Happiness Pays

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2. Recognition, Recognition, Recognition

In a sense, the compensation policies are only the most tangible aspect of a broader policy of recognition. Recognition happens continuously at PaeTec. Chesonis is known for writing small notes, sending e-mails, sticking his head through the door, to thank someone for a job well-done. He's constantly aware of everyone.

"We give out Maestro Awards," Ottalagana says. "You may be awarded a hundred stock options for doing something exceptional. The Chairman Award is for people consistently performing at a very high level. You get a Rolex watch, or a Four Seasons vacation, plus $1,000 to help with the tax impact. A $5,000 award."

Perhaps, though, the most modest forms of recognition have the most pervasive and lasting impact. Chesonis walks around the building constantly--Management by Walking Around, in the old Tom Peters formulation. Marion Wyand, vice president of engineering, recalls: "One day, Arunas came into my office and said, 'Mary, who on your team worked the hardest?' Well, this one lady, Sarah Spencer, had been working on some problems we had with vendors. He comes in with a flower arrangement as tall as she is, thanks her, and says, 'Marion told me how hard you worked this week.' You can't measure the sort of impact that has."

3. Everyone Shares

There is almost no limit to how much departments and people are expected to communicate at PaeTec. Every other Friday, Chesonis conducts a companywide conference call. He usually gets 500 to 600 participants. He divulges details of financing, acquisition plans, profits, and other things usually kept in the boardroom. It's an enormous show of respect for all employees. He recognizes workers. He invites questions. Usually he closes with a joke.

Chesonis wants every department sharing knowledge with every other. He stays in touch, hour by hour, with what's happening both in the company and in the personal lives of his people. He answers e-mail from anyone. He expects everyone else to do the same. If you want to know more about how another department operates, you just walk in, sit down, and listen. People are expected to keep their doors open. Tom FitzGerald, vice president of operations, calls it a "teaching telecom." It's a policy that sometimes has to be enforced. Scott Magee, 28, started in the NOC and quickly proved himself more than capable. He asked FitzGerald for a raise.

"I'd closed more tickets than most," Magee recalls. "Tom said, 'I don't know why I shouldn't fire you right now. You're hurting everybody by not sharing what you know.'"

As FitzGerald recalls: "Our philosophy is to give somebody a raise before they ask for it. Scott is brilliant. But he was holding back. I told him, 'You think you can't go beyond anybody else because you think you'll insult them. I'm thinking of letting you go. From now on you're bubble boy, and I want to see dramatic things from you.' The bubble had to burst. Scott didn't want anybody to know what he knew."

He started sharing what he knew. No one took offense, and he got his raise. Magee is now a systems engineer.

4. Eliminate Boundaries

Sharing knowledge comes naturally for most people at PaeTec because everyone is expected to think full circle--a term Tom FitzGerald uses constantly with his people in the NOC. Full circle means thinking about how a task will, or won't, benefit a customer. The company wants porous walls between departments and employees, between home life and work life, and between PaeTec and its customers.

This lack of boundaries extends up and down the organizational chart, as well. One new hire, in his first week in the NOC, needed help with a customer problem: "I'd been here just over a week, and I can call a vice president and ask him for help," he marvels. "At my former employer we had to prove we needed to engage somebody from another department. Here I just pick up the phone."

The main priority is fixing problems and serving customers--not guarding territory or pulling rank. On any given day, the expert in the matter at hand, the leader, could be a clerk or a VP or the CEO.

5. Learning From the Bottom Up

When departments collaborate, organizational learning rises up naturally from below. Jason Elston, the manager of the NOC, says: "One thing that endeared this place to me from the start, you could have a good idea and that good idea can become company policy."

The culture of cooperation, of knowledge sharing--all the ways respect for employees is manifested--helps generate products and services as a function of doing daily business, not as a separate research and development operation. Wyand says Mike Meath brought a new idea to her cross-disciplinary team. He suggested PaeTec create something called a managed router service, through which the company could monitor and do maintenance on a customer's voice and data services remotely; many PaeTec customers weren't equipped to do these things themselves.

"He decided his team could do that," Wyand says. "So we implemented this service and realized more than $50,000 in revenue in the first six months. He got a Maestro Award for that."

It's assumed that workers know what needs to be done better than anyone who manages them. At PaeTec, the motto is: Trust but verify. You are presumed a hero until proved otherwise.

6. Play Hard and Play Together

People respond to this kind of respect by voluntarily working, and playing, into the night. Playing together is essential. The company celebrates every holiday with employee and customer gatherings. At Halloween employees show up in costume and their kids trick-or-treat from office to office. Customers' kids do the same. Last year, the employee with the best costume received 100 stock options. So did the employee whose child had the best children's costume.