Secrets of Canada’s Best Bosses

When the Great Recession dealt a nasty blow to Wadood Ibrahim’s business fortunes in 2009, the CEO of Winnipeg-based business performance consulting and IT solutions firm Protegra Inc. was forced, like many Canadian entrepreneurs at the time, to hand out pink slips. He had to let go 10 of his 67 workers as Protegra’s revenue dipped from $7.7 million to $6.8 million in the span of a year.

“It was tough,” Ibrahim admits. He worried whether the morale of Protegra’s highly engaged and productive workforce would collapse under the pressure. He had a lot to lose: just before the layoffs, Protegra had placed first in the 2009 Best Small and Medium Employers in Canada (BSME) ranking-conducted by the Kingston, Ont.-based Queen’s Centre for Business Venturing and global HR consultancy Hewitt Associates LLC (now Aon Hewitt). The CEO didn’t want the momentum to stop.

It didn’t. In fact, Protegra’s staff has become even more engaged. The firm once again tops the BSME list this year, and in so doing has bested its already high 2009 engagement score by six percentage points. Ibrahim credits these achievements to a long-term approach to building and maintaining a strong, employee-first corporate culture. He’ll continue to emphasize this as the company works to reclaim its pre-recession head count and earnings. It is, quite simply, what Protegra is built on.

According to BSME research, employee engagement is signified by three behaviours: employees’ willingness to remain with an employer, the degree to which they advocate working for or doing business with their employer and their willingness to perform above and beyond the call of duty to provide their employer with a competitive advantage. Statistics show that encouraging these behaviours boosts a company’s bottom line: a 2010 Aon Hewitt study of publicly traded companies revealed that firms with highly engaged employees logged annual revenue growth rates 269% greater than their rivals with less engaged staffs. These leaders also received 45% more unsolicited applications for employment and enjoyed 54% less voluntary employee turnover.

Figures such as these paint a clear picture for SME owners and managers across the country: develop internal systems to foster high employee engagement levels, or risk being left behind by competitors that do. Yes, there are challenges: Creating and maintaining high engagement is a carefully managed process in which return on investment is usually measured in years, not quarters. Plus, it often takes CEO time, HR tools and money-all of which can be in short supply at SMEs. But this year’s top employers demonstrate time and again that it’s absolutely possible for resource-strapped firms to build and sustain highly engaged workforces. Moreover, they prove that doing so can help drive a company’s growth to unimagined heights.

CREATE AND MAINTAIN A CULTURE

Ibrahim has focused on employee engagement since the day he founded Protegra in 1998. It’s why, shortly after launch, he introduced an employee share-ownership program-which exists to this day-and encouraged his workers to participate. No fan of traditional corporate titles, he took a bold step and refused to grant them to staff. Although the company does have project managers tasked with ensuring that specific targets, timelines and business goals are met, an outsider visiting the firm would be hard-pressed to identify a traditional hierarchy.

It has been challenging at times to keep Protegra’s egalitarian culture going. In 2004, as the company was in major growth mode, changes started to creep in. The firm was hiring left and right, recruiting people for skills alone. It was ignoring candidates’ cultural fit, which had previously been a prerequisite. A more hierarchical management structure started to take hold. Conflicting opinions about Protegra’s direction began to emerge, causing a rift in what had always been a fairly harmonious workplace. After about six months, Ibrahim realized, to his dismay, that his beloved corporate culture was being replaced by something entirely different: “It was becoming a place and a culture we didn’t want to create.”

Ibrahim conducted an internal employee survey to identify how staff felt about the direction the firm was taking. In doing so, he learned that lax communication was a key problem. So, he decided to put a clear vision for the company on paper and, while he was at it, define the characteristics of Protegra’s culture. He asked employees to contribute their ideas of what the company stood for-values such as respect, teamwork and dependability came up most often-and also where they thought it was heading. Ibrahim studiously analyzed their input, using the most common responses to create a concept of what Protegra was, what it aspired to be and how employees were expected to apply its values. The culture thus codified, he took the drastic step of challenging staff to buy into it-or move on.

Almost a quarter of the staff, 10 in total, weren’t on board and chose to leave. It was a defining moment for the firm. “Since then we’ve had a big turnaround,” says Ibrahim. “We got alignment on values and vision.”

By the time Protegra topped the 2009 BSME list, it was clear that Ibrahim’s long-term strategy was paying off. But that didn’t stop the CEO from making more improvements. His intuition caused him to question whether the firm’s highly engaged culture would survive another growth spurt and the planned addition of more offices, which would diffuse staff. So, Ibrahim took his earlier efforts to codify Protegra’s culture one step further, developing a website for internal use called the Enduring Culture Machine. The site not only provides in-depth explanations of Protegra’s values, it also lays out processes for functions such as billing, HR practices and project management. The site is meant to be a primer for new recruits, a communication tool for existing employees and a mechanism to protect and strengthen Protegra’s culture over the long haul. “We still want creativity and empowerment, but [new staff] need to abide by basic company principles,” Ibrahim explains. As a result, the company enjoys an annual staff turnover rate of just 5%.

Ibrahim’s next project is to create career-development portfolios with individual staffers that highlight their personally defined career objectives and align these with company goals. He believes demonstrating an interest in helping workers reach their full potential will ratchet up Protegra’s engagement further: “Believing in your people means trusting them and creating the mechanisms to let them be who they are.”

BE OPEN TO STAFF SUGGESTIONS

For years, Rodney Peacock suspected that employee engagement was high at ISL Engineering and Land Services Ltd., the Edmonton-based infrastructure planning and design firm he heads. Turnover was low, growth was consistent and customer feedback was positive. When the CEO asked his staff to participate in the 2009 BSME survey, he discovered his gut instinct was not as correct as he’d hoped: employees were satisfied and motivated in most aspects of the job-but, crucially, not all. There were problem areas that Peacock and ISL’s senior managers hadn’t known were causing trouble.

He learned that employees wanted better professional-development options; many felt the company wasn’t doing enough to facilitate their ambitions. Peacock was happy to oblige, but wasn’t sure where to start; he didn’t want to impose forms of educational support that employees wouldn’t use. So, he asked workers to identify their career-development priorities. Some identified conferences they wanted to attend, while others expressed an eagerness to improve their formal education.

In response to these requests, ISL created a formal mentoring program for younger engineers and support staff, many of whom join the firm out of school. ISL also developed a program that subsidizes professional development: it pays tuition fees for up to three employees working toward engineering degrees each year, for instance, and will also reimburse staff for professional dues. About 75% of the company’s 286 employees take advantage of the firm’s career-development support. The cost: an average of about $2,000 per participating employee annually. Peacock says it’s a good investment, as it creates “an opportunity to make each person happier and more marketable to the firm.”

The 2009 BSME study also revealed that ISL’s benefits package was a source of employee concern. Although the package was relatively strong, many on staff weren’t taking full advantage of it because they simply didn’t understand what it offered-a problem largely born of poor communication. So, ISL’s HR reps staged a series of seminars at its seven offices in B.C. and Alberta to explain the package.

The firm also conducted a survey to highlight areas for improvement. Staffers were quick to point out several areas that could be adjusted to suit their needs better. Management listened. ISL increased the plan’s healthy living account, which allows staff to spend in areas such as dental and optical-a measure that costs the firm about $150 per employee annually. The company also widened the scope of its interest-free loan program, which for years had been offered to staff buying computers for use at home. “We’ve opened it up in the past year to include gym memberships, bikes or fitness equipment,” explains Peacock. About 76 people, roughly 27% of the company, take advantage of the program annually.

Combined, these and other engagement-boosting tweaks-including appointing internal sustainability champions in response to younger staffers’ concerns about ISL’s environmental performance-have cost the firm some money. But in the professional-services field, in which staff is the most important asset, Peacock feels it’s more than worth it. “If you’re not willing to invest in your people, you’re going to have some major challenges,” he says. Besides, catering to staff needs is helping the business: since 2008-before ISL started its improvement campaign-annual turnover has been just 4%. As for revenue, it has grown from $45 million to an estimated $55 million a year.

IT’S NEVER TOO LATE FOR A CHANGE

Paul Seed, president of London, Ont.-based StarTech.com Ltd., didn’t stop to measure employee engagement at his fast-growing firm until 2002. When he finally did-using internal resources-he was stunned to learn just how dissatisfied the employees at his computer hardware distribution firm were. That taught him a lesson: “When you’re running a company that started in the basement and grew to 153 employees, you have to change your style as you grow,” says Seed. “We didn’t update our communication style to suit the size of the company.”

After a few years of tracking engagement internally, Seed was confident things had improved and enrolled in the BSME program in 2005. To his surprise, StarTech failed to make the 50 Best list. Clearly, employees weren’t nearly as engaged as he’d thought. After poring over employee feedback, Seed noticed two particularly glaring complaints, both of which reflected badly on his leadership team’s people-management approach: first, poor communication from management; and, second, a lack of involvement in how the company makes decisions.

Seed was determined to make changes that would stick. To bridge the communication gap, he quickly placed a much stronger emphasis on management/employee dialogue. Perhaps too quickly; the sudden about-face raised the eyebrows of more cynical employees. “Everyone was a bit skeptical at first,” Seed admits. But he stuck to it. He encouraged senior managers to keep initiating conversations with front-line workers, to share news of developments and to act on any concerns. After about a year, even the wariest employees were hard-pressed to question management’s commitment to communication.

To get employees involved in the decision-making process, Seed gathered staff at corporate headquarters for a weekend to discuss the firm’s progress and goals. Called the StarTech One Team conference, it was meant to give all staff an understanding of the firm’s achievements and goals while creating an opportunity for them to contribute to the company’s strategic direction. It was a hit. Since its debut in 2005, the now-annual conference has expanded to include entertainment; it is now as much a social team-building affair as a strategic one. It has also grown in size-today, the firm flies in employees from its U.S. and U.K. offices, too. The cost of hosting the conference is between $50,000 and $60,000, not including the time-and-a-half pay and day-in-lieu each staffer is granted for working on a weekend. “It costs,” Seed reasons, “but employees get a chance not only to talk to everyone but to see where the firm is going.”

These actions are clearly resonating with staff. StarTech finally made the BSME ranking, in 45th place, in 2009 and occupies 36th place this year. The benefits of boasting a dedicated, determined workforce aren’t lost on Seed. “You can never underestimate the power of employee engagement and the difference it makes in moving from a good company to a great company,” he says. Although StarTech does not disclose its financials, the CEO directly credits engagement initiatives with revenue growth ranging from 10% to 25% in 2005 through 2008, 5% at the height of the recession in 2009 and 35% last year.

EMPOWER EVERYBODY

Some CEOs might think that a large HR team is a prerequisite for success on the engagement front. Steven Fitzgerald doesn’t. In fact, the president of Vancouver-based IT firm Habañero Consulting Group-which builds websites and customizes Microsoft products-contends that an HR department isn’t necessary at all. Instead, “our whole company acts as an HR department,” he says. “It’s such a high priority that, since we founded the company in 1996, we’ve refused to bring in HR professionals to run it from a distance.” Such a hands-on, bureaucracy-free approach may be unconventional, but staff appear to like it: the firm’s 75 employees reported high enough engagement scores to land Habañero in 13th spot on this year’s BSME ranking.

Habañero has achieved such high levels of engagement in part through some of the same tactics and strategies as Protegra, ISL and StarTech, including focusing on employees’ career development (Habañero spent $218,000 on professional development last year alone) and encouraging staff input into the company’s growth strategy. But the main driver, according to Fitzgerald, is the accountability that comes from dispersing traditional HR duties among staff. This has helped boost camaraderie and focused workers’ attention not only on their personal success but on that of their colleagues and the firm, too. For instance, senior staffers are encouraged to coach new recruits. “Everyone in the organization takes an active role in developing others,” Fitzgerald explains.

This culture of accountability has deep roots. In the early days of Habañero, Fitzgerald wasn’t spending much time with his young family and began to burn out. Determined not to let an “all work and no play” ethic define the business, Fitzgerald decided that workers would be largely autonomous and judged on the quality of their work-not the number of hours they put in. That’s why the firm doesn’t track sick days, allows workers to telecommute (where possible) and offers flex-hours.

Living up to that cultural philosophy has been a work in progress. In 2006-a year in which the company’s revenue soared by 80%-Habañero, like Protegra, found itself hiring for convenience instead of cultural fit. When veteran employees began openly questioning the company’s direction, Fitzgerald woke up to the problem. He altered Habañero’s recruitment practices and hasn’t looked back. Now, job applicants face interviews with up to a dozen people in the company-mainly prospective colleagues-who outline the culture and explain exactly what the job entails. The process is capped off with a one-hour interview by Fitzgerald himself. Cultural fit is no longer a question with new hires: in 2010, Habañero’s turnover rate was just 1.5%.

Another hiccup occurred last year, when Fitzgerald realized Habañero’s billable-hour invoicing model was starting to contradict its commitment to work/life balance. “We would talk about harmony and self-fulfilment in terms of employees’ careers, yet we had a target for a certain number of hours to bill each month,” he explains. So, management worked with staff to analyze how Habañero could better meld its internal ethos with its customer-service needs. They found that a new model-project-based billing-delivered better value for clients, didn’t adversely affect profitability and fostered a truly flexible work environment. So far, says Fitzgerald, feedback has been overwhelmingly positive.

Fitzgerald has no doubts that such engagement-boosting initiatives have fuelled the company’s revenue growth from $5.7 million in 2006 to an estimated $14.3 million this year. His advice to Canadian SME owners aspiring to similar results? Take the time-and it does take time-to understand the needs of employees fully. “You need to know the hopes and dreams of the people working with you so you can measure whether they’re lining up with your purpose,” says Fitzgerald. “Once you do that, you attract people who are engaged for the right reasons-and that’s very powerful.”

Credit: Chris Atchison

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Published in: on March 2, 2011 at 2:32 pm  Comments (1)  

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