- July 27th, 2008
- 2 Comments »
7 practices of successful organizations
In my first semester as a business student, I read a useful article about people-centered management: Putting people first for organizational success by Pfeffer & Veiga, which was part of the inspiration for this list blog (before I realized every business article and book uses numbers ala The 7 Habits of Highly Effective People). I was reminded of this article in a few recent conversations with friends who are looking for more fulfilling jobs so thought I’d share.
Studies show that companies that treat their employees as their greatest asset and manage as such have lower turnover and greater sales, profitability and stock market value per employee. Read on before you dismiss this as common sense. How many of these practices does your company follow?
- Employment security: To encourage innovative and productive behavior, managers need to make employees know that they won’t lose their jobs for creative risk taking gone awry or work themselves out of a job for a job well done.
- Selective hiring: Companies that attract a large applicant pool and then carefully choose people based on knowledge, skills and abilities consistent with company values and mission (i.e. the Southwest way) are doing it right. They invest the up front effort into hiring the right people by evaluating individuals on the skills that are hardest to learn (and can’t necessarily be taught) - initiative, passionate problem solving, ability to learn, collaborative approach - and avoid wasting time and resources on fitting people to a job they might not have been right for.
- Self managed teams and decentralization of decision-making: Allowing individuals the autonomy and power to control decisions within a team structure leads to an increased sense of ownership and accountability. It also provokes initiative and greater acceptance of responsibility because of the lack of hierarchy - barriers to growth and achievement.
- Comparatively high compensation contingent on organizational performance: This seems so obvious and yet I know too many people who get raises based on lapsed time. Effective companies directly link pay to success and pay for performance - above industry averages if possible.
- Extensive training: Like Southwest, GE (the other golden child of b-schools across the country) has applicants pounding down the door. If employees are to help push innovation within the organization, critical in a knowledge economy, they need the opportunity to adopt new skills to use on the job. A formal program sends a strong message that employees are worth the investment.
- Reduced status distinctions: Blurring the hierarchical structure can be done through language, labels, physical space, wages, and a host of other signals. This effectively establishes equal value for all employees and reduces perceived or actual barriers between top management and lower level employees encouraging information flow.
- Extensive sharing of financial & performance information across the organization: Did you know every Whole Foods store has a book that lists the salaries and bonuses of all 6,500 employees for any employee to see? While that’s an extreme case of transparency, or “open book management,” disclosing financial performance, strategy, operational measures, etc. all convey trust and encourage ownership in achieving established qualitative goals.
