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Northport Good Management Doubled Profit in Two Years

August 10, 2001
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Related Topics: Corporate Culture, Motivating Employees, Featured Article
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Northport is an international public relations firm. Here, we will listen tothe people of their New York office (the executive committeeand the mid-level group), which achieved a financial performance52 percent above the average for all the offices in our database. They doubledtheir profit in two years, and achieved a profit per employee some 80 percentabove the norm. Here in descending order, are the ten areas in which they mostout-performed the average on an employee survey, by amounts ranging from 18to 50 percent.

  1. We have high-quality training opportunitiesto improve skills.

  2. Management shows by their actionsthat employee training is important.

  3. Around here you are required, notjust encouraged, to learn and develop new skills.

  4. Enthusiasm and morale around herehave never been higher.

  5. We have an effective system in placeto measure client feedback.

  6. This place has done a good job ofproviding the training I've needed to do my job well.

  7. I am actively helped with my personaldevelopment.

  8. I am given the chance at the officeto learn and develop new skills.

  9. We keep our people informed aboutwhat is happening in the office.

  10. We regularly discuss our progresstoward our strategic objectives, not just the financial goals.

The executive committee:
    What are we doing to get our results? Most of our timeas an executive committee is spent on HR issues. As a firm, we have been measuringemployee attitudes and concerns via a survey since 1991, very early in the firm'slife. The staff takes the surveys very seriously, and they know we do too. Wemake complete disclosure of the results, and give a formal two-hour presentationto all employees.

    We put out a written highlight report as well. We then have individual groupmeetings to zero in on issues of importance to each specific group. We makepublic commitments about the initiatives and actions. The staff knows the surveysare important because they affect what goes on. For example, one survey showedour salaries weren't up to market levels and people wanted us to address salaries.And we did.

    Morale here is very high. We hire fabulous people, and we explicitly hire forenthusiasm, excitement, and sparks. We are also selective about clients. Wetry to keep only those that are exciting. We will walk away from clients ifwe question whether we can work with them -- if it is not fun, creative or exciting.Employees give us big points for this. It is easier nowadays to replace clientsthan good employees.

    We work long, hard hours, so we are inevitably a big part of the staff's sociallife. Social connections lead to a more team-based atmosphere. People nowadaysare looking for a community where they work. It is more than having Fun Fridays.We offer French lessons, outings, a book-readers club and many other events.The interactions among employees that result from these make for meaningfulwork relationships.

    We have a monthly all-staff meeting, designed to be a business update and toallow the teams a chance to look at what went right or wrong in a non-threateningatmosphere. We take the opportunity to have a giggle. Each month one of ourgroups is responsible for running the meeting. There is usually a theme, withdecorations, and prizes. This all builds a team spirit, which makes money forus, we have no doubt.

    If someone is not a team player here, even if they are good technically, theydon't survive. Everyone here is expected to be self-motivated and vibrant. Ifwe make a mistake and hire an individual who isn't these things, the team startsto exclude that person long before the manager picks up on it. It's a self-correctingprocess that takes place naturally. A client once said they liked our firm becausethey knew that "No one has a private agenda" and they could speakto anyone on team and would be helped. That's worth a lot of money.

    We have a more rigorous career development approach than other firms. Orientationis thorough. We have a six-week "how is it going meeting?" then threemonths, then six months. These are done very formally in this office comparedto other offices of our firm.

    We are also rigorous about on-time performance reviews. If they don't get doneon time, a person's raise doesn't go through. If a manager neglects to do thecareer development review stuff, his or her own bonus is reduced significantly.

    Coaching programs are held regularly. People need feedback all the time, aswell as in-depth guidance of how to develop. As we get bigger, we have usedsome programs from outside the firm to help us develop coaching skills in oursenior managers. This is very expensive but we're sure it's worth it.

    If a manager were not a good coach, financial consequences would occur. Inthe long run, lack of coaching skill would not be tolerated. But we go to greatlengths to save such a person, such as hiring a personal coach to help him.

    We regularly ask employees whether they have good role models in the office,and we have been getting higher scores every year. We think this is a centralelement of our success.

    We must give our managers and other senior people the skills needed to retainthe best employees, especially in this people crisis we are experiencing. Wehave large clients looking for longer-term relationships and it is essentialthat we maintain teams to keep the clients happy and satisfied. Savvy clientsappreciate a team that grows with them.

    Each manager's job is to balance client service, employee development and businesshealth. Even though it's difficult, this is not rocket science. We are doinggood, obvious management stuff. What is different here is that we are actuallyenforcing it and there are consequences if managers don't do it. This is nota loose environment despite the fun things we try to do.

    We are organized and have good financial controls in place. There is a lotof structure. After employees get through the first few months they appreciatethe structure, because the systems that are in place are designed to run thebusiness in an efficient, profitable and fun way. This means a more disciplinedoffice. The trick is to find the right combination of fun and discipline thatgets the job done.

    We practice financial transparency with the staff. Except for salaries, wediscuss everything financial with managers on a quarterly basis, and this materialgets passed down to employees. We let everyone know the hard numbers. This alsoshows our commitment to making money as well as having fun. We have other pointsof transparency via job descriptions, salary ranges, and so on. A phrase commonlyused around here is: Treat People Like Grown-Ups. We know from working withrecruiters that in other places information is controlled. Here it is transparent.

    With regard to training, we live the promise. We manage it and worry aboutit. We really do listen to input from employees and adjust programs to makesure we are getting the training we want. A minimum of thirty hours per personper year is required, and a training stipend is given to each person. Thosewho don't use it are spoken to. Our approach to training has evolved, but itis at the core of our culture. We don't cancel training if profits are down.

    There is an approval process to make sure the training we do is appropriate,but we interpret that liberally. For example, we have even approved acting lessonsto help someone improve presentation skills and provided voice training forthe same purpose.

    We want people to manage their work and clients around their training. We mustbe able to say to a client, "So-and-so can't come to your meeting becauseshe has training scheduled." Most clients accept (and even approve of)this.

    We are big on self-responsibility. We once had a problem with people not showingup to an outside training course for which the firm had prepaid. We asked theemployees what to do about this. They decided that if an employee didn't showup, part of their stipend would go to pay for it.

    This isn't meant to be punitive, but self-correcting, and is part of the grown-upenvironment we strive for. It means a sense of responsibility to the firm andto themselves to grow their role here. There is no spoon-feeding. We expectpeople to step up to the plate, and fix their problems without waiting for someoneto tell them to do it. We hire people who know how to take responsibility. Peoplefeel they are in control of where they are going client-wise and career-wise.

    We try to minimize politics. We discourage gossip, whining, complaining. Thereis not a lot of idle chatter here. There's a lot of "Why?" We willstop the engines to fix things. When we can't fix something, we are open withpeople about this as well. We are diligent in keeping promises, because it isa violation of trust if we don't.

    Staff development is a huge part of our client service, since the client isgetting highly skilled people. A client once said "We don't want your Ateam, they will excel before we do. Can we have the B or C team instead?"We didn't get that job (and frankly we didn't want it) because we build ourpitches around a "we are the best" attitude and if the client doesn'twant that or can't work that way, then it is best we don't work with the client.

    We have an annual client survey and we consistently have at least one face-to-facewith each client every year. For an individual client, we have the team fillout the same form. We have a feedback session with the staff afterwards. Themanagers take the results back to the team to report what is being done well,what done badly. The document then goes back to the client and we make a commitmentto the client, identifying problems and developing an action plan to fix things.The whole team is involved in how to fix things.

    Survey results are combined and given to the management team to show overallwhat the positives and negatives are. We publish aggregated client feedbackresults internally, and bonuses are influenced by client feedback results. Wehave regular reviews where each team has to write up three things that keepthem awake at night about their client.

    Then we have "The Doctor Is In" sessions. Any team can bring in atechnical or client problem they are having. For each problem the "doctors"(three senior managers who have had special sensitivity training as facilitators)then spend 15 minutes doing fast brainstorming of ideas.

    Our management acts as a team. Things are brainstormed, decisions are madecollectively and everything is put out on the table. This style transfers tothe employees. There are no politics here. Everyone cares as much about everyoneelse's group. We see goals as collective; no egos allowed. Politicking wouldn'tbe tolerated.

    We have no room for people who want to cruise because both peers and managerswould be troubled by it. Sometimes you have to actually tell someone, "Youhave to contribute some ideas around here to move ahead." Usually, peoplerealize they are not pulling their weight, and they say "OK" and change.On the other hand, we have different ways of rewarding people, like spot bonuses.

    In the past, people who left the firm were treated as pariahs. Bad treatmentof those leaving had a hugely negative impact on those who stayed. It was likea double standard. If you were leaving, all of a sudden you were treated asless than a human. People realized that if they were to leave too they wouldget that treatment from "their firm" as well.

    That part of our culture has changed. Now we treat people who leave respectfullyand with appreciation for what they have done for our firm. We have goodbyeparties, sending people away respectfully, with their contributions highlighted.The result is that we have former employees who actually want to come back.

    There are no surprises here for the employee. We are articulate in saying,"This is what we stand for and this what you get." We practice whatwe preach. We stick to our guns, and there is no wishy-washy management behavior.We are disciplined about standards, although we are open to reasons why theymay not be met.

    It takes emotional courage to be a good and improving manager. Even if it isintellectually obvious what has to be done, it is still hard to do it. It isabout respect, trust, empowerment, confidence, loyalty, keeping promises. It'sabout having a certain type of character, having principles and sticking tothem. We have learned that sticking to your principles has a tight correlationwith profitability. Ethics have to the bedrock that you start from.

Now we hear fromNorthport's middle-level group. Those who volunteered to talk were representativeof a variety of departments and were all at a junior level with exception ofone newly hired VP. Here's what they had to say:

The middle-level group:
    What is being done here that causes positive results?People are willing and eager to stay at work, due both to a great corporateculture and to a sense of community.

    Around here, you are required to respect your colleagues and be cordial. Ifyou are "snappish" with someone, you have to apologize to him or her,whether he or she is a more senior or a lower level person. If people don'ttreat others with respect, they are discharged, no matter how senior or successful.

    It's different in other firms. Some even allow people to scream at the staff,using obscene language, which we would never accept! Management has also resignedclients who do no show respectful treatment to us.

    Our rule is "Give respect and you will get it." You hear "Thankyous" every day. Management knows that in today's environment any of uscan go somewhere else at any time (and probably for more money). They show appreciation,not just with money, but in small ways like sharing between teams and e-mail"thank yous."

     Management lets us be the best judge of our own priorities. We respect everyone'sideas and values. We listen to everyone. We don't give people the brush-offbecause they are at a different level. Everyone brings expertise to the table,and you must be able to identify and use that expertise.

    We are a tight community here. We play hard and work hard. It provides a funenvironment to a stressful occupation. You must take the time to interact socially,even if just in the hallway.

    There is more freedom here than other places. There is flexibility here aboutwhat you want, what you want to work on and what your personal issues are. Whateveryou are doing or what is going on, you'll be listened to!

    We have a willingness to let someone young take on a job and be responsible.Age doesn't matter. Management asks for feedback from all levels of people ona regular basis, whether it's a dinner menu or a client program. They createtask forces for all changes in the firm.

    For example, when we moved office space, everyone's opinion was sought out.Everyone feels free to say, "this is not going to work," no matterwhat level you are at. Most importantly, we can see how feedback changes thingshere. You know management is listening.

    We have constant innovation and change. There is no "This is how it'sbeen done here!" There's always a chance to break new ground. We push tobe on the leading edge, always trying to do something else, always buildingon what works. There's always a risk here and that is motivating. It would behard for a cruiser to fit in here because the review process is always about"Where do you want to go next? What are the resources that you need?"

    Management is trusted because they are available. Managers support and backup their staff and the staff's decisions. They are willing to confront the clienton our behalf. They understand that employees are looking for help from managersin growing their career.

    Personal life is respected. If you work late, they understand that you willbe in late the next day. Teams that are overbooked are told not to pursue newbusiness. Clear workload and revenue targets exist but there are no browniepoints for exceeding them. Our top manager once told us, "Profitabilityis too high, and it shows we are working too hard." That had a big impact!

    There is clearly a commitment to the development of staff. Management understandsyou may not be here forever but they want to make sure you have skills. We thinkthis is very noble.

    The head of the office is real and honorable. She is not soft; she just doesn'tput walls between people. What you see is what you get. You see the real personall of the time. She is, however, also a "let's get down to business"person and can be hard-nosed.

    It's the little things. On your anniversary of your time with the firm, youget a note from her -- handwritten. People actually post her notes on theirwalls. She knows everyone's name. When you first come in you have tea with herand talk about yourself. She is personally involved with the staff.

    What do we do differently on the client side? Reasonable deadlines are givento clients. This is very much appreciated by the staff, and it makes for a betterquality of work.

    We tell clients we have a whole team and everyone is important and can answertheir questions. This is good for the clients, because they know who is doingtheir work and that their questions will be addressed promptly. We also believethat whoever pitches the work also does the work. That is not necessarily thecase in other places.

    Recently, one of us didn't want to work on a specific account which concernedgun advocacy. He would have to do work for something he didn't believe in, andit upset him. Management agreed they didn't believe in the message and thereforecouldn't service the account properly, so they resigned the account. We believeyou must believe in what you are doing.

    Creativity here is second to none. If someone from another department has anidea, they are welcome to join our brainstorm sessions. We make a lot of useof cross-boundary teams.

    We use the right staff levels for accounts and billing. Our upper rate isn'tcharged if someone from lower level can do work. We play fair with the clients,and they know it. They can see it.

    Pitches (new business proposals) are sold on the basis of relationships. Youwant to like the people you are pitching the program to, and you want them tolike you, not just the work. Winning business is about relationships, aboutwho the client will trust.

    This is a nice environment to work in and that is why many nice people arehere. This image transcends to clients with whom some relationships have beenas long as twenty-seven years. Our people have gone on site and actually workedtemporarily for the client company, while still in our employ. We think it showsthe client's respect for us.

    Face-to-face client reviews are done annually. This allows open integrity andrespect. The results of client feedback help you know how you are doing andhelp you to do your job.

    Bonuses are tied to what you are doing, and are more frequent rather than annual.They are tied to something concrete and specific, so you can understand whyyou got it.

    What is one thing we could improve on? Salaries should be brought up to industrystandards. Everyone knows that if you leave you can get 15 to 20 percent moresomewhere else. We are happy to be here but happiness doesn't pay the bills.However, management isn't ignoring this problem, so that helps to make peoplewant to stay.

    We are two hundred people here now and we don't want the firm to get any bigger.They do a lot to keep you in the loop here and they don't want to lose the family-likeatmosphere, which can happen when you get bigger.

My initial reactions:
    I walked away from these interviews with one word ringingin my brain: "Wow!" Here's a group of people who know exactly whatthey're doing and how to do it. Did you notice that terrific phrase? "Theright combination of fun and discipline." That's one to remember.

    The fun stuff is real and pervasive here: book clubs, have a giggle, theme-decoratedmeetings. And, notice, it's not just fun periodically at the annual retreator office meeting. It's fun embedded in how they conduct their business. Butlet's also not ignore the discipline. Managers don't get their bonuses if theydon't do performance reviews? That's tough! (And courageous and brilliant!)

    Most firms today have client feedback of one sort or another, but how manytake as disciplined an approach as this office? Full debriefings, share theresult with all of the team, and make public commitments to the client abouthow you are going to follow up! Now, that's discipline! That's courage! That'spracticing what you preach!

    Finally, note that the concern about not getting too big exists at this 200-personoperation. Everyonethinks you have to be small to sustain a culture, but maybe it's not a requirement.

Reprinted with permissionfrom PracticeWhat You Preach by David H. Maister, The Free Press, 2001.

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