A sense of teamwork is reinforced at MTW because employees own the majority of the company's stock -- 53.5%. Also, MTW is an "open book" company. It shares financial information with all employees, clarifying expectations about its companywide financial goals. It's a strategy that seems to be paying off. Three years ago MTW, which is privately held, had its accounting firm value the company's equity. The stock, according to the accountants, was then worth 58¢ a share. Today it's worth $5.11.
Edward O. Welles is a senior feature writer at Inc.
The company
MTW Corp., based in Mission Woods, Kans.
Business: Provides Web-based software and consulting services to clients primarily in state government and the insurance industry from its central location and from five regional offices situated close to customers.
Financial summary: In 2000, sales were close to $40 million.
Management: CEO Ed Ossie, 46, joined MTW after being recruited from Texas Instruments by former MTW chairman Dick Mueller, age 55. Mueller now sits on MTW's board of directors and remains a major shareholder in the company.
Capitalization: MTW is privately held. Employees own 53.5% of the stock. The balance is owned by two outside investment firms, Mellon Ventures and the Halifax Group, which last year took big positions in MTW, helping provide it with working capital for future growth.
Strategy: Increase margins by developing proprietary software for MTW's current consulting clients. Improve employee retention and performance by recruiting carefully and making job expectations crystal clear.
The CEO and the professor
The man who has been whispering in CEO Ed Ossie's ear is Jeff Pfeffer, a Stanford business-school professor of organizational behavior, whom Ossie met when he attended an executive management course at Stanford, in the spring of 1997. Ossie was impressed by what Pfeffer had to say back then, and now the professor sits on MTW's advisory board.
Pfeffer is the author of The Human Equation: Building Profits by Putting People First. His research over the past decade has focused on a quest to understand what increases a company's value the most. His simple answer: people and how they're treated.
Specifically, Pfeffer says that several variables contribute to the long-term success of a company: employment security; recruiting for cultural fit as opposed to expertise; an emphasis on continual training; pay that's contingent on group as well as individual performance; decentralization of authority; and an egalitarian culture that freely shares information. Pfeffer acknowledges that those factors "are soft, and hard to measure." Consequently, while corporate America gives them lip service, it rarely emphasizes them. But aren't they really just common sense? Pfeffer's response: "Common sense is very uncommon."
Pfeffer teaches smack at the epicenter of one of the world's modern economic miracles, Silicon Valley. And yet he's far from impressed by what goes on around him. He is, in fact, quite scathing of the management techniques he sees at work in many of the vaunted companies in his own backyard.
"Silicon Valley management is abominable," proclaims Pfeffer. Pressed for specifics, Pfeffer is quick to tick them off: too much outsourcing, a free-agent mentality toward the work, an overemphasis on financial rewards, and contempt for the customer. It all adds up to a shifting, mercenary, narcissistic mÉlange that erodes loyalty and continuity inside organizations. And absent those elements, Pfeffer believes, it's hard to build a growing, lasting business.
Best practices
Two or three times a year CEO Ed Ossie and other members of MTW's management hold "People First" meetings with employees at various company locations. Each meeting begins with a roundtable, in which employees at that office report on business and on how to improve it, as well as on anything that might be happening in their personal lives. In the second half of these two-hour meetings Ossie reports on events companywide and on MTW's financial performance. (All employees are stockholders; MTW is an "open book" company.) Ossie says the intent of the meetings is to encourage a free-flowing exchange that's not just informative but also affirming of MTW's culture. "The basic tone is that there's more to life than what we do for the next hour."
MTW "hires for fit and trains for skill." It seeks flexible, open personalities and then offers extensive and ongoing training so employees can reach their potential. Marcie Wibright, a recruiter who reluctantly left Southwest Airlines and joined MTW, recalls that she started at MTW on a Monday. "That Wednesday I was on a plane for Chicago to go to a training class," she says.
At MTW the emphasis is on team. The typical team at MTW numbers from 5 to 10 people, and teams work on discrete projects. They can be quickly dissolved and reformulated. "They're virtual and collapsible," says Ossie. While management sets an overall strategy, the teams are expected to generate ideas about new markets, products, and directions that the company could address. "We want to unlock 100% of the intellectual capacity of people every day," says Ossie.
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