Theoretical realities

It is always reassuring when the results of a study verify theories you’ve been espousing for years. Recently, the international consulting firm Hewitt Associates studied “people practices” in what it refers to as DDGs — companies that achieve double-digit growth.

Here are some of the results of that study.

* Culture. There has always been discussion about company culture and the role it plays in success. This study confirms the importance of culture and the components of that culture that make DDG companies stand out. Employee engagement at DDG companies was nearly 30 percent greater than at non-DDG companies. When employees are engaged, they tend to remain at the company, say positive things about the company and strive for outstanding results.

In addition, the study found DDG companies have strong customer-centered cultures; employees who saw a strong connection between their role and business results; and management that focused resources on core competencies and outsourced activities beyond that focus

* Selection. The study’s findings in the area of employee selection mirror Jim Collins’ right people on the bus scenario. The study found a strong management mindset in DDG companies to recruit, retain and develop the best employees.

Then these companies identify the employees with the strongest potential and provide them with opportunities to shine. Frank management discussions about talent in the organization, as well as discussions with that talent, are common practices in these companies.

* Assessment. DDG companies also employ strong employee assessment processes. The study found DDGs focus on performance and results, continually evaluating the fit of the employee into his or her particular position.

* Performance. The differences between DDGs and single-digit growth companies are magnified when it comes to performance. Three characteristics were common — aggressive goals, clear communication and broad-based participation.

Finally, incentive plans were also different. DDGs averaged 47 percent work force involvement in short-term incentive plans, compared to 19 percent in single-digit growth companies. However, in a not-so-surprising twist that follows the DDG mindset of lofty goals, it was more difficult for employees in DDG companies to achieve those incentives.

Joel Strom is the founder of Joel Strom Associates. His firm works with closely held businesses and their ownership, helping them set and achieve their growth objectives while maximizing their profitability and value. For more results from the Hewitt study, reach him at (216) 831-2663 or [email protected].