Executive Summary:
Disenchantment in the American Workplace: More Virtuous Practices Needed by Firms
The state of the American workplace has arrived at a pivotal moment in history—indeed, the pursuit of the American Dream is showing signs of backlash. While productivity gains continue, in large part because of information technology, the American worker is becoming disenchanted, burned out, dissatisfied, and insecure. Two firms adopting practices for achieving satisfaction and happiness in the workplace may serve as role models: Dallas-based The Container Store and TDIndustries. Fortune magazine awards both firms as very best companies in which to work. Each in their own way pays deep respect to their employees, customers, suppliers and the other stakeholders with whom they do business. In “The Virtuous Organization: The Value of Happiness in the Workplace” Distinguished Professor and Director of the Maguire Center for Ethics Richard Mason and Joanne Gavin of Marist College show the business world that supporting the humanity of employees returns much more than the widespread focus of incremental productivity gains from employees.
Work in America
Americans are spending much more time at work and work longer hours than counterparts in other countries. In Juliet Schor’s book, The Overworked American, she estimates that the average employed person in America currently works 163 hours more than he or she did in 1969, the equivalent of one month’s additional work. This lack of leisure time clearly gives people fewer opportunities to re-create themselves and to seek new meanings in their lives. It also makes it more important for individuals to find fulfillment during the time they spend at work. Is all of this added work improving the workers’ situation? Are people better off?
Much of the gains in productivity are the result of the use of two things: new technology, especially information technology, and corporate work practices based on scientific management and mass production concepts—simplification, standardization, measurement, monitoring and control of job tasks. Accordingly, they serve to strengthen hierarchical relationships between employees and their managers, enhancing managerial power. These managerial techniques speed up business processes which lead to increased labor productivity.
The increased use of these practices renders many workers’ jobs “dumbed down” – Simon Head, author of The New Ruthless Economy: Work and Power in the Digital Age calls it “skill-debilitation” – and in effect dehumanizes them. Dr. Mason commented, “This is a big challenge because we know now that the division of labor concept is very efficient. But interestingly enough, it’s not what Adam Smith had in mind. In Theory of Moral Sentiments, Smith referred to the need for individuals to have sympathy or what we today call empathy with respect to each other. In doing so, people can build trust so they can work together.” Mason continued, “In Wealth of Nations, Smith did not mean we should do away with this sympathy. It’s not clear that he meant that you should demean people by putting them into narrow although economically efficient sets of tasks, by means of a division of labor.”
In a speech at the University of North Carolina, Federal Reserve Chairman, Alan Greenspan, referred to this outcome as creating a wide spread ‘perception that skills are becoming redundant at a rate unprecedented in human history.’ Because these workers may be more readily replaced by machines or other workers -- perhaps less skilled and likely lesser paid workers -- their job security is undermined while their bargaining power in the workplace is being weaken. “The environment of insecurity in the workplace is increasing. The ever-increasing productivity gains as measured in the economic statistics are a contributor to this,” Mason explained. “There’s a shadow side to the productivity gains. Perhaps these gains are being taken out of the human being.” Mason continued, “If you put people in situations where they have less control, that does several things. First, you use the least of that person’s capacities and are not really honoring who they are as a human being. Second, you imply that this is a job that many could do; and people may feel trapped in performing their duties. Some firms know how to structure an environment and culture that does this in a respectful way, like Federal Express, for example.”
Many organizations are ignoring this fundamental lesson—people find work a source of pride and meaning. A workplace managed as such fulfills workers sense of happiness and health, which in turn is more productive. Work-related stress is on the rise and job satisfaction has declined from 59% in 1995 to less than 49% in 2003. These three things – health, happiness, and productivity – are the essential ingredients of a good society. Improvement in productivity alone, which is almost the sole emphasis of many organizations today, is not enough.
A Tale of Two Firms
The Container Store (TCS), a specialty retail store, and TDIndustries (TDI), a construction company working on large-scale projects, are two firms with a passion for and commitment to a healthy, happy and productive workplace. Senior executives at both firms even periodically meet to discuss their firms’ unique philosophies of management. Both firms are fervent in their belief that success begins with a deep respect for their employees and that this respect must extend outward to their customers, suppliers and community members.
The Container Store
First, TCS pays its retail staff well and benefits are substantial, underscoring its culture of mutual respect. People working at TCS report that ‘they feel they have made a difference’ by working there. The firm is committed to employee education and communications. After ten years, employees are encouraged to take a sabbatical. Everyone knows where the firm stands financially at any given time. Employees are expected to know current sales at the outset of every day, so he or she can make better decisions throughout the day.
TCS relies on six Foundational Principles to guide everyone everyday:
1. “Fill the other guy’s basket to the brim.” TCS encourages employees to use their imagination to craft creative and mutually beneficial relationships with its customers, vendors and employees by doing everything possible to “fill their baskets to the brim.”
2. “Man-in-the-desert.” Based on the observation that a thirsty man reaching an oasis needs more than just a drink of water, TCS employees are implored to “astonish” their customers. They fulfill their customers’ immediate needs but also explore the broader context of those needs to exceed their customers’ expectations.
3. The exceptional human being formula. “1 average person = 3 lousy people. 1 good person = 3 average people. And, 1 great person = 3 good people.” TCS seeks great people and pays them well based on the belief that the company realizes on average three times the productivity that average employees generate.
4. “Intuition does not come to an unprepared mind. Your need to train before it happens.” TCS is so committed to education and training, which is crucial for developing each employee’s ability to create unique solutions to customers' needs and to solve other stakeholders’ problems.
5. The merchandising formula. “The best selection [of products] anywhere + the best service anywhere + the best (or equal to the best) pricing in our market area.”
6. “Air of excitement!” Three steps into the door, customers or visitors should sense that they have arrived at a different place, one that adds drama and fun to the serious business of satisfying their needs.
Living by these principles engenders respect on the part of employees, customers, vendor and others. Respect begets trust and vice-versa. CEO Kip Tindal explains:
“TCS’ [Foundational Principles] empower our employees to serve the customer in the true sense of the word. Employees are trusted to make whatever decision necessary to help a customer. TCS is said to provide exemplary service through values-driven marketing practices. Its employees delight in helping customers solve problems – and who possess the freedom and confidence to do so. The quest for excellence pays off in human terms, as well as financial terms.
TDIndustries
This statement exemplifies TDI’s vision—“We are committed to providing outstanding career opportunities by exceeding our customers’ expectations through continuous aggressive improvement.” Every employee is exposed to it from day one. One partner told Fortune, “This company makes you feel like a human being again.” TDI’s stock is held by its employees with lower-level employees owning 75% of the firm. Employees feel treated as full members regardless of their position. Health insurance premiums are indexed to income; the more one makes, the more they pay. After three years, employees receive an astonishing twelve weeks off at full pay.
TDI conducts all of its business based on a deeply held philosophy of servant leadership. Robert Greenleaf, who originated the idea, describes the concept as follows:
“It begins with the natural feeling that one wants to serve, to serve first. Then conscious choice brings one to aspire to lead. The difference manifests itself in the care taken by the servant – first to make sure that other people’s highest priority needs are being served. The best test, and difficult to administer, is: do those served grow as persons, do they while being served, become healthier, wiser, freer, more autonomous, more likely themselves to become servants? And, what is the effect on the least privileged in society, will they benefit, or at least, not be further deprived?”
TDI founder, Jack Lowe, Sr., was entranced by the essay “The Servant as Leader” by Greenleaf and drew from it: leaders are first servants of those they lead. That is, the best leadership is provided by those with both a compelling vision and a desire to serve others first. Jack Lowe, Sr. acquired copies of the essay for all of his employees. All TDI employees at the time were invited to read the essay, and then gather at the Lowe’s house for breakfast to discuss its meaning for their work and personal lives. A near-monthly ritual includes department and/or company wide sessions to discuss how they can work together to make the company better and enrich each other’s personal lives.
Servant leadership is at the heart of TDI’s business theory, which is based on a metaphor of the construction industry in which they work. A building is erected in steps. Accordingly, so too must an ethical corporate culture. Servant leadership in TDI’s practice is the essential process for preparing a firm, bedrock site upon which to build. This provides the necessary grounding for laying down a foundation of trust. Trust, then, undergirds four key ascending pillars: continuous learning, shared commitment, authentic diversity, and strategic planning. These pillars, in turn, support a canopy community of powerful trusting partners. The partners work together to delight their customers. Satisfied customers result in business success, which further reinforces the community of powerful, trusting partners. This virtuous cycle is reinforced by constantly maintaining a culture of trust, service, quality, and learning. The firm’s philosophy was tested in the late ‘80s when their industry had virtually collapsed and banks were deep in losses as well. Unable to raise $16 million to stay afloat, employees risked their retirements to keep the firm alive. In less than a year, TDI recovered.
Partners participate actively in the design and conduct of their own training. When the company wanted to develop materials in such sensitive areas as harassment, use of corporate resources, and how a manager should deal with an employee who has made a significant mistake, self selected teams were formed to study each problem and formulate solutions. Teams were so inspired that they decided to write scripts depicting good and bad practices. As a result the teams decided, with management’s full support, to act out the scripts and to video each session. An “Academy Awards” ensued with a variety of awards given in such areas as best script, best production, most humorous, best actor, best actress and the like. Engaging employee teams in solving important corporate problems has become a standard operating practice (and the videos are still used as training tools).
Jack Lowe, Jr., managing partner, reflects: “Until someone has been in our work environment where the individual is valued, encouraged, challenged, guided, given freedom to perform and is loved, it is difficult to comprehend the power of the trust that exists here…”
Re-thinking an Environment for Contented Workers
Both TCS and TDI pursue quality with empathy. They work hard to be more efficient and to provide the highest levels of service, but they do it in a way that not only preserves but also enhances their employees’ dignity. In this research, Mason and Gavin offer a framework for a holistic sense of happiness in the workplace stemming from three defining characteristics. One is freedom which results from an individual’s ability to make choices. Happy people are those who can think independently and are free to choose. Second is knowledge—having the means and tools by which workers are allowed to make important and intelligent decisions by way of practical reasoning. The third characteristic is virtue, which requires moral character. Moral training comes in large part from the corporate visions and foundational principles that all employees learn, assimilate, and continue to practice.
Mason expressed that the real challenge is for existing firms that do not have these practices. Many of the recognized firms are founded with their sets of values from the onset like TCS, TDI, Southwest Airlines and even Wholefoods. “If firms and their management will adopt some aspects of servant leadership, that immediately moves them away from strong authoritarianism and away from the feeling a worker may have as a replaceable part,” Dr. Mason commented. “It takes really strong leadership and commitment to the idea of treating people/employees as if they are valued.”
Conclusion
If we are to create and maintain healthier, happier and more productive workplaces, organizations are well advised to place more emphasis on positive psychology which focuses on more positive, preventative measures. As Mason surmised from history’s lessons, “We seem to be moving to a class system like the Brits—an elite class and a servant class in the more negative sense—who are in fact trying to break this structure down. There is a sense of a re-kindling of labor movements that may force the kinds of changes we have seen in Europe with their labor movements.” In recent years, economic productivity has been wrung out of the average worker, in large measure, at the cost of his or her health and happiness. This trend towards pathological and dysfunctional effects needs to be reversed. Organizations have the capacity to create healthy and happy as well productive lives for their members if only their leaders commit themselves to it.
“The Virtuous Organization: The Value of Happiness in the Workplace” was published in Organizational Dynamics in December of 2004.
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