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 / Second Quarter 1997 / Issue 7(originally published by Booz & Company)


The Triumph of People Power and the New Economy

Half of its work force have less than one year of service, and 20 percent are independent workers. The company added more than 1,200 jobs in 1995. Roughly half of the workers are nomadic, meaning they can and do work anywhere.

3Com stresses interdependence, not loyalty, as the basis of the employer-employee relationship. It seeks commitment from employees as part of an adult relationship in which self-esteem and power come from within the individual.

Debra Engel, the senior vice president for corporate services at 3Com, is careful to draw a distinction between loyalty and commitment. She cautions against "blind-faith loyalty" -- in that kind of environment, she feels, it is difficult to keep people shaken up and moving forward. Given the rapid pace of growth in its industry, speed is a critical requirement for 3Com. The "old Silicon Valley culture" produced sluggish, dependent organizations that move far too slowly in an environment where half the revenue stems from new products.

At 3Com, this new employee relationship shows itself in a sense of urgency, high productivity, high commitment, collaborations and adaptability/flexibility. Ms. Engel believes that people crave honesty, openness, meaningful work, learning support, recognition that they are whole people and more control over their lives. The new employment relationship moves from dependency to interdependency, from paternalism to partnership, and from entitlement to earning what you get.

People systems are designed to drive commitment to results and productivity. At 3Com, for instance, all jobs are posted, no matter how high. For every job, searches are conducted on both the inside and the outside. This accomplishes two things: it keeps the tension on people and it lets people refer others they know who might be appropriate. At the end of the day, about one-third of the positions are filled internally.

3Com also provides easy access to services that enhance productivity. For example, 3Com offices are outfitted with such niceties as fitness centers, dry cleaners, shoe and car repair services, video rental counters and car washes, not to mention Starbucks in the lobby. But these are not treated as entitlements, as they are at other companies. 3Com charges for all of them and requires that they at least break even, as well as stimulate productivity. 3Com will consider almost any proposal for a new service that makes business sense and can satisfy the break-even requirement.


High-tech companies are probably the furthest along in terms of developing and implementing the New People Partnership, but they are by no means the only companies that are moving in this direction.

Richard M. Kovacevich, the president and chief executive of the Norwest Corporation, says it all too well: "The primary responsibility of business managers is to influence the hearts and minds of our people, consistent with the culture of Norwest, so they care more about our business than competitors care about theirs."

At Norwest, career development is very much a shared responsibility. Employees are expected to take charge of their own development, understand the competencies required for the next job and then enroll in Norwest training courses to build those competencies.

Southwest Airlines has built an effective people system by tightly linking its people processes with an emphasis on customer service and cost management. The company stresses business priorities that make a difference: intense commitment to customer service and a focus on maintaining low costs. Southwest puts great stock in a family culture with a high degree of loyalty. Heavy emphasis is placed on social interaction, creating a fun work environment and sharing information.

Employees enjoy an informal communication style and complete access to all levels of management. The chief executive, Herbert D. Kelleher, is known to everyone as "Herb." He maintains an open-door policy that allows line workers to contact him, and he promises to respond to employee ideas or questions within five days.

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