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IT company's unique management style leads to happier employees and higher profits

As published in TechRepublic, February 19, 2001

Sandy Lillie had a problem: She was married to a workaholic IT guru.

"I never saw him, and I said, 'Hey, if you're going to work like that, why don't you work for yourself and work at home? At least I'll see you,'" she said. "So he did!"

Terry and Sandy Lillie started OMIX, an Internet and e-commerce application service provider, out of their home in 1994, eventually growing the company into its present headquarters in Menlo Park in California's Silicon Valley.

Sandy Lillie, a doctor of psychology, became the chief operating officer at OMIX. Dr. Lillie had spent most of her life listening to clients who described the horrors of work. Her main observation: "Too often, managers and executives treat and talk to workers as though they were children." From her observations and work, she believed that employees could be treated with respect and given freedom without compromising the bottom line.

OMIX was her opportunity to test her theories on the workplace.

The results, especially for an IT firm located in the Silicon Valley, were astounding:

  • A turnover rate of less than 5 percent
  • Employees who deferred their salaries for months at times to ensure the company stayed afloat
  • Employees who worked long hours when necessary, without complaint
  • Employees who declined offers of more money and stock options from competitors

A company that cares about employees

Dr. Lillie wanted to build a company that cares about employees, not just as workers, but as people. She wanted to prove that a company could fulfill its practical needs while respecting employees' human needs.

"Caring is also expressed through generous policies for time off, flexible schedules, reasonable workloads that don't require excessive travel or workaholic lifestyles, and prompt responsiveness to other employee concerns," she said.

When employees feel their needs are respected, they are happier. This leads to better customer service and better internal relationships, according to Dr. Lillie. "They are also more likely to tolerate times when their needs cannot be met, if they trust that it is not [due to] lack of caring," she added.

Her approach worked, according to former employee Brad Davenport, a software engineer. He recently left OMIX only because he received an offer to work for a close relative.

"OMIX is an ideal place to work," Davenport said. "I really couldn't wait to get to work. You have the freedom to explore new ideas and technologies without the pressure of a manager watching over your shoulder."

We asked Dr. Lillie what she thought of companies that essentially leash employees to work with cell phones and laptops. Employees at OMIX do work long hours at times, she acknowledged, but the company also respects that employees have lives outside work.

"Being a workaholic high-tech person in [Silicon] Valley is like being an alcoholic in a bar. Everyone expects [long hours]," she said. "There was tremendous pressure for Terry to be that way in his previous jobs, and I don't want other people to have to deal with that."

She believes the recent trend of giving company perks in order to improve retention rates is often self-serving for businesses, and that makes them ineffective. She feels the key is to genuinely care about your employees as people, not to just offer compensation carrots.

"It seems like everybody is worried about employee retention now, so there is a lot more openness to asking what employees want," she said. "But the energy of it is a little off because the reason they're doing things for employees is in order to maximize what they get from them, not because they actually care about them. I think that people can tell the difference. That feels more like a bribe."

OMIX has even turned away work that required too much of the employees. Last year, OMIX was offered a project that required 24-hour availability because the overseas customer wanted to be able to call during its work hours — despite the 12-hour time difference.

"The project manager let me know that this was really getting to be too much, so we sat down with all of the project managers and divvied up [the project responsibilities]....Having done that, we realized that, you know what? It's too much, period."

The results: Dedicated employees and profitability

The results of respecting employees? Loyalty and profitability, according to Dr. Lillie.

Despite the fact that the company is located in technological center Silicon Valley, OMIX's turnover rate has been under 5 percent — despite some rough times.

"Employees really did defer payroll," said Davenport. "Some deferred a percentage of their compensation, and others deferred it all! It was to be paid back with interest, but there was a belief in the company/family that this was just a bump in the road."

The Lillies have had opportunities to sell the company, but they're holding out for an offer that will take care of everyone in the company, not just themselves, Dr. Lillie said.

"When we look at these offers, the quality of life for everyone after acquisition is very important to us," she added.

Last year, the Lillies came close to accepting an offer from a company that would have given them enough cash to retire comfortably. But doubts about the company's ability to produce a healthy initial public offering ended the deal.

"We weren't confident that our employees' stock would end up being worth that much. And we were worried that we'd sacrifice our culture, and no one but us would even get that much out of it," Dr. Lillie said.

The problem: They worried that the employees might prefer to sell to the bigger, well-funded company and might be disappointed if the Lillies didn't go through with the deal. The Lillies decided to ask the employees what they thought, though they made it clear that the final decision was theirs.

"We called a big meeting, and we were actually very surprised," she said. "I would have thought that they would have said 'Let's just go with them,' but that is not what they said. The clear consensus was, 'Why should we wreck our culture, and the IPO may not even materialize? Why don't we just continue as we are and take our chances?'

"We were really heartened that our employees placed that much value on the culture and were willing to put that much faith in us, without the financial backing of a big company. So we didn't do the deal."

Now, OMIX continues to be profitable, in part, Dr. Lillie believes, because of its positive culture.

Click here to see the original article in TechRepublic site.

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