Hand's On

Worker, rule thyself

Do you really need a human-resources department?
BY CHRISTOPHER CAGGIANO

Sure, you sometimes ask your employees for input on human-resources-related issues. But would you turn the entire department over to them? Believe it or not, some companies do, managing all or part of their human-resources functions with employee teams. Some merely supplement a traditional HR department with representative committees. But there are some companies that go all the way, eliminating the human-resources department entirely.

Bill Palmer of Commercial Casework, a $10-million woodworking and cabinetry shop in Fremont, Calif., practices the partial approach. He put together an employee group to research and design the company's bonus plan. The group comprised Palmer and a crew of seven volunteers. Palmer says that he not only got good information about how to motivate his employees, but he also got more informed employees. "They learned a whole lot more about what it means to give and get a bonus," says Palmer. "They saw how difficult it was and wound up really taking ownership of the process."

Each year Palmer asks for a new group of volunteers. As he refines its membership and dynamics, the group "becomes another training tool," he says.

Martin McConnell, on the other hand, went all the way. McConnell is vice-president of finance for Spectrum Signal Processing Inc., a hardware and software designer with 180 employees in Burnaby, British Columbia. He says his company has no HR department at all. Instead, it uses rotating HR committees.

In a 1996 employee-satisfaction survey, Spectrum's managers discovered that its employees were not all that satisfied with the way human-resource issues were dealt with in the company. So Spectrum created a cross-functional employee team to focus on those issues. McConnell initially thought the committee would be only short-term; it would deal with the immediate problems and then disband. "But it gained so much interest and momentum, it became part of our culture," he says.

Now the committee regularly discusses and addresses most of the company's typical human-resources functions: performance appraisals and the employee handbook, as well as company training, recognition, mentoring, and orientation programs. (Payroll and benefits administration are handled by the accounting department.)

The committee consists of 12 elected members from various job functions. Member-involvement dates are staggered, so the committee is constantly getting new members and perspectives.

McConnell and CEO Barry Jinks also serve on the team, albeit in an advisory role. According to group chair Carol Schulz, the bosses' presence doesn't present a hindrance. "They have the same say as anybody else," says Schulz. "Plus it gives employees the feeling that they really do care."

McConnell admits that at first he worried the committee might establish some overly expensive policies. "But it's not us versus them," he says. "Whatever decision they made would be modified for what works for the environment. Or maybe we'd implement it in stages."

Palmer has had a similar experience. He stresses that at his company, the employee group has limited power. "It's called an advisory committee," he says. "We made it clear that when they make decisions, they need to get buy-in from all the employees, that it has to be beneficial to the company, and mostly, that I have to buy it, too."

McConnell says one big problem is enlisting committee members without distracting them from their regular jobs. So in 1997, McConnell and his group took on a co-op student from a local university to do the legwork. That's worked so well that the group is currently assessing the appropriate timing of bringing on a full-time human-resources specialist.

"We'd definitely like to have somebody eventually," says group chair Schulz. "But whoever we get will work side by side with the committee. They'll bring strategic expertise committee members don't have."


Start-ups slow down
Could it be? Could turbulence in the economy be affecting entrepreneurs? It seems so. Not only are the number of business failures up, as we reported last month, but the number of business start-ups in the first 10 months of last year dropped by 7%, according to Dun & Bradstreet's Monthly Business Starts report. In 1998 there were some 10,000 fewer start-ups than in the previous year (131,860 compared with 141,987). The slowdown was most dramatic in Dallas and Chicago, which showed the biggest percentage drop in start-ups, 26% and 19% respectively. --Cheryl McManus

NUMBER OF START-UPS IN LARGEST U.S. CITIES
CITY OCT. '98 OCT. '97
New York 365 353
Los Angeles 198 174
Houston 209 199
San Diego 110 110
Baltimore 63 59
Milwaukee 35 33
Cleveland 67 60
Boston 37 37
Chicago 128 158
Philadelphia 64 59
Detroit 27 43
Dallas 92 124

Hot Tips
With all the 800-number florists, mattress makers, and lawyers out there, how can you come up with a phone number your customers will remember? Identity consultant Elizabeth Goodgold of the Nuancing Group, in San Diego, says it takes just a little creativity. She offers these rules for numbers that ring a bell:

  • Be compelling. If you want flowers, there's no better memory hook than a phone number like 800-FLOWERS.
  • Be simple. A Chicago towing start-up uses the number 800-EASY-TOW.
  • Use action verbs. The Goose Island Brewing Co., in Chicago, uses 800-GOOSEME. Fun and easy to remember.
  • Don't hesitate to use more than seven letters. Liquor By Wire, a liquor-delivery service, uses 800-SPIRITED.
  • Be funny. Make potential customers laugh. They'll laugh with you--and maybe call you, too.

--Shane McLaughlin

How can you make your employees want to learn more about their jobs? Mary Jo Stuesser-Yafchak, president of AccuData, a $17-million marketing-data company in Cape Coral, Fla., found the answer. She wanted her employees to attend monthly after-hours training sessions, but she knew most of them wouldn't show up. So she now enters attendees' names into a monthly drawing for $50. Then, at year's end, she randomly selects two people from the names of everyone who has attended a training session that year and awards each of them $1,000 worth of travel credit. --C. C.


Breakfast of champion CEOs
Entrepreneurs belonging to The Executive Committee (TEC), a San Diego-based CEO development and education group, have a new guru. His name is Joe Dillon, and he's the cofounder of Healthy Lifestyle Corp., in Torrance, Calif., which markets Joe Dillon's Healthy Lifestyle Program for eating and exercise.

At the heart of Dillon's plan is the energy-boosting, easy-to-make Energy Shake. Designed for the harried CEO with little time, "it's the most effective meal anyone could put in their body," if Dillon does say so himself.

Consultant Judee Nerren of Cleveland-based Nerren Cooper Partners is a longtime health enthusiast. She was skeptical when an associate suggested she try one of Dillon's shakes, especially since most protein shakes taste, well, bad. But she was pleasantly surprised by Dillon's recipe, calling it a boon in her world of tight deadlines, varying client schedules, and jet lag. "You really feel the difference," she says. "It comes down to energy and a greater sense of well-being."

The shake is chock-full of protein, "good" fats, and carbohydrates, which help stabilize blood-sugar levels and give a steady four- to six-hour energy boost. But Dillon's formula is not a secret, and it doesn't depend on proprietary ingredients. -- S.M.

Protein Shake Recipe

1. Pour 16 ounces of water, nonfat milk, or 1% milk into blender.

2. Add 2 to 3 scoops of lactose-free whey-protein powder.

3. Add 1 tablespoon of raw flaxseed oil.

4. Add 1 piece of raw fruit or 1 cup of frozen unsweetened fruit.

5. Add up to 1 tablespoon of concentrated whole-food supplement, if desired.

6. Blend for 30 to 45 seconds.


Get out of the house

Everyone should work at home. That's what the pundits were saying just a few years ago. The reality: while some people love the freedom, others have found working at home to be lonely and distracting. The solution? Consider these two options:

The Near-Home Office
Tim Celeski, an independent designer for 24 years, tried working from his Seattle home but found it difficult. "It was completely psychological," he says. "I found myself working very late and seven days a week."

So Celeski rented an office two blocks away. He found a retired couple down the street who were willing to lease him a guest house. The clients who visit Celeski come away marveling at the panoramic view of Puget Sound from his office window. And there's another advantage. Celeski pays $39.95 a month for lightning-quick Internet access. Take the fast surfing, add the view and the rent break, and Celeski is happy. "Kind of a slam dunk, isn't it?" he says.

The Food-Court Strategy
A "recovering" lawyer living in New York City, Kristin Cuene has spent the past few months launching her Internet-based start-up, International Healthcare Exchange Inc. (IHCE). Working from home, she was frustrated by the isolation. Then her brother advised her to combine the search for affordable office space with the quest for newmedia peers. Cuene placed the following advertisement in the Silicon Alley Reporter, a new-media trade publication:
Would welcome sharing space with an angel investor or other Internet start-up that would like to offer guidance and share the excitement of building a business in this lucrative sector.

Within a week Cuene had received 11 faxed inquiries. She finally decided to cohabitate with E Technology Associates, a young consulting firm. The rent was only $400, and it included such perks as a shared receptionist and conference room, as well as help in obtaining funding. And there's a little added gravy: Cuene is still in talks with some of the companies whose offers she rejected. She's hoping to derive several strategic deals and one full-blown joint venture from the contacts.

"My only regret is that I didn't do this sooner," she says. -- Mike Hofman and Shane McLaughlin


My biggest mistake

JIM KOCH
Founder and CEO,
Boston Beer Co.

Brewers share a fatal flaw: an edifice complex. Every brewer dreams of owning a brewery. I'm no exception. That's what led me to try to build my own huge brewery in Boston.

In 1984, when I founded Boston Beer, I brought my recipe to a brewery in Pittsburgh, where the beer was produced. In 1985, Sam Adams won several awards and our volume took off. I began laying plans to build a big brewery on the site of our Boston warehouse, which had actually housed a brewery at one time.

From a business point of view, it made no sense. We'd already received a "Best Beer in America" award, so a new brewery wasn't going to make it any better. What it would do was make the beer significantly more expensive, thanks to capital and operating costs.

I spent about two years and $4.5 million designing and engineering a large brewery, down to the last nut and bolt. I had estimated all along that it was going to come in at $8 million. The lowest bid was $15 million.

I was stunned. I realized that building the brewery could take the company under. I thought about it very hard and came to two conclusions. First, I really, really wanted my own brewery in Boston. Second, I didn't care how big, or how small, it was.

That was the liberating decision. I scrapped my expensive plans and scaled the concept way back. We built a beautiful little jewel of a brewery, one-twentieth the size of my original plans. It cost maybe $1 million. It didn't replace our contract brewing, and I can't say whether or not it is profitable, but it certainly doesn't lose as much money as the other one would have.

In 1997 I was able to buy my dream brewery in Cincinnati, where I grew up. It cost $5 million.

Jim Koch is the founder and CEO of Boston-based Boston Beer Co.


THE QUOTABLE ENTREPRENEUR
'The whole process of merging two companies takes longer than you think. From the moment they walk into your office space... you really have to work hard at it. It's like the Brady Bunch.'

--Pam Miller, cofounder of $2-million public-relations agency KMC Group of Seattle, which tried to merge with another Seattle PR agency. The merger ultimately failed.