Some in the business community would argue that so-called “touchy-feely” leadership qualities such as treating people with respect, displaying fairness and communicating openly and honestly with them is nice and everything, but it doesn’t directly impact the bottom line.

I was reminded just how wrong those of that mind are during a phone call I made a few weeks ago to an employee in the PR department of the company I wanted to profile as this month’s Success Story, Texas-based Rackspace Managed Hosting.

The Rackspace employee I spoke with expressed enthusiasm that I wanted to get to know not only one of last year’s Best Bosses – the company’s Chairman, Graham Weston – but also other Rackspace employees, which everyone there proudly and readily refers to as “Rackers.” As I continued with my call, I paused while trying to remember the phrase the company uses to describe its personalized service to clients that I remembered seeing in Weston’s Best Boss application.

“Fanatical Support,” the employee said, almost fanatically.

As the conversation ended and I hung up, I felt excited that the firm had granted me interviews with Mr. Weston and several other Rackers. Then it dawned on me: I had received Fanatical Support – and I wasn’t even a paying Rackspace customer.

This anecdote stresses the power and potential of setting up employees, especially front-line workers, as their own brand within the brand. They don’t have to have their own nickname, as Rackspace employees do, but they should have a shared way that they think of themselves – one that transcends titles and one they can take pride in.

One of the benefits of driven-down decision making is that employees can innovate with the help of direct customer input. Among other advantages, this can aid employee career development while helping the business to profit as it better serves its niche(s) and becomes more adept at identifying new ones.

Since late June, Travel site Expedia.com has devoted significant advertising to its Fare Alert tool, a downloadable desktop application that automatically alerts fare seekers when flights and/or vacation packages within a pre-set price range become available. Yet, as Adweek wrote last month, employee-friendly Southwest Airlines has had a similar tool in use for over two years.

The airline has moved on to making the most of an employee-written blog it introduced in April 2006 called “Nuts About Southwest.” With a focus on making interaction with employee departments transparent, Southwest has used feedback from the blog to make service improvements, including streamlining the results of their desktop fare application tool and even expanding the timeframe in which customers can book tickets in advance. “The company learned that talking directly with consumers requires a more honest, direct approach than typical marketing,” Adweek wrote.

An even more current, and more technical, example of internal branding appears in this month’s Fast Company magazine. Rather than clamp down on customers who modify their robot designs to do things other than originally intended, the magazine explains how employees of Massachusetts-based iRobot Corporation (whose CEO, Colin Angle, is one of our Best Bosses) elected to turn that brainpower into an online community, where tech-heads can congregate, interact with employees and share their best “mods.” The bottom-line result? Increased orders for a “blank canvas” version of the popular Roomba, including bulk orders from universities seeking to teach students about robotics.

The “touchy-feely leadership”-aversive types I mentioned earlier might also focus on top-line sales results. Some of the best results in this area come from well-satisfied, repeat customers. It’s worth mentioning an emerging trend when it comes to courting this group: company-guided word-of-mouth advertising.

The Los Angeles Times recently wrote about this trend, profiling an L.A.-based voice-over artist who found herself a member of Staples’ frequent shopper program. Accompanying free products like sticky notes and cases of no-leak pens, the artist found Staples-written talking points containing “choice phrases to use when casually plugging the products.”

Certainly there is a benefit to the cost of giving free products to good customers – the Times article cites a study by research firm EMarketer which estimated that 65 million Americans gave word-of-mouth consumer advice last year, through both formal programs like Staples’ and in the course of normal conversations.

The power of viral marketing is reinforced, and the message is validated, when customers and potential customers find that dealing with the company is a positive experience. Empowering front-line employees, showing them respect, and then getting out of the way while they interact with customers and use those experiences to innovate will not only result in “something for nothing” – it will lower turnover and increase morale and productivity.