Reward Well

In a cavernous, no-frills retail warehouse setting, where bulk sales determine stockholder profits, knowledgeable, dependable service usually isn't part of the low-cost package. Don't try to tell that to Costco Wholesale Corp., where employee longevity and high morale are as commonplace as overloaded shopping carts. “We like to turn over our inventory faster than our people,” says Jim Sinegal, Costco founder and CEO until he retired in 2012. Costco, a membership warehouse store headquartered in Washington State, by 2016 had become the world's second largest retailer (after Walmart) with more than 700 stores across the United States and beyond.

Costco has a counterintuitive success formula: Pay employees more and charge customers less than its biggest competitor, Sam's Club (a Walmart subsidiary). A great way to lose money? Costco has been the industry's most profitable firm in recent years. How? In Sinegal's view, the answer is easy: “If you pay the best wages, you get the highest productivity. By our industry standards, we think we've got the best people and the best productivity when we do that.” Costco paid its employees about 70 percent more than Sam's Club but generated twice as much profit per worker (Cascio, 2006). Compared with competitors, Costco achieved higher sales volumes, faster inventory turnover, lower shrinkage, and higher customer satisfaction (RetailSails 2012; American Customer Satisfaction Index, 2016). Costco illustrates a general principle: Pay should reflect value added. Paying people more than they contribute is a losing proposition. But the reverse is also true: It makes sense to pay top dollar for exemplary contributions of skilled, motivated, and involved employees (Lawler, 1996).

“This is the lesson Costco teaches,” says retailing guru Doug Stephens. “You don't have to be Nordstrom selling $1,200 suits in order to pay people a living wage. That is what Walmart has lost sight of. A lot of people working at Walmart go home and live below the poverty line. You expect that person to come in and develop a rapport with customers who may be spending more than that person is making in a week? You expect them to be civil and happy about that?” (Stone, 2013).

To get and keep good people, selective organizations also offer attractive benefits. Firms with “high-commitment” human resource practices are more likely to offer work and family benefits, such as daycare and flexible hours (Osterman, 1995). Take software powerhouse SAS:

Just about every benefit known to corporate America—on-site child care, swimming pools, medical clinics, fitness centers, car detailings, nail salons, shoe repairs—are on offer at this software company based in Research Triangle Park, North Carolina. Said one employee: “I get massages, pick up prescriptions, get my hair done, take photography classes, get physical therapy. The list is endless.” But the employee quickly added: “It's not just about the ‘what.’ It's about the place itself. The campus is beautiful and quite tranquil. I can take a walk during lunch and find myself far away. I know it sounds corny, but I enjoy just driving into campus in the morning” (Fortune: SAS Institute, 2016).

Why spend that much? In an industry where turnover rates hover around 20 percent, SAS maintains a level below 4 percent, which results in about $50 million a year in HR-related savings, according to a Harvard Business School study. “The well-being of our company is linked to the well-being of our employees,” says SAS CEO Jim Goodnight (Stein, 2000, p. 133).

Promote from Within

Costco promotes more than 80 percent of its managers from inside the company, and 90 percent of managers at FedEx started in a nonmanagerial job. Promoting from within offers several advantages (Pfeffer, 1998):

• It encourages both management and employees to invest time and resources in upgrading skills.
• It is a powerful performance incentive.
• It fosters trust and loyalty.
• It capitalizes on knowledge and skills of veteran employees.
• It avoids errors by newcomers unfamiliar with the company's history and proven ways.
• It increases the likelihood that employees will think for the longer term and avoid impetuous, shortsighted decisions. Highly successful corporations rarely hire a chief executive from the outside; less effective companies do so regularly (Collins and Porras, 1994).

Share the Wealth

Employees often feel little responsibility for an organization's performance because they expect gains in efficiency and profitability to benefit only executives and shareholders. People-oriented organizations have devised a variety of ways to align employee rewards more directly with business success. These include gain-sharing, profit-sharing, and employee stock ownership plans (ESOPs). Scanlon plans, first introduced in the 1930s, give workers an incentive to reduce costs and improve efficiency by offering them a share of gains. Profit-sharing plans at companies like Nucor give employees a bonus tied to overall profitability or to the performance of their local unit.

Both gain-sharing and profit-sharing plans usually have a positive impact on performance and profitability, although some have worked better than others. Success depends on how well these plans are integrated into a coherent human resource philosophy. Kanter (1989a) suggests that gain-sharing plans have spread slowly because they require broader changes in managing people: cross-unit teams, suggestion systems, and more open communication of financial information (Kanter, 1989a). Similar barriers have slowed the progress of ESOPs:

To be effective, ownership has to be combined with ground-floor efforts to involve employees in decisions through schemes such as work teams and quality-improvement groups. Many companies have been doing this, of course, including plenty without ESOPs. But employee-owners often begin to expect rights that other groups of shareholders have: a voice in broad corporate decisions, board seats, and voting rights. And that's where the trouble can start, since few executives are comfortable with this level of power-sharing (Bernstein, 1996, p. 101).

Nevertheless, there have been many successful ESOPs. Thousands of firms participate (Rosen, Case, and Staubus, 2005), and most of the plans have been successful (Blasi, Kruse, and Bernstein, 2003; Blair, Kruse, and Blasi, 2000; Kruse, Blasi, and Park, 2010). Employee ownership tends to be a durable arrangement and to make the company more stable—less likely to fail, be sold, or to lay off employees (Blair, Kruse, and Blasi, 2000). When first introduced, employee ownership tends to produce productivity gains that persist over time (Kruse, 1993). A plan's success depends on effective implementation of three elements of the “equity model” (Rosen et al., 2005, p. 19):

• Employees must have a significant ownership share in the company.
• The organization needs to build an “ownership culture” (p. 34).
• It is important that “employees both learn and drive the business disciplines that help their company do well” (p. 38).

All those characteristics can be found at Publix, America's largest employee-owned business. Publix has become a fixture on Fortune's list of most admired companies and its list of best places to work, while achieving the highest customer satisfaction ratings in its industry (American Customer Satisfaction Index, 2016).

Bonus and profit-sharing plans spread rapidly in the boom years of the 1990s. The benefits often went mostly to top managers, but many successful firms shared benefits more widely. Skeptics noted a significant downside risk to profit-sharing plans: They work when there are rewards but breed disappointment and anger if the company experiences a financial downturn. A famous example is United Airlines, whose employees took a 15-percent pay cut in return for 55-percent ownership of the company in 1994. Initially, it was a huge success. Employees were enthusiastic when the stock soared to almost $100 a share. But, like most airlines, United experienced a financial crunch after 9/11. Employees were crushed when bankruptcy left their shares worthless and their pensions underfunded.

Provide Information and Support

A key factor in Enron's dizzying collapse was that few people fully understood its financial picture. Eight months before the crash, Fortune reporter Bethany McLean asked CEO Jeffrey Skilling, “How, exactly, does Enron make money?” Her March 2001 article in Fortune pointed out that the company's financial reports were almost impenetrable and the stock price could implode if the company missed its earnings forecasts.

Over the last few decades, a philosophy sometimes called “open-book management” has begun to take root in progressive companies. The movement was inspired by the near-death experience of an obscure plant in Missouri, Springfield Remanufacturing (now SRC Holdings). SRC was created in 1983 when a group of managers and employees purchased it from International Harvester for about $100,000 in cash and $9 million in debt. It was one of history's most highly leveraged buyouts (Pfeffer, 1998; Stack and Burlingham, 1994). Less debt had strangled many companies, and CEO Jack Stack figured the business could make it only with everyone's best efforts. He developed the open-book philosophy as a way to survive. The system was built around three basic principles (Case, 1995):

• All employees at every level should see and learn to understand financial and performance measures.
• Employees are encouraged to think like owners, doing whatever they can to improve the numbers.
• Everyone gets a piece of the action—a stake in the company's financial success.

Open-book management works for several reasons. First, it sends a clear signal that management trusts people. Second, it creates a powerful incentive for employees to contribute. They can see the big picture—how their work affects the bottom line and how the bottom line affects them. Finally, it furnishes information they need to do a better job. If efficiency is dropping, scrap is increasing, or a certain product has stopped selling, employees can pinpoint the problem and correct it.

Open-book strategies have been applied mostly in relatively small companies, but they've also worked for Whole Foods, the natural foods supermarket chain, and Hilcorp, the largest privately owned U.S. business in the oil and gas industry. Whole Foods “collects and distributes information to an extent that would be unimaginable almost anywhere else. Sensitive figures on store sales, team sales, profit margins, even salaries, are available to every person in every location” (Fishman, 1996a). Hilcorp attained notoriety in December, 2015, when CEO Jeffrey Hildebrand came through on his promise to give every employee $100,000 if the company met its five-year goals to “to double Hilcorp's oilfield production rate, net oil and gas reserves, and equity value.” The bonuses cost Hildebrand more than $100 million, but he could afford it—the company's success had made him a very wealthy man. The checks went out in time for Christmas.

Encourage Autonomy and Participation

Information is necessary but not sufficient to fully engage employees. The work itself needs to offer opportunities for autonomy, influence, and intrinsic rewards. The Theory X approach assumes that managers make decisions and employees follow orders. Treated like children, employees behave accordingly. As companies have faced up to the costs of this downward spiral in motivation and productivity, they have developed programs under the generic label of participation to give workers more opportunity to influence decisions about work and working conditions. The results have often been remarkable.

A classic illustration comes from a group of women who painted dolls in a toy factory (Whyte, 1955). In a newly reengineered process, each woman took a toy from a tray, painted it, and put it on a passing hook. The women received an hourly rate, a group bonus, and a learning bonus. Although management expected little difficulty, production was disappointing and morale took a dive. Workers complained that the room was too hot and the hooks moved too fast.

Reluctantly, the foreman followed a consultant's advice and met face to face with the employees. After hearing the women's complaints, he agreed to bring in fans. Though he and the engineer who designed the manufacturing process expected no benefit, morale improved. Discussions continued, and the employees came up with a radical suggestion: let them control the belt's speed. The engineer was vehemently opposed; he had carefully calculated the optimal speed. The foreman was skeptical but agreed to give the suggestion a try. The employees developed a complicated production schedule: start slow at the beginning of the day, increase the speed once they had warmed up, slow it down before lunch, and so on.

Results were stunning. Morale skyrocketed. Production increased far beyond the most optimistic calculations. That became a problem when the women's bonuses escalated to the point that they were earning more than workers with more skill and experience. The experiment ended unhappily. The women's high pay created dissension in the ranks. Instead of trying to expand a concept that had worked so well, management chose to restore harmony by reverting to a fixed speed for the belt. Production plunged, morale plummeted, and most of the women quit.

Successful examples of participative experiments have multiplied across sectors and around the globe. A Venezuelan example is illustrative. Historically, the nation's health care was provided by a two-tier system: small-scale, high-quality private care for the affluent and a large public health care system for others. The public system, operated by the ministry of health, was in a state of perpetual crisis. It suffered from overcentralization, chronic deficits, poor hygiene, decaying facilities, and constant theft of everything from cotton balls to X-ray machines (Palumbo, 1991). A small group of health care providers founded Ascardio to provide cardiac care in a rural area (Palumbo, 1991; Malavé, 1995). Participation was a key to remarkably high standards of patient care. A key innovation was the General Assembly, which brought together doctors, technical staff, workers, board members, and community representatives where they discussed everything from individual performance issues to the system-wide implications of salary increases ordered by the President of Venezuela (Malavé, 1995, p. 16). Arteta (2006) argued that Ascardio's skill at learning has helped it to survive and grow in a very turbulent environment as Venezuela lurched from one economic and political crisis to another.

Studies of participation show it to be a powerful tool to increase both morale and productivity (Appelbaum et al., 2000; Blumberg, 1968; Katzell and Yankelovich, 1975; Levine and Tyson, 1990). A study of three industries—steel, apparel, and medical instruments—found participation consistently associated with higher performance (Appelbaum et al., 2000). Workers in high-performance plants had more confidence in management, liked their jobs better, and received higher pay. The authors suggested that participation improves productivity through two mechanisms: increasing effectiveness of individual workers and enhancing organizational learning (Appelbaum et al., 2000).

Lam, Huang, and Chan (2015) found that participation only works when it rises above a threshold level—managers need to be fully committed, and to include information sharing and effective leadership in the package. Efforts at fostering participation have sometimes failed because of managers' ambivalence—even if they like the idea, they often fear subordinates will abuse it. When managers are conflicted, participation is often more rhetoric than reality (Argyris, 1998; Argyris and Schön, 1996) and turns into “bogus empowerment” (Ciulla, 1998, p. 63; Heller, 2003). Without realizing it, managers often mandate participation in a controlling, top-down fashion, sending mixed messages—“It's your decision, but do what I want.” Such contradictions virtually guarantee failure. Fast, Burris, and Bartel (2014) report that the less confidence managers had in their own effectiveness, the less likely they were to welcome employee input. That suggests that insecure, defensive managers set up a self-destructive spiral: They need help but avoid getting it.

Redesign Work

In the name of efficiency, many organizations spent much of the twentieth century trying to oust the human element by designing jobs to be simple, repetitive, and low skill. The analogue in education is “teacher-proof” curricula and prescribed teaching techniques. When such approaches dampen motivation and enthusiasm, managers and reformers habitually blame workers or teachers for being uncooperative and resistant to change. Only in the late twentieth century did opinion shift toward the view that problems might have more to do with jobs than with workers. A key moment occurred when a young English social scientist took a trip to a coal mine:

In 1949 trade unionist and former coal miner Ken Bamforth, a postgraduate fellow training for industrial fieldwork in London, was encouraged to return to his former industry to report on work organization. At a newly opened coal seam, Bamforth noticed an interesting development. Technical improvements in roof control had made it possible to mine “shortwall,” and the men in the pits, with the support of their union, proposed to reorganize the work process. Instead of each miner being responsible for a separate task, as was the custom, workers organized relatively autonomous groups. Small groups rotated tasks and shifts among themselves with a minimum of supervision. To take advantage of new technical opportunities, they revived a tradition of small group autonomy and responsibility dominant in the days before mechanization (Sirianni, 1995, p. 1).

Bamforth's observations helped to spur the “sociotechnical systems” movement (Rice, 1953; Trist and Bamforth, 1951), which sought to integrate structural and human resource considerations. Trist and Bamforth noted that the old method isolated individual workers and disrupted informal groupings that offered potent social support in a difficult and dangerous environment. They argued for the creation of “composite” work groups, in which individuals would be cross-trained in multiple jobs so each group could work relatively autonomously. Their approach made only modest headway in England in the 1950s but got a boost when two Tavistock researchers, Eric Trist and Fred Emery, were invited to Norway. Their ideas were welcomed, and Norway became a pioneer in work redesign.

At about the same time, in a pioneering American study, Frederick Herzberg (1966) asked employees about their best and worst work experiences. “Good feelings” stories featured achievement, recognition, responsibility, advancement, and learning; Herzberg called these motivators. “Bad feelings” stories clustered around company policy and administration, supervision, and working conditions; Herzberg labeled these hygiene factors. Motivators dealt mostly with work itself; hygiene factors bunched up around the work context. Herzberg concluded that attempts to motivate workers with better pay and fringe benefits, communications programs, or human relations training missed the point. Instead, he saw “job enrichment” as central to motivation. Enrichment meant giving workers more freedom and authority, more feedback, and greater challenges.

Hackman and his colleagues extended Herzberg's ideas by identifying three critical factors in job redesign: “Individuals need (1) to see their work as meaningful and worthwhile, more likely when jobs produce a visible and useful ‘whole,’ (2) to use discretion and judgment so they can feel personally accountable for results, and (3) to receive feedback about their efforts so they can improve” (Hackman et al., 1987, p. 320).

Experiments with job redesign have grown significantly in recent decades. Many efforts have been successful, some resoundingly so (Kopelman, 1985; Lawler, 1986; Yorks and Whitsett, 1989; Pfeffer, 1994; Parker and Wall, 1998; Mohr and Zoghi, 2006). Typically, job enrichment has a stronger impact on quality than on productivity. Workers find more satisfaction in doing good work than in simply working harder (Lawler, 1986). Most workers prefer redesigned jobs, although some still favor old ways. Hackman emphasized that employees with “high growth needs” would welcome job enrichment, while others with “low growth needs” would not. Organizational context also makes a difference. Job redesign produced greater benefit in situations where working conditions were poor to begin with (Morgeson et al., 2006).

Recent decades have witnessed a gradual reduction in dreary, unchallenging jobs. Routine work has been increasingly redesigned or turned over to machines, robots, and computers. But significant obstacles block the progress of job enrichment, and monotonous jobs will not soon disappear. One barrier is the lingering belief that technical imperatives make simple, repetitive work efficient and cheap. Another is the belief that workers produce more in a Theory X environment. A third barrier is economic; many jobs cannot be altered without major investments in redesigning physical plant and machinery. A fourth barrier is illustrated in the doll-manufacturing experiment: When it works, job enrichment leads to pressures for system-wide change. Workers with enriched jobs often develop higher opinions of themselves. They may demand more—sometimes increased benefits, other times career opportunities or training for new tasks (Lawler, 1986).

Foster Self-Managing Teams

From the beginning, the sociotechnical systems perspective emphasized a close connection between work design and teamwork. Another influential early advocate of teaming was Rensis Likert, who argued in 1961 that an organization chart should depict not a hierarchy of individual jobs but a set of interconnected teams.¹ Each team would be highly effective in its own right and linked to other teams via individuals who served as “linking pins.” It took decades for such ideas to take hold, but an increasing number of firms now embrace the idea. One is Whole Foods Market, the grocery chain discussed in Chapter 5. The firm cites “featured team members” on its website, and its “Declaration of Interdependence” pledges, “We Support Team Member Excellence and Happiness.”

The central idea in the autonomous team approach is giving groups responsibility for a meaningful whole—a product, subassembly, or complete service—with ample autonomy and resources and with collective accountability for results. Teams meet regularly to determine work assignments, scheduling, and current production. Supervision typically rests with a team leader, who may be appointed or may emerge from the group. Levels of authority and discretion vary across situations. Some teams have authority to hire, fire, determine pay rates, specify work methods, and manage inventory. In other cases, the team's scope of decision making is narrower, focusing on issues of production, quality, and work methods.

The human resource concept of teams overlaps with the structural approach to teams (Chapter 5) but emphasizes that teams rarely work without ample training. Workers need group skills and a broader range of technical skills so that each member understands and can perform someone else's job. “Pay for skills” gives team members an incentive to keep expanding their range of competencies (Manz and Sims, 1995).

Promote Egalitarianism

Egalitarianism implies a democratic workplace where employees are an integral part of the decision-making process. This idea goes beyond participation, often viewed as a matter of style and climate rather than shared authority. Even in participative systems, managers still make key decisions. Broader, more egalitarian sharing of power is resisted worldwide (Heller, 2003). Managers have often resisted organizational democracy—the idea of building worker participation into the formal structure to protect it from management interference. Most U.S. firms report some form of employee involvement, but the approaches (such as a suggestion box or quality circle) “do not fundamentally change the level of decision-making authority extended to the lowest levels of the organization” (Ledford, 1993, p. 148). American organizations make less use of workforce involvement than evidence of effectiveness warrants (Pfeffer, 1998; Ledford, 1993).

Formal efforts to democratize the workplace are more common in some parts of Europe. Norway, for example, legally mandated worker participation in decision making in 1977 (Elden, 1983, 1986). Major corporations pioneered efforts to democratize and improve the quality of work life. Three decades later, the results of the “Norwegian model” look impressive—Norway came in at number one on the 2017 World Happiness Report (Worldhappiness.report, 2017) and is regularly at or near the top of rankings for “best country to live in,” with a strong economy, broad prosperity, low unemployment, and excellent health care (Barstad, Ellingsen, and Hellevik, 2005; Garfield, 2015).

The Brazilian manufacturer Semco offers another dramatic illustration of organizational democracy in action (Killian, Perez, and Siehl, 1998; Semler, 1993). Ricardo Semler took over the company from his father in the 1980s and gradually evolved an unorthodox philosophy of management. At Semco, workers hire new employees, evaluate bosses, and vote on major decisions. In one instance, employees voted to purchase an abandoned factory that Semler didn't want and then proceeded to turn it into a big success. “In a 10-year recessionary period in Brazil, Semco's revenues still grew 600 percent, profits were up 500 percent, productivity was up 700 percent, and for the last 20+ years, employee turnover remains at an incredibly low 1–2 percent per year. They have no managers, no HR department, no written policies (just a few written beliefs) and no office hours. Everyone works in small, self-motivated, self-managed work teams who make their own decisions regarding salary, hiring, firing, and who leads the team for the next six months” (Blakeman, 2014).

Is organizational democracy worth the effort? Harrison and Freeman (2004) conclude that the answer is yes. Even if it does not produce economic gains, it produces other benefits such as reduced stress (Kalleberg, Nesheim, and Olsen, 2009). Still, many managers and union leaders oppose the idea because they fear losing prerogatives they see as essential to success. Union leaders and critical management theorists sometimes argue that democracy is a management ploy to get workers to accept gimmicks in place of gains in wages and benefits or as a wedge that might come between workers and their union.

Organizations that stop short of formal democracy can still become more egalitarian by reducing both real and symbolic status differences (Pfeffer, 1994, 1998). In most organizations, it is easy to discern an individual's place in the pecking order from such cues as office size and access to perks like limousines and corporate jets. Organizations that invest in people, by contrast, often reinforce participation and job redesign by replacing symbols of hierarchy with symbols of cooperation and equality. Semco, for example, has no organization chart, secretaries, or personal assistants. Top executives type letters and make their own photocopies. Nucor has no executive dining rooms, and the chief executive “flies commercial, manages without an executive parking space, and really does make the coffee in the office when he takes the last cup” (Byrnes and Arndt, 2006, p. 60).

Reducing symbolic differences is helpful, but reducing material disparities is important as well. A controversial issue is the pay differential between workers and management. In the 1980s, Peter Drucker suggested that no leader should earn more than 20 times the pay of the lowest-paid worker. He reasoned that outsized gaps undermine trust and devalue workers. Corporate America paid little heed. In 1980, big-company CEOs earned about 40 times as much as the average worker. By 2015, with an average annual compensation of $13.8 million, they were earning more than 200 times as much (Chamberlain, 2015). In the year it went bankrupt, Enron was a pioneer in the golden paycheck movement, handing out a total of $283 million to its five top executives (Ackman, 2002). The controversial drug company, Mylan, which came under fire in 2016 for stunning price increases on its most profitable product, the EpiPen, paid its top five managers a total of $300 million over five-year period—significantly more generous than much bigger and more profitable competitors like Johnson & Johnson and Pfizer (Maremont, 2016).

In contrast, a number of progressive companies, such as Costco, Whole Foods, and Southwest Airlines, have traditionally underpaid their CEOs by comparison with their competitors. Whole Foods Markets limits executives' pay to 19 times the average employee salary, and CEO John Mackey asked the board in 2007 to set his salary at $1/year (Gaar, 2010). It was newsworthy that Southwest's CEO received “less than $1 million in 2006 even as the carrier posted its 34th straight year of profits” (Roberts, 2007). In the same year, United Airlines, fresh out of bankruptcy, unintentionally united all five of its unions in protest against the estimated take-home pay of $39 million for its CEO (Moyers, 2007).

Promote Diversity

A good workplace is serious about treating everyone well—workers as well as executives; women as well as men; Asians, African Americans, and Hispanics as well as whites; gay as well as straight employees. Sometimes companies support diversity because they think it's the right thing to do. Others do it more grudgingly because of bad publicity, a lawsuit, or government pressure.

In 1994, Denny's Restaurants suffered a public relations disaster and paid $54 million to settle discrimination lawsuits. The bill was even higher for Shoney's, at $134 million. Both restaurant chains got religion as a result (Colvin, 1999). So did Coca-Cola, which settled a class action suit by African American employees for $192 million in November 2000 (Kahn, 2001), and Texaco, after the company's stock value dropped by half a billion dollars in the wake of a controversy over racism (Colvin, 1999).

Denny's transformation was so thorough that the company has frequently appeared on lists of best companies for minorities (Esposito et al., 2002; Daniels et al., 2004).

In the end, it makes good business sense for companies to promote diversity. If a company devalues certain groups, word tends to get out and customers become alienated. In the United States, more than half of consumers and workers are female, and about one fourth are Asian, African American, or Latino. California, New Mexico, and Texas are the first states in which non-Hispanic whites are no longer a majority—except for multiethnic Hawaii, in which whites have never been a majority. The same will eventually be true of the United States as a whole. When talent matters, it is tough to build a workforce if your business practices write off a sizable portion of potential employees. That's one reason so many public agencies in the United States have long-standing commitments to diversity. One of the most successful is the U.S. Army, as exemplified in Colin Powell's ability to rise through the ranks to head the Joint Chiefs of Staff and subsequently to become the nation's secretary of state.

In industries where talent is a vital competitive edge, private employers have moved aggressively to accommodate gay employees:

As a high-profile supporter of gay rights, Raytheon of course provides health-care benefits to the domestic partners of its gay employees. It does a lot more, too. The company supports a wide array of gay-rights groups, including the Human Rights Campaign, the nation's largest gay-advocacy group. Its employees march under the Raytheon banner at gay-pride celebrations and AIDS walks. And it belongs to gay chambers of commerce in communities where it has big plants. Why? Because the competition to hire and retain engineers and other skilled workers is so brutal that Raytheon doesn't want to overlook anyone. To attract openly gay workers, who worry about discrimination, a company like Raytheon needs to hang out a big welcome sign. “Over the next ten years we're going to need anywhere from 30,000 to 40,000 new employees,” explains Heyward Bell, Raytheon's chief diversity officer. “We can't afford to turn our back on anyone in the talent pool” (Gunther, 2006, p. 94).

Promoting diversity comes down to focus and persistence. Forward-looking organizations take it seriously and build it into day-to-day management. They tailor recruiting practices to diversify the candidate pool. They develop a variety of internal diversity initiatives, such as mentoring programs to help people learn the ropes and get ahead. They tie executive bonuses to success in diversifying the workforce. They work hard at eliminating the glass ceiling. They diversify their board of directors. They buy from minority vendors. It takes more than lip service, and it doesn't happen overnight. Many organizations still don't get the picture, but others have made impressive strides.