Discipline 2—Firing Up Your Employees

Master: I Love Rewards

Key Indicators: Tripled sales; 90% retention rate

It takes a lot for a founder to consider walking away from his own company. But that's where Razor Suleman, CEO of I Love Rewards, found himself in 2005. Despite healthy sales of $5.4 million, morale was low and attrition rates through the roof at his expanding—but largely visionless—incentive marketing firm. The Toronto-based company had lost six of its 18 staff in just three months. Employees, though working hard, were largely detached from their jobs. And the CEO felt the same.

"One day," Suleman recalls, "I walked into my second-in-command's office, partly for effect and partly out of frustration, and said, 'I'm done. I'm out of here. You run it.'" With some convincing from his right-hand man, Suleman reconsidered. He opted instead to galvanize his firm with a mission to recruit, inspire and retain the best employees. His goal: to turn the company into one people would truly love working for.

Todd Mathers, a Toronto-based principal at Hewitt Associates, a global human-resources consultancy, says becoming an employer of choice can boost morale, kick-start productivity and improve your bottom line. He cites data from Hewitt's 2007 Best Employers in Canada study, which ranks firms by the share of their workers who reported high engagement in their jobs. Those companies in the top 20—81% of whose staff, on average, were highly engaged—had an annualized cash flow return averaging 14.7% over five years. But those in the bottom 20—with just 41% of their employees highly engaged—scored only 6.5% on the same cash-flow measure.

The study also showed that top employers have an easier time attracting and retaining talent. The top 20 received 53 applications per job opening, versus 24 for the bottom 20. And turnover rates for high-and low-engagement firms averaged 7.5% and 13.4%, respectively.

"Companies that invest in creating a quality work experience that aligns well to the needs of their workforce have a clear advantage over organizations that don't do that," says Mathers. "That translates into higher employee engagement, which translates into some very real differences in performance metrics."

I Love Rewards now offers a range of workforce-pleasing perks such as an annual employee retreat, flex-time and four weeks of vacation for new hires. But it's not just about being nice to your people. The firm also requires employees to participate actively in setting and achieving company objectives. It runs a nine-minute daily meeting at which employees and management review goals, discuss challenges and acknowledge exceptional performance. To boost engagement, Suleman also introduced an employee share ownership program and open-book management, the latter giving staff full access to the company's financial details. On a quarterly basis, employees can grill management on everything from cellphone expenses to growth strategies at what Suleman calls "brutal facts sessions."

This approach has made recruitment easier: I Love Rewards, which twice ranked as one of Canada's Top 100 Employers, now receives more than 200 resumés per job posting, and its retention rate hovers around 90%.

Suleman credits his fired-up workforce with driving 200% growth in the year ending January 2009. "In the worst economic quarter in years, we tripled sales," he says. "I attribute it to our culture, our business model and our focus on people and rewards and recognition."

And the payback has been more than monetary: "Now, I love coming to work. It's amazing to see 27 people so engaged, so aligned and wanting to change the world in our little way."