Archive for the ‘Admired Companies’ Category
The Culture Club
Thursday, May 29th, 2008Sometimes, I think there’s a secret society of companies that just “get it.” From top to bottom, these companies live and breathe their culture and know that it’s their most valuable asset, and, strangely, one that is invisible on a corporate balance sheet. Which companies are part of this secret society? Google, Genentech, Harley Davidson, Continental Airlines, Whole Foods Market, Medtronic. But, the company that sets the standard is Southwest Airlines. Thirty-five of our top JDV execs did a three-day off-site retreat twelve years ago exclusively focused on what makes Southwest Airlines the champion of the flying business. Of course, they have the odds stacked against them in that industry and this company is the low-price, second most unionized airline so who would expect them to be the most profitable, most admired, highest customer loyalty company in the biz. From that off-site sprouted our Joie de Vivre heart which has been a foundational piece of our business strategy ever since as all 3,000 of our employees gets educated in how culture drives employee enthusiasm which fuels customer loyalty which drives profits which can then be invested back into the culture. It’s a virtuous circle.
Last week, the New York Times printed a fabulous story juxtaposing Southwest and American Airlines. Both are based in Dallas. Both have their annual shareholder meetings on the same day every year. If you want to understand the importance of culture, read this article as it demonstrates that a vibrant culture leads to applauding investors at the Southwest shareholders meeting – even during a very difficult time for the airline industry. Quite the opposite at the American meeting.
NY TIMES story
I will sign off by just taking my hat off to two giants of industry. Southwest co-founder and former CEO Herb Kelleher is stepping down as chairman after 37 years. Shareholders at the annual meeting “gave him the kind of standing ovation usually reserved for rock stars.” His “Herbisms” (great quotes like “the customer comes second”) taught me more than any Stanford Business School class I ever took. And, I also want to express deep appreciation to Warren Buffett whose company, Berkshire-Hathaway, had their annual “Woodstock for capitalists” this month. This company’s annual shareholder meeting attracts 30,000 of Berkshire’s faithful and it’s almost like a church revival event. In the era when corporate CEO’s are “over-handled” by their PR departments, I truly admire the fact that Warren gets up on stage in the big arena and answers questions and extols wisdoms for five hours to the tens of thousands of Berkshire shareholders. And, he does so with humanity and a sense of humor. I am the Finance Chair of the venerable, inner city Glide Memorial Church Board and have to tell you that each year the Church auctions off a “Private Lunch with Warren” to the world on eBay. Warren has donated himself for this cause because he’s such a believer in African-American Minister Cecil Williams’ brand of liberation theology and the impact it has on San Francisco’s inner city. What’s truly remarkable is that people will bid as much as a half-million dollars to have a private lunch with friends with Warren sitting at the head of the table. Thanks to both Warren Buffett and Herb Kelleher for reminding us that there’s a culture-driven brand of capitalism that is more powerful and sustainable than the transaction, dog-eat-dog brand of capitalism that we tend to read about in the popular press.
Can Your Company be a “BEST PLACE TO WORK” and be Results-Oriented at the Same Time?
Monday, April 30th, 2007This past week, Joie de Vivre was honored as one of the 100 Best Companies to Work for in the Bay Area (including the full East Bay and Silicon Valley). We earned the honor of coming in 7th place for companies with 500-3,000 employees after having come in 6th place two years ago (we didn’t compete in 2006). This award is based upon a very thorough survey of a large sampling of the employees for the nearly 500 companies that compete. So, being a well-liked employer is an essential part of how a company makes the grade.
Yet, I was full of cognitive dissonance this week. Sadly, I had to abruptly terminate the contract of an outside PR company that wasn’t meeting the needs of one of our hotels, and, I also had to tell the landscape designer who was planning an overhaul of my backyard that this relationship wasn’t working either. Can you be a nice guy and get what you want in life? And, how does that principal apply to companies?
For nearly a decade, Joie de Vivre has been measuring our managers’ performance on a grid that shows RESULTS on one axis and RELATIONSHIPS on another axis. We rate our managers on a 1-4 scale (1 being outstanding, 4 being poor) on both Results and Relationships, which leads to four quadrants and sixteen boxes that a manager could find themselves in (for more info, take a look at my book The Rebel Rules , which talks more about this method of performance evaluation). We don’t promote managers who aren’t in quadrant one (being either a 1 or 2 in both Results and Relationships).
But, more recently, I’ve heard people within JdV make comments that might suggest our culture is favoring relationships over results. In other words, we’re a “great place to work” because we create a positive, recognition-driven culture that makes people feel good. There’s nothing wrong with that as long as the company is very focused and entrepreneurial in executing on its business plan. There are lots of “good vibe” companies that faced big challenges because they got a little too distracted with just being nice and friendly. Anita Roddick’s The Body Shop was socially responsible both externally and internally but they had a faulty business plan and poor execution in many ways and their performance suffered a nosedive. While Levi Strauss has more recently made some positive strides, a decade ago they were in a deadly downward spiral due to the complacent culture that had developed from their positive-spirited, yet results-blind environment.
My Executive Committee has heard me recently thumping the bible of results and accountability as we’ve seen a few of our hotels not perform as well as we would expect. Fortunately, the majority of our hotels are still gaining market share, but four years ago, 80% of our hotels were gaining market share during the biggest drop in American hotel revenues since World War II. We executed effectively when our back was up against the wall. Does that mean that fear needs to be the primary motivator in the business world? I don’t think so, but a healthy mix of fear, clarity of roles and responsibilities, and a reconnection with what makes us great will help almost any business start to right some of its performance metrics problems.
What do I mean by a “reconnection with what makes us great”? There are two parts to this. First, there’s just the basic business plan which, if it’s well thought through, can prove to be a trusty roadmap for success. It’s amazing how many companies deviate from their well-tested business plan because they just stopped executing properly (quite often, due to complacency or a new regime that didn’t recognize the importance of the business plan).
But, the other component of “what makes us great” is the part that takes us back to my title for this musing. Great companies have great purposes. Southwest Airlines is about the freedom to travel. Whole Foods Market is about nourishing the body whole. Apple is about creating technologies that serves and delight you in a truly unique way. Joie de Vivre is about creating joy. Companies that execute well engage their employees in a way that makes the employees feel a deep sense of mission and meaning in what they do. The National Opinion Research Center at the University of Chicago just published a study this month which showed that the professions with the highest job satisfaction ratings and general happiness were those where the employees look at their occupation as a calling. The top three professions were the clergy, physical therapists, and firefighters with the common theme being that these folks feel a deep sense of calling in what they do every day and they know their “results” – whether it’s ministering to someone in need, providing physical therapy to someone who is frail or injured, or putting out a fire at a family home – make a big difference to those they are serving.
So, one of the secrets to being a great place to work is to create that sense of mission or calling as employees’ performance skyrockets when they see what they’re doing is more than just a job or career. What happens to those employees who aren’t clearly pursuing their calling or have performance challenges? Even great places to work occasionally have to terminate poor performers, usually after giving the employee sufficient attention and tools to help turn things around. While Joie de Vivre is a very relationship-driven place, it hasn’t stopped us from ending someone’s employment if we see that the results that the business (and their co-workers) needs aren’t forthcoming from the employee or manager. It’s no fun telling someone they must leave (or, in some instances, finding them alternative employment within the company), but a company that doesn’t demand both results and relationships is putting all of its employees at risk in the very competitive business world we live in.
The founders of Hewlett-Packard proved decades ago that a great place to work can also be results-driven. I think it was Dave Packard who said “being a business leader is all about knowing when to be soft-hearted and when to be hard-headed.” That’s the kind of wise advice that’s helping me negotiate my way through the balancing act of creating both harmony and prosperity.