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1995 Quality of Life Optimas Award Profile Lotus Development Corp.

June 1, 1994
Lotus Development Corp., by virtue of its name, has a tough reputation to uphold. Throughout history, the word lotus has been affiliated with dreaminess and enlightenment. The ancient Greeks believed in the power of the lotus plant's fruit to induce a dreamy state. Hindus assume the lotus position when engaging in yoga, a discipline designed to align one's own spirit with a supreme being's. And, lotusland is a name given to dreamlike settings. In recent times, this title has been bestowed on Hollywood and its film industry, with its ability to create worlds rooted in fantasy.

Although to call the Cambridge, Massachusetts-based software firm lotusland would be an exaggeration, Lotus is somewhat idyllic. The company strives to uphold the legend of its name by creating a mutual environment of harmony between the corporation, its workers and the communities in which they live and work.

Founder Mitch Kapor, a follower of the Hindu philosophy, instilled this spirit when he created and named the company in 1982. From the beginning, he deemed Lotus to operate under a set of seven values that formed the company's "soul."

Current president and CEO Jim Manzi refuses to let that soul die. In a memo to Lotus' worldwide work force in March, Manzi explained: "É the 'body' of our company is healthier, and systems are in place to ensure its continued fitness. Now it's time to take a more focused look at our 'soul,' by which I mean the sometimes tangible and sometimes intangible efforts and energy that define the quality of work life and spirit here at Lotus." He added that "É we've always paid attention to our soul, striving to balance what we do with how we do it in a way that makes our organization supportive as well as profitable."

An outgrowth of this soul-searching is the company's 11 operating principles (see "Vitals"), established during a week-long off-site session of senior managers in 1989. "The operating principles are the renewal of [Kapor's seven] values in a way that makes sense for the management team," says Russell Campanello, vice president of HR. "We incorporate them into the infrastructure," using them for the framework of how Lotus people should work together.

They're key to Lotus' success-in-deed, its very existence. Lotus' business is one of intellectual capital, a product only derived from people. "We have to be able to attract and retain the best and brightest from everywhere because our ability to do so is key to our ability to address a diverse set of customer requirements," says Campanello.

The best and brightest don't come cheap, however. To attract and retain these people Lotus pays competitive salaries, evaluating pay levels each year. It gives out bonuses through several programs to reward outstanding performance. It also has stock-option programs. But these things are just the beginning. "People no longer strictly look at direct compensation when they're interviewing," says Diane Duval, benefits manager. They want to know what type of benefits the company has, what programs it has to make their work life easier.

After all, working for a competitive business such as Lotus is demanding. "The company expects people to come in and commit themselves fully to the effort that the company has in creating radically interesting and productive software," says Campanello. "It expects people to take responsibility, insist on integrity and commit to excellence."

Duval says that this expectation creates a "high-energy, competitive environment" in which people put in a lot of hours and effort. They wouldn't be willing to do it unless the company's values matched their own, because the values dictate the HR policies and ideologies.

Matching values to employees' needs requires knowing the work force.
Lotus employs approximately 5,000 people worldwide. It has a fairly young work force with the average age of workers being 33. There are nearly the same number of female employees as male-48% and 52% respectively. The work force consists of parents and nonparents (both single and married), heterosexuals and homosexuals. Some workers are highly educated. Some are mentally challenged. Twenty-five percent are minorities. In short, the employee population is diverse.

One of Lotus' operating principles is to treat people fairly and value diversity. Another is to respect, trust and encourage others. The company expects its workers to do these things and, in return, it provides services for them that do the same. "We want to create an environment that meets the needs of our population," says Campanello.

Looking at the demographics of the employee base is one way to determine what that environment needs to be. Opinion surveys are another. Duval says that the human resources department conducts formal surveys periodically-the next one will be done in the second quarter of this year-that uncover workers' interests and needs.

Most importantly, the HR staff just keeps in touch with employees and listens to what they're saying. (After all, listening with an open mind is one of the company's corporate objectives.)

That's how one of the company's most innovative benefits policies came about. In 1989, an informal gay and lesbian group did extensive research and put together a proposal asking for benefits coverage for their "spousal equivalents." The benefits people listened, and in 1991, Lotus became one of the first large companies in the United States to offer benefits to gay and lesbian partners of employees. The program offers gay partners of the company's workers the same choices in medical, dental, vision and hearing insurance as it does for heterosexual spouses. They're eligible immediately after signing an "affidavit of spousal equivalence," which merely verifies the person's partner status.

"Our benefits program was out of synch with our stated values around not discriminating based on sexual orientation," says Campanello about the plan the company had prior to 1991. "It has to reflect the needs, interests and values [of the workers] because that's what makes [the relationship] mutual."

Campanello stresses, however, that the company doesn't just blindly bow to workers' wishes. Evaluating what programs are feasible based both on their congruency with values and their cost takes time. The spousal-equivalent coverage, for example, took two years to implement, even though it received immediate upper management support for its alignment with the company's value system. Not only did the benefits department have to define criteria and draw up a plan, it struggled with getting cooperation from insurance companies. After much research, Lotus decided to self insure its health-benefits program.

"The responsibility I have is to make sure that the money the company's expending on the kind of programs, policies and benefits that we have are effectively achieving our ability to attract and retain the best from every community," Campanello says. In this case, the addition of Lotus' spousal equivalent coverage hasn't had any negative financial impact, but nearly 1% of Lotus' U.S. population use the benefit.

The same type of considerations go into decisions about child-care programs. Because of the makeup of the Lotus staff, child care is a major issue. So much so that the company opened an on-site child-care center at the Cambridge facility in 1990. It's available to all Lotus employees at Cambridge, and has capacity to serve 72 children, infant to preschool. Year round, it stays close to full.

When Lotus built its North Reading, Massachusetts, facility and relocated workers from Cambridge, a feasibility study showed that child care was an issue for many of the transferred workers, but that the need didn't warrant building a costly on-site center. So instead, Lotus contracted with a nearby day-care facility that reserves a specific number of slots for Lotus employees' kids. For other field locations, Lotus has found research-and- referral services the most beneficial and cost effective. Boston-based Work/Family Directions Inc. provides research-and-referral services for the entire company. In addition to child-care services, it provides sources for elder care and adoption services and offers educational programs.

Part of Lotus' goal around valuing diversity is offering education specific to the needs of its workers. One aspect of this is its lunch-and-learn program at the Cambridge facility. Approximately once a month, Lotus brings in speakers to conduct learning sessions that are open to all workers. The topics vary. Some are broad, such as stress management, AIDS awareness and nutrition. Others, such as child-care issues, address needs of specific groups. One recent program, for example, offered advice on how to begin the adoption process.

To determine topics for discussion, the HR staff uses survey tools that collect feedback from workers at both the Cambridge and North Reading facilities. "We also have a human resources combined effort between the benefits department and the organizational training and development group to research interesting topics and speakers," says Duval.

The benefits manager says that attendance for the programs generally is good, ranging from 20 to 50 people depending on the breadth of the topic. However, even more people seek outside education specific to their jobs or career paths. Because this activity is so popular among its staff, Lotus offers tuition reimbursement to all employees who work at least 28 hours a week. On top of that, the company offers tuition advancement for non-exempt employees who want to pursue higher education but might not have disposable income to spend on a course.

Lotus takes responsibility for its workers and helps them do the same for themselves and their communities.
Workers who use tuition benefits have embraced the company's objective: Take responsibility. They're independently pursuing steps for career development. Some employees take this concept even further by becoming responsible citizens in their communities.

Lotus helps them do this through its worldwide philanthropy and community affairs programs that are structured around employee involvement. Through the programs, employee committees decide to which non-profit agencies the company will donate money, products and time. Some of these programs are:

  • Domestic Project Grants Program, which provides financial support to organizations operating in the Cambridge area
  • International Philanthropy Programme, which offers grants in all countries where Lotus maintains a significant presence
  • Software Donations Program, which gives Lotus products, such as Notes and cc:Mail, to private, nonprofit organizations. Recent recipients have been the Boston AIDS Consortium, Rebuild LA and the Atlanta Project
  • Nonprofit Training Program, for which employees volunteer their time and skills to train the staff of nonprofit organizations on Lotus products.

In addition, employees throughout the company participate in a wide range of community-based activities, such as fundraisers, awareness-raising activities and emergency-relief efforts.

"Lotus operates under the premise that as a company in society, we have a responsibility to society," says Michael Durney, director of philanthropy and community affairs. "We're trying to play the most productive role that we can using our resources that are available, which includes our products, our profits to a certain extent and our people."

Maintaining quality of life is an ongoing process.
The needs of the community constantly change, as do the needs of Lotus' employees. Indeed, the company itself evolves in response to market response. As a result, the HR staff must continually reevaluate its programs and policies as the company reexamines its principles. None of these things can remain static, says Campanello. The company consistently must revisit them, ensuring that they still reflect the company's soul. "We look at the attributes of the company and how they compare to the values that we've stated and how they're operating as the company continues to change," says Campanello.

For this reason, Manzi forms employee committees approximately every five years to reevalute the values relative to the work the company is doing, its workers' needs and the condition of the industry. Results of the committees' work culminate not only in refreshed principles but also in the realignment of policies and procedures to these value statements.

According to Manzi's March letter to the work force, the current Soul Committee was formed, "É to take a focused approach to continuing the process of evaluating the aspects of our organization-be they policies, attitudes or perceptions-that influence life at Lotus." The committee, chaired by Manzi, is made up of middle and senior managers from throughout the company with Chris Newell, director of human and organizational learning, overseeing all subcommittees.

According to Newell, the main goal of the committee is "To go beyond being just a profit-oriented organization and espouse certain values [so as to] be a great place to work."

To complete this arduous chore, the committee has created five task forces to tackle specific issues. Each of the task forces is headed by a vice president, but contains cross representation of the company's work force. The task forces are:

  • People development, which is exploring how the company hires, develops and recognizes people relative to its values; how it supports its people to work in teams; and how successful the award system is in rewarding expected behaviors
  • Flexible work options, a group that's looking into new ways to balance personal- and work-life
  • Benchmarking, a task force that's researching the culture and practices of organizations recognized as superior places to work
  • Team development, which is exploring the value of working in cross-organizational teams and the type of support needed, such as leadership training, skill- set evaluations and reward systems, to make team work successful
  • Employer/employee compact, a group formed to examine the company's values as they apply to its people, customers and communities. It's answering the questions: What agreement do we have with every employee when they come work for us? How do we make sure that we make Lotus a place of which employees are proud?

With these task forces, Lotus proves that it isn't content to rest on its laurels. For example, the company already has a formal job-share program in place to aid workers who need flexibility with their work schedules. The program is open to anyone in the company, including managers, and participation is based for the most part on managerial discretion. Currently, approximately 50 people are in job-sharing arrangements for 25 different jobs.

Other flexible arrangements are available to workers but haven't yet been made into formal policies. In the sales organization, for example, telecommuting is commonplace for sales representatives who don't have office space assigned to them. They work from virtual offices, which usually are their homes.

To better value its work force, Lotus' cross-functional task force on flex-time formed by the Soul Committee is working on institutionalizing telecommuting and other alternative arrangements such as part-time schedules. The task force consists of members of the sales force, human resources representatives and people who at one point in time either worked part time, had a job-sharing partnership or telecommuted from home. "They can speak firsthand as to what the obstacles are in that type of a policy and what the advantages are from their perspectives," says Duval.

The task force also is researching through literature and looking at best practices in other companies. "Lotus recognizes that flexibility is an important factor in a lot of people's lives and that the issue of productivity is one that should be measured on outcome and not so much focused on the visibility factor," says Duval. In other words, the company is trying to get away from the stereotypical attitude of condemning a worker who leaves the office at 3:00 to pick up children from school or day care by comparing him or her with a worker who stays until 7:00 or 8:00 at night. The person who left earlier actually may be working at home or coming in early every day.

What's most difficult is coordinating flexibility with team-based activities. Lotus has a working-together strategy that Duval says starts at the top of the firm. It's most evident in the research-and-development function. Many of Lotus' products have cross functionality, requiring the teams working on each of the products to collaborate with other teams so that there's a commonality of product and shared features among products.

Lotus is trying to transport this process across the organization. With the team-development task force, it hopes to discover ways to make this happen without sacrificing any of the its other values.

These and the other task forces will stay together for as long as necessary to evaluate their topics. They already have completed the first phase in which they did internal surveys and made initial recommendations. Currently, they're engaged in external surveys and evaluating what other companies are doing. Final recommendations could be a year away.

But their solutions won't be final. Throughout the years, they'll be reevaluated as needed. And, in another five years or so, the process will begin again. "Quality of life isn't static," says Campanello. "It's a process of renewal, a process of always being willing to examine yourself, both in good times and bad. This is what keeps the company fresh."

Perhaps as the evolution progresses, the firm will get even closer to lotusland.

Personnel Journal , June 1994, Vol. 73, No. 6, pp. 54-61.