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The study provides, for the first time, quantifiable proof that there is a direct correlation between how you treat people and financial results. The best way to value people is to create an environment in which smart people are treated as if they are smart. Employees are told what the goals are; they are not told how to achieve them. In these environments, employees have the latitude to make decisions about how to achieve their goals.

At Best Software, a Georgia-based software development company, Bill Furrey's boss put him in charge of developing a new product and then got out of the way. "He let me do my job. He basically said, 'If you need anything, come and talk to me. If you don't, have fun, and go at it.' " Furrey, in turn, trusted his team to accomplish the goal. "I allowed my developers to work and do the job that they needed to do," he said. The team released the product on time, with all the planned features. According to Furrey, management was shocked, because that had never happened before. "It didn't happen on other teams. It did on ours because we really believed in the product and what we were doing."

The ABN AMRO Foreign Exchange Institutional Sales team gives its salespeople the opportunity to interact with various levels of the client organization. "We're given a lot of tools and a lot of information that can enhance our relationship with the client," said Brian Tracy, an associate in the group. "I came into the business knowing little about the foreign exchange market, and I was brought up to speed very quickly."

Robert Rodman, the workgroup leader, explained, "The salesperson is the quarterback of the relationship, pulling resources to address various problems and opportunities. That is unlike other banks that are focusing on institutional clients, where people are very specialized in their roles. In our group, the salesperson has ownership of the overall relationship.... They have more authority and autonomy and are privy to a greater understanding of all client issues. That's enabled us to attract higher caliber recruits."

Barrister Executive Suites, Inc., is a California-based private company that leases commercial office space, along with receptionists, furniture, office equipment, and other business needs. The company trusts its property managers to do a good job, and gives them a great deal of authority. "You can run a million dollar business, and you're in charge of the budget; you're in charge of all the hiring and firing at that location, of the equipment, of getting the new tenants," said chairman and CEO Vince Otte. "We have corporate support but basically it is like they have their own business. And that seems to work." The company reduced the number of employees from 135 to 100 and increased annual revenue from $5 million to about $25 million since the current owners took over in 1990.

In high-performing groups, people also have the authority to use resources to meet their goals. "If it's necessary to spend fifty thousand dollars in one night because something is going to blow and a client is not going to be happy, then we spend that fifty thousand dollars because it had to get done and we could have lost a million dollars," one respondent said.

Optimize Critical Thinking

The second major differentiator between high-performing and nonperforming groups is optimizing critical thinking. Critical thinking involves drawing logical conclusions from complex information and determining how to use that information to achieve the workgroup's goals. To be able to think critically, people need the information to do their best work.

Tom Mendoza, president of Network Appliance, said that his company "made a decision early on that we were going to give our employees too much information. We were going to be too open with them . . . I'm trusting that they will not hurt us with that information." And, in fact, Mendoza said that "we've never been hurt." Network Appliance, a leading network storage solutions company, joined the prestigious Fortune list of "100 Best Companies to Work For" in 2003.

Thinking critically also requires people to get their emotions out of the way. If they believe that leaders' words and actions aren't congruent, they react angrily, which distracts them from doing their job and kills motivation.

One study respondent said that in his company there is never enough money for new equipment or upgrades, "but at the same time we're finding out that the CEO got a $12.4 million bonus."

In another company, executives are asking employees to cut costs by turning off lights, flying coach, and staying in inexpensive hotels. In the meantime, the executives enjoy weekly catered lunches, fly first class to meetings at the drop of a hat, and take limousines two miles to the airport. The company used to stock ramen noodles for people who work late at night but stopped doing that, presumably to save money. "Ramen only costs ten cents. And it's good for six to seven months. So, you have all these developers who no longer work late at night because there's no food in the kitchen," said a study participant.

Copyright © 2004 Susan Annunzio. All rights reserved. This excerpt, or any parts thereof, may not be reproduced without permission.

Tags: Management & Leadership

About the Author

Susan Lucia Annunzio is chairman and CEO of the Hudson Highland Center for High Performance, a subsidiary of Hudson Highland Group, Inc. The author of Evolutionary Leadership and coauthor of Communicoding, she advises senior executives around the world and is an adjunct professor of management at the University of Chicago Graduate School of Business.