With each day’s financial news gloomier and more uncertain than the last, how can anyone see recognizing excellence in small and midsize workplaces as anything other than frivolous? These are companies whose brands are often not broadly known. Further, they are privately held and have no direct influence on the stock market. Besides, aren’t workplace issues really all about expensive perks and benefits?

Why does any of this matter?

It has become common to talk about how small business is the backbone of the nation’s economy. The Small Business Administration tells us that small businesses account for 50 percent of the nation’s gross national product and create 60 to 80 percent of the net new jobs each year. Even more importantly, they estimate that small businesses are 14 times more innovative per employee than large firms.

This makes a pretty strong case that small businesses are important to the economy. But why do workplace practices make a difference, and aren’t they a distraction from “real business issues”?

Great workplaces underpin great businesses. Extensive research shows that organizations that are good workplaces, those that effectively engage employees in the issues that affect their jobs, achieve better results along every dimension: business growth, quality of products and services, productivity and, ultimately, profitability.

The 2008 Top Small Workplaces demonstrate this well. They have grown revenues 23 percent annually for the last two years. They are innovative, often recreating themselves and defining or redefining their industries. Employee retention averages six years; turnover is 13 percent. Further, they have been in business an average of 42 years, reflecting that many are not young, high-growth companies. Their sustainability alone is an argument for looking at how they operate, especially as we face tough economic times.

The Top Small Workplaces have uncovered and institutionalized practices that can be directly linked to both their sustainability and their high level of innovation. Through an analysis of the 2008 Top Small Workplaces applications, we have identified a number of themes common to the organizations that rose to the top and were selected among the 15 Top Small Workplaces. These themes reflect why they are great workplaces, and explain how they have tapped a defining competitive element: their employees.

  1. These companies take a long view of their business. These firms have a long time horizon and are committed to building enduring, sustainable businesses. They will sometimes sacrifice short-term growth to preserve their cultures and develop trusting relationships with their stakeholders. They have grown consistently over a period of time, remain profitable and have loyal customers.
  2. It’s not just about profits…these firms intend to change society. Leaders of these firms share a strong sense of mission, are driven by clear values and view their roles as responsible stewards serving multiple stakeholders: their employees, customers and the larger community.
  3. Open communication helps weather the good times and the bad. If mission and values drive these organizations, a commitment to honest and transparent communication assures that they operate effectively, grow wisely and respond quickly to changes. These organizations actively invite and expect employees to participate in decisions that affect their work lives. Nearly all share financial information with employees and train them to understand what the numbers mean.
  4. Teamwork – it’s how the work gets done. These organizations believe that a high level of teamwork leads to greater inspiration, high levels of innovation, camaraderie and unmatched productivity. Thus, they have structured their work around teams to bring all disciplines together to address a challenge or accomplish a goal.
  5. Employee development assures quality execution. These firms hire for “attitude” and “fit,” then train for skills. They understand that learning organizations are more adaptable, and they invest accordingly. Further, because of their long view and commitment to sustaining a strong culture, they grow their leaders from within whenever possible.
  6. Workspace matters. These firms have learned that to sustain a vibrant, team-based learning culture, their work environment should encourage collaboration and communication. They believe that open spaces, team-based desk arrangements and flexible work settings contribute to productivity, as well as employee morale.
  7. Employees share in the risks and rewards. Philosophically, these firms believe that trust, commitment and self-worth are built when everyone that helped to create the business success gets to share in the benefits of that success. All of the Top Small Workplaces offer some kind of performance-based incentives: often a combination of stock options, profit sharing, sales commissions and bonuses.
  8. A focus on well-being, prevention and health builds endurance. These organizations actively nurture a culture of good mental and physical health by offering above-industry-average medical benefits, wellness programs that promote prevention and health and flexible work options to help employees balance work and life demands.
  9. Committed, able employees enable these firms to compete on quality and service, less on price. These firms are growing and profitable because they have clearly defined market niches, and they provide extraordinary quality and value to their customers. Their customer-centered focus differentiates their businesses, and it is directly tied to their highly engaged, committed workforces.

Winning Workplaces annually seeks out and recognizes extraordinary small organizations because we believe that by drawing attention to excellence, we can encourage others to learn from and follow their models. These organizations have learned that employees are critical to the success of their businesses. These organizations will be able to weather the economic uncertainty and storms ahead and are likely to lead the economy in renewing itself. They demonstrate that it is possible to develop workplaces that are simultaneously humane and capable of achieving competitive advantage in a global economy.