"I had to run that machine for another two weeks and never did better than the average rate of 32,000 pieces. That was my first lesson in bad management."
To prevent such productivity-sapping forces from polluting Com-Corp, Strazzanti engineered a review system that gives employees a major say in how compensation rates are determined and controls managers' power in the review process.
Ten to 15 employees volunteer to serve on the Wage and Salary Committee; their stints are two years long. To determine going market rates for jobs ranging from floor sweeper to president, the workers survey and collect job-skills data from comparable companies in the region.
Similarly, managers use a standardized appraisal form that breaks an employee's performance into a variety of objective, measurable criteria, such as the number of parts the employee produces per hour; his or her record of meeting deadlines; attendance; and safety compliance. The form includes some soft measures, such as how well a worker gets along with other employees and managers. If an employee scores 80% on a review, his or her pay will amount to 80% of the highest rate of pay for that specific job, as determined by the employee-run committee.
To eliminate subjective influences such as personality conflicts and favoritism among managers and employees, peers also report on how well an employee is performing on the job. If there's a discrepancy, the human-resources director reevaluates the manager's appraisal of the employee. Workers who disagree with their appraisals can conduct their own compensation-rate surveys and air their grievances in front of the employee-run Human Resources Assistance Committee.
To put a reality check on the review system, turnover -- measurement of which includes only employees that have been on board for three months -- is tracked in two ways. Positive turnover is defined as the percentage of employees who leave for jobs that are more challenging than those Com-Corp can offer. Negative turnover covers those who leave Com-Corp for comparable jobs at higher rates of pay; it indicates that the company's pay rates are not competitive. The negative turnover rate in 1994 was 2%.
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On Giving Employees Tenure
Throughout his life Strazzanti witnessed many preventable firings. His first experience was the most painful. As a high school student in the mid-1960s he saw his own father fired from a job after he'd become incapacitated. His own experiences of the workplace hardened his opinions:
"One of the things that really bothered me in nonunion companies was management's lack of consideration for the years an employee had served. I saw young, new managers have the attitude that if somebody's getting to be in their fifties and they're slowing down, you get rid of 'em. Yet there was usually an unspoken rule that managers with the most seniority had the most job security -- as if their performance didn't slip over time.
"Also, I would see someone get into an argument with a manager and the manager would just say, 'You're fired,' and that order would stick. Or maybe a manager just doesn't like you and wants you to get out of his territory. Being concerned that your livelihood hangs by a thread because of a manager whose ass you have to kiss -- that's not a great way to wake up in the morning."
When he founded Com-Corp Strazzanti developed an innovative tenure system that borrows from academia. Its goal: to eliminate any chance of an employee's being let go unfairly by an abusive manager. "I wanted to eliminate those threats for employees here, but I wanted to do it in a way that wouldn't mean that if they obtained tenure, they would no longer have an incentive to perform to the best of their abilities," he explains.
To be eligible for tenure, full-time employees must have three years of continuous service with the company. To apply, an employee gets a manager to be his or her sponsor. Then, if one-third of the already-tenured employees sign a candidate's petition, the matter is voted upon by all those with tenure. A two-thirds majority is needed to win. (Currently 12 employees hold tenure.)
If a tenured employee's performance slacks off, so does his or her pay. For instance, if a job's maximum hourly rate is $10 and the employee gets only a 70% review rating, hourly compensation will drop to $7. Assuming the employee gets back on track before the following quarter's review, he or she might get a 90% rating and start earning $9 an hour.
To determine if tenure should be revoked, a hearing is held before a panel of tenured employees. The employee and the manager tell their stories, and the matter is put to a vote. One individ ual who had a nasty habit of getting drunk and destroying company property lost tenure and was subsequently fired.
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On Offering Free Education
In 1968, at age 22, Strazzanti was determined to work his way out of the working-class environment in Cleveland, where he had grown up, and "make it big" in business:
"I had to pay my own way through school. I saved money and went to the community school at night to learn everything from tool-and-die work to management. But the companies were benefiting from it, and I never thought that was fair.
"In 1972 I was in the third year of my apprenticeship. A foreman for whom I'd worked only three weeks told me he didn't think I was cut out to be a tool-and-die designer. He was an arrogant type and wanted to put me in my place. I didn't believe that was a judgment for him to make. I quit and went on to become a well-respected tool-and-die designer. If an employee's aspirations don't match up to his or her capabilities, it's got to be the employee who makes that discovery."
A respectable 10% of Com-Corp's full-timers are enrolled in an outside education class, compared with 3% for most companies that offer education benefits. To ensure that employees remain committed to their original inspiration, Com-Corp requires that they shell out for the class up front and reimburses them when the class is completed. The company pays 100% of class tuition for "A" grades, 80% for B's, 70% for C's, and zippo for D's and F's.
Former human-resources director Judi Sandbrook is a beneficiary of Strazzanti's education system; she began as Com-Corp's receptionist. Numerous hourly employees have worked their way up Com-Corp's ladder by taking advantage of the education benefits.
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On Sharing Profits with Employees
In 1978 Strazzanti was general manager of a $7-million-a-year metal-stamping shop in Cleveland, and he got a taste of profit sharing as he raked in 2% of the company's earnings along with his salary. That's when he realized that profit sharing could be an important incentive for any growing company:
