How Civility Breeds Success

Last week, I wrote about why mean is not effective in the workplace. But is the opposite equally true? Is a harmonious, civil workplace beneficial to a company’s bottom line? It would appear that it is. For the past eighteen years, Fortune magazine has run an annual list of the 100 Best Companies to Work For in the United States, the results of which have become a playbook for building trust and employee engagement. The firms that make the list each year show consistently impressive financial outcomes, typically far better than their industry counterparts. Overall, the 100 Best also grow at a faster clip and have significantly lower turnover in side-by-side comparisons with comparable firms.

So what gives? Is it tangible factors like child care, free snacks, a gym, and other benefits offered by places such as Google, Genentech, and Intuit (which all consistently score within the top ten)? Certainly employees appreciate these perks, but the true common denominator is that all of these firms manage—in many cases obsessively—their workplace cultures and demand a high level of civility.

So how do highly effective entrepreneurs shape the culture that enables these firms to become rockets for growth?

Trust and Openness

Spend a week in Ann Arbor, Michigan, and you’ll inevitably find yourself at one of the Zingerman’s businesses. Originally a traditional Jewish deli, Zingerman’s was founded by Paul Saginaw and Ari Weinzweig, who realized early on that growth was dependent on figuring out how to ensure that every employee thrived at work.

Their brand is now known nationally, and what they call their “Community of Businesses” has grown to include imported gourmet foods, a bakery, a creamery, and a second restaurant (Zingerman’s Roadhouse). They’ve also expanded their brand to include a mail-order catalog, coffee, catering, and more. By 2012, the combined revenues were coming in at $45 million.

Wayne Baker, a management professor and chair of the University of Michigan’s management department, has written several case studies about Zingerman’s and its approach to achieving sustainable growth. He found that Zingerman’s shares enormous amounts of critical information with employees; teams within each unit see exactly how their division performs on a weekly basis.

They are also explicit in their intolerance of incivility. Leaders are expected to treat employees with the same high standards of respect that the employees are meant to uphold with customers. Zingerman’s has built an environment where leaders set the tone and serve as role models.

Another key to the company’s success is that each unit has a managing partner who owns part of that business. “They make the push to go for greatness,” Weinzweig says, and they operate as one business with “semiautonomous units.”

Zingerman’s management philosophy has been so successful that they decided to start a management-training company in 1996 called ZingTrain to help spread the word. The program includes such seminars as “Fun, Flavorful Finance: Why Our Dishwashers Know Our Net Operating Profit.”

Emotional Intelligence

Emotional intelligence is essential in the critical moments of a start-up. Research shows that when the status quo needs to be challenged, emotionally intelligent employees speak up more frequently and more effectively. They are also more likely to speak up—while keeping their anger in check—when colleagues are treated unjustly. And their ability to express enthusiasm helps them avoid appearing threatening to leaders when bringing new ideas to the fore. Great leaders value these employees and don’t use their own often formidable emotional intelligence to manipulate others, as mean men like Peter Arnell do.

We can see the benefits of emotional intelligence in action by looking at founders of successful companies who remain in leadership positions. Sergey Brin and Larry Page of Google are prime examples. The two founded Google while still in their twenties and were mature enough to see early on that they needed a seasoned CEO to help lead the company. But they wanted a CEO who would also value and nurture the culture they were creating at Google, a culture that valued people’s individual creativity and was supportive of their personal goals—for example, by allowing engineers to spend twenty percent of their time working on their own projects. Eric Schmidt fit that bill, and together the three men created a culture that highly talented people found empowering and appealing.

Eventually Schmidt stepped aside, and now Page is CEO of Google. I admire Google for growing so quickly while holding firm to its original values. Google’s ability to quickly grow its highly complex product and service offerings on a global scale, with an organizational structure of mind-numbing intricacy, and remain a place where employees feel valued and empowered is incredible. Full disclosure: Google has been a client of mine, though I cannot say that I often walk away with such a high opinion of leaders I’ve worked with as I did with these guys.

Facebook has a similar story. Mark Zuckerberg was very young when he cofounded it and recognized his need for growth in certain areas. He has reportedly worked hard to develop his emotional intelligence, both with executive coaching and help from Facebook’s COO, Sheryl Sandberg, a leader renowned for her combination of smarts and civility.

Zuckerberg’s position at Facebook is secure given his stock holdings and the structure of Facebook’s board. Whether he needs to or not, Zuckerberg values civility and he’s consistently ranked as one of the most well-liked CEOs in Silicon Valley.

Emotional intelligence can be a double-edged sword. It’s vital for any leader to recognize, understand, and manage emotions, but a strong intuition about others can be used toward diabolical goals. So, while companies like American Apparel fight tooth and nail to keep their founder out, the leaders who learn the value of civility may spend their entire careers atop the company they built.