While much of American industry is grappling with the decline of productivity, the companies that regard employes as the key element are increasing profits.
When "ordinary workers" sense their bosses' interest and respect, says California management consultant Thomas J. Peters, an instructor at Stanford Business School, Palo Alto, they become capable of "extraordinary effort." At one successful high-technology firm, an "explicit criterion" for picking top managers is that they can spark an unusual excitement in their staffs.
It is well-known, says Peters, that people seek meaning in their lives, and when their work provides it they become achievers. Time and again in successful companies he has observed "extraordinary energy exerted above and beyond the call of duty when the worker shop floor worker, sales assistant, desk clerk is given even a modicum of apparent control over his or her destiny."
When Peters, 40, was with McKinsey & Company, a California management consultant firm, he served as project leader for a 1977 study on management effectiveness. After extensive interviews with American business men and women as well as theorists in the nation's business schools, the study pinpointed eight common attributes in the best-run companies that appear to have contributed to their innovative and financial success.
None of them are surprising. Nevertheless, in most large companies, these qualities--which Peters calls "motherhoods"--are "conspicuously absent" today.
The project found the companies that did well (the study names 62) concentrated on the basics, including their workers. "Tools didn't substitute for thinking," says Peters. "Intellect didn't overpower wisdom. Analysis didn't impede action. Rather, these companies worked hard to keep things simple in a complex world.
"They persisted. They insisted on top quality. They fawned on their customers. They listened to their employes and treated them like adults. They allowed long tethers. They allowed some chaos in return for quick action and regular experimentation."
Peters and co-project leader Robert H. Waterman Jr., a McKinsey director and lecturer at Stanford Business School, have incorporated their findings in a highly readable book, In Search of Excellence: Lessons From America's Best-Run Companies (Harper & Row, 360 pages, $19.95). Peters has heard that some business firms are handing out a copy to each of their managers. It has appeared on The Washington Post's Book World best-seller list for six weeks.
Peters considers paying attention to employes, or what he and Waterman call "productivity through people," one of the most important attributes. All companies pay it lip service, they say, but "few deliver."
Surprisingly, it is Peters' older students--middle managers with years of on-the-job experience back for a graduate degree--who seem to grasp most easily what he is saying. "Thank God," they tell him after years of management theory, "somebody is sanctioning us to do something that makes sense."
The younger ones, who have never put time in at an office desk, are harder to convince. "I get blank stares from the 25-year-olds, because they've never had the numbing experience of not being told for three years that they are doing a decent job."
If companies want productivity and "the financial reward that goes with it," the authors write, "you must treat your workers as your most important asset." Well-managed firms "give people control over their destinies; they give meaning to people. They turn the average Joe and the average Jane into winners. They let, even insist that, people stick out. They accentuate the positive."
The book cites the example of RMI, a subsidiary of U.S. Steel and National Distillers, which produces titanium products. Five years ago, its productivity--and its profits--were poor. But since then, "owing almost entirely to its adoption of an intensely people-oriented program," RMI has had an 80 percent productivity gain.
What happened? A new president, "Big Jim" Daniell, formerly of the Cleveland Browns football team, started a folksy smile campaign, putting a smile face on the company's stationery, on factory signs and on the workers' hard hats. The company's headquarters in Niles, Ohio, is now sometimes referred to as "Smiles," Ohio.
Until he left the firm last fall, Daniell spent "much of his time riding around the factory in a golf cart, waving and joking with his workers, listening to them and calling them all by their first name--all 2,000 of them."
Another example of employe emphasis is Delta Airlines, which the authors find has weathered deregulation better than most competitors. Delta, they say, "is a people company. It advertises 'the Delta Family Feeling,' and lives by that philosophy. The company promotes from within, pays better than most airlines, and goes to any length to avoid laying workers off in a traditionally cyclic industry."
One retiring Delta pilot last year took the astonishing step of thanking the airline for providing him with a good career by taking out a full-page ad in the morning and afternoon Atlanta papers.
The book quotes Thomas Watson Jr.'s description of how his father established the policy still in effect at International Business Machines: "T.J. Watson didn't move in and shake up the organization. Instead, he set out to buff and polish the people who were already there and to make a success of what he had. That decision in 1914 led to the IBM policy on job security, which has meant a great deal to our employes."
IBM sets sales quotas that almost all the sales force can meet, while at another company only 40 percent can make its quotas. For IBM workers, it's a psychological boost to be a winner, while 60 percent of the competing company's employes see themselves as losers.
The losers "resent it and that leads to dysfunctional, unpredictable, frenetic behavior," say Peters and Waterman. "Label a man a loser and he'll start acting like one."
Other common characteristics of people-oriented firms:
* They tend to use words "that upgrade the status of the individual employe." It can sound corny, concede Peters and Waterman, but employes of McDonald's are called "crew members" and at the Disney parks, "cast members."
* They "really do view themselves as an extended family." Employes join sports clubs, choral groups, tour packages with others in the company.
* They are basically open and do not keep information from employes.
* There is no rigid chain of command. "For information exchange, informality is the norm. People really do wander around. Top management is in regular contact with employes at the lowest levels (and with customers). Everyone is typically on a first-name basis."
For a company to become people-oriented, says Peters, the critical element is the two or three people at the top. "The person at the shipping dock is vital to change and must be involved, but the sad, tough truth is that if the guy or gal running the show doesn't believe it, it doesn't happen."
The "tough" side of working for one of the "excellent" companies, of course, is that performance expectations are high. And warns Peters: "Paying attention to people is not a part-time task. It's a preoccupation."
He advocates managers regularly "getting off their duffs" and going out among the staff (and the customers).
"If you realize," says Peters, "the people on the line have the best ideas, you're in fat city."