All Keith Dunn wanted was to prove you didn't have to mistreat employees to be successful

You don't like how you've been treated as an employee, so you start a company to show that there is a better way. Your new business is an overnight sensation, but before you can even spell S-U-C-C-E-S-S, you're treating your people shabbily.

Keith Dunn's struggle to build an "excellent" company is a vivid illustration of the difference between a management concept as it appears in a book and the way it really works in the chapters of a company's operations. -- J.H.

* * *

Keith Dunn knew exactly what to expect. He knew how his employees felt about him.

That's why he had sent them the questionnaire in the first place. He needed a shot of confidence, a feeling that employees were behind him as he struggled to build McGuffey's Restaurants Inc. beyond two restaurants and $4 million in annual sales.

Gathering up the anonymous questionnaires, Dunn returned to his tiny corporate office in Asheville, N.C. With one of his partners by his side, he ripped open the first envelope as eagerly as a Broadway producer checking the reviews on opening night. His eyes zoomed directly to the question where employees were asked to rate the three owners' performance on a scale of one to 10.

A zero. The employee had scrawled in a big, fat zero. "Find out whose handwriting this is," he told his partner, Richard Laibson.

He ripped open another: zero again. And another. A two. "We'll fire these people," Dunn said to Laibson coldly.

Another zero.

A one.

"Oh, go work for somebody else, you jerk!" Dunn shouted.

Soon he had vowed to fire 10% of his 230 employees. "Plenty of people seemed to hate my guts," he says.

Over the next day, though, Dunn's anger subsided. "You think, 'God, I've done all this for these people and they think I'm a total jerk who doesn't care about them,' " he says. "Finally, you have to look in the mirror and think, 'Maybe they're right.' "

For Dunn, that realization was absolutely shattering. He had started the company three years earlier, in 1983, out of frustration over all the abuse he had suffered while working at big restaurant chains. If Dunn had one overriding mission at McGuffey's, it was to prove that restaurants didn't have to mistreat their employees.

He thought he had succeeded. Until he opened those surveys, he had believed McGuffey's was a place where employees felt valued, involved, and appreciated. "I had no idea we were treating people so badly," he says. Somewhere along the way, in the day-to-day running of the business, he had lost his connection with them, and left behind the employee-oriented company he thought he was running.

Everyone acts a little nervous as Keith Dunn sits down. Dressed in black, he looks every bit the amateur magician that he is. The 13 recruits are sitting around a table in a dining room at McGuffey's in Charlotte, N.C. "So," he says, "tell me why you are here."

The trainees have asked for asylum at McGuffey's after fleeing oppressive regimes at other restaurants. "New management came in," says one. "They were supposed to know what they were doing." He rolls his eyes, and a few others offer nods of recognition. "Yeah," adds another, "I heard this place was real employee oriented."

Dunn smiles; orientation at the fourth McGuffey's is off to a good start. Clearly he has turned his concern for employees into a competitive advantage.

He begins by reeling off his own résumé, a 13-year odyssey through some big restaurant chains that left him feeling as limp as a cheeseburger after a day under the heat lamps. Ponderosa in Georgia. Bennigan's in Florida and Tennessee. TGI Friday's in Texas, Tennessee, and Indiana. Within one six-month period at Friday's, he got two promotions, two bonuses, and two raises -- then his boss left, and he got fired. That did it. Dunn was fed up with big chains.

At meetings, managers talked about landscaping, they pondered whether to hang canoes from the walls, they considered expensive uniforms and custom-made chairs -- but they rarely uttered a word about employees. One chain, he says, gave more thought to caring for the 17 kinds of light bulbs in each restaurant than it did to being concerned with its employees.

Maybe I'm just in the wrong business, Dunn thought. In 1982, at 29, he returned to Atlanta, where he had attended Emory University as an undergraduate, and began waiting tables at a local restaurant.

There he met David Lynn, the general manager of the restaurant, a similarly jaded 29-year-old who, by his own admission, had "begun to lose faith." Lynn and Dunn started hatching plans to open their own place, where employees would enjoy working as much as customers enjoyed eating. They planned to target smaller markets that the chains ignored.

They toyed with calling it The Good Old Days, and Dunn ran the idea past his father, a college professor. Oh, I see, said the elder Dunn, a place that evokes the era of 5 meals, 2 newspapers, and the McGuffey's Reader. What reader? Dunn asked. His father explained that it was the standard primer used in one-room schoolhouses during the 1800s. Hence the name McGuffey's was born; the logo includes a pencil, and each restaurant has a private dining room called the Classroom, with pencils, textbooks, and a blackboard.

All the two needed was a hefty helping of money. They got it from the night janitor's cousin at the Atlanta restaurant where Dunn was waiting tables. The investor helped them obtain a $162,000 line of credit in return for a 51% equity stake. The investor's parents leased them property in Asheville, N.C. Dunn and Lynn soon brought in one more partner; Michael Brandson was another chain-restaurant veteran whom Lynn had worked with. Brandson took 9% of the remaining equity, while Dunn and Lynn claimed 20% apiece.

All three managers had extensive backgrounds as corporate trainers, so they set up an elaborate hiring and training program. They spent about $20,000 on two weeks of training. The first week included three days of intense classroom learning, then a couple of days of role-playing. They devoted the second week to dry runs. The owners invited local businesspeople to sample McGuffey's for free.

True to their people-oriented goals, the partners tried to make employees feel more appreciated than they had ever felt at the chains. They gave them a free drink and a meal at the end of every shift, let them give away appetizers and desserts, and provided them a week of paid vacation each year.

A special camaraderie developed among the employees. After all, they worked in an industry in which a turnover rate of 250% was something to aspire to. The night before McGuffey's opened, in October 1983, some 75 employees circled the ficus tree next to the bar, joined hands, and prayed silently for two minutes. "The tree had a special energy," says Dunn.

Maybe so. By the third night of operation, the 230-seat McGuffey's had a waiting list. The dining room was so cramped that after three months, the owners decided to add a 58-seat patio. Then they had to rearrange the kitchen to handle the volume. In its first three and a half months, McGuffey's racked up sales of about $415,000, ending 1983 just over $110,000 in the red, mostly because the partners paid back the bulk of their $162,000 debt right away.

Word of the restaurant's success reached Hendersonville, N.C., a town of 30,000 about 20 miles away. The managing agent of a mall there -- the mall there -- even stopped by to recruit the partners. They made some audacious requests, asking him to spend $300,000 on renovations, including the addition of a patio and upgraded equipment. The agent agreed. With almost no market research, they opened the second McGuffey's in April 1985; Asheville was still roaring, having broken the $2-million mark in sales its first year, with a marginal loss of just over $16,000.

By midsummer, the 200-seat Hendersonville restaurant was hauling in $35,000 a week. Gee, you guys must be getting rich, the partners heard all around town, when are you going to buy your own jets? "Everyone was telling us we could do no wrong," says Dunn. The Asheville restaurant, though, was developing some problems. Right after the Hendersonville McGuffey's opened, sales at Asheville fell 15%. But the partners shrugged it off; some Asheville customers lived closer to Hendersonville, so one restaurant was probably pulling some of the other's customers. Either way, the customers were still there. "We're just spreading our market a little thinner," Dunn told his partners.

Business was so good, Dunn says, that the partners were "starting to believe that we had invented the restaurant business." If that was so, maybe the time was right to reinvent the restaurant business. McGuffey's was a great concept, to be sure, but they had mastered it already. "We thought we could do anything," says Dunn.

Only six months after opening the Hendersonville restaurant, Dunn and his partners decided to open McGuffey's Sneakers, a 123-seat pub and grill in Skyland, N.C. It was a scaled-down, simpler version of McGuffey's.

Like its predecessors, Sneakers took off right away. But there was still that nagging matter of shrinking sales at the other restaurants: Asheville had lost another 10%, Hendersonville 5%. This time, Dunn blamed the fact that the drinking age had been raised to 21 in Asheville, cutting into liquor sales. "I didn't want to face that maybe our quality was suffering," he says.

Dunn thought of himself as the man who made daring restaurant concepts succeed in the middle of nowhere. McGuffey's Sneakers pulled in just under $1 million in its first year. Four competitors took him on in Hendersonville, including one national chain; he put two of them out of business within six months. How? "It's not any one thing we do," Dunn told admirers over and over. "We just do 100 little things better." For instance, there were the chilled salad forks, heated maple syrup, and pewter soup bowls.

By 1985 the company recorded nearly $3.5 million in sales, with nominal losses of about $95,000. But the adulation, and the expectation of big money and fancy cars, was beginning to cloud the real reason they had started the business. "McGuffey's was born purely out of frustration," says Dunn. Now, the frustration was gone. "You get pulled in so many directions that you just lose touch," says Brandson. "There are things that you simply forget."

What the partners forgot, in the warm flush of success, were their roots.

Dunn talks about his former managers with disdain. "You know the type. He comes in and starts pinching the waitress, says, 'Cut your labor, it's too high,' has five drinks at the bar, then waltzes out the door."

His own employees describe Dunn, circa 1985, as the guy "with his nose in the air" who was "all dressed up for the bankers" and "never said hello." Says one employee: "Keith was just somebody who came through the restaurant once in a while."

He should have plunked down on a bar stool and listened. McGuffey's just isn't the same, he would have heard from his workers. Asheville employees resented that the owners didn't seem to care about the original eatery anymore. In Hendersonville workers were unhappy that their superstars had been sent to open Sneakers. "The magic was gone," says Sharon Morales, a bartender.

The magician had pulled a disappearing act. Dunn was off at trade shows, spending money on "neat" items like a $3,000 french-fry cutter. He was busy preparing for bankers, lining up plans for another McGuffey's. He got involved with local charities and street festivals, activities befitting a successful businessman, he thought. "All I was doing was going to meetings," says Dunn. The man who had devised two-thirds of his restaurants' recipes was never in the kitchen.

"Success breeds ego," says Dunn, "and ego breeds contempt." He would come back from trade shows or real-estate meetings all pumped up. "Isn't this exciting?" he'd ask an employee. "We're going to open a new restaurant next year." When the employee stared back blankly, Dunn felt resentful. "I didn't understand why they weren't thrilled," he says. He didn't see that while his world was constantly growing and expanding, his employees' world was sliding. They were still busing tables or cooking burgers. Forget the new restaurant; you haven't said hello to me in months; and by the way, why don't you fix the tea machine?

His three-hour orientation sessions became a relic of the past, of the time "before we were big, rich, and successful. I just got too good, and too busy, to do orientation," he says. In fact, he decided to tape an orientation session, to make a film just like the one he had been subjected to when he worked at Bennigan's. On tape, Dunn told new employees one of his favorite stories, the one about the customer who walks into a chain restaurant and finds himself asking questions of a hostess sign because he can't find a human. The moral: "McGuffey's will never be so impersonal as to make people talk to a sign." A film maybe, but never a sign.

Since Dunn wasn't around the restaurants all that much, he didn't notice that employees were leaving in droves. Even the departure of Tom Valdez, the kitchen manager in Asheville, wasn't enough to take the shine off his "glowing ego," as he calls it.

Valdez had worked as Dunn's kitchen manager at TGI Friday's. When the Hendersonville McGuffey's was opening up, Dunn recruited him as kitchen manager. A few months later Valdez marched into Dunn's office and announced that he was heading back to Indianapolis. "There's too much bullshit around here," he blurted out. "You don't care about your people." Dunn was shocked. "As soon as we get this next restaurant opened, we'll make things the way they used to be," he replied. But Valdez wouldn't budge. "Keith," he said bitterly, "you are turning out to be like all the other companies." Dunn shrugged. "We're a big company, and we've got to do big-company things," he replied.

Valdez walked out, slamming the door. Dunn still didn't understand that he had begun imitating the very companies that he had so loathed. He stopped wanting to rebel against them; under the intense pressure of growing a company, he just wanted to "master their tried-and-true methods. I was allowing the company to become like the companies we hated because I thought it was inevitable," he says.

Three months later McGuffey's two top managers announced that they were moving to the West Coast to start their own company. Dunn beamed. "Our employees learn so much," he would boast, "that they are ready to start their own restaurants."

Before they left Dunn sat down with them in the Classroom at Hendersonville. "So," he asked casually, "how do you think we could run the place better?" Three hours later he was still listening. "The McGuffey's we fell in love with just doesn't exist anymore," one of them concluded sadly.

Dunn was outraged. How could his employees be so ungrateful? Couldn't they see how everybody was sharing the success? Who had given them health insurance as soon as the partners could afford it? Who had given them dental insurance this year? And who -- not that anyone would appreciate it -- planned to set up profit sharing next year?

Dunn's defensive attitude simply showed that he couldn't relate to his employees. His own idea of what it meant to show concern for them had shifted, although he wasn't much aware of it. Forget the pats on the back, the personal attention, the we're-all-in-this-together attitude that employees had cherished back in Asheville. Dunn wasn't about to stand in a circle and join hands with them again.

He treated them like nagging children, writing checks to keep them out of his hair. Throw them this benefit or that, but keep them at a distance. He wasn't really interested in what they had to say. "Your ego won't let you listen," he says. "You get to thinking you're so wonderful that you start getting charitable with people."

Employees sensed it. One departing manager zapped Dunn with a remark he couldn't shake. "You think you can buy people off with health insurance and dental insurance," he said. "Well, you can't."

"It was a real shock," says Dunn. Unfortunately, not enough of a shock for him to act in time.

In the summer of 1986 David Lynn decided he had had enough. Believing that Sneakers would be easier to manage, he offered Dunn a deal: I'll give you my 20% stake in McGuffey's if you'll spin off Sneakers to me and assume its $90,000 debt. Dunn agreed.

Dunn had always been president, but now he had more stock than anyone else in management. His stake rose to 30%, Brandson's increased to 13.5%, and Richard Laibson, a new partner, owned 5.5%. The outside investor held onto the rest. Just after Hendersonville opened, Laibson, a CPA and line cook, was brought aboard to take over the books. Laibson warned Dunn that the Sneakers debt, plus the loss of cash flow, could put the company in jeopardy.

By the end of 1986, when the Sneakers spin-off became official, McGuffey's posted a profit of about $75,000 on sales of $4 million. But the situation was deteriorating. Sales at both restaurants were still dwindling. This time, there were no changes in the liquor laws or new restaurants to blame. With employees feeling ignored, resentful, and abandoned, the rest rooms didn't get scrubbed as thoroughly, the food didn't arrive quite as piping hot, the servers didn't smile so often. But the owners, wrapped up in themselves, couldn't see it. They were mystified. "It began to seem like what made our company great had somehow gotten lost," says Brandson.

For Brandson, though, his own fate was about to take precedence over the company's. One afternoon, while riding his motorcycle at 50 miles per hour in the mountains near the South Carolina border, he smashed into a car head-on. He spent 21 days on a respirator and four weeks in intensive care. It would be four months before he could return to work.

Shaken by all the recent defections, Dunn needed a boost of confidence. So he sent out the one-page survey, which asked employees to rate the owners' performance. He was crushed by the results. Out of curiosity, Dunn later turned to an assistant and asked a favor. Can you calculate our turnover rate? Came the reply: 220%, sir.

Dunn was lost. What had happened to his original concern for employees? "When you become a president of a company, you grow," says Dunn. "The reason you are not a typical employee is because you have a certain ambition, a drive. And what affects you and motivates you every day is different from what affects and motivates them. They hate that the dishwasher leaks or that they run out of plates.

"So you don't know where you went wrong. All you do is sit and wonder, 'What could I have done to make them hate me so much?' "

Keith Dunn had never thought out what it meant to manage people well. In the beginning, everything he did was a reaction against what he had experienced himself as an employee. It was a shallow commitment, one that didn't survive in the face of success and the pressures of running a growing company.

Now, he was renewing his commitment, but still he wasn't thinking about what that meant. This time, he figured, he would consult the management gurus through their books, tapes, and speeches. You want people-oriented management, he thought, fine. I'll give it to you.

He heard consultant Don Beveridge suggest that smart companies kept managers involved by tying their compensation to their performance. McGuffey's had been handing managers goals every quarter; if they hit half the goals, they pocketed half their bonus. Sound reasonable? No, preached Beveridge, you can't reward managers for a halfhearted job. It has to be all or nothing. "From now on," Dunn told his managers firmly, "there's no halfway."

Dunn also launched a contest for employees. Competition, he had read, was a good way of keeping employees motivated. So the CUDA (customer undeniably deserves attention) contest was born. At Hendersonville and Asheville, he divided the employees into six teams. The winning team would win $1,000, based on talking to customers, keeping the restaurant clean, and collecting special tokens for extra work beyond the call of duty.

Employees came in every morning, donned their colors, and dug in for battle. Within a few weeks, two teams pulled out in front. Managers also seemed revitalized. To Dunn, it seemed like they would do anything, anything, to keep their food costs down, their sales up, their profit margins in line. This was just what Tom Peters, Kenneth Blanchard, Don Beveridge, Zig Ziglar, and the others had promised.

Dunn and Laibson had spent a few months visiting 23 of the best restaurants in the Southeast. Driving for hours, they'd listen to tapes on management, stop them at key points, and ask, "Why don't we do something like this?" At night, they read management books, underlining significant passages, looking for answers.

"They were all saying that people is where it's at," says Dunn. We've got to start thinking of our people as an asset, they decided. And we've got to increase the value of that asset. Dunn was excited by the prospect of forming McGuffey's into the shape of a reverse pyramid, with employees on top. Keeping employees, he now knew, meant keeping employees involved.

But after about six months, only one store's managers seemed capable of winning those all-or-nothing bonuses. At managers' meetings and reviews, Dunn started hearing grumblings. How come your labor costs are so out of whack? he'd ask. Heck, I can't win the bonus anyway, a manager would answer, so why try? Look Keith, another would say, I haven't seen a bonus in so long I've forgotten what they look like. Some managers wanted the bonus so badly that they worked understaffed, didn't fix equipment, and ran short on supplies.

The CUDA contest similarly deteriorated into jealousy and malaise. Three teams lagged far behind after the first month or so. Within those teams people were bickering and complaining all the time. We can't win, so what's the use? The contest, Dunn couldn't help but notice, seemed to be having a reverse effect than that he had intended. "Some people were really killing themselves," he says. About 12, to be exact. The other 100-plus were utterly demoralized.

Dunn was angry. These were the same employees who, after all, had claimed he wasn't doing enough for them. But OK, he wanted to hear what they had to say. Get feedback, Tom Peters preached, find out what your employees think. Dunn announced that the owners would hold informal rap sessions once a month.

This is your time to talk, Dunn told the employees who showed up -- all three of them. That's how it was most times, with three to five employees in attendance, and the owners dragging others away from their jobs in the kitchen. Nothing was sinking in, and Dunn knew it.

Early on, Dunn and Laibson hired a consultant to help them decide the company's mission. They settled on aiming to be "the best restaurant in the Carolinas." Execute being the best, preached Tom Peters, and everything else will follow.

Then they devised the "10 ABCs of Excellence." Half of them revolved around food: it must taste great and have a pleasant plate appearance, among other things. The remaining 5 included appreciating guests by remembering their names, greeting them within one minute, and having managers in the dining room talk to every guest.

Three months after unveiling these principles, the owners gave employees and managers a written test. What's the company goal? How do we measure it? What are the 10 ABCs? Sixty percent of the managers got it right; a dismal 40% of employees knew the answers. "We felt defeated," Dunn recalls.

He even embarked on a campaign to bring the magic back -- literally. All bartenders, he announced in the new Greenville, S.C., restaurant, will be required to perform magic tricks. Catch a glass behind your back, twirl a quarter-full vodka bottle, pop a strainer before dumping it in the sink. Few bartenders even wanted to try. "When somebody is hollering for a drink," says Bruce Ladd, a bartender in Asheville, "they do not want to see a magic trick."

What could Dunn do? He launched another CUDA contest, this time issuing sweatshirts that said "It's Back" on the front, and featuring the shark from Jaws on the back; he sat with the other owners at rap sessions; he tinkered with the all-or-nothing bonus plan, simplifying the goals. Nothing seemed to take. After six months, only 70% of the managers and 50% of the workers remembered the 10 ABCs or the company goal. Desperate, Dunn stood up at a manager's meeting and asked: Do any of you have a clue as to why employees aren't showing up at the rap sessions?

An assistant manager spoke up. Well, he began, the employees are coming on their days off. Some of them have to line up baby-sitters, then come down here for two hours and not get paid for it.

OK, why isn't the CUDA contest working? Because you can't have a contest where a small group wins and the majority loses. It's got to be a win-win situation. The same for the bonus plan.

And the magic tricks? It may have sounded like fun to you, Keith, but it was just another thing you shoved down our throats.

Usually, Dunn would have defended his efforts. It's not the bonus or the contest, it's the people. He would have accused them of being bad workers. He would have pointed to the good eggs who were knocking themselves out. But on this particular day, driven to the point where he issued a cry for help, he just sat quietly and listened.

In doing so, he realized what had been absent all along: the voices of his employees. Voices that had been missing from all of his deliberations over restructuring the company. It was a supreme irony: Dunn had tried to superimpose an employee-oriented management style on McGuffey's without ever really consulting the employees. He threw them new-age management, just as he had thrown them dental insurance. But his basic attitude had to change. "Listening is hard," he says. "I didn't know how to do it.

"I can't say it was exactly 3:00 on a Thursday afternoon when I realized the problem. I have to hear the same thing five different times before my ego allows it to sink in. I don't give up easily. But you hear something in enough places, you get the message."

Now, Dunn wasn't afraid to try different approaches. His employees would tell him what they needed, and they would tell him what wasn't working. Dunn set up an associate board, a group consisting of two cooks, two servers, and a bartender from each restaurant, which would meet with the owners once a month and serve as a sounding board.

At first, he invited managers, an unfortunate mistake. Employees who spoke out against their managers would find themselves with the worst schedules or with stern warnings. It got dangerous. "Two of our managers almost choked the living daylights out of their associate board members," recalls Dunn.

Based on an employee suggestion, McGuffey's also started employee focus groups so that every employee meets with an owner at least once every six months. Dunn begins each focus group with a written test covering the company goals, the 10 ABCs, and the managers' goals for the year. Now, he can count on more than 90% of the managers scoring perfectly and 80% of employees acing the test.

But not all of McGuffey's problems were solved once Dunn started listening. "We still don't listen enough," he says. The company's Service Excellence program, a pay-for-knowledge compensation plan, is so complex that employees are trying to simplify it. Only about half the employees took any interest in last year's special contest, which rewarded the employee who knew the most guests by name. It was too long term, too focused on an individual winner, they complained. Employees are now helping design a better contest.

Dunn has taken some painful knocks learning the limits of his new approach. Last year, for instance, many employees offered ideas on how to design the Charlotte McGuffey's. As a result Dunn let their finest bartender work with the equipment supplier to design the bar. Once finished the partners simply gave plans a cursory once-over. It was an expensive mistake; the bar's design turned out to have many drawbacks. "We'll always have a bar that could have been better," Dunn says with a sigh.

That fiasco hasn't stopped him from exploring the outer ranges of employee participation. An experiment in which the owners allowed employees to run the restaurants for two days, for example, has grown into the self-managing restaurant in Asheville (see "A Self-Managing Restaurant," below).

"The employee input is phenomenal, but it's only one part of the triangle," says Dunn, who now tries never to miss an orientation session. "An employee might design a great bar for a bartender. But he doesn't have to think about guests. Or profitability."

In 1987 Dunn opened his third McGuffey's in Greenville, S.C., and the entire company hauled in profits of nearly $170,000 on sales of more than $5 million. Turnover halved to 110%. Last year, with the addition of a Charlotte McGuffey's, the company posted about $6.5 million in sales, with profits of about $230,000. A 3.5% profit margin is hardly extraordinary, but with turnover now below 60% -- roughly one-quarter the industry average -- Dunn expects margins to creep up to at least 5% on sales of more than $10 million in 1989. "We're in this for the long term," says Dunn.

So, it seems, are many employees. "You feel like you're a person here," says Geri O'Brien, a hostess in Charlotte who helped design the hostess stand. "You feel like you have input," says Morales, the bartender. Last year Morales convinced Dunn to tear out a booth in Charlotte and plant a baby ficus in its place -- like the magic ficus back in Asheville. What it all boils down to, says waitress Wanda Light, is that "most restaurants don't make that much of an effort to see to it that their employees have a good time."

Like at McGuffey's on dress-up days, for example, when all the employees don Hawaiian garb or pretend it's New Year's Eve. Recently workers in one restaurant dressed up as employees of other restaurants. If you had walked in, you would have seen uniforms from Bennigan's. Shoney's. Dunn had even planned to wear his TGI Fridays polo shirt.

"It's a big joke, because we're nothing like them," says Dunn. "Everybody knows that now."


A SELF-MANAGING RESTAURANT

Employees help run McGuffey's on an experimental basis

It started with Employee Days. Keith Dunn, president of McGuffey's Restaurants Inc., had been reading books by Tom Peters and others encouraging companies to adopt an organizational structure in which workers are on top, with middle managers acting as facilitators. Last year Dunn decided to experiment by letting employees run the restaurants -- planning the menu and drink specials, handling scheduling, choosing uniforms -- for two days every six months.

Employee Days have boosted morale and have "