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November 24, 2009
Originally published in The American Spectator
How do you turn a company from a small Internet start-up into a billion-dollar-a-year business? We wish we knew, but we can tentatively say that it sure doesn't hurt to empower employees -- to tell them that they have a stake in the company's success, and mean it.
A worker vs. management mentality is often pervasive in D.C. You've heard the litany peddled by union bosses: company executives are motivated only by greed and perhaps malice. They're out to oppress the worker for fun and profit. Industries that let themselves get sucked into this adversarial set-up struggle. The hostility can lead to battles that cripple or bankrupt companies.
Many employers know better than to let it come to that. Successful firms today treat management and labor as a partnership and help their employees succeed. These employers know that success depends on the quality and betterment of those who work for them.
Take the Internet discount retailer Overstock.com. At the company's invitation (and on its dime), we went to tour the Overstock's warehouses in Salt Lake City, Utah, in September. We found a company that was working to enhance the quality of its workers and rewarding them for their efforts.
We found that promoting from within is ingrained in the Overstock management philosophy. The Internet sales giant believes that the experience that employees obtain by starting at the front lines of its customer care and warehouse departments is indispensable.
Overstock management believes that workers who start at these entry level jobs and climb their way up have the right mindset for improving the company. So management encourages customer care and warehouse department employees to apply for positions of greater responsibility.
We met Stormy Simon, who started as a sales representative in the very early years of the company. She joined a team of four making business -to-business cold-call sales. She quickly took the lead, ringing a cowbell every time she made a sale. That constant ringing got the attention of CEO Patrick Byrne, who decided that he wanted more cowbell. He put her in charge of the department.
Byrne soon discovered Simon had experience with radio. He gave her a budget for radio and television commercials. Simon discovered the woman for the now famous "Big O" commercials, which helped put Overstock on the map. Simon now runs the marketing and customer care departments.
Overstock also promotes education to its workers. The company provides a "corporate campus" -- an integration of online resources and an onsite leadership library -- to provide employees with leadership, business management, and other courses. About 600 free courses in all.
Overstock has partnered with four colleges and universities to expand opportunities for employees. These schools accept credits from the "corporate campus" as electives toward degrees. There are also a few full scholarships available to overstock employees each year.
We met Jose Jimenez, who started working in Overstock's warehouse as a temporary worker on the janitorial team. He was in the U.S. on a visa. Because of his enthusiasm he was quickly moved to the packaging department as a temp. After a few weeks, Jimenez (no relation to the astronaut created by Bill Dana) pulled a supervisor aside and suggested a physical modification. It was implemented and improved packing efficiency by 30 percent.
Jimenez was a college graduate in Mexico who had come to America seeking better opportunities. After he made the improvement to the packing operation, he became a team leader. In 2005 he got his U.S. citizenship and has since completed his Masters Degree in Information Systems from the University of Phoenix. He was the first recipient of the company's Vanessa Antrobus Quinn Scholarship and is now a shipping manager and one of the top leaders in Overstock's main warehouse.
Finally, we found that Overstock encourages employees to feel like owners of the company by making them owners of the company. Each year Overstock gives associates company stock as part of their end-of-year compensation. Generally employees receive stocks equal to one or two percent of their salary. If they hold onto those stocks and the company does well, everybody wins.
Aggressively promoting from within, encouraging education, and giving employees a stake in the company are great ways to allow workers to flourish. The company understands something important -- something that union bosses and sadly too many companies miss -- that by bettering workers it is also bettering itself.