Every employee that joins MTW writes an expectations agreement, for a simple reason. "A lot of people are here because their expectations were not met somewhere else," says Ossie. At MTW, new hires are encouraged to put it all out on the table. Ossie says the process allows employees to name what's most important to them. Sometimes people want flexibility to handle special family situations, be it an aging parent or a child with special needs.
The expectations agreement is a two-way, ever evolving document that follows an employee throughout his or her career at MTW. It's reviewed, and potentially revised, about every six months. Sandy Clark, who came from Zurich Personal Insurance, a large insurance company that was once a customer of MTW's, says that in a large company "a lot of time you put your heart and soul into something, and then it doesn't get implemented." She says that doesn't happen at MTW, where there is a clearer sense of mission. "The company is aware of where you want to go, and you are aware of where it's heading."
Take Dan Carier, for example. After MTW developed a proprietary software tool called progression methodology, Carier's agreement stated that the company expected he would stay up to speed on that tool's use. For his part, Carier recalls, "I had some expectations regarding geographic flexibility." It appeared he might have to move to California to follow his wife's job. "I wanted to continue on the project I was working on and have the same responsibility," he says. MTW understood and agreed to comply with his wish. "I felt I was in control of my destiny," Carier says.
Dean Ammons feels the same way. He values his agreement as much for the broad commitment to mutual understanding it cultivates as for its specifics. Ammons, like more than 80% of MTW employees, came out of a large company. He worked at DuPont and then Texas Instruments. At those places, he says, he felt "buried." At MTW, with the expectations agreement, "I've got something I can wave at people if they don't follow through. If I have a complaint and I'm not happy, I'll knock on Ed's door."
John Van Blaricum, who works in marketing, says that his expectations agreement, like most at MTW, is a mix of general and specific goals. In his case he had no trouble articulating a handful of the latter. He wanted support from the company in broadening his experience in software marketing, he wanted to find a mentor to help him grow professionally, he wanted to get involved in a number of professional trade associations to increase his knowledge of the industry, and he wanted more exposure to business operations in order "to learn more about the business, and not just marketing."
MTW's management assented and then responded in equally concrete terms. It wanted him and his team to redesign and redeploy the company's Web site by a certain date. It wanted him to write three articles about MTW and get them published within a six-month period. And it wanted him to go to a certain number of industry conferences to ramp up promotion for a new market. Writing an agreement with that level of detail, recalls Van Blaricum, "helped me plan and focus my efforts for the coming year. It gets you to reflect on what you've been doing, as well as project what you should be doing."
Though an employee's expectations agreement is intended to be reviewed every six months, MTW builds flexibility into the process by trying to time the update to occur at the end of a particular project. Similarly, the review isn't a meeting between a boss and a worker; rather, it involves the employee's sitting down with the team leader of that particular project over lunch. "We want someone you've been working with doing this, because they know what you're up to," Ossie explains.
What follows when expectations are clear
The expectations agreement, Ed Ossie firmly believes, reinforces some other key drivers of MTW's success, namely low turnover, a focus on careful recruiting, and compensation linked to increases in the company's value.
Low turnover is a distinct competitive advantage for MTW, as it operates in an industry -- software and information technology -- that's rife with opportunity and, therefore, transience. "There's a lot of impatience with jobs that aren't fun," says Ossie. Turnover in the industry averages 30% a year. MTW's turnover rate last year was 6.7%, a figure approaching the natural rate of attrition. In fact, turnover has shrunk dramatically since Ossie arrived at MTW, when the rate was 24%. It has fallen each year since then, eventually reaching its present level.
The high retention rate is also partly due to the time, care, and expense the company invests in recruiting. "We want to build a culture that will sustain itself by having people stay put," says Ossie. MTW has five full-time recruiters and awards workers bonuses for referring candidates that the company brings on board. It now finds about 60% of its hires through employee referrals.
MTW's interview process is nothing if not thorough. After one phone interview with a recruiter and another phone interview with a technologist at the company, who assesses a recruit's technical skills, the job applicant is flown by MTW to its headquarters, outside Kansas City. There a candidate will typically interview with five people on staff, including at least two members of the senior management. "We want them to get a sense of the long-term potential of the job," says Ossie, "and the only way they can get that is by speaking one-on-one with someone from senior management."
MTW's practice of sharing stock with employees also discourages turnover -- and motivates better performance overall. Each new hire receives options on 250 shares the day he or she walks in the door. (The options vest in four years.) On day two that employee is eligible to be awarded additional options in one of three ways: being recommended by a customer, being recommended by a manager, or being recommended by a team member. The senior management puts the most weight on the last one. Praise by a peer is especially valued by the management because it wants to encourage team members to share information with one another.
