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Contented Cows Give Better Milk: The Udder Truth About Managing for Profit
By Bill Catlette and Richard Hadden
How does one organization achieve sustained success while a seemingly identical competitor is struggling? Consider Southwest Airlines, which has flown above the competition with record revenues and growth for more than 30 years. Or Wal-Mart. What have they done to beat the pants, T-shirts, and housewares off the other mega-retailers? And what medicine does Johnson & Johnson take to consistently bring impressive returns to its stockholders? You can bet it's no Band-Aid approach to running a business.
Instead, it's a vital premeditated element of business strategy, and it deals not with products, marketing, or capital spending, but with people. Regardless of the industry, it's no accident that the organizations consistently identified as winners in their chosen field also happen to be some of the best places on earth to work.
We’re not pushing any social or humanitarian cause here, but capitalism at its very best. Or as former FedEx COO and current Netscape CEO Jim Barksdale said when describing the people philosophy at FedEx, “Motivated people move faster!"
Pretty simple concept, huh? So simple, in fact, that the folks at Carnation Milk may have put it best years ago when they suggested on their labels that their milk comes "From Contented Cows". (Go pick up a can of Carnation today, and you'll see the slogan's still there.) The same is true for workers and productivity.
A study we conducted on twelve high-profile publicly traded companies shows the stark contrast between the earnings performance of six companies known as great places to work and six less distinguished competitors. The first group, which we call the Contented Cows, outearned their Common Cow counterparts by $40 billion in the ten year period 1986-1995! When we revisited these same twelve companies six years later, we found that the earnings advantage of the Contented Cow companies over the Common Cow companies between 1996 and 2001 had grown from $40 billion to $72 billion!
How do Contented Cow companies do it? By focusing like a laser on three principles:
- Contented Cow companies get their people committed. Not just complying with rules. To get people committed:
- Start using crayons. That's right, crayons. Peter Lynch, former Fidelity Magellan fund manager said people ought not invest their money in anything they can't describe with a crayon. The same goes for people investing their careers in your company. If you can't explain what your company is all about with a crayon, then you can't explain it, and people can't, and won't invest in it. Take down all those fancy mission statement posters adorning your lobby. Go out and invest in a box of Crayolas.
- Contented Cow employees know that they are cared about. We didn't say coddled. But people simply perform better for you when they know you care. If you do care, and you want to show it,
- Tell them the truth. Even when it hurts. The most uncaring thing you can do as a manager is not to tell someone they're doing a lousy job, and then fire them, because they're doing a lousy job.
- Go the extra mile when times are tough. East Alabama Medical Center is just one example of a company that cares. Through an employee-funded, company-managed program called the Cornerstone Foundation, the hospital reaches out to help employees, financially, and with additional leave time, donated by employees, in the event of serious illness or other catastrophic situations that befall employees and their families.
- Stamp out corporate bulimia. When it comes to layoffs, don't be guilty of bingeing and purging to keep payroll in daily lockstep with demand. Know the difference between danger and extinction, and layoff only when faced with extinction. Worried employees don't make very contented, let alone, productive employees.
- Contented Cow employees are enabled. Notice we didn't say ‘empowered’. Employees are empowered already, if managers would get off their necks long enough to let them do their jobs. Enable your employees with:
- Training. And don't cut training when profits slump. No one ever dug out of an earnings hole by ``dumbing down" their workforce.
- Tools. That means both equipment and systems. Do a careful audit of the operational systems in place in your company. Get rid of all the ``dumb" systems encumbering your workers, and do it soon!
- Trust. You'll get what you expect to get. If you need a policy manual as thick as the Manhattan phonebook, you've got the wrong people. Get rid of them, and the rulebook. Train them and lead them to make the right decisions. Nordstrom, the Seattle-based department store, has built a legendary reputation for phenomenal customer service. Their "employee handbook" is the size of a postcard.
Competition these days is tougher than ever. Technology, capital spending, and restructuring alone will not lead to the promised land. The highest return from your investment in people comes from getting them committed, caring about them, and providing what they need to do their best work. Apply these practices, attract the gems of your industry, and become one of the best, and most profitable, places on earth to work.
Please print the following attribution for this article: Bill Catlette and Richard Hadden, co-authors of Contented Cows Give Better Milk, help clients clobber the competition by having a focused, fired up, and capably led workforce. They deliver powerful conference keynotes and leadership training. They can be reached at 800-940-7006 (+1-904-720-0870 from outside North America) or www.ContentedCows.com.