Tag Archives: employee benefits

What Makes a Great Employer?

I ask myself this question all the time, for a number of reasons. What makes a great employer?

Is it how well they pay? Vacation time? Benefits? Culture? Is there a magic answer to this question?

I’ve thought about it quite a bit, and I think the answer is…yes. There IS a magic answer, or at least a simple one.

At the end of the day, what makes an employer truly great is defined by how they see their employees, and consequently how they treat them.

But what exactly do I mean by “see” and “treat”? Let’s take a look at Zappos.

I’ve used them as an example many times, but I just can’t say enough good things about that company! You see, what Zappos understands, better than any other company I’ve ever studied, is that the employees are the heart and soul of a business. They know that if you treat employees like family, provide for their needs (and many of their wants), and more or less give them a home away from home, they will reward you with an incredibly zealous loyalty.

Happy employees lead to happy customers, which leads to happy business owners, investors, and share holders šŸ™‚

That’s it, the great secret to being a great employer.

Toss the traditional corporate HR crap basket out the window! Enough of the lame, uptight corporate handbooks that few people read and even fewer follow. Try thinking outside the box, throwing stuffy tradition to the wind. Be different, be fun, and don’t create and run a company that feels like a prison (or even worse, a High School šŸ™ .)

It really is that simple.

So, what are some things you can do to show your employees just how much you value them, and that you don’t see them as mindless cogs in a machine? Here’s a few examples:

  1. Pay them well. If you want to attract and retain the best people, don’t just pay them “fairly”. Pay them as much as you can afford to pay them. If you’re looking for better profit margins, you should never look at reducing compensation as a means for improving those margins. Money matters, and if what an employee is being paid isn’t enough to provide for all of their needs and some of their wants, there will be discontent.
  2. Understand that the traditional 9-to-5 is dead, and that where an employee does their work is less important than how well it is done. Offer remote working arrangements, or a results only work experience (ROWE.) Studies have shown that this increases productivity and morale immensely, and it saves you a ton of money on office space and supplies.
  3. Don’t limit sick hours. If an employee is sick, pay them to stay home so they don’t spread it…period. Some employees may take advantage of this, but most will love you for it and respect it for the gift it is. You can always offer to let them work at home that day, so they get some rest and avoid spreading the illness, and you still get some work from them. Don’t EVER make an employee feel guilty for taking sick time.
  4. Employees aren’t mindless machines. They work best with a bit of fun and entertainment sprinkled in throughout the day. Consider having ping pong tables, pool tables, a Nintendo Wii or an XBox, and let them take time throughout the day to de-stress, have fun, and grow closer to their co-workers.
  5. Don’t make rules and regulations from the top down. Talk to your employees and make those decisions from the bottom up. HR is, unfortunately, an antiquated department, and should probably stick to managing paychecks and benefits.
  6. Reward results over experience or education. Just because someone doesn’t have 10 years in a given field or doesn’t have a college degree doesn’t mean they wouldn’t be the most amazing VP of whatever, ever.
  7. Hire slowly and fire quickly (but rarely). Avoid layoffs at all costs, since few things are worse for morale. If you absolute have to do layoffs, do it deep so it never has to happen again, and make that clear to your employees.
  8. Provide benefits that are best for the employee, not your bottom line. Sick, miserable and stressed employees are not good employees, and great benefits go a LONG way towards avoiding that.
  9. Don’t hire Type A people, especially not for management roles. Control freaks do not have a place in the workplace, and will usually make the lives of anyone they manage utterly miserable. Creative geniuses make much better managers šŸ™‚
  10. Don’t try to force a “company culture” on your employees. Culture develops naturally, and fake/forced always comes across as fake/forced.
  11. Don’t spy on your employees. Studies have shown that most workers only work 3-5 hours of an 8 hour shift. Unfortunately, that’s life. The human brain needs breaks, especially from tedious tasks. It is important to understand that you aren’t hiring an employee for their time, but for the results they can produce in that time. If an employee can produce great results in 3 hours per day, trying to squeeze 2.66 times what you need out of them in a day isn’t going to produce good results. Speedy, quality results tend to follow a power law curve.
  12. Let your employees use social media on company time. If you are an awesome employer, it could actually be to your benefit. Remember, results are more important than time spent getting those results.
  13. Enough with the non-competes already. They are rarely enforceable anyways, and do nothing but contribute to unemployment later on. If what your company does is so unique and special, try protecting it with IP laws. Get a patent, copyright, trademark, etc. In almost every instance I can think of a good confidentiality agreement is more than sufficient for an employee. A non-compete is nothing but a slap in the face to an employee, a clear declaration that you don’t trust them at all, now or in the future.
  14. Dress codes = super lame. What you wear REALLY doesn’t matter, unless you will be meeting with a client. Requiring a suit and tie, or even business casual, of everyone in the company is almost pointless at this point. Let your employees be comfortable, wear what they want to wear, and be themselves.

I’m sure there are many more points to address, but those are a few of the biggies. Old school business practices are dying at an astonishing rate, primarily because the barrier to entry in most fields is vanishing, and more and more people are deciding to work for themselves. Fewer employees = more contractors, and most contractors will cost you a hell of a lot more than a good employee.

So seriously, treat your employees like you would your best customers, because in a sense they are. You’ll never regret treating employees well, but you will almost always come to regret treating them poorly.

Happy Employees and Happy Customers Aren’t Mutually Exclusive

There is a disturbing trend amongst employers that has been going on for some time. In the last 12 months, thanks to the recession, I have seen this trend steadily worsen, and I believe it is almost at critical mass…I’m referring to a trend I’ll call Retailitis.

RetailitisĀ happens when a business is vastly more concerned about the happiness of their customers than they are about the happiness of their employees. This is a fundamental flaw in many businesses, and one that if fixed would literally change the entire face of business as we know it.

Let us examine a few examples of this problem. I’ll start with my least favorite company in the world, Wal-Mart.

Negative Example #1 – Wal-Mart

Once upon a time, I worked at a Wal-Mart in American Fork, UT. At this particular Wal-Mart, while I was there, our employee turnover rate was over 90%. The highest I remember seeing it was like 95%. I remember being told that it cost between $3,000 and $4,000 to train a new employee, and there were roughly 500 employees in this particular store. Taking 95% and $4,000 and 500 employees, that comes out to just shy of $2,000,000 being lost each year to employe turnover. Ouch!

So the question is, why was turnover so high at this store? Because of the mentality of the management team. First, let me explain a few things. Salaried managers at Wal-Mart are paid pretty hefty bonuses if they reach certain revenue goals, giving the greedy managers very strong motivation to sell sell sell.

This translates into a slave driver mentality, where everyone beneath you becomes a means to your financial end, nothing more than tools. This was amply evident at this particular store. If my memory serves me right, our store manager, with his bonuses, was making roughly $300,000/yr. The Co-Manager was about half that. The average overnight employee, on the other hand, the best paid hourly workers at this store, were makingĀ around $20,000/yr.

Yet, in spite of this, this particular Wal-Mart store was growing significantly year over year, and was one of the highest revenue generating stores in the region last I heard. Unfortunately, this type ofĀ result tends to reinforce to management that what they are doing is both right and effective. Alas, what they were really getting was a “false positive”. Sure, the store was doing well financially, but the employee turnover was sky high, and both efficiency and morale were way down.

The reality is that by paying the hourly employees just a little bit more, combined with more positive reinforcement and less negativity from the managers, turnover would have decreased, efficiency and loyalty would have improved, and the store would have actually done even better financially, perhaps significantly so. Happy employees do SO much more for a company than the average company realizes. Unfortunately, few managers understood this, and so nothing was done to fix the problem.

Negative Example #2 – Teleperformance USA

Lets look at another example. I am acquainted with a supervisor at a local Teleperformance USA call center. They handle customer service calls for Verizon FIOS. The contract that this call center is under stipulates that they are paid only for the first eleven minutes and fifteen seconds of a call. Anything over that, and they are not making any money.

So, naturally, there is an EXTREME push for low call times. If an employee is on a call that is going too long, their name is written on a board, called out loud to the other employees, and otherwise criticized and publicly humiliated. This is supposed to help them improve. What this actually creates is an extreme conflict of interest.

It is now, under the above circumstances, in the employees best interest to cut their call times down. However, many of the calls at this center are very complex, and CAN NOT be handled in the allotted time.

The result of this is that the employees are coming up with creative ways to cut their call times, but at the expense of customer service. They will, as often as possible, refer the caller to their manufacturer, or transfer the call, orĀ just plain drop the call, all to make sure they get yelled at less and have a higher chance of being promoted to a less stressful position.

This problem is not an employeeĀ training issue, but a management training issue. As far as I know, there is not a single employee there whose call time is under the limit who is not cutting corners. From what I was told, the very best employees there, those who don’t cut corners and are extremely good at their jobs, hover closer to 15 minutes per call, and are harassed continually about it, in spite of the fact that their customer satisfaction and first call resolution are very, very high. That is a serious problem.

In this particular instance, the real problem is that the contract between the call center and Verizon needs to be renegotiated. Go the Verizon and say, despite our extensive training, even our very best employees can not meet this call time limit without cutting corners and skimping on customer service. Here is the data to back this up. We need to negotiate a longer call time limit. Simple enough. It is in Verizons best interest to retain as many customers as possible, which they cannot do if the customers are getting poor customer service.

On top of this, the managersĀ at this call centerĀ need to be taught some serious people management skills. Negative reinforcement is their tool of choice, and obviously it doesn’t work. You cannot tell an employee to do something that is literally not possible, and tell them their job and pay hangs in the balance, and expect honesty and effective workĀ from that employee. Desperation does not a happy employee make. It just won’t happen.

In addition to that, everything at this call center is always in a rush. Everything is urgent, must happen right now, hurry hurry hurry. This reeks of poor time management skills, and an inability to plan properly and set realistic expectations. No surprise that this call center is one of the worst call centers this company owns.

I could go on and on about companies showing perfect examples of Retailitis, but that is not the point. The point is, how do you fix and/or avoid this problem? Simple! Put your employees well being ahead of your customers/clients. Sounds counter intuitive, right? Well, it isn’t. It works perfectly, and I’ll prove it.

Lets take a look at Zappos, and online shoe company, headed by The Wizard of Happiness, Tony Hsieh.

Good Example #1 – Zappos

At Zappos, happiness is at the heart of everything. Tony, the founder and CEO, want BOTH employees and customers to be happy, and has organized his company accordingly. For example, new hire training at Zappos is a multi-month affair, to make sure that everyone understands the culture and nature and mission of Zappos. At the end of the training, these new employees are offered $2,000 to quit, right then and there.

Most businesses would look at this as crazy, but it is anything but. Though many employees think they want great pay, what most really want is to be appreciated and work in a positive environment. Tony understands this, and employees at Zappos are both well paid and appreciated. By offering people money to quit, Tony makes sure that the employees are more interested in the culture and environment than the money. Zappos wants employees for who their work is more than just another job.

Beyond that, everything at Zappos is structured to make employees happy, from the work environment to the perks. Employees are authorized to transfer this happiness to the customers, which they doĀ in abundance. Zappos is a billion dollar company largely because of repeat customers, which they have in droves thanks to their incredible customer service, a result of happy employees.

I could give more examples, but why bother? Zappos does it perfectly…just model after them šŸ™‚

So How Do I Apply This to My Company?

Easily! For a business to reach it’s full potential, the happiness of employees needs to be a company’s highest priority. When your employees are happy at work, they become loyal and efficient. Efficiency is money. On top of that, of all the forms of marketing, word of mouth is still the most powerful, and is particularly meaningful when it comes from a happy employee who is sharing the joy not because they have to, but because they WANT to. Happy employees, when coupled with a good business model and a great product or service, will inevitably lead to happy customers, and long term profit and growth.

Do not give in to Retailitis! Regardless of whether your business is doing well or poorly, take a close look at your employee morale. Encourage an open door policy, where employees can discuss concerns with you without consequence to them. Keep your eyes and ears open. If you find that your employees are not happy, fix it! In this economy above all, nothing will provide a bigger boost for your bottom line than happier, more efficient employees.