Culture Makes the Workplace

Some companies have a reputation for being among the best places to work in Northwest Arkansas: the University of Arkansas, Airways Freight of Fayetteville, McKee Foods of Gentry.

Others get mixed reviews.

In January of 2001, Fortune magazine ranked Wal-Mart Stores Inc. as the 80th best company in America for which to work. But some former Wal-Mart employees with whom we’ve spoken said they just couldn’t hack the cult-like cheerleading meetings and other aspects of that corporate culture.

Wal-Mart is the largest retailer in the world with the largest work force in America except for the federal government. Shouldn’t it have ranked a little higher than 80th in the magazine’s best places to work list?

Not necessarily, said John Delery, an associate professor of management in the University of Arkansas’ Sam M. Walton College of Business.

With almost 1 million employees worldwide, it’s somewhat phenomenal that Wal-Mart made the top 100 at all because of its sheer size, he said.

“In many ways, I’m surprised they ranked that high,” said Delery. “It’s very difficult to do given the breadth of their operations.”

Give Me a ‘Squiggly’

Delery, an expert on human resources management, said it boils down to culture, and successful culture usually involves respect for employees.

But culture is a nebulous thing to define and duplicate.

“If we could do it easily,” Delery said, “we would all be the head of a successful company.”

Delery said a strong corporate culture starts with a charismatic founder or leader, such as Sam Walton in Wal-Mart’s case. The culture evolves over time and is supported by management practices.

“I think culture is sustained by good recruiting and selection processes,” Delery said.

Companies try to hire employees that fit in with their corporate culture. The best places to work are usually those focused on performance and people, he said.

As far as the cheerleading goes, well, maybe it grows on people.

“I can’t say I’d want to work at any of the companies that have the strongest cultures because I don’t fit in with those cultures,” Delery said. “Once you make a decision to be with an organization, once you decide to do the Wal-Mart cheer, you start to believe in that culture.”

But as Wal-Mart grows internationally, it’s more difficult to keep the culture in tact. Delery said some of the problems Wal-Mart has faced lately are probably from growing pains.

With annual sales of $191 billion, Wal-Mart operates more than 3,080 stores in the United States and more than 1,080 internationally.

“As of late, they’ve had a hard time keeping the culture consistent across locations and staying out of trouble,” Delery said.

“We know a lot of people who love Wal-Mart. It’s been very good to people here. But I just read an article about them settling lawsuits about discrimination. So there may be two sides to Wal-Mart. In many respects, it’s a great company. But you have to look at it the other way, too. I know they’ve got good people. My guess is they’ll be able to do well [in spite of a recession]. They’re just going through a challenging time.”

The Friendly Skies

Delery said he contrasts the cultures of Southwest Airlines and Delta Air Lines in his MBA class “Leading High Performance Work Organizations.”

“Southwest’s employees aren’t the highest-paid employees,” he said. “But if they own stock, they’ve done well. It’s a culture of respect for everybody, and they work as a team.”

Delta, on the other hand, has tried to mimic Southwest’s low-cost ways, “but they haven’t mimicked the work force,” Delery said.

And, he noted, low wages is not the same thing as low labor costs. If a company hires people at low wages, those people often have to work longer to get the job done.

“It’s going to take them more hours,” Delery said. “In the long run, you might be paying more money for that labor. That’s where I think a lot of employers miss the big picture.”

Southwest Airlines ranked No. 4 behind Container Store, SAS Institute and Cisco Systems, on Fortune’s list.

But Delery doesn’t put much stock in such lists, saying they are too subjective. At least 250 employees at each company filled out a questionnaire, and Fortune used that information to compile the list.

“It’s really hard to get a handle on what companies are the best to work for,” Delery said. “I don’t think the Fortune methodology is that good. It’s really subjective.”

R. Levering and M. Moskowitz pioneered the genre. They wrote a book in 1993 titled “The 100 Best Companies in America to Work For.” Since 1998, Fortune has been doing the list annually with Levering and Moskowitz as the researchers and authors.

Vendor Factor

Wal-Mart vendors such as Procter & Gamble and Johnson & Johnson ranked very high with the employees we spoke to, but they didn’t make Fortune’s Top 100 list. Those companies have come into Northwest Arkansas — traditionally an area of low wages and hard-working people — and paid big-city salaries. And they’re probably getting their money’s worth.

“The companies that have essentially been forced to set up shop in Northwest Arkansas due to increasing Wal-Mart demand know how to treat their employees and how to compensate them for hard work and dedication,” said Ashley Woods, a replenishment planner with Johnson & Johnson.

“They understand that people make the business, Johnson & Johnson specifically,” she said. “I have never in my life worked with such a professional, positive, intellectual, here-to-help-you, genuinely concerned group of individuals in my entire professional career as I do at Johnson & Johnson, and that goes all the way to the top of the ladder. I would be so lucky to remain within this company throughout the remainder of my career. One phrase sums it up at Johnson & Johnson: This place is golden.”

Growing Pains

In many ways, Northwest Arkansas is experiencing growing pains. The University of Arkansas, known in particular for its employee benefits, is competing nationwide for faculty members. That means paying salaries that are above what the state Legislature mandates, which means grant money is often used to supplement income.

But apparently the UA, and in particular the Sam M. Walton College of Business, is doing a good job of recruiting employees and keeping them. Several Walton College employees responded to an online survey conducted by the Northwest Arkansas Business Journal saying they were very happy to be working for the UA’s business school.

“You are appreciated, recognized and rewarded for the contribution you make to the overall vision,” Nancy L. Hart, a special events director in the Walton College, wrote in response to our online questionnaire.

Hart said management and staff at the Walton College work well together, educational opportunities are “abundant,” vacation and sick leave are generous, the health care is affordable, the college has state-of-the-art technology and “people are encouraged and rewarded for their contributions and work.”

Charles Leflar, an assistant professor of accounting, wrote to tell us that Dean Doyle Z. Williams and a $50 million gift from the Walton family of Bentonville have had a lot to do with making the Walton College an exceptional place to work.

Other area businesses that were touted by their employees in our online survey included Edgewater Technology Inc., Trinity Rehabilitation, Arkansas Capital Corp., IntelliMark, Bank of America, Credit Counseling of Arkansas, Mercy Health System of Northwest Arkansas, The Mullikin Agency, Farris Insurance Agency, Arvest and United Bank.

History of the Workplace

Founded in 1837 as a soap and candle maker, Procter & Gamble was a model of exemplary employee relations at the turn of the 20th century, according to Fortune.

The driving force behind many of its pioneering policies was William Cooper Procter, grandson of a co-founder. Procter joined P&G as a low-level factory worker and quickly rose through the ranks.

In 1887, he persuaded his father and uncles to introduce a profit-sharing plan to foster company loyalty. The plan was improved in 1903 by tying it to the purchase of company stock, and it stands today as the oldest known profit-sharing plan in continuous operation.

In 1915, P&G workers were introduced to an “employee disability and death benefit plan,” one of the first of its kind, Fortune said. After World War I the company gave factory workers an eight-hour day — long before any federal law required it — and in 1923 it guaranteed 48 weeks of work per year. Barney Krieger, the first man hired by P&G, stayed for 47 years.

Since the early days of P&G, an Arkansas company has become known for implementing some of those early strategies of employee/management relations.

When Sam Walton joined J.C. Penney as a management trainee in 1940, he noticed that all the employees were called associates, a practice that dated back to 1902, according to Fortune.

Walton instituted the policy at his growing discount chain in the 1960s. He also embraced Tom Watson Sr.’s open-door policy at IBM (where any employee was encouraged to visit the CEO with their concerns) and did Hewlett Packard’s “management by walking around” one better by visiting every store.

Walton broke new ground by opening Wal-Mart’s books to all associates, a strategy that made the corny Wal-Mart mantra — “Our people make the difference” — credible. Walton was notoriously chintzy on salaries, and his associates worked like dogs. But as at P&G years before, compensation included carrots such as profit-sharing and stock-ownership plans for everyone. The company faltered after Walton’s death in 1992, but it’s back on track, and one visit to a Saturday morning meeting proves that Mr. Sam’s legacy lives on.