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


The Triumph of People Power and the New Economy

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.

What are the principles that define this New People Partnership? A successful partnership is a coherent set of people systems and processes that reflects the business environment, individual company strategy and organizational values. Each one will be unique to a company and its employees. But there are some common threads and lessons that can be learned from all the companies that are exploring the New People Partnership. Boiled down to its essentials, there are five key principles to this partnership. Let's look at how each of these principles works and what it means to implement them.

Both parties commit to employee well-being as a core value.

The first step toward a New People Partnership is a commit-ment to the well-being of employees. As Robert Saldich, the former chief executive of the Raychem Corporation, said, "Companies must shift from using and then harvesting employees to constantly renewing employees."

Unless both the employer and the employee abandon any illusions and agree that employee well-being is a core value, the New People Partnership will surely disintegrate. This commitment has to originate at the highest level in the corporation and be expressed through more than sheer rhetoric. It must be embodied in everything the company does and everything it communicates internally and externally. And there must be a coherent link between the people strategy and vision and the business strategy and vision.

To begin to think about how to understand and implement this principle, a company must first articulate, and preferably quantify, how employee well-being affects organization performance. While the logic is reasonably straightforward, the real business case for sustaining and improving employee well-being can be hard to make. In the hospitality and airline industries, one can define the link between front-line employee satisfaction and customer satisfaction. In many of these cases, the costs of high turnover can be readily quantified. In the high-tech arena, where companies have aggressive growth objectives and there is a shortage of the most highly skilled labor, the cost of turnover can be substantial.

But in other industries, the business case can be harder to develop. And without the business case, it can be difficult to instill employee well-being as a value if it has not been viewed as one in the past.

At the same time, the employees must make the business argument for programs designed to bolster their well-being, and they must appreciate the relationship between their well-being and the organization's performance. 3Com's ongoing commitment to evaluate and provide any service (whether a car wash or a dry cleaner) that improves productivity and meets the break-even requirement is a clear example of this practice at work.

Another example of this principle is at Motorola Inc. Motorola has developed a broad-based approach to identify, resolve and elevate employee issues. In what is called the Individual Dignity Entitlement Program, employees are asked to answer the following questions every quarter and review them with their supervisors:

1) Do you have a substantive, meaningful job that contributes to the success of Motorola?

2) Do you know the on-the-job behaviors and have the knowledge base to be successful?

3) Has the training been identified and made available to continuously upgrade your skills?

4) Do you have a personal career plan, and is it exciting, achievable and being acted upon?

5) Do you receive candid positive or negative feedback at least every 30 days that is helpful in improving or achieving your career plan?

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