August 8, 2006
Small and midsize companies demonstrate that business can be successful without compromising quality or responding to demands of a grow-or-die mentality.
Editor's Note: This column was prepared by the staff of Winning Workplaces, a not-for-profit organization that helps small and midsized businesses create better work environments.
While fraud, multinational mergers, and sizable layoffs make headlines, small and midsized businesses are quietly driving the U.S. economy, making positive social and economic impacts. Many small and midsized businesses are becoming increasingly creative in how they treat their employees and go above and beyond to provide great customer service and focus on a bottom line in which numbers are only part of the equation.
In his book Small Giants, Inc. magazine Editor-at-Large Bo Burlingham profiles 14 companies that choose to be great instead of big. While relatively small and privately held, the organizations Burlingham chronicles could not be more different in their industries, organization, operating principles, and people practices. The one true constant among them is what he calls mojo: "Something indefinable and immeasurable, something that goes beyond the standard definitions of success in business, something that can easily be lost unless it's protected against the homogenizing influences brought to bear on every company."
ECCO, an Idaho-based manufacturer of backup alarms and amber warning lights for commercial vehicles, is a company with mojo, according to Burlingham. The company refers to its 150 employees as "team member owners." That's because ECCO provides an employee stock ownership plan (ESOP), which controls 58 percent of the company's stock. The author profiles a single mother with three children who works in customer service and whose stake in ESOP was worth $12,000 at the time of Burlingham's writing. That, along with other practices like a monthly, companywide meeting to review financials, creates an atmosphere where employees are highly invested in the company because they know exactly what can be gained and lost. As a result, employees feel like an owner and believe they are treated like one.
All of the profiled companies work hard to define their internal community and strengthen ties to the external community on a local scale with a strong emphasis on personal relationships. The author argues that a sense of community hinges on maintaining three pillars: integrity, professionalism, and human connection. "Indeed, the relationship between the employees and the company is the entire basis for the mojo they exude. You can't have the second without the first," Burlingham writes. "Everything ... that makes a company extraordinary ... depends on those who do the work of the business, day in and day out."
In the book Alpha Dogs: How Your Small Business Can Become Leader of the Pack, Donna Fenn, who also writes for Inc. magazine, outlines strategies for success that eight small businesses have used to come from behind to outperform the competition. In explaining one of the steps, "convert your employees into true believers," Fenn profiles Dayton, Ohio-based upscale grocer Dorothy Lane Market. She notes the unusual practice the company's CEO, Norman Mayne, has undertaken for the past 20 years: Talk to each new hire about Dorothy Lane's company culture, customer retention, and competition. Fenn notes that although this training program costs the organization $25,000 annually, it results in a part-time employee turnover rate of 20 percent to 30 percent—far below the industry average of 100 percent.
Other initiatives Dorothy Lane practices to inform and unite its 250 full-time employees are open-book management and flying kitchen staff to the countries that inspire the grocer's prepared entrees so they can study firsthand the cooking techniques involved.
These great but small companies offer compelling evidence that small and midsized organizations can make a difference by creating unique and personalized workplaces. They demonstrate that a business can be successful without compromising quality or responding to demands of a "grow-or-die" mentality. Finally, they show that building strong ties with customers and inviting employees to contribute to solving core business problems are good business.
Winning Workplaces, 1603 Orrington Ave., Suite 1880, Evanston, IL 60201, 847-328-9798, fax 847-328-2224, firstname.lastname@example.org, www.winningworkplaces.org. Winning Workplaces' third annual Best Bosses Conference and Celebration will be held Sept. 27, 2006, in Chicago.
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