Book Excerpt: Good Company
The authors of the new book say employer goodness requires an inspiring purpose to buoy an organization during tough times.
Paul Levy walked the halls of Beth Israel Deaconess Medical Center. But he may as well have been walking a tightrope.
The Great Recession had hit, and Levy, CEO of the Boston hospital, had to cut labor costs while somehow preserving a high level of patient care. As he considered his options, Levy watched as a janitor emptied the wastebasket, a food service worker delivered meals, and other low-wage employees pushed patients through the halls on gurneys. And he realized that these "low-skill" workers were delivering health care.
As layoffs loomed large, this was not an idle insight. Levy knew that these workers are normally the first to go. But he also knew that patients would suffer in small but real ways as a result. Levy was not content with "normal," and so he called an employee meeting in the hospital's auditorium.
At a staff meeting soon after, Levy struggled to find the right words that would explain to all present what he had seen and heard: that each of them, down to the lowest-paid employee, was critical to delivering quality health care, and that perhaps there was some way that high-wage employees could find to save the jobs of their colleagues who earned less.
Before he was able to finish his thought, the auditorium erupted in applause. He had spoken a truth that touched the hearts of those present. Money-saving ideas poured in, and the hospital managed to save almost all of the positions targeted for layoffs.
In effect, Levy struck a balance when it comes to employees. Employees are both a cost and an asset. Finding the equilibrium between these opposites is most difficult in the midst of an economic downturn, but the challenge never disappears. Day in and day out, in good times and in bad, leaders and managers make myriad choices about their workers—the totality of which determine whether a company can truly be considered a good employer.
This essay discusses the elements of the Good Employer, revealing a recipe for workplaces that are at once caring, exacting and stirring.
Establishing such a workplace is of growing importance to companies because of a major shift under way in the business world today. Thanks to a convergence of disparate factors, including the explosion of online information-sharing, the emergence of the ethical consumer and the arrival of civic-minded millennials, we are entering a new economic age. We call it the Worthiness Era. In it, the firms that will thrive will be good companies—good stewards of communities and the planet, good sellers and good employers.
A Value-Created Organization Committed to Its Employees:
Great places to work have to be places that create value for customers and other stakeholders, including owners who expect a good return on their investment. Only those organizations are capable of a long-term commitment to their employees, providing job security and opportunities for development and advancement. This creates a virtuous cycle because organizations committed to employees typically bring out the best in their workers—who in turn create value.
In other words, chief among the ingredients for a value-creating organization is a long-term commitment to employees, where they are:
• Rewarded for developing needed skills.
• Able to advance.
• Recognized for accomplishments.
• Reasonably secure in their jobs.
A commitment to employees is complemented by other leadership, work and learning elements in developing and maintaining a value-creating organization.
Sound leadership in a good employer boils down to communication and behavior. Effectively communicating as a leader is hard. It takes time, effort and skill. And firms need high-quality communication from leaders throughout an organization. Leaders and managers must convey what is expected of employees and they must be genuinely open to two-way communication.
Leaders' actions also speak very loudly. Essential leadership behaviors include working collaboratively with employees to identify and eliminate barriers to effective work, following and demonstrating the organization's values, and exhibiting principled and ethical behavior.
The work environment consists of multiple components, including hiring practices, job design, work processes, conditions, accountability and compensation practices.
Taken together, these components comprise the nuts-and-bolts factors that are essential to creating value for all of an organization's shareholders. Many executives believe that responsibility for these "routine" aspects of organizational effectiveness can be delegated. Senior executives should not be involved in the day-to-day minutia of the work environment, but post-mortem organizational autopsies have revealed that total abdication of this responsibility by executives can result in a firm's speedy death.
Learning: Learning is an economic elixir. It makes both people and organizations more adaptable, more able to respond to change, more nimble. It serves as the bedrock for innovation; it is impossible to innovate without learning something new. And when it occurs in workplaces, it is one of those rarest of opportunities—where employers' and employees' incentives can be in perfect harmony, with the potential to almost always make both better off.
Creating Business Intelligence for Being a Good Employer:
Traditional systems of measurement, which are so key to running a business, often make it more difficult to be a worthy employer. Although CEOs proclaim "Employees are our most important asset," employees are measured as costs.
There is a nascent movement under way to correct this imbalance by collecting, compiling and analyzing data in new ways to create true insight—actionable business intelligence—that helps employers better measure (and therefore manage) employees as both costs and assets.
Tools now exist that allow more organizations to apply analytics to create actionable business intelligence on the people side of the business, such as quantifying the link between a training program and improved sales.
These sorts of insights can guide smarter business strategy and counterbalance the cost-focused nature of the standard accounting system.
Goodness as an employer requires more, though, than the ingredients discussed above. It also requires an inspiring purpose, which includes clear identification of both who the company is designed to benefit and what the company is trying to achieve.
Increasingly, companies are expanding what we might call the people purpose beyond owners and executives to include employees as stakeholders. Whether explicitly written into company bylaws (often reflected by employees owning stock) or implicitly adopted as an ethos, such a mindset helps ensure that companies will treat workers with dignity and respect. A broad people purpose also can spur great effort and loyalty from employees.
A stirring, inclusive vision also can buoy an organization during tough times. Consider Beth Israel Deaconess Medical Center and a bruising 2010 scandal it weathered when a personal relationship between Levy and a former female employee became public knowledge. Levy was fined $50,000 by the hospital for "poor judgment," apologized, and ultimately resigned from Beth Israel.
The hospital's ethos of treating "patients with the utmost respect and compassion, like our own family members and friends" seemed to help the organization remain on an even keel even as the scandal unfolded throughout 2010. And despite the turmoil, Beth Israel employees continued to give the hospital high marks on workplace review site Glassdoor.com. One clinical research assistant noted that Beth Israel was a "great place to work."
The hospital, in other words, continued to strike a balance between treating employees as costs and assets. All companies seeking to be good employers must do this. By caring for workers, being careful about how they're managed, and providing them with a compelling overall purpose, companies are finding they can be good to their employees and to the rest of their stakeholders as well.
Economist Laurie Bassi is CEO at consulting firm McBassi & Co. Ed Frauenheim is senior editor at Workforce Management. Dan McMurrer is chief analyst at McBassi & Co.
Based on their book Good Company: Business Success in the Worthiness Era, © 2011 by Laurie Bassi. Reprinted with permission of Berrett-Koehler Publishers, San Francisco, bkconnection.com or 800-929-2929.
Workforce Management, November 2011, pgs. 10,12 -- Subscribe Now!