Ten Keys to Happy Companies (and the Firms that Hold them)

By Max Borders - August 25, 2012 | Tickers: CSCO, DWA, GOOG, WFM | 0 Comments

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In this economy, the fortunate among us spend two-thirds of our days at work. So good businesses are constantly having to re-learn some simple truths:

• Happy employees are more productive.
• More productive employees make up more productive firms.
• More productive firms are likely to be more profitable firms.

So, how do you get happy employees? Here’s a top ten list (in no particular order):

1. Autonomy - People don’t mind being told the objective. Sometimes that comes with the job. What people mind is being told how to do it. When people are left relatively free to reach goals in their own way, they will consistently surprise their colleagues in how well they perform. Autonomy doesn’t mean no oversight. Nor does it mean they have to work alone. It means leaving them to figure things out and to apply their local knowledge without superiors issuing commands. Too many commands take the challenge and the accountability out of the office.

Great company for this? Google (NASDAQ: GOOG). Google is known for it’s “20 percent time” -- a strategy for letting employees tinker with their own side projects.  

2. Accountability/Recognition - These are two sides of the same coin. Holding people accountable means defining the objective and ensuring which individuals or teams are expected to produce. In team environments, it’s important to prevent “tragedies of the workplace commons” in which everyone is accountable, so no one is. To prevent lateral buck-passing, everyone should take ownership of some aspect of the project. And when an individual or team comes through, it is vital to recognize them as stellar contributors. Recognition for earned achievements is the fertilizer of dignity. (Frequent bonuses can’t hurt either, of course.)

3. Feedback Empowerment - People have opinions. But hierarchical organizations make it so that subordinates are scared to say much. Companies that fail to introduce some sort of feedback process from all levels miss out on great things -- both critical points and great ideas -- from people at all levels of the firm. This is not the hoary “suggestion box” approach. It is more about building in formal processes that help pull the right people into the right conversations.

I’m of the radical view that firms need not have formal hierarchies at all -- convinced as I am by folks like management guru Gary Hamel and entrepreneur Chris Rufer. But a good starting point for establishing more lateral relationships in an organization is to create both formal and informal feedback mechanisms. These mechanisms will: let employees contribute ideas; filter the good ones from the bad; and deploy them within the relevant profit center or business unit.

Great company for this? Cisco Systems (NASDAQ: CSCO). They’re known for robust use of intranets, social networking, blogging, vlogging and other Intranet 2.0 tools that let employees act more like a hive than a hierarchy.

4. Team Spirit - Collaboration is critical. People are social animals. Above we said people like to be relatively autonomous at work -- that is, to figure out their own path to success. But it’s no contradiction to say that autonomous people know when to pull good people into the mix, or when to build a great team. Organizations that create collaborative environments -- especially when they can break down silos -- are the organizations that will let really interesting things emerge. Matt Ridley of The Rational Optimist fame argues that innovation proceeds largely through “ideas having sex.” Small collaborative teams are not only good for this mating ritual, but can increase productivity by helping divide labor in ways that make people feel less like they're working on a production line (unless, of course, they are).

The ideal team size is about 4 or 5 people, according to Fortune.

5. Cross-Networking - Why should the bean counters sometimes communicate with the programmers? You just never know what might come out of this contact. Does a bean-counter know a trick that lets the coder fret less about his personal accounting? Does the coder know a piece of software that lets bean-counter teams be more collaborative? Or when they get together, do they see opportunities to combine their talents in an entrepreneurial venture that increases firm-wide productivity? In dynamic work environments, you never know. But it can be a fairly low-cost proposition to get different folks on one another’s radar from time to time. Make the silos porous.

Beyond what the firm gets out of it, people like to feel like they’re a part of building something bigger than themselves, according to author Daniel Pink. But a big company? Yes. It’s not just about connecting people with others in the firm, it’s about connecting them viscerally with the fruits of the firm’s productive efforts. Companies, after all, are just people working together to create valuable goods and services people want. Every employee participates in creating that value. So connecting folks emotionally to that value -- and to each other -- makes them happier.

Daniel Pink’s book Drive has interesting insights into this and related motivators.

6. Trust Culture - A culture of trust makes happier employees simply because in the absence of trust you get suspicion, backbiting and gossip. While gossiping can be fun if you’re not the one being talked about, and backbiting benefits the opportunist, a culture of suspicion is destructive long term. It makes for an unhappy situation all around.

Building a culture of trust is hard, but not as hard as one might think. When openness, transparency and respect is in the corporate DNA, you’re halfway there. And it starts with the executives. It also means introducing processes for identifying high-trust types as early as the first telephone interview. Because people who are part of a trust culture not only sleep well every night, they will be loyal, productive team members.

Great company for this? DreamWorks Animation (NASDAQ: DWA). As Workforce.com's Todd Henneman writes: "The strategy: foster spontaneous discussions, encourage risk-taking, openly discuss mistakes, share successes and nurture professional development. The result: The digital-animation studio is perennially ranked in the top tier by Great Place to Work Institute and boasts a 97 percent retention rate."

7. Flow - The concept of happiness eludes definition. And happiness can be hard to sustain. But some of us can when we’re happy at work. As positive psychologist Mihaly Csikszentmihalyi teaches us, there is a species of happiness to be found in "flow." Flow is a state of focused immersion in an activity. It means harnessing the best in oneself in the service of performing and learning. In the flow state, our emotions are not just channeled, we pour them into the job. Flow animates us towards purpose.

Martial arts experts say that the masters of their disciplines find beauty in subtle variations of mundane practice. They find peace in the routines and the plateaus between times of improvement. This dimension of happiness, as it originates in creative or constructive work, can figure well into the workplace. So how can organizations harness flow? It starts with matching good people with roles that they’re best suited for and that keep their interest.

8. Purpose - Some companies have learned that profits are but one side of a coin. On the other side is purpose: that is, why the company exists. Of course companies exist to make profits. But because exchange is a two-way street, companies also exist to serve customers well. Some, like John Mackey, argue that companies can have a deeper purpose, like an ethos, which customers may share. Having a deeper purpose connects employees to the firm's vision in a way that helps them find their own sense of purpose. 

Great company for this? Whole Foods Market (NASDAQ: WFM). Mackey has built a billion-dollar operation around an ethos, which he shares with his customers. Purpose and profitability are, for Mackey, like yin and yang.

9. Balance - It’s not just a balance between worklife and homelife that keeps employees sane. A balance at work roles can keep them motivated too. Does an employee wear one hat or many hats? Most people like to wear multiple hats, just not too many. Too few roles can leave someone bored and detached. Too many roles can leave one anxious and stressed. It’s important to look for the sweet spot. Finding balance in the workplace is also a group phenomenon. How do members of this or that team complement each other? Are the right team members doing the right things? The idea of balance as a virtue goes back thousands of years.

Note: Aristotle called it “The Golden Mean.” We forget it at our peril.

10. Beauty - “Everything has beauty, but not everyone sees it,” said Confucius. It’s important that firms integrate the aesthetic into their organizations. This may sound like a bizarre claim for an investor site. But beauty is a big part of happiness. It’s important to see beauty in the apparently mundane -- for example in business processes. And consciously bringing aesthetics to all parts of the business -- from the lampshades to the product lines -- may be one of the most important, but overlooked, aspects of business life.

For many, this list will seem like common sense. And yet tremendous discipline is needed to maintain corporate cultures that comprise even a few of the ten keys. Don't believe me? Just ask any of the millions of people who are currently unhappy at work.

Max Borders is author of the forthcoming Superwealth: Why we should stop worrying about the gap between rich and poor. Contact him if you would like to receive notice when the book is out.

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