In widely varied kinds of businesses, the smart company builders are creating workplaces that employees love and success is bred in. Inc.'s second annual report

To: Inc. magazine

From: Determinedly Seeking the Perfect Job

I don't want to screw around anymore in a place that's badly managed, poorly run, and so stupid I'm just wasting my time. Or a place where you have to be a vice-president to get a window. I want to take my dogs to work, at least on Saturdays, and if I break into a chorus of "Oklahoma" at 4 p.m., I want two people to harmonize with me -- not look at me sideways. I want to work cooperatively in a team. I don't care so much what industry it is, but the more socially conscious, the better. I want an environment that's honest, supportive, fair, inclusive, and playful. I'm really great at what I do, and now I'm going to find a really great place to do it in. I want flextime and exercise space and community service and lots of chances to learn. I want trees and easy parking!



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This out-of-the-blue note, faxed to us recently by a white-collar worker, speaks volumes. It also echoes many of the themes you'll read about in the pages that follow.

We've been hearing a lot lately from the Clinton administration about employee-friendly policies, such as mandated family leave, health-care reform, and even a proposed federal program, modeled perhaps on the Baldrige national quality awards, to applaud companies that have stellar workplace practices. But long before last November's election, the companies we're celebrating had committed themselves to their employees. Their chief executives are among the smart ones who have known all along that astute people management is another tool to help them build their businesses.

While we don't pretend that our Best Small Companies to Work For listings are all-inclusive, they do give us the chance to recognize 36 growth companies that are great places to work. They have become that way without spending a fortune and while turning a profit.

The companies reveal a variety of creative techniques for working with people -- techniques that often reflect the CEO's personal beliefs as much as they reflect competitive pressures. Would you hand out free running shoes to employees who walk to work? One profitable little company we know makes a practice of it. How about tying pay directly to how happy your customers are? We've got the completed questionnaire of the folks who do that, too.

Among the companies that made the cut is White Dog Cafe, where the employees -- many of whom are artistes on the side -- get to show off their fire eating or painting at the cafÉ's "Anniversary Howl." At Childress Buick, car buyers don't have to play dumb price-tag games waiting for the manager's final decree, because the lot salesperson has the power to cut a deal. At Ashton Photo, employees get to put a price on themselves. There are no cookie-cutter techniques among these companies. Those that are great to work for have tailored their benefits to suit their particular work force.

Two issues surfaced again and again as we delved into the best-companies research. One is the importance of communication. Talk, write, fax, E-mail, meet, broadcast, announce, pin up -- whatever it takes, employees say, but do communicate, and do it often. We discovered a metal-stamping shop -- Luitink Manufacturing -- that even employs a trainer who views his primary role as getting the workers to communicate effectively with one another.

The second issue that came up time after time was hiring. There's Ann Machado, CEO of temporary-placement agency Creative Staffing, who recruits a couple of levels beyond her current needs. "If I can't look at people and say, 'Awesome!' I don't hire them," she says.

Recruitment sometimes borders on the fanatical -- five-stage interviews, sometimes with peers, often using psychological tests. That's what happens at Job Boss Software.

Other issues clamored for attention as well. The very diversity of approaches is a reminder that when it comes to managing people, there's no one true way, just as there is no average employee. The small companies that are winning reputations as great places to work have figured that out; they've learned to recognize employees as individuals with widely differing needs.

They accept, too, that they won't be great workplaces for everyone on their payroll. As in every other area of running a company, in relations with employees, change is a fact of life. Even if a company is considered great by most employees today, that may not be true tomorrow. Individuals' circumstances change. An entry-level worker gets married and has kids and starts paying new attention to child-care and 401(k) plans; a craftsman in his midforties starts placing more value on a flexible health-care plan.

The CEOs of companies that are terrific places to work wax enthusiastic about the returns to their businesses: they get loyalty, initiative, and enthusiasm from employees. Those employees don't buy into the moribund job-for-life ethic. Instead, they're busy growing themselves, and growing the companies they work for in the bargain. Most not only understand that with rights come big responsibilities, they relish the idea.

As we worked our way through our best-companies qualification forms (most were from nominees suggested by third parties that we'd selected for their regional connections to small businesses -- local offices of Big Six accounting firms, Technical Executive Committee chapters, and such), it quickly became obvious which companies get the whole notion of workplace excellence. The real contenders did not send in box after box of whimsy to prove how much gosh-darn fun they all have. Rather, they faxed back reasoned explanations of why their employees matter to them, and what they are doing to strengthen the relationship between employees and their company. Several did point out that their employees are the company. Many of the CEOs polled their employees and mailed in their viewpoints, too. And there were some chief executives who fessed up to the problems they'd faced in the days when kick-ass management had been the only style they knew.

One owner disqualified her own company, admitting to not having thought enough about the topic. Here's what she had to say:

"We must decline participating. We surveyed our employees and found there is a feeling of dissatisfaction among them. Some of this is probably because of a major layoff last year; job security was a big concern in their replies.

" While we are not in the business to make our employees happy, I am grateful that the nomination made us look at this problem; now we can go to work fixing it."

The winning candidates, who had made it through several rounds of interviews (mostly with employees), presented an interesting quandary. We had chosen six categories of "the best." We would recognize six companies in each category: compensation; training; career advancement; job autonomy; sensitivity to employees' outside lives; and, finally, one loosely titled "love of product," recognizing that that can be precisely what matters most to some employees. While few companies -- large or small -- excel in every aspect of people management, the companies that are the best places to work do not fit neatly into a single category, either. Instead, they do many things well. So, as you read about those companies that have particularly effective training programs, for example, bear in mind that they probably also excel in other areas we examined.

As we moved on to the intensive interviews with employees, word traveled fast. In came a few letters from anonymous workers giving eloquent rebuttals to our attention to their places of work -- a knuckle rap that underlined what we all know: no company, no matter how legendary, will suit all of its employees all of the time. Here's a portion of one letter that blamed a high-tech employer's high annual turnover on its perceived lack of opportunities for advancement, poor minority representation, low pay, lack of short-term disability benefits, and lack of employee empowerment:

"Although several people have said they would write to you, I am probably the only one who will do it. I realize that the concerns I have outlined are probably not uncommon in start-up companies, but I also know there is a high level of dissatisfaction among employees."

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We have no doubt that over the long run there are real, if as-yet-unmeasured, connections between workplace satisfaction and company success. It's not necessarily true in the short term; after all, success comes easily if a company sells something the world simply must have lots of. Or if the labor market is such that high turnover presents few problems, concern for employee satisfaction may seem superfluous to the bottom line.

But sooner or later, a competitor will gain an edge, or a market will saturate, or the spark will go out of a company's product-development push. That is when a business needs all the help it can get from employees who are pulling with it.

In the end, building a great company is not just about setting up an on-site day-care center or offering a better dental plan or taking the crew hiking. It doesn't mean throwing the empowerment switch the day after the best salesperson walks out. Building a company with a reputation as an outstanding place to work means believing that an employee-centered strategy is an inextricable thread in the weave of the company's overall business strategy -- and acting on that belief from day one and for the long haul. Those nuances are not lost on the best small companies to work for.