Chapter 11
Organizational Strategy and Positive Management
This book started with strategic issues and returns to them at its conclusion by using examples of organizations that show how positive management (PM) can lead to long-term success.
Human Resources as a Sustainable Competitive Advantage
A profound change in how the human resources (HR) function is viewed has occurred in organizations over the past several decades. There was a time when the personnel department was considered something of a necessary evil, primarily an expense center that existed largely because of externally imposed legal requirements. In recent years that view has changed, and HR practices are now recognized as a source of competitive advantage. Proper selection and retention techniques allow an organization to develop a workforce with better experience and ability profiles than competitors.
PM can work hand-in-hand with professional HR practices to enhance retention, reduce adverse selection, limit absenteeism and turnover, and increase employee loyalty and commitment. These workforce characteristics are strong core competencies because they are hard to duplicate in the short term. If an organization succeeds in implementing a PM culture, competitors may find it hard to follow, thus creating a sustainable competitive advantage.
Examples of Positive Culture Organizations
Service: Southwest Airlines
Southwest has the most consistent profitability of any American airline, going on 36 consecutive years of profits as of this writing. Because of its phenomenal growth and success, many aspects of Southwest have been analyzed by academics, consultants, and competitors. Attention has been focused on the following:
- Low fare structure
- Limited range of aircraft types
- Hedging of fuel purchases
- Early adoption of fuel-saving techniques such as engine cleaning and winglets
It is surprising that greater focus is not placed on its HR policy. Consider the corporate mission of Southwest Airlines:
The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.
To Our Employees
We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.1
Considering that Southwest enjoys the highest customer satisfaction in comparison to the number of passengers boarded, the importance of positive employee relations to sustained performance leaps out. The mission statement doesn’t mention efficiency, though the airline is known for it, or aggressiveness in competing with rivals, though it is known for that, too. It simply says that Southwest will take care of its employees and that they will make everything else happen.
Folklore about Southwest’s positive environment abounds, from the installation of basketball hoops at airport gates for gate crew amusement between flights to the case of the rapping flight attendant2; even more indicative of Southwest’s commitment to the idea of having fun on the job is the fact that flight attendant David Holmes’s rapping was embraced by company leadership when announcing financial results for the company.3 Given increasingly commoditized pricing and service among major airline competitors, customer satisfaction may be the only remaining source of competitive advantage. Yet major competitors have not made serious attempts to imitate Southwest’s HR practices, thereby providing the airline with a sustainable competitive advantage.
Intellectual Property: Ultimate Software
According to the Great Place to Work Institute (GPTWI),4 the best medium-sized company to work for is Ultimate Software, an HR management software development company in Florida. In assessing how Ultimate’s HR practices created a powerfully positive working environment, GPTWI focused on its open communication policies and heavy emphasis on participative decision making. Team-based activities and a family-like atmosphere with special focus on trust and respect add to its success. Employees are happy to work there and want to stay for the long term. They see their personal goals and aspirations as compatible with the goals of the company.
The Ultimate Software website expands on the company’s emphasis on employees as productive assets to be protected and nurtured:
The Ultimate Software environment is a culture defined by the way we think, work, and behave—treating coworkers, customers, vendors, and the community with honesty and respect.
Walk through the halls of our offices at any time and you’ll see something that’s often lacking in corporate America today: happy, smiling employees. At Ultimate Software, we value our workforce, take pride in their accomplishments, foster their continued professional growth, and encourage their ideas.5
Natural Resources: Devon Energy
Much of the profitability in natural resources depends on the organization’s ability to find, acquire, and move them to market. HR can seem secondary in light of those priorities, but Devon Energy doesn’t see it that way at all. Several sections of its mission statement point to HR as the key to competitive success:
Hire the best people. Our belief that our people are our most important asset provides the foundation for all of our values and convictions. Our extensive portfolio of corporate resources is, however, not enough to make us “the best.” To be the best, we need the best people—people who are always striving to obtain more and to maximize value for our company.
Always do the right thing. The most important of our values, integrity, defines the core of every relationship we have. Whether inside the company or outside the company, integrity establishes the trust that is critical to the relationships that make our values work. Embracing honesty and integrity as our most important value means we stick by our word and we will always do the right thing, even when no one is looking.
Be a team player. A central value of our company is the belief that teamwork and collaboration will create a better organization, provide more fulfillment for employees, significantly reduce bureaucracy and dramatically improve results. Teamwork and cooperation increases nimbleness, enhances effectiveness and helps to create an atmosphere of trust and goodwill that directly results in better performance.6
An investment in Devon purchased at the very beginning of 2000 appreciated over 300% during the following 10 years.7
High-Tech Manufacturing: Texas Instruments
With the possible exception of Southwest, this is likely the best known entry on this list of positively managed companies. Rather than comport itself like an almost 60-year-old company, deeply established and leading the market in a number of its most important products, Texas Instruments (TI) pushes forward continuously on the HR front, always refining the ways that it relates to employees. The following are some examples from its website:
TI Founder Cecil Green underscored TI’s people philosophy when he said, “Getting ahead depends not on working people, but on working with people.”
In that spirit, TI pays close attention to the safety, health and well-being of our valued work force globally. We believe that a safe, open and diverse working environment inspires innovation, which is integral to our long-term success as a company. This applies to all employees of all ethnicities, ages, genders, religious beliefs and sexual orientation.8
We discovered many years ago that when we acknowledge the value and commitment of our work force, TIers become better connected, engaged and aligned with our company. That, in turn, encourages our talent to stay with us.
Our recognition team regularly communicates the importance of thanking and congratulating employees for a job well done. The team periodically trains managers on small ways they can make a big difference, from sending an e-mail and copying the boss to offering their thanks in a staff meeting.
In 2008, TI continued our proactive engagement with all levels of management about the importance and consistency of employee recognition. We continued to invite suggestions from managers and employees alike about even more creative ways our company can make them feel valued.9
With its components in half of the world’s cell phones plus countless computers, televisions, and other electronic devices, TI is at number 215 on the Fortune 500 and has been on Fortune’s “100 Best Companies to Work For” list 9 years in a row, showing that even the largest of industrial companies can make PM work.
Construction: TDIndustries
From the standpoint of sustaining a first-world economy, construction is important for two reasons. First, it is local and not easily outsourced to other countries. Second, it is increasingly tied to environmental and energy conservation issues. With 11 years on Fortune’s “100 Best Companies to Work For” list, TD focuses on people as the core of its strategy by using servant leadership10 as the centerpiece of its HR management policy. Among the principles of this approach are employee ownership, replacement of the term “employee” with the term “TDPartners,” and mission and values statements that focus on employees: “TDIndustries customers and employees work together to fulfill our mission: We are committed to providing outstanding career opportunities by exceeding our customers’ expectations through continuous aggressive improvement.” The company’s values statement is even more compelling:
Servant Leaders are active listeners … they elicit trust … and share power. Our Basic Values listed below are the most important characteristic of TDIndustries and guide all of our relationships—with our customers, our suppliers, our communities, and among ourselves.
Concern for and Belief in Individual Human Beings
Valuing Individual Differences
Honesty
Building Trusting Relationships
Fairness
Responsible Behavior
High Standards of Business Ethics11
Because it is employee-owned and therefore private, TDIndustries’s financial results are not available. The most recent indication of the company’s success is its integral involvement in the installation of plumbing and heating, ventilation, and air-conditioning (HVAC) at the new $1.2 billion Cowboys Stadium in Arlington, Texas. The company’s creativity was crucial in this project because the nature of the installed systems and of the structure itself required the invention of new installation equipment and techniques.
Go for It
I hope that you will consider implementation or expansion of PM as a core strategy of your organization. It is not terribly costly, difficult to understand, or complicated to implement. Most importantly, it can tap into a source of improved productivity that is likely not being fully used now. If you do decide to shift your organization’s culture to be employee centered, I hope that your competitors are as slow to catch on as Southwest Airlines’s have been. Good luck!