downturn: “When our business is good,” he noted, “you could put monkeys in charge and they would still make money.” But when times are tough, he continued, strong leadership is essential and individual contributions are easily distinguished. Put another way by Warren Buffett, you find out who’s been swimming naked when the tide goes out.

A current view: human resource priorities

In November 2008, Hay Group conducted a global study to understand how human resource strategies, programs and priorities are being affected by the current economy. Nearly 2,700 respondents from 91 countries were asked to describe whether changes were being made to such areas as pay and benefits, staffing levels, performance management and training programs, and what those changes entailed.

Notably, three of the top five workforce concerns indicated by respondents pertained to the employee life cycle—attracting and recruiting the right talent, engaging and motivating employees and retaining key contributors. Concerns about talent acquisition and retention may seem misplaced during an economic downturn, when we are confronted with daily reports of organizations laying off large numbers of people. But the study results point to key reasons for organizations to continue to attend to these issues.

Even amid downsizings, organizations are still hiring staff to fill critical roles. And many are finding it harder to do so, as promising candidates are reluctant to move from their current positions. As one respondent noted, “Our new-hire offer acceptance rate is low due to the market situation. The candidates are worried about future layoffs if they change jobs, as the practice is commonly based on last in, first out.” Likewise, faced with constrained compensation budgets that limit their ability to reward staff, many organizations are fearful of losing valued employees. Savvy leaders recognize that competitors often see opportunities to lure away key contributors in downturns and worry about vulnerabilities in some or all of their markets.

Employee engagement is critical in a downturn, but it’s not enough

Maintaining a focus on engagement is especially critical in difficult times. Engagement refers to the commitment employees feel toward the organization (e.g., their willingness to recommend it to friends and family, their pride in working for it and their intentions to remain a part of it). But it’s also about employees’ discretionary effort—their willingness to go the extra mile for the organization. Right now, as organizations need to do more with less and strive for greater efficiency, tapping into the discretionary effort of employees is all the more essential.

Unfortunately, however, our research confirms that many organizations that have enviably high levels of employee engagement still struggle with performance issues. So while engagement is necessary, engagement alone is not sufficient for achieving maximum levels of individual and organizational performance. Leaders must not only engage and motivate employees but also enable them to channel their efforts productively and effectively.

In what we call an enabled workforce, employees are effectively matched to positions, such that their skills and abilities are put to optimal use. Likewise, employees have the essential resources—information, technology, tools and equipment, and financial support—to get the job done. They are able to focus on their key responsibilities without wasting time navigating such obstacles as procedural restrictions or nonessential tasks in the work environment.

Most organizations employ a sizable number of frustrated workers: individuals who are highly engaged but lack the tools required to be fully effective and successful. Frustration is a significant problem for organizations and employees, especially in a challenging economic environment. Organizations trying to squeeze out every drop of productivity can’t afford to squander the energy of motivated employees. And employees who are being asked to work harder and to do more with less understandably want to work in smart and efficient ways. In the short term, these motivated but frustrated employees may suffer in silence. But over time many can be expected to turn off and disengage, or tune out and leave.

The second part of this article will offer a “path to performance” for generating business results through enhanced levels of employee engagement and enablement.

May 6, 2009June 29, 2023

Employee Engagement in Tough Times, Part Two

Tough times make it essential that organizations get the most out of talent at all levels. But those that focus exclusively on employee engagement are likely to be disappointed by the extent to which improvements in this area translate into enhanced performance. To maximize individual and team contributions, engagement alone is not enough. The commitment and discretionary effort offered by engaged employees can easily be squandered if leaders do not also enable them to succeed by putting them in roles that fully leverage their potential and providing them with the workplace supports they need to carry out their responsibilities.

A path to performance
The drivers of employee engagement and employee enablement can be organized around four major themes, representing a “path to performance” for generating business results through enhanced levels of employee effectiveness.

Also read: Employee Engagement in Tough Times, Part One

Organizations first need to clarify strategic objectives to promote understanding and line of sight at all levels. They need to instill confidence in leaders and ensure appropriate market positioning and focus on customers and quality. Next, organizations need to align structures with strategy and ensure that resources, decision-making authority and support from co-workers are adequate to put employees in a position to succeed.

With the structure in place, organizations then need to attend to getting the right people “on the bus,” providing training to enhance employee skills today and development opportunities to build capability for the future. Finally, organizations need to motivate high levels of employee performance through appropriate performance management systems, along with compensation and recognition approaches that reward employee contributions.

Below we highlight key considerations in each of these areas in challenging economic environments.

Key considerations in a downturn
Leadership and direction:
Leaders need to help employees understand that the company has a coherent strategy that will allow it to succeed in the current business environment. They must communicate that both the company as a whole and its individual divisions are making progress relative to strategic objectives, and that all employees have a role to play in helping the organization carry out its plans. To win trust and confidence in a downturn, leaders are well advised to:

• Communicate, communicate, communicate: In the midst of change, communication channels in organizations often dry up. Yet in times of uncertainty, employees are most in need of communication. If leaders are not meeting this need with credible messages, gossip and rumor often fill the vacuum.

• Be transparent: As employees are asked to make sacrifices for the organization, it is important that they have a sense that decisions are being made rationally and equitably and that the changes will result in increased organizational effectiveness and the eventual betterment of the work environment.

• Enlist supervisors: If middle managers and first-line supervisors are supportive of senior executives, they can foster high levels of confidence in the organization’s leadership and direction. If, on the other hand, middle managers and supervisors signal to employees through their words or actions that they lack faith in organizational leaders, employees’ trust can be expected to decline rapidly.

Work structure:
Faced with challenging economic environments and competitive pressures, many organizations have reduced headcounts without reducing the amount of work to be done, resulting in higher workloads for remaining staff. To promote efficient execution of key tasks, leaders need to ensure that employee efforts are backed by efficient processes, adequate resources and support from co-workers:

• Solicit broad input: While effective job and organization design is part of the solution, so too is harnessing the creative ideas of employees at all levels. To draw out improvement suggestions broadly, organizations need to ensure that leaders and the organization’s overall culture encourage employees to come forward with innovative suggestions for improving the way work is done and reinforce the value of employee creativity by appropriately translating ideas into action.

• Clarify must-win battles: In high-workload environments, leaders must clearly state which personal goals and priorities are critical. Doing so allows employees to focus their efforts on essential, value-added tasks.

• Make sure managers wear “enterprise hats”: In transition environments, some managers and employees may be inclined to hunker down and focus on the achievement of individual or departmental priorities. It is imperative that organizational cultures, performance management systems and hiring and promotion processes reinforce the need to balance local concerns with broader organizational concerns.

Capability:
Faced with a difficult economy, some organizations may be tempted to shift their focus away from training and career development activities. But doing so is a big mistake. Recognizing that personal development and growth are among the most important drivers of engagement and enablement, organizations should instead:

• Be surgical in training and development cost reduction: In tough times, organizations are often forced to make cuts in training budgets. In doing so, however, organizations should identify and protect high-value training offerings and training that is focused on high-potential employees.

• Emphasize the role of line managers: Through coaching and regular performance feedback, supervisors can help employees identify developmental needs and enhance their skills. Supervisors also serve as mentors and sponsors for employees by helping them understand organizational expectations, develop supportive networks and work the informal systems that are a part of every organization.

• Promote equity and fairness: Where promotion opportunities are constrained, it is important that leaders effectively communicate the resources that are available to help employees manage their careers and clarify how promotion decisions are made. These messages build employee trust that development processes are fair and equitable.

Rewards:
In high-workload environments, employees are very sensitive to compensation issues. Acutely aware of all they are contributing, they can be expected to pressure their organizations to balance rewards and contributions. Managing rewards in a downturn requires that organizations:

• Focus on rewards, not just ratings: Many organizations spend an agonizing amount of effort to ensure that managers comply with prescribed distribution curves for performance ratings. But what is the value if the highest performer still receives only marginally more in merit or incentive pay than the average performer? Instead, organizations need to ensure that performance ratings translate into differentiated rewards.

• Clarify reward philosophies: In partnership with WorldatWork, Hay Group recently undertook a study of compensation practices and policies by surveying top compensation managers in member companies. Notably, more than two-thirds of more than 1,200 respondents rated their pay-related communications to be “not effective” or only “marginally effective.” Not surprisingly, these respondents also expressed much less favorable views of the motivational impact of their compensation systems. While 91 percent of respondents indicated that their companies have a pay philosophy, nearly two-thirds indicated that “about half” or “less than half” of employees understand it.

• Leverage tangible and intangible rewards: Especially when compensation budgets are tight, organizations need to think more broadly about the value propositions they are offering to employees—that is, the totality of financial and nonfinancial returns employees can expect based on their contributions.

Conclusion
Organizations that manage dynamics in all four “path to performance” areas successfully during the downturn are likely to foster the engagement and enablement necessary to cope with economic challenges and set the stage for enhanced performance when the economy recovers. When it comes to employee issues, a downturn is not the time to take your eye off the ball. For organizations as for individuals, character is revealed in tough times. The organizations that continue to put people first in tough times will win loyalty for the future.

February 18, 2009July 22, 2019

Sources: UAW to Give Up Cost-of-Living Allowances, Bonuses

More details emerged Wednesday, February 18, on the concessions made by the United Auto Workers to the Detroit Three automakers in advance of Tuesday’s viability-plan filings by General Motors and Chrysler.

The new agreements call on workers to give up lump-sum bonuses over the next two years and their cost-of-living allowances, said two UAW sources familiar with the talks. The contracts also limit overtime pay and supplemental unemployment, the sources said.

At Chrysler, workers also will forfeit a $600 Christmas bonus, the sources said. Automotive News first reported the concessions on bonuses, overtime and supplemental unemployment Tuesday.

Detroit Three and UAW officials are keeping mum on the agreements until workers have an opportunity to vote on the provisions. Details about the concessions were not released when GM and Chrysler revealed the viability plans to the U.S. Treasury Department.

UAW vice president Bob King and GM manufacturing and labor chief Gary Cowger declined to comment when asked about the changes at an event Wednesday in suburban Detroit.

Still left to be negotiated is future funding of retiree health care trusts. Loan provisions require the union to take carmaker equity in lieu of cash for half the remaining money owed the multibillion-dollar voluntary employees’ beneficiary associations.

In the case of GM, the UAW is being asked to take GM equity for half of the $20 billion that the carmaker owes the VEBAs.

Nevertheless, the UAW engaged Detroit Three negotiators in marathon bargaining over the past week to meet the filing deadline for the viability plan. As a requirement of $17.4 billion in federal rescue loans, GM and Chrysler must bring their work rules and labor costs in line with their Japanese counterparts in the U.S.

Although Ford isn’t getting loans, it may ask for a $9 billion line of credit and wanted to be a part of a contract pattern to stay competitive with Chrysler and GM. Ford said the UAW agreement would help it avoid asking for financial assistance.

In the plans released Tuesday, GM and Chrysler said they would need up to $21.6 billion to weather the current dismal sales climate.

The Detroit Three got the UAW to move on several fronts, one of the sources said. Instead of paying overtime for work beyond eight hours, they will pay overtime only for work beyond 40 hours during a week, the source said.

The union gave up two of the four lump-sum bonuses due workers during the four-year contract, the sources said.

Supplemental unemployment benefits, or SUB, also have been limited.

Idled workers with more than 20 years of service can collect SUB pay for 52 weeks at the traditional 72 percent of gross pay and another 52 weeks at half pay, the source said. Workers with less than 20 years get 72 percent SUB pay for 39 weeks and half pay for an additional 39 weeks, the source said.

Those SUB provisions are all that UAW members can get now that the Jobs Bank has been eliminated. The Jobs Bank was a program that guaranteed idled workers 95 percent of pay and full benefits indefinitely if no other job could be found for them.

Chrysler and GM were required by the 2007 contract to pay up to $4 billion for the Jobs Bank and SUB pay during the four-year agreement.

Details of total cost savings have not been made public.

Filed by David Barkholz of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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September 17, 2007June 29, 2023

The Talent Trifecta

We know it matters. Some go to war for it. Professional sports teams draft for it. Actors audition to show they have it.

Others consider it the ultimate solution and try to manage it. Agents contract for it. Some are innately endowed with it, while others strive diligently to develop it. We all want it.

“It” is talent, which is evolving into a science for some HR professionals and a passion for many line managers. A multitude of programs and investments have been made to attract, retain and upgrade talent.

Yet, sometimes after stipulating that talent matters, it is easy to get lost in the myriad of promises, programs and processes and lose sight of the basics. At the risk of grossly oversimplifying, let me suggest that there is actually a deceptively simple formula for talent that can help HR professionals and general managers turn their talent aspirations into actions: Talent equals competence times com- ¬mitment times contribution.

Competence means that individuals have the knowledge, skills and values required for today’s and tomorrow’s jobs. One company clarified the usual definition of competence and framed it as “right skills, right place, right job.”

Competence clearly matters because incompetence leads to poor decision-making. But without commitment, competence doesn’t count for much. Highly competent employees who are not committed are smart, but don’t work very hard.

Committed or engaged employees work hard, put in their time and do what they are asked to do. In the past decade, commitment and competence have been the bailiwicks for talent.

But my colleagues and I have found that next-generation leaders for an organization may be competent (able to do the work) and committed (willing to do the work), but unless they are making a real contribution through the work (finding meaning and purpose in their work), then their interest in what they are doing diminishes and their willingness to harness their talent in the organization wanes. Contribution occurs when employees feel that their personal needs are being met through their participation in their organization.

Organizations are the universal setting in today’s environment where individuals find abundance in their lives through their work. They want this investment of their time to be meaningful. Simply stated, competence deals with the head (being able), commitment with the hands and feet (being there), and contribution with the heart (simply being).

In this talent equation, these three terms are multiplicative, not additive. If any one is missing, the other two will not replace it. A low score in competence will not ensure talent even when the employee is engaged and contributing.

Talented employees must have skills, wills and purposes; they must be capable, committed and contributing. HR leaders can engage their general managers to identify and improve each of these three dimensions to respond to the talent clarion call.

Competence
Competent employees have the ability to do today’s and tomorrow’s tasks. Creating competence comes by following four steps:

1. Articulating a theory or setting a standard.
Competence begins by identifying what’s required to deliver future work. Rather than focus on what has worked in the past by comparing low- and high-performing employees, more recent competence standards come from turning future customer expectations into present employee requirements. At any level in a company, an HR professional can facilitate a discussion sparked by these questions:

}What are the current social and technical competencies we have within our company?

}What are the environmental changes facing our business and what are our strategic responses?

}Given our future environment and strategic choices, what technical and social competencies must employees demonstrate?

By facilitating a discussion about these questions, HR professionals help general managers create a theory or point of view on competencies that leads to a set of employee standards. When general managers build competence models based on future customer expectations, they direct employee attention to what they should know and do. The simplest test of the competence standard is to ask target or key customers: “If our employees lived up to these standards, would they inspire confidence in our firm?” When customers answer yes, the competence model is appropriate; if they answer no, it needs more work.

2. Assessing individuals and organizations. With standards in place, employees may be assessed on the extent to which they meet or do not meet standards. In recent years, most talent assessments have evaluated both results and behaviors. Talented employees deliver results in the right way. The right way is defined by the competence standards I described in Step 1. These behaviors may be assessed by the employee and others through a 360-degree evaluation by subordinates, peers and supervisors. But to provide a holistic view of employees who have contact outside the company, they can also be evaluated by such stakeholders as suppliers, customers, investors and community leaders. This shifts the 360 to a 720 (360 times 2 equals 720). This assessment lets the individual know what to do to improve, and it also provides valuable input to the organization about how to design and deliver HR practices to upgrade talent.

3. Investing in talent improvement. Individual and organizational gaps may be filled by investing in talent. In work my colleagues and I have done, we have found six investments that may be made to upgrade talent:

Buying: recruiting, sourcing and securing new talent into the organization.

Building: helping people grow through training, job assignments or life experiences.

Borrowing: bringing knowledge into the organization through advisors or partners.

Bounding: promoting the right people into key jobs.

Bouncing: removing poor performers from their jobs and/or the organization.

Binding: retaining top talent.

When HR professionals create choices in these six areas, they help individuals and organizations invest in future talent.

4. Following up and tracking competence. Hoping for talent won’t make it happen. Ultimately, talent measures should be derived to track how well individuals are developing their skills and how well the organization develops its talent bench. Individual employees can be tracked on their understanding of their next career step and their capacity to do it. Organizations can track the extent to which backups are in place for key positions. Or, leaders who are measured on how much money they contribute to their company can also be assessed on the extent to which they are talent producers rather than talent users. Here is what I mean: If these leaders run through an organization’s talented employees, driving them away or burning them out, there should be some accountability for such outcomes. As leaders produce money for a company, so should they be held responsible for replenishing the talent pool, and must be expected to answer to the organization if they are only tapping it out.

These four steps will help HR professionals and general managers ensure competent employees to do today’s and tomorrow’s work. In the past 20 years, almost all companies have done at least minimal work in these four areas.

Commitment
Competence alone is not enough. Commitment means that employees are willing to give their discretionary energy to the firm’s success. This discretionary energy is generally conceived as an employee value proposition that makes a very simple statement: Employees who give value to their organization should get value back from the organization. The ability to give value comes when employees are seen as able to deliver results in the right way.

Those employees who give value should get value back. In many studies of employee engagement, researchers have identified what employees get back from their work with the firm. Almost all consulting firms have engagement indexes that can be used as a pulse check to track employee engagement. Generally, these instruments suggest that employees are more committed when their organization offers them:

Vision: a sense of direction or purpose.

Opportunity: an ability to grow, develop and learn.

Incentives: a fair wage or salary for work done.

Impact: an ability to see the outcome or effect of work done.

Community: peers, bosses and leaders who build a sense of community.

Communication: knowing what is going on and why.

Entrepreneurship or flexibility: giving employees choice about terms and conditions of work.

When these seven dimensions exist in an organization, employees have a VOI2C2E, as shown in the acronym above. They demonstrate their engagement by being at work on time, working hard and doing what is expected of them. Commitment (not just satisfaction) may be measured through surveys or productivity indexes.

Contribution
One of my colleagues graduated from a top business school (a validation of competence), got her ideal job and was willing to work very hard (which demonstrates commitment). But after about a year, she left. She still savored the job and was willing to work hard, but she felt that the job was not helping her meet her needs.

In recent years, many people have been finding that traditional organizations, such as families, neighborhoods, hobby groups and churches, which had once met people’s needs, have been faltering. As employees work longer hours and with technology removing the boundaries between work and life, companies need to learn how to help employees meet their needs. When people have their needs met through their organizations, they feel that they are contributing and finding abundance—the personal fulfillment and meaning that we seek in life.

My wife, Wendy, and I have scoured theory and research from positive psychology and developmental psychology—individual motivation, personal growth and organizational theory—to figure out what organizations can do to help employees find abundance, which occurs when individuals feel they are contributing. We have identified seven questions that leaders may help employees answer so that employees experience abundance in their work:

Who am I? How does the employee identity meld with the company reputation?

Where am I going and why? How can the organization help the employee reach his or her goals?

With whom do I travel? How does the organization build a community of support so that an employee feels connected?

How well do I practice spiritual disciplines? How well does the organization practice such spiritual disciplines as humility, service, forgiveness and gratitude?

What challenges do I enjoy? How does the organization help an employee find challenges that are easy, enjoyable and energizing?

How well can I access resources? How does the organization help the employee manage health, physical space and financial requirements?

What are my sources of delight? How does the organization help the employee have fun? Fun work environments mean that employees have the ability to laugh at difficult situations, thereby becoming resilient and positive.

When managers help employees find answers to these questions through their participation in the organization, these employees will find abundance and feel that they are contributing.

Talent is not an “it”—some abstract, unknown and impersonal set of ideal principles. Nor is talent a random set of programs and policies that evolve according to the whims of talent-fashion trends. Using the simple talent formula—competence times commitment times contribution equals talent—leaders and HR professionals may join in helping talent become a reality. It is worth doing.

Workforce Management, September 10, 2007, p. 32-33 — Subscribe Now!

July 11, 2007June 29, 2023

HR for HR at Amex

American Express sees HR as such an important part of driving business performance that the company has assigned an executive specifically to the task of developing future HR leaders.

” ‘HR for HR’ is one of our five ‘big bets’ for the HR function this year,” explains Patricia McCulloch, vice president for HR capacity and development. “It’s really elevated the importance of the subject. I’ve got a standing spot in every one of our town hall meetings for the HR group and in our HR leadership team meetings to talk about it.”

The company’s plan for developing HR leadership centers on a competency model with five components: applying knowledge of the American Express business; driving creativity and change; demonstrating value as HR professionals to internal partners and employees; leveraging HR expertise; and transforming ideas into tangible, measurable outcomes. American Express lists behaviors at different career stages that meet parts of the competency model, and uses these to plot an HR leadership candidate’s current proficiency level.

American Express recruits leadership candidates with business or HR degrees from a small number of core graduate schools and puts them through a program of three eight-month rotations—a position as an HR generalist partnered with a business unit, a stint in an HR functional area and a job outside of the HR field. “This way, they’ve started their career with a mind-set that it is OK to move around and experience various parts of HR,” McCulloch says.

At the end of the two-year program, they’re placed in an HR job somewhere in the company.

American Express also provides future leaders with Project Endeavor, a training program designed to build their financial and business acumen, with American Express itself as the case study. The company is developing additional programs to augment Project Endeavor and sustain the learning experience.

“There’s the piece around what people do in the two and a half days in the class,” McCulloch says. “But another part is what they do six months later to keep that knowledge alive.”

Workforce Management, June 25, 2007, p. 36 — Subscribe Now!

October 3, 2003June 12, 2019

Starbucks is Pleasing Employees and Pouring Profits

There’s something comforting and classy about Starbucks. It’s not just the enticing aromas and blues tunes wafting through the air, the handsome surroundings or the likelihood of running into a friend or neighbor. It’s more the way the baristas (never called “counter help”) greet people, perhaps offering a blueberry scone sample, or remembering a customer’s preference for nonfat soy latte with extra foam.

Starbucks attracts a near-cult following, serving 25 million drinks a week at nearly 7,000 locations worldwide. In a four-week period ending in August, the company–which is growing by three to four stores a day–reported net revenues of $335 million, an increase of 26 percent over the same period last year. The Seattle-based coffee empire was among the top 10 on Fortune’s most recent “America’s Most Admired Companies” list. The magazine also rated it the most admired food-services company in 2001 and 2002. Business Week named founder Howard Schultz one of the country’s top 25 managers in 2001.

Since Starbucks began with a single store in 1971, its overriding philosophy has been this: “Leave no one behind.” With that in mind, new employees get 24 hours of in-store training, steeping themselves in information about coffee and how to meet, greet and serve customers. Full health-care benefits (medical, dental, vision and alternative services) are offered to all employees, including part-timers who work at least 240 hours per calendar quarter. The EAP is available to all employees. Employees share in the company’s growth via “Bean Stock” (stock options) of up to 14 percent of their gross pay, and a stock-investment plan allows them to buy shares of Starbucks common stock at a discount (85 percent of fair market value) through payroll deductions. The company also matches employees’ contributions to their “Future Roast” 401(k) plans, adding from 25 to 150 percent of the first 4 percent of pay, depending on length of service.

As a result of such measures, Starbucks employees have an 82 percent job-satisfaction rate, according to a Hewitt Associates Starbucks Partner View Survey. This compares to a 50 percent satisfaction rate for all employers and 74 percent for Hewitt’s “Best Place to Work” employers. Though the company won’t release specific numbers, it also claims that its turnover is lower than that of most fast-food establishments. But it’s not just the benefits that attract employees. Another company survey found that the top two reasons why people work for Starbucks are “the opportunity to work with an enthusiastic team” and “to work in a place where I feel I have value.”

Omollo Gaya, who grew up on a coffee farm in Kenya and immigrated to San Diego to attend college, was drawn inside a Starbucks store seven years ago by the heady aroma. He bought a pound of coffee, struck up a conversation with the employee behind the counter, and was impressed by the barista’s knowledge. As he sipped his brew, “something clicked,” Gaya says. After researching Starbucks, he applied for a job and spent the next four years in a San Diego store before being promoted to his current position as one of eight coffee tasters at company headquarters. After six years, Gaya exercised his Bean Stock options, which netted about $25,000 after payment of the exercise price, to build a new four-bedroom house for his widowed mother on 15 acres in her home village.

“The health benefits, the 401(k) and the stock options really surprised me, and confirmed what this company is all about,” Gaya says. “From my first day on the job, I got a lot of satisfaction when I offered a cup of coffee to customers and saw the smile on their faces, when I answered their questions about coffee, and when I saw their enthusiasm when they returned with a friend or colleague. My love for coffee started when I was 5 years old, but I never thought it would come to mean so much to me. Buying a home for my mother is the highlight of my being with Starbucks.”

Maintaining that kind of feel-good atmosphere in a small mom-and-pop company is one thing. The question is how Starbucks manages to keep the spirit flowing with 11,000 full-time and 60,000 part-time employees in North America, and an additional 7,400 workers globally. “Staying ‘small’ while we grow is one of our biggest challenges,” says Dave Pace, executive vice president of partner resources (the company’s term for human resources). “It sounds clichéd, but we do it by taking our mission statement seriously. Almost all companies have a mission, but at Starbucks, we use it as our guiding principle and hold it up as a filter for decision-making.”

Providing a great work environment and treating employees with respect is number one on Starbucks’ six-point mission statement. The list also includes a commitment to diversity; excellence in purchasing, roasting and delivering coffee; keeping customers satisfied; contributing to communities and the environment; and, of course, achieving profitability.

Starbucks encourages its employees, who are called partners, to keep in mind its mission statement, monitor management decisions, and submit comments and questions if they encounter anything that runs counter to any of the six points. Employees submit about 200 such Mission Review queries a month, and a two-person team considers and responds to each one. As a result of one such review request, Starbucks extended its military-reserve policy to protect the jobs, salaries and health-care benefits of employees who were called into action after September 11 and again during the Iraq war.

The company also encourages community involvement by donating $10 for each hour that an employee volunteers to a nonprofit or charitable organization. Profits from sales of the company’s logo-emblazoned “coffee gear” are channeled into clubs and services for employees, which include everything from running groups and bowling leagues to quilting and book clubs. Employees can donate an amount of their choice to a voluntary “CUP (Caring Unites Partners) fund,” which is used to provide grants to fellow employees who fall on hard times. And every year, as part of its Earthwatch program, the company selects a few employees to travel to coffee-producing parts of the world, where they learn firsthand about environmental and conservation issues from the growers. Last year two were selected; this year five are going.

“People come to Starbucks to socialize and interact, so our partners do much more than just make coffee,” Pace says. “They are the ones who create that environment in our stores and make this a place that people feel good about. So they feel empowered and know they are making a contribution. This is a company where we look out for each other and look out for the community. And when people see us responding to them, they feel like this company really ‘gets it.’ ”

Workforce Management, October 2003, pp. 58-59 — Subscribe Now!

September 10, 2003November 28, 2018

Underfunded Pensions The Next Big Bailout

Despite encouraging signs of recovery in the stock market and elsewhere, one aspect of corporate health is likely to remain in “critical” condition for some time. The Pension Benefit Guaranty Corporation (PBGC), a quasi-public institution that insures private pensions, continues to face falling income, rising liabilities and expected losses that could exceed its assets.

In addition, the pension programs of the companies insured by the PBGC have alarming levels of underfunding. The General Accounting Office classifies the PBGC as a “high risk” program requiring urgent transformation and reform. Tough luck for pensioners getting ready to retire? Not yet, but someone else–the American taxpayers who guarantee their pensions–should be worried right now.

More failures
During the past two years, falling asset prices and failing manufacturers have eroded the financial foundation of the PBGC, and the crushing weight of the troubled programs it insures portends a potential collapse that would obligate taxpayers to rescue them. The plans of the companies in the Standard & Poor’s 500 that offer defined-benefit pensions face deficits totaling at least $182 billion, and possibly more if the economy performs erratically.

Furthermore, pension failures have been on a rising trajectory. In 2002 and 2003, the PBGC sustained losses significantly greater than its assets and posted the worst deficit in its 29-year history. The PBGC manages more failed pensions than ever before, and the yearly benefits it disburses have more than doubled over the past two years.

In the past, the agency covered bankruptcies with little difficulty because its premium income exceeded the losses. However, losses sustained from completed and probable terminations of pension plans increased nearly 50-fold over the past two years, and the PBGC estimates that it will sustain a $35 billion loss from plan terminations in 2003. Unfortunately, its assets total only $25.43 billion, making its projected losses for the current year 138 percent of its total assets.

Why such huge shortfalls? As interest rates decrease, a company must place more money in its pension program to guarantee its ability to meet its future pension obligations. Most companies did not take this step as interest rates fell during the end of the last decade because the significant appreciation of the equity assets in the funds covered the assumed future decline in returns from a lower interest rate. Because of this poor planning, a study by Goldman Sachs reports, these firms may have to direct $160 billion toward their pension plans over the next two years to reach an adequate level of funding.

Chronic headache
Recent changes in interest rates notwithstanding, certain structural issues surrounding pensions themselves will ensure that PBGC’s headaches won’t go away.

For one, the defined-benefit pension plan is fast becoming a relic of past decades in which workers spent their entire careers with the same company. The PBGC was designed for that rigid employment structure, and is struggling to stay ahead of the changing demographics, which threaten to stretch the agency’s responsibilities beyond its resources.

The PBGC manages more failed pensions than ever before, and the yearly benefits it disburses have more than doubled over the past two years.

Further exacerbating the flight from the traditional pension system is the fact that healthy firms, responsibly managing their pensions, essentially cover the losses incurred by mismanaged funds. As a result, these “good corporate citizens” understandably restructure their pension programs into defined-contribution plans to eliminate the cost of subsidizing poor performers through insurance premiums.

Moreover, the average length of retirement increased 20 percent between 1975 (the year of the PBGC’s inception) and 2000. Consequently, the number of beneficiaries supported and the amount of benefits paid by the agency continue to grow at accelerating rates. In the past two years alone, the benefits paid by the PBGC increased by 140 percent.

Where to begin
Clearly, reform is necessary to prevent a taxpayer-financed bailout. One place to start is correcting the PBGC’s pricing to better reflect risks. Current insurance premiums ($19 per pension participant, plus a small charge on underfunded plans) don’t adequately account for the differences in management style among plan administrators.

Conversion to defined-contribution plans to ease long-term fiscal pain is another measure worth taking. This would eliminate the PBGC “risk subsidy” and help end a market distortion that may be dissuading some from making the retirement-benefit choice that best suits their individual circumstances.

Finally, competition should be instituted. This creates healthy market-based pricing, which increases consumer choice and minimizes risks to taxpayers. The modern insurance industry is capable of underwriting pension risks and freeing the federal government from an outdated, unnecessary obligation.

Government-sponsored enterprises are renowned for their economic inefficiency, and the PBGC is no exception. Congress must reform its regulation of the private-pension system to ensure the security of pensions (correction), expand the personal pension choices available to employees (conversion), and remove the potential cost to taxpayers (competition). Solving the PBGC’s conundrum may not be as easy as A-B-C, but remembering the Three Cs is sure to save tax dollars and give lawmakers a valuable economics lesson to boot.

November 9, 2001July 22, 2019

Relocations That Move Into Legal Quagmires

Relocation isn’t normally associated with litigation. Yet the issue isn’t as cut-and-dried as many HR professionals think. Something as seemingly simple as a corporate move can trigger any number of legal difficulties. Robert W. Sikkel, a partner in theHolland, Michigan, office of Warner, Norcross & Judd LLP, offers the dos and don’ts of employee relocation.

To begin with, how much control does an employer have over whether an employee relocates?: That’s a common question: Can you force or require an employee to relocate?The answer is almost always no. It can’t be required. Occasionally you’ll havean employee who is hired with the understanding that he or she will be moved around the country as part of training or the business practice. You see thata lot in retail with managers and assistant managers. And while it would be understood that the employee should take the relocation, there’s no way youcan physically force them. But most of the time, when the relocation comes,the employee has not necessarily anticipated it or agreed to it up front. Therefore,an employer needs to present the relocation as if it is the employee’s (only)option to remain employed by the company.

How do you present this relocation ultimatum?: Typically it would be approached conversationally with the individual. The opportunity to relocate would be presented. Employers should also think about the alternative. If the employee declines the relocation, then be prepared to address the status of that individual. It likely means the employee loses his or her current position. So HR might then offer some severance pay, and typically also ask for a waiver of claims in exchange for the severance pay. So the employee should be presented with a good-faith option to either stay with the employer and accept the relocation, or — you need to fill in the blank as to what the other choice is.

So if the employee refuses the relocation, HR should have that person sign a waiver?: If the employee doesn’t take the relocation and instead accepts some sort of severance package, that all needs to be documented, and the release must bein accordance with applicable state and federal laws today.

How else should an employer protect itself from an employee who loses his position because of his refusal to relocate?: That comes up in the area of forced relocation. For example, the employee declines a move to Montana. The employee’s position at the company is then forfeited.The legal question at that point is, what has just happened? The typical model is: when an employee leaves a company, he or she either quits or is fired. The employer might say, “I did not terminate this employee. I offered this employee another alternative, and this employee said no. This employee quit.”The employee says he didn’t quit. By requiring him to take a position miles away in a different state, the company created a circumstance where — while he wasn’t specifically fired — constructively that’s what has happened.

And what’s the significance of the employee’s termination claim?: The significance of that is, No. 1, an employer should recognize that simply terminating the employment after offering relocation doesn’t automatically mean the employee quit. And it does not alleviate the potential for challenges like constructive discharge. Most times, this kind of claim will arise when someone’s pay or benefits have been so significantly reduced that, although they’re still employed, it’s not with the same function, status, or pay. That’s the most common pattern. But asking someone to uproot and relocate could give rise to the same thing.

If the employer is choosing specific employees to relocate, does a company have to be aware of their race and gender?: If it turns out that all the employees who have to move to Toledo are women or people of color, that’s grounds for a disparate-impact claim. Absolutely,it happens all the time. If, during a relocation, some employees are being allowed to stay in the office, while others are being relocated, that should really be assessed. Who is getting the option to stay and who isn’t? Look at all the protected categories — race, age, gender — to make sure these people aren’t the ones being forced to relocate.

If an employee does accept a transfer, what are the company’s legal responsibilities as far as paying for or assisting in the relocation?: There are no state or federal requirements as far as what you must offer on relocation. It’s left to employers and their policies and their practices exclusively– including any prior contractual arrangements with the employee.

What about in a merger or takeover situation, in which your employees are being required to move to a new city — what’s the responsibility then?: Generally you’d work that out during the merger as to which of the policies would be applicable. You’ll see that a lot, where you have a collision of policies dealing with things like severance pay. Usually the merger agreement itself will dictate it.

What if an employee relocates, but then must be let go after the move occurs?: Those are common areas of challenge, where the employee relocates and in a short period of time their employment is terminated at the other end. Managers need to be careful not to overcommit to the job security of the employee post-relocation.So the first step would be to avoid verbal overcommitment. Second, avoid any written overcommitment in any transfer or relocation letters. So make sure there aren’t contractual commitments made to the employee. This is true even if your company has an at-will employment policy. We’re seeing areas where misrepresentation can legally negate even at-will employment policies. So the greatest caution to an employer on transfer is not to overcommit.

What if the company relocates an employee and that person quits soon after the move?: That’s a question we’ve been receiving a lot in the last nine months, as the economy has changed. If an employee quits after the company spends thousands on their relocation, can the employer recoup those expenses? More and more employers are developing or contemplating arrangements to address that issue. They deal with time period: If you stay in this position for at least a year, I’ll forgive the relocation expenses. If you stay for three years, for every year worked,I’ll forgive a third of it. This is normally for the employee-driven move or the recruitment of new employees. A year ago, employers weren’t thinking about this — they were just happy to fill positions. As the market is changing and employers view the cost of relocation as potential risk, they’ll address that now.

The information contained here is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.

Workforce, November 2001, pp. 70-71 — Subscribe Now!

June 24, 2001June 29, 2023

Meditation and Mindfulness at Sounds True

It’s an overcast March morning and Adam Mentzell, director of human resources for Sounds True, is discussing the painful experience of laying off 15 percent of his company’s workforce last summer.

“What did I learn from it?” he asks. “I learned that people are tremendously capable of dealing with hardship. If you hire mature people and treat them well, they can be very resilient.”

As Mentzell finishes his last sentence, the alarm on his sports watch starts beeping. He excuses himself, walks to his desk, switches his telephone to the intercom mode, and strikes a small brass bell sitting next to the phone. He strikes the bell three times, creating low, calming tones that resonate throughout the company’s offices.

“Sorry about that,” Mentzell says as he sits back down to explain that the bell is rung at precisely 11:00 each day to call employees to group meditation — which he usually observes — or to practice 15 minutes of silence. The bell of mindfulness, as he calls it, is a way of reminding employees to slow down and become more present and aware.

Meditation? Mindfulness? These aren’t words normally discussed by corporate HR people. But at Sounds True, it’s fitting that the bell of mindfulness was rung during a conversation about downsizing, for this is a company that deals with all the routine struggles of a growing business, including layoffs, but does so with an eye — and heart — toward the human side of work life.

Sounds True is an audio publishing company based in Louisville, Colorado, a town located 20 miles northwest of Denver along the Front Range of Colorado’s Rocky Mountains. The privately held company was started in 1985 by Tami Simon, a 22-year-old woman who had a $30,000 inheritance and a vision to disseminate spiritual wisdom.

Today, Sounds True is a $9.3 million company that produces spoken-word audio tapes and CDs on topics related to world religion, psychology, and alternative medicine. The company boasts a catalog of more than 500 titles, including Women Who Run with the Wolves, by Clarissa Pinkola Estes, Energy Anatomy, by Caroline Myss, and Breathing: The Master Key to Self-Healing, by Andrew Weil, M.D. In 16 years, Sounds True has grown from a one-person labor of love into a 60-employee enterprise. Along the way, the challenge has always been how to maintain the company’s spiritual focus — and spiritual integrity — while also responding to the gritty, mortal demands of business.

At first glance, Sounds True does seem different from most buttoned-down corporate settings. Walk toward the company’s main entrance and you’ll pass a serene white marble statue of an angel. Once you’re inside, a golden retriever will click across the lobby and greet you. And as you tour the quiet offices, you’ll find employees wearing fleece and khaki and hiking boots. They work alongside rippling desktop fountains, or to the accompaniment of bamboo flutes, or underneath warm reading lamps.

But these are just superficial differences. Within this casual, fleecy environment, employees also have to negotiate contracts, meet deadlines, fulfill orders, and generate profits just like any other corporate workforce. How does Sounds True balance the realities of competitive corporate life — profit goals, employee conflict, and customer demands — with its goal to promote spiritual wisdom? How does the company instill self-awareness in employees alongside the requisite business awareness?

Spend a day with Mentzell and you’ll learn that the company’s desire to create an aware workplace is much like an individual’s attempt to find spiritual wisdom: it’s something that needs continual attention. Just as there is no path to permanent spiritual enlightenment — faith and spirituality being ongoing disciplines — there is also no such thing as an unwavering workplace culture.

The best that Sounds True or any HR department can do is to be continuously mindful of those things that contribute to a positive working environment: hiring the right employees, adhering to core values, and conducting business in a way that fosters both individual awareness and business accountability. Simply stated, creating cultural wisdom is a discipline, not a destination, a discipline that might best be called enlightened leadership.

Hiring: It’s not just a job
The path to enlightened HR starts with hiring, and fortunately, Sounds True is one of those lucky companies that attracts people with a natural affinity for their products. Just as techies head to Microsoft, metaphysically focused people gravitate toward Sounds True, supplying the small company with about 20 unsolicited résumés a week. “We attract employees who want to work in a different kind of way,” Mentzell says.

But even though many people have an interest in working for the company, it’s the job of Mentzell and other managers to make sure that those who are hired fully understand and embrace the company’s mission. “In key positions, such as those in the editorial department, it’s imperative that employees have a deep connection to our product line,” he says. This means recruiting people with education and experience in world religions, and having them demonstrate that knowledge both orally and in writing.

For most of the company’s positions, however, religious knowledge is not as important as the right skill set, which is determined by past experience; the ability to communicate honestly and respectfully, which is assessed through a series of team interviews; and support for the overall mission. The last criterion is trickier to assess, because the mission is spiritual and it’s illegal to ask questions about religion in interviews. How does Mentzell determine whether candidates will uphold the mission to disseminate spiritual wisdom? By asking them to listen to taped products, review the catalog, and visit the company Web site.

“During follow-up interviews, I ask a series of open-ended questions about the candidate’s reaction to our products and ask whether or not it is a problem for them that Sounds True produces products from a wide variety of wisdom traditions and schools of thought,” he says. “Rather than looking for adherents, we are looking for capable people who do not have a problem with our material and support our overall mission.”

Sounds True
Interview Questions

How will you make contributions to our core values?
If you were hired and we could jump ahead six months, what do you think we would be saying about how you helped forward our core values?
What core aspirations excite you or interest you?
Why in the world do you want to work here?
Tell me what is important to you — what do you value deeply?
Tell me about the last time you lost your cool. What was the cause? What action did you take? What did you learn?
What are your expectations from an employer? Name at least four.
Tell me about a specific situation when you were disappointed by an employer or manager.
Whom do you admire? Why?
Tell me about a time when you were overwhelmed at work. What was the cause? What action did you take? What did you learn that you can carry forward?
What in your history are you most proud of and why?
Conversely, what in your work history do you regret the most and why?
What do you understand the mission of the company to be?

The interest of spiritual seekers in working for Sounds True, combined with the company’s diligent hiring practices, makes it possible for the culture to be almost self-generating. Case in point: Three years ago, the company hired a longtime customer to manage its warehouse, a department where profanity and gruffness are the norm in most companies, Sounds True included. The new manager, thanks to his long-term interest in Sounds True products, used professional language, treated employees with respect, and lived the company’s value system. “He changed the way the warehouse was run not by dictating change, but by setting a good example,” Mentzell says.

Honesty, openness, and accountability
Let’s face it. Even if companies hire the right people, the ugly demands of business have a way of inflicting pain and uncertainty on even the wisest and most aware individuals. How does Sounds True make sure that employees don’t revert to nasty reactive behavior in the wake of tough business demands? They do it by adhering to company values. Sure, many companies pay heed to the importance of values. But at Sounds True, the company’s 20 values are integrated into daily business practices — with the emphasis on the word “practice.”

“One thing we are clear about is that our work is a work in progress,” Mentzell says. “We have set aspirations that we continually strive for, but sometimes we fall short of our goals.”

The guiding principles underlying all of Sounds True’s values are mindfulness, honesty, and kindness. “These are the spiritual or wisdom qualities that are taught on the tapes we publish, so we also want to live them in our own work lives,” says company president Tami Simon.

Let’s start with the practice of mindfulness, which Mentzell describes as the art of paying attention and seeing things in a fresh and non-habitual manner. Sounds True promotes mindfulness by encouraging employees to stop what they are doing and become aware of their thought patterns. This is done through the 11:00 call to meditation, by providing an on-site meditation room, and by opening every large staff meeting with a two-minute period of silence. “This contemplative space provides the opportunity, if only for a moment, for employees to set aside their individual agendas,” Mentzell explains.

The ability to set aside individual agendas allows employees to fully engage in the second guiding principle: honest and open communication. “In many companies, people waste a lot of time through backstabbing and office politics,” Simon notes. “This happens because people don’t trust each other.” She believes that the only way to foster trust is to promote open communication, even if employees don’t always like what they hear.

Sounds True encourages open communication in several ways. First, every Monday morning, employees gather in the lobby to discuss business issues with the management team. During this time, employees can ask any manager, including the president, pointed questions about budgets, the hiring processes, whatever. “Tami has admitted to making mistakes on more than one occasion,” Mentzell says.

Second, the company makes extensive use of peer-review processes that allow team members to provide direct feedback to coworkers about how they may be affecting others. Upward review processes are also used to give managers anonymous feedback from those they manage.

Third, the company promotes collaborative decision-making so that managers jointly make key business decisions, and departmental teams determine their own best way of working together. The only way to arrive at mutually beneficial decisions is for managers and employees to engage in honest communication.

Is there any downside to having such an open and honest culture? “Oh my god, yes,” Simon says. “People who are used to being in corporate environments where there is more strategic game playing don’t always make it here.” Why? “Because it often takes a while for people to realize that honesty, even if it pinches, can lead to much higher levels of trust. Some people just don’t make it that far.

“Many people here are very genuine, and they expect you to be genuine, too. If you are a person who doesn’t want to bring your emotional life to work, you may think that coworkers are poking at you to find out what’s going on in your life.”

Tim Bucher, a recently hired network administrator in Sounds True’s IT department, agrees with Simon. “I had wary thoughts coming in,” he admits. “I was used to a large corporate structure, and I was a bit intimidated by how different the culture was here. Now, I’m used to it. I don’t have to work to weed out truth from lies, because everybody here is so honest.”

The other guiding principle embedded in all of Sounds True’s values is kindness, which simply means respecting others and honoring individual differences. The company honors individual differences through such practices as a nonexistent dress code, flexible working hours, and allowing employees to bring their dogs to work.

Sounds True Values

Sounds True is both mission-driven and profit-driven.
We build workplace community.
We encourage authenticity in the workplace.
Open communication.
Animals are welcome.
We place a high value on creativity, innovation, and ideas.
Opportunities exist for flexible work schedules.
Teams determine the best way to reach their goals.
We honor and include a contemplative dimension in the workplace.
We reach out to a diverse community.
We strive to protect and preserve the Earth.
We have a relationship with our customers that is based on integrity.
We take time for kindness, have fun, and get a lot done.
We acknowledge that every person in the organization carries wisdom.
We encourage people to speak up and propose solutions.
We encourage people to listen deeply.
We honor individual differences and diversity.
We strive for clarity of expectations.
We encourage people to realize their creative potential.
Employees participate in profit sharing and ownership.

A complete description of each Sounds True value can be found on the company’s Web site, www.soundstrue.com.

Building financial acumen
In a company driven by spiritual values, capitalistic concerns such as cost and profit easily can become secondary. Such was the case at Sounds True last year, when the company tried to expand in too many different directions at once and ultimately lost money for the first time in 15 years.

Smarting from the loss, the company was forced to lay off employees in unprofitable divisions and also pay stricter attention to financial concerns. This upset a few longtime employees, who felt that the company was “selling out” to capitalism and chose to leave on their own.

“We had to work to create business-mindedness,” Simon explains. “For 15 years the people who worked here did not pay much attention to the critical drivers of financial success such as cost of goods, margins on product lines, and product formats.”

“What we had to communicate to remaining employees,” Mentzell adds, “is that our mission to disseminate spiritual wisdom is not possible unless the company can also pay its bills.”

To make sure that employees are conscious of the relevant measures of financial performance, Sounds True launched an open-book management program called the Great Game of Business, wherein all employees were trained in financial literacy. Today, department representatives provide weekly forecasts against their specific budgets and then present this information in bimonthly business “scoreboard” meetings. All managers are in attendance at this fast-moving meeting and are expected to report financial information to their teams immediately afterward.

“Information on our performance against budget quickly travels to all areas of the organization,” Mentzell explains. This raises employee awareness of financial measures and stimulates employees to take corrective action when necessary.

Although speaking freely about finances has helped the company get back on track, there are some risks involved. “There is a certain kind of anxiety introduced in an environment where people know all about the business and its accompanying uncertainties,” Simon explains. “In companies where the executive team acts like parents who withhold difficult information from workers, people are protected from this anxiety. But I think that approach gives people a false sense of safety. Here, employees may feel anxious about finances more of the time, but at least everyone knows where they stand.”

The role of HR
It may come as no surprise that Sounds True’s HR director personally embodies the company’s mission. On the door of Mentzell’s office are in and outboxes marked with the signs: Breathing IN I feel calm; Breathing OUT I smile. “I’ve been on my own spiritual quest for 10 years,” he says, adding that he not only meditates regularly but also is a serious student of Western psychology and Eastern religion and philosophy.

Mentzell’s personal connection to the company’s mission helps him to be mindful of the never-ending work involved in creating an aware culture. As HR director, an unusual position in a company of this size, he oversees hiring, mediates disputes, communicates financial results, negotiates benefits, and trains managers. He reports directly to the CEO. “I’m responsible for how management happens here,” he says. Other than that, most of Mentzell’s job is typical HR: recruitment, benefits, compensation, performance reviews, and training.

“I’m surprised how much of my job is routine,” he says, almost sheepishly.

It could be routine because Sounds True is as mindful of human needs as it is of business needs, although Mentzell would be the first to say that maintaining the balance between financial and human goals is not easy. Shift too far in one direction and business suffers. Shift too far in the other and morale withers. But by staying aware that both goals are important — and by integrating that awareness into daily business practices — Sounds True has been able to weather hard times.

“Enlightened HR?” Mentzell asks. “Sounds True should not be portrayed as having figured it out, but merely striving to find a better way of doing business.”

Workforce, June 2001, pp. 40-46 — Subscribe Now!