The second and final day of the 2008 Top Small Workplaces Conference covered small business leadership topics as relevant and diverse as growing leaders from within and managing in lean times to open book management. Following is a summary of the first two concurrent sessions of the day.

Developing Leaders from Within

Larry O’Toole, founder and CEO of 2007 Top Small Workplace Gentle Giant Moving Company, and Ryan Libby, manager of Gentle Giant’s Providence, RI office, talked about how O’Toole’s vision of Gentle Giant as a people development company has helped define the business – and created a differentiating niche in the moving industry.

O’Toole spoke about how when he started his Massachusetts-based business in 1980, the moving industry saw itself as a commodity business that competed only on price, and he saw a market need for quality movers who could do a quality job. He decided to build a business where everybody who worked there was exceptional, whom “you’d be delighted to have in your home.” O’Toole said he is proudest of the people who’ve worked at Gentle Giant and moved on to be great in their careers, whether they’re surgeons, airline pilots, or building robots for the military.

He argued that one of the chief advantages of promoting from within is that it sends a message to new hires that if they stay with the company they will have the opportunity to move up, which helps keep turnover in check in an industry that is known for high turnover. This philosophy was also profitable: their reputation as a top quality mover has enabled the firm to grow 10 to 20 percent per year and open 16 regional offices.

O’Toole rounded out for attendees in detail the company’s approach to growing leaders:

  • Hire thoughtfully
  • Establish expectations early
  • Ground everyone in core values
  • Set clear paths to advance
  • Create opportunities to grow
  • Communicate consistently
  • Provide feedback and seek input

A lively moment occurred in Q&A portion at end of session when Colleen Barrett, who has managed using similar servant leadership principles at Southwest Airlines, mockingly asked if Larry if he was single, because she was interested in marrying him.

Creating a Culture of Employee Ownership

The presenters of this session included Bill Marshall, president & CEO of 2007 Top Small Workplace Phelps County Bank in Rolla, MO, and three of his fellow employee owners: Sandy Karr from Human Resources, Teller Supervisor Tonia Mendenhall and Loan Processor Hilary Smith.

Marshall explained that Phelps, which is currently one of only two 100 percent employee owned banks in the country, had a “horrible” defined benefit pension plan. The former CEO, who hired him on in 1986, had read about ESOPs and had talked the then owner into selling 5 percent of the bank to the employees. With a goal of providing all employees with a generous retirement account, by 1993 the bank became 100 percent employee owned. As part of this process leadership moved the sense of ownership among employees from merely stock ownership to job ownership.

Karr, a 20-year employee owner, came onboard during this transition and detailed how it resulted in the creation of new programs that fostered both career and individual development. Phelps’ “Bank Buddy” program, for instance, pairs new hires with tenured employees to help the former quickly learn the ropes and fit into the culture. Another program that is for new hires and all associates with less than five years of service is “Banking 101,” a curriculum of job-specific, employee-taught courses that emphasize knowledge building and confidence to help with customer service, as well as lay the groundwork for career advancement at the bank.

Smith, who has served in the loan department for six years, broke down Phelps’ employee ownership culture into its various pieces. These include:

  • Job empowerment – A committee of employees from different departments review ideas and bring them back to their departments for feedback and implementation. This gives everyone a direct stake in process development.
  • Involvement – in the community and the bank itself. She emphasized the diversity in their committees, which address Christmas party planning to IT to the ESOP. The latter committee recognizes seven-year employees formally as 100 percent vested in the ESOP.
  • Communication – includes open book management; open door policy, especially with financials; and meetings. Smith drew particular attention to the quarterly bank meeting, which enables her to know how the bank is doing compared with the overall economy.
  • Value on fun – to keep people’s interest up. Employees come together frequently to put on skits and enjoy food and drink.

Mendenhall concluded the discussion of Phelps’ employee ownership culture, touching on how Phelps is different than many other businesses in Rolla. This includes elements that are value-adds for customers such as free Starbucks and TVs in waiting areas. It also involves an unusually high employee allowance for work apparel – $600 per person for new hires and an additional $200 per person for each additional year of service – and the fact that all business cards, for the CEO on down, say “Employee Owner.”

One more area Mendenhall touched on that serves as a recruiting differentiator is a focus on family events for employees, which have ranged from miniature golf outings to “Christmas in September” in 2007, a popular all-employee event that took advantage of the nice fall weather. She stressed that the more small firms can do to bring their people together in fun and unique ways, the more cohesive and productive the culture can be.