Few direct-marketing professionals expect to carve pumpkins, practice yoga, or study classical music when they head to work. But Merkle Direct Marketing Inc. is not your typical marketing shop. The Lanham, Md., database marketing firm requires all employees to take, and even teach, classes in such unusual subjects at its own in-house educational center -- the "Merkle Institute of Technology," or MIT.

Sure, plenty of business owners encourage education. But few take the idea as far as Merkle. Each class hour attended is worth one credit; each teaching hour, five -- and all employees are required to complete a certain number of credits to be eligible for annual salary increases. Senior managers must put in 150 credits a year; lower level workers need 25. The courses, generally taught over lunch in a conference room, are eclectic -- from nutrition to time management -- which is precisely the way CEO David Williams wants it. Rather than requiring, say, techies to study computer programming or bookkeepers to brush up on their accounting, Williams wants his employees to investigate whatever strikes their curiosity. What's more, because courses are attended by all employees regardless of rank or job description, MIT fosters communication across departments and has helped Merkle retain a small company feel even as the payroll has swollen to 700. "We get people to interact in ways they wouldn't naturally through the course of the business," says Williams.

When Williams, 40, started MIT in 1990, Merkle had about 35 employees. But it was growing fast, adding clients like DirecTV and Marriott Vacation Clubs, and Williams did not want to lose the company's loose, nonhierarchical culture. And while coerced education might strike some as a recipe for resentment, many Merkle employees actually exceed their yearly requirements. Take Scott Nuernberger, a 26-year-old senior statistical analyst. Last year, he earned three times the 25 credits required of him. A favorite course: a public speaking seminar taught by Michael Mathias, the senior VP of client management. "A lot of companies talk about teamwork, but this place really truly has it," Nuernberger says.

MIT is a strong model for any company looking to boost its intellectual capital, says Jeff Clanon, director of partnership development of the Society for Organizational Learning, a Cambridge, Mass., research firm. "A lot of companies do development," Clanon says. "People attend courses, but it's separate. There's this mental disconnect between work and learning." Merkle, by contrast, "develops people in the organization to be good learners."

And teachers. Susan Connors, vice president of client services and a classical pianist, recently taught a music course, explaining to 25 co-workers how to use symphonies and sonatas to relieve stress. Meanwhile, a class she took on pumpkin carving really had less to do with Halloween crafts than project management, since students were required to work in groups and develop a plan.