Executive Summary

Great Companies Use Positive Employee Practices

James P. Secord
President & CEO of Lakewood Publications Incorporated

December 1994

Whenever the topic of employee-friendly practices arises, the question "Why?" seems to follow closely. Why even care? The answer is amazingly simple: positive employee practices lead to success.

Many believe we will look back on the '90s as a time when American business was fundamentally transformed. In the end, our current workplace revolution may be even more profound than the Industrial Revolution. Certainly we can look at today's successful firms and see that they are very different from the old bureaucratic monoliths we emulated.

Today's successful organizations think globally, act swiftly, innovate constantly, do more with less, and continuously improve. The flexibility and speed required to make all this happen can only be achieved if every person in the firm is fully engaged, fully utilized, fully committed. And the only way to evoke that kind of loyalty and performance is through positive employee practices.

Successful companies invest for the long term in their greatest asset -- their people. They invest through information sharing, training, incentives, and increased responsibility. They invest by building a set of shared values that drives all actions and decisions.

When you walk into an organization that uses positive employee practices, you immediately see and feel the difference. The energy is palpable. The bottom-line results are evident and often astounding when measured against the "old way" of doing business.

The U.S. Department of Labor produced a report in August 1993, High Performance Work Practices and Firm Performance, which stated: "A survey of 700 firms from all major industries found that companies utilizing a greater number of innovative human resource practices had higher annual shareholder return from 1986-91 and higher gross return on capital. The top 25 percent of firms--those using the greatest number of best practices--had an 11 percent rate of return on capital, more than twice as high as the remaining companies."

According to the April 18 issue of Fortune, Professor Paul Osterman of MIT's Sloan School of Management surveyed 875 firms looking for real-world execution of four positive employee practices: self-directed work teams, quality circles, job rotation, and total quality management. He found that high-performance organizations had at least half of its production workers involved in two or more of these four practices. "Cutting-edge workplaces had common traits, among them concern for their employees and extensive worker training."

Companies included in the book, The 100 Best Companies to Work for in America, were selected on the basis of factors such as their "open and friendly atmosphere, the benefits they provide and the degree of job security extended." The U.S. Department of Labor found that these companies "had higher total return than the market average over the past eight years." The key factor all of the businesses had in common was positive employee practices.

The facts are in and America's business mission is clear. The faster and faster pace of change means we must also move faster just to stay even. But to be leaders in the new workplace, a quantum leap is required. To continue to compete effectively, we must fully engage and utilize all of our people and all of their talents. This is difficult. It means a long-term investment with top-driven commitment. But what better place is there to invest than in our most important asset -- people. Our future depends on them.

Center for Ethical Business Cultures

1000 LaSalle Avenue, TMH 331 ▪ Minneapolis, MN 55403-2005 ▪ USA

Phone: 651 962 4120 or 800 328 6819 Ext. 2-4120 ▪ Facsimile: 651 962 4042

Email: mail@cebcglobal.org

© 1978-2008 Center for Ethical Business Cultures. All Rights Reserved.

Business Partnering with the University of St. Thomas - Minnesota