For Linda Skoglund, getting a pedicure on a busy Tuesday afternoon was a career turning point. It ran against her Midwestern work ethic. And certainly, there was plenty of work piled up at J.A. Counter & Associates, the $2.5 million insurance and investment advisory firm she owns in New Richmond, Wisconsin. On the other hand, canceling her visit to the salon that day could have sent a bad message. It risked signaling to her 15 employees that they weren't allowed to do whatever they wanted at any given time during work hours. And that would tank her plans to overhaul the work environment at J.A. Counter.

In recent years, profits had been sluggish, and the company was lagging 15 percent behind industry benchmarks for revenue per employee. Skoglund had started doing more comprehensive performance reviews, increased the company's sales goals, cut expenses, and fired a couple of employees. Those adjustments boosted the bottom line slightly, but at a cost. "There were so many changes, it affected morale," Skoglund says. "A lot of people feared for their jobs." Not only that, she was constantly being forced to put out minor fires, which prevented her from focusing on sales. "I was tired of problems always ending up with management," she says. "I wanted to move away from KinderCare."

Finally, last spring, Skoglund decided to implement a new way of managing -- a system known as a results-only work environment, or ROWE. Now, J.A. Counter's employees can leave the office whenever they please. They don't have to tell anyone where they are going or why. If an employee chooses to share the fact that he or she is taking the afternoon off to go to a baseball game, no one's allowed to make muttering comments about his or her work ethic. It's no surprise that this system has boosted morale; perhaps more significant, Skoglund says it has improved productivity as well.

Of course, companies have been touting flexible work arrangements for years. At most businesses, however, freedom has a limit: It's allowed only a couple of days a week or only for certain employees. But Cali Ressler and Jody Thompson, the two women who developed ROWE, say the system doesn't work unless it works for everyone -- even the assistants, secretaries, and receptionists who have traditionally been at the mercy of a boss. Ressler and Thompson came up with the idea for ROWE while they were working in the HR department at electronics giant Best Buy, which wound up offering it to 3,000 employees at its corporate headquarters. This year, Ressler and Thompson left Best Buy and ventured out on their own as consultants and authors of the recently published book Why Work Sucks and How to Fix It. So far, they have worked with a few small companies, including J.A. Counter, and the results have been surprising. Changing the entire philosophy of work at corporate behemoth Best Buy was hard enough; at smaller companies, the two have found, it can be even harder.

That's because at small companies, employees are more likely to wear many hats -- at J.A. Counter, for example, one person is in charge of HR, accounting, and IT. Employees who play so many roles are more hesitant about leaving the office, and their bosses are more reluctant to let them go. Plus, smaller companies often don't have well-defined job descriptions, so it's difficult to judge whether employees are doing their jobs if they are not spending every day in the office. And when an employee in Best Buy's IT department takes the afternoon off, another one can cover for him or her. Not so at a company filled with one-person departments.

Many of Skoglund's employees were skeptical when she announced the move to ROWE. "I'll believe it when I see it," said financial adviser Matt Radintz. Then the kicker: "What about Judy?"

Judy Wentlandt is J.A. Counter's receptionist. The team could readily imagine the salespeople -- many of whom already had flexible schedules -- moving to ROWE. But a receptionist? Skoglund was adamant -- yes, the receptionist. She wasn't sure just how it would work; she told her staff members to figure it out. Two weeks later, they came back with a simple plan. When Wentlandt gave advance notice that she would be at home or off-site, volunteers would be asked to fill the receptionist's role.

New technology allows all employees to view their desktop from any station in the office. The company is considering installing a new phone system that will allow Wentlandt to answer phones from off-site locations, giving her even more flexibility. "I don't have the spontaneity that everyone else has," Wentlandt says. "But if I need coverage, I get it." She has left work to take her grandson to a museum and to attend her father's birthday party. Before, she would have had to take vacation time or skip those events.

Mark Devereux, a senior investment adviser, has manned the front desk several times -- a role he admits he would have sniffed at a few months earlier. "At first I thought, Where is the payback doing that?" he says. "But then I began to realize the value of becoming more aware of each other and what we contribute to the overall success of the company. And when I answer the phone, it gives me the opportunity to explain ROWE to our clients. They think we're cutting edge."

That hasn't been the only revelation for Devereux. When the new system started, he was something of a resister. The problem: His assistant Shannon Mehls was, as he puts it, "no longer at my beck and call."

"I had no idea how much I was creating fires until we started ROWE," Devereux says. "She'd be working, and something would happen in my world. I'd give her my emergency and walk away." After a few days of ROWE, Devereux found that Mehls wasn't always there to dump work on. Instead, if he had an emergency, he often had to take care of it himself. "I had an 'aha' moment, and I said to her, 'Have I always created this kind of panic?' " (The answer was yes.) Devereux says he is now focused on planning -- and more respectful of Mehls's time and skills. They discuss in advance what needs to be done and when she will be available to work with him.

That doesn't mean she is working any less. Mehls sometimes helps him during off-hours, which was rare before ROWE. "Before, you came in when you were supposed to and left when you were supposed to," Mehls says. "You were there putting in the magic 40 hours." But the shift to ROWE has forced J.A. Counter's managers to focus more on outcomes than on hours. Before moving to the new system, each manager met with his or her direct reports and wrote out detailed job descriptions, with expectations and measurements. Now, Mehls says, J.A. Counter's employees are like "mini-entrepreneurs," managing their own schedules and focusing on delivering results instead of just pulling in a paycheck.

Skoglund is sending out a client survey to assess whether customer service levels have improved since the switch to ROWE. She is also tracking productivity, revenue per full-time employee, sales, and turnover. Already, accuracy on investment and insurance forms has improved 10 percent, which Skoglund attributes to a more attentive and engaged staff. And, of course, Skoglund's toes are looking rather nice. "With ROWE, you can stand up in the middle of the afternoon and say, 'I'm going shopping for a purse,' and no one blinks an eye," she says. "The secret is that the guilt is gone."