By David Creelman
Outstanding companies often have unorthodox HR practices.
Retail giant Costco does not pay for performance; instead employees get increments based on how long they have worked there. Lululemon, famous for its fitness clothing, does not hire based on a competency interview; they take you to a yoga class and see how you fit in. Award-winning Fusion Homes doesn’t stick to standard policies; they readily make exceptions, such as paying one employee’s petrol costs because he has a terribly long commute.
So are your hiring practices based on yoga or behaviourally-based competency interviews? Do you pay for performance or seniority? Do you follow policy or play it by ear? Are you managing in a normal way or are you following the sort of unorthodox practices found in highly successful firms?
If you keep an eye out for oddball practices you will see them again and again in good companies. A good example of ‘oddballishness’ is the Brazilian conglomerate Semco. In his books Maverick! and The Seven Day Weekend, CEO Ricardo Semler describes cases where employees can fire their boss, set their own wages, or decide where to locate a new plant. Semco is very profitable despite this stunning disregard for normal management practice. The success of oddball companies raises the question: are the orthodox HR practices we preach a bad idea?
Understanding the Unorthodox
When you listen to these companies talk about their practices, one of the common characteristics is a deep sincerity. They don’t deviate from regular practice because they think it is cool or because they think they are smarter than everyone else. They do so because they are convinced it is the right thing for the business. Lululemon blurts out they want the company to be a place of “love and support” then almost apologizes for using the word “love” since you are not supposed to say that in HR. Yet, it is that fundamental belief that if they are to thrive in the brutally competitive retail world then the business needs to be a place of love and support that drives their hiring practices. They want, they need, employees to be more than competent at their work; they need employees to be the kind of person you want to hang out with.
When you have deeply held beliefs about what it takes to be a successful organization, you do not pull your management practices out of a textbook; you craft them based on what feels right for the business.
The High Commitment Workplace
The companies mentioned here, while seeming quite different, are all examples of what is called a high commitment workplace. High commitment workplaces believe their success rests on getting a committed group of employees working towards a common goal.
They typically have a strong culture—one that won’t appeal to everyone. They hire slowly to ensure fit and fire quickly if they make a mistake. They emphasize training and teamwork. They tend to pay above the market. They minimize status differences between senior managers and everyone else. The academic research has shown again and again that high commitment companies outperform ones following the command and control tradition.
So why don’t all companies adopt the high commitment model? Dr. Ed Lawler of the University of Southern California says it is because this kind of culture is hard to build and easy to break. It takes an intense belief to keep the spirit of high commitment alive, to always keep an eye on the intangibles not simply do what is expedient. Also, I dare say that many managers like to command and control; they like status differences and they are not inclined to build a different kind of workplace even if it is more effective.
Even if you do not work in a high commitment organization, there are lessons you can learn from these successful companies. One is to start with a deep understanding of the business when designing practices. What you do should be driven by the business strategy, not by what everyone else is doing. There is a slight twist on this worth noting: the high commitment companies drive practices not just on a calculated assessment of business needs, but on deeply held values. These organizations say clarity of values helps them make difficult decisions. They believe that a big part of strategy is having values.
Don’t be afraid to be unorthodox. If it is clear that performance management doesn’t work in your organization or that you should have hourly fitness breaks or it is important that managers be funny then act on those insights.
It is worth remembering that in management a bad approach done with passion is almost always better than a good approach done in a lackluster way. If you can kindle some passion you will find the courage to do what’s right instead of what is normal.
Finally, let me give credit to the Conference Board of Canada and Deborah Nixon of Trust Learning Solutions for lining up all these great examples of high commitment companies.
David Creelman (firstname.lastname@example.org) is CEO of Creelman Research, providing writing, research and speaking on human-capital management. He works with a variety of academics, think tanks, consultancies and HR vendors in Canada, the U.S., Japan, Europe and China.
(PeopleTalk Winter 2011)