Marina Gorbis's Blog, page 1577

One Nation, Incentivized and Disincentivized

Having a baby in the United States, The New York Times reported this week, is more expensive than pretty much anywhere else on earth. This is, of course, exactly the opposite of what Americans should want, as a public policy matter. It's going to take lots more babies growing up into productive, healthy adults to get us through the country's long-term Social Security and Medicare funding difficulties.

The high cost of childbirth in the U.S. is the product of a mix of private- and public-sector decisions, not a straight-out result of government policy. But it nonetheless got a few of my HBR colleagues and me thinking about what strange and not-so-strange economic incentives Americans face relative to citizens of other nations. So here is a mostly unscientific Independence Day list — compiled with lots of help from the databases of the Organisation for Economic Co-operation and Development, a.k.a. the OECD, a.k.a. the rich nations' club — of what sort of behaviors we're collectively encouraging and discouraging.

1. We don't want our fellow citizens to have kids. It's not just the high cost of childbirth. In general, U.S. families get less help with the cost of child-rearing (in the form of tax breaks, government services, and cash handouts) than those in almost any other affluent nation. On the OECD's list, only Mexico and South Korea devote a smaller percentage of GDP to family benefits. The U.S. also has just about the least supportive parental-leave policies in the developed world. Of course, we still do have kids, and the fertility rate in the U.S. is above the OECD average. So either (a) financial incentives don't matter all that much or (b) for lots of societal and other reasons (we have more space, for example) Americans are inclined to have more kids, even though government policies discourage it. I think it's b, and the financial incentives are beginning to win — the U.S. fertility rate is now barely above the OECD average, and some surprising countries — Sweden, Norway, France, Great Britain — are now producing more babies per capita than we are.

2. We don't want our fellow citizens to go to college. Higher education costs students more in the U.S. than anywhere else in the OECD. We also have especially great universities, and lots of financial aid. But the general trend has one of skyrocketing tuition at both private and public institutions, and aid for students that, while rising, hasn't kept up. Sure enough, the level of educational attainment in the U.S., once the highest in the world, has slid toward the middle of the OECD pack.

3. We want our fellow citizens to drive a lot. Among OECD countries, only Mexico levies lower taxes on gasoline and diesel. Then again, only Mexico and South Korea levy lower taxes overall, but the disparity on fuel taxes is much sharper than on the rest of the tax code. And I would imagine the U.S. spends less on public transit than other wealthy countries, but I've been having trouble finding evidence for or against this. (Any help would appreciated.)

4. We want our fellow citizens to be charitable and religious. The U.S. offers relatively big tax breaks for gifts to non-profits and religious organizations, and sure enough, the U.S. has higher rates of charitable giving ("private social expenditures," in OECD lingo) and church attendance than other wealthy countries.

5. We want our corporations to keep their money outside the country. This one has been in the news enough lately that I'm not going to bother explaining it here. But it is pretty weird, no?

6. We want our fellow citizens to get their health care through their employers. The list of perverse incentives and disincentives relative to health care in the U.S. is so long and controversial (the tendency to favor health-care spending on the old over spending on the young and unborn, for example) that one could fill several lists with them alone. But this one is just so weird and pervasive that it deserves special mention. The country's single biggest "tax expenditure," by far, is the exclusion for employer-sponsored health insurance. If your employer subsidizes your health insurance, all that spending is tax deductible (for your employer). If you pay for your own, the tax breaks are much more limited. The result is a subsidy that delivers the bulk of its benefits to high-paid workers, incentivizes high spending on health care, discourages self-employment, and encourages companies to get themselves into trouble (GM was the most dramatic example of this) by overpromising on health benefits.

7. We want our affluent fellow citizens to save a lot for retirement. Next up on the tax-expenditure list are the various breaks for retirement savings. Encouraging people to save for retirement seems like a good thing, and it is a good thing, but the current U.S. array of tax incentives for 401(k)s, IRAs, Roth IRAs and the like all share one characteristic — the higher your tax bracket, the clearer the benefits. Yes, there are income cutoffs for some of these tax breaks; in general these programs are designed to benefit the upper middle class, not the wealthy (who have enough other ways to shelter their savings from taxes). And for lower-paid workers, Social Security actually does a pretty good job of replacing income in retirement. But the focus of U.S. retirement-income policymaking over the past few decades has been on encouraging those who already save to save more, not building true retirement security for the middle class. (Sorry, I've long been kind of obsessed with this one.)

8. We want our fellow citizens to own homes. Tax expenditure No. 3 is the home mortgage interest deduction. The reasoning here, I guess, is that homeowners make better citizens. More to the point, they vote. But home ownership can be pushed too far, as we learned in the recent real estate meltdown and financial crisis. And even if we want to encourage home ownership, the current tax treatment of mortgage interest is a spectacularly inefficient way to do it, with most of the benefits going to the people with the most expensive homes.

9. We want our fellow citizens to be fat. Corn is the most heavily subsidized crop in the U.S. It's of limited nutritional value. It's used to fatten up cattle, in the process making their meat far less healthy to eat. And it's used to sweeten soft drinks, a big contributor to America's skyrocketing obesity rates. On the plus side, ethanol subsidies in recent years, whatever their other dubious effects, at least diverted some corn from our guts to our gas tanks. On the whole, though, U.S. farm policy is geared toward encouraging the production of grains, soybeans, cotton, meat, and dairy — not the fruits and vegetables we're supposed to be eating more of.

10. We want our fellow citizens to start businesses, sort of. The U.S. ranks fourth on the World Bank's "Ease of Doing Business" index, behind only Singapore, Hong Kong, and New Zealand. That's down from No. 1 when the index was launched almost a decade ago, which may or may not have any significance. But what definitely seems significant is that when you dig into the sub-rankings, the reasons the U.S. scores so high have entirely to do with its strong financial and legal systems. On factors that Congress or state lawmakers could easily affect, like how hard it is to get a construction permit, register property, or figure out your business taxes, the U.S. ranks much lower (17th, 25nd, and 69th, respectively).

Obviously, there are tons of other candidates for this list, and my selections owe much to my own biases and what happened to catch my attention one summer morning. Please feel encouraged to add yours in the comments. Happy 4th!

A New Use for MOOCs: Real-World Problem Solving

There's been no shortage of media coverage on Massively Open Online Courses (MOOCs) in the past year. Universities have touted the value of free on-line courses offered to millions of learners from all walks of life. Some MOOC critics have argued that the "MOOC revolution" has been characterized by the Gartner Hype Cycle and that 2012, the Year of the MOOC, has given way to a new trough of disillusionment. Recent criticisms by faculty at Amherst College and professors at San Jose State University have questioned the pedagogical value of these online courses.

However, directly comparing MOOCs to traditional classrooms may prevent us from realizing the true potential of global online education. Perhaps it's time we stop trying to fit MOOCs into old educational molds and start considering how we can harness their powers in new and exciting ways.

We can use MOOCs as platforms for real-world problem solving. This March, over 90,000 life-long learners from 143 countries enrolled in Foundations of Business Strategy, a MOOC offered through Coursera by the University of Virginia's Darden School of Business. These learners enrolled to explore the frameworks and theories underlying successful business strategies. Some came from leading international organizations such as General Electric, Grameenphone, Johnson & Johnson, Samsung, and Walmart. Many others were intrepid entrepreneurs, small business operators, and social venture founders. With their unique backgrounds, the students wove a rich tapestry of ideas and creative insights.

To harness these students' talents, the course's final project invited them to help real organizations by performing a strategic analysis of an existing firm's business operations. In partnership with Coursolve, an initiative founded by two of us that connects organizations with courses to empower students to solve real-world problems, the course enabled a wide range of businesses to take advantage of the global student body's insights and creativity.

One hundred organizations joined the course and actively connected with learners. Organizations of all types participated, from resource-strapped small enterprises to established brick-and-mortar organizations, including one with close to 280,000 employees operating in over 30 countries.

The result: of those organizations that were in existence for 10 years or more and who completed the post-course survey, nearly 60% indicated that they would want to collaborate with students to address future business problems. But not just any problems: 72% of these organizations sought assistance on medium to very high priority challenges. The results were comparable across organizations of all ages, suggesting that new ventures and established initiatives alike can derive value from working with students.

In a knowledge economy, life-long learning is not confined to a canonical classroom, and students enrolling in MOOCs cannot be compared with those enrolling in traditional higher education settings. We need to rethink what constitutes "a student." Today's students are astute, have work experiences, and in many cases, have already developed a set of core competencies. Moreover, students in MOOCs offer unique international perspectives that would be the envy of any business school classroom.

In Foundations of Business Strategy, over 80% of students had at least an undergraduate degree and over 50% were industry professionals. Many of these students — consultants, managers, analysts and entrepreneurs — brought with them a well-developed ability to solve hard problems, which they exhibited through rich case study discussions and strategic advice that had a game-changing impact on some existing companies.

To make these MOOC experiences work both for organizations and students, some basic principles apply. Organizations must ask themselves not just what they want to get out of it, but why working on this problem will be meaningful to students, and how they will successfully work with students when they can only dedicate 2 hours a week over the course of six weeks.

However, despite the challenges, connecting with courses is a relatively simple way in which organizations can engage talented people from around the world, the future drivers of tomorrow's marketplace. For instance, Foundations of Business Strategy attracted students from all across the globe, including some of earth's fastest growing economies including Kazakhstan, Mozambique, Nigeria, Tanzania, and Uganda, as well as from larger emerging market countries such as Brazil, Russia, India, and China. Who wouldn't want to tap into such pools of knowledge?

Men's Arm Strength Affects Their Political Views

Among men of high economic status, the greater the self-reported circumference of the flexed bicep, the greater the opposition (on average) to measures that would redistribute wealth to the poor. But among men with low economic status, bicep circumference is associated with greater support for such measures, says a team led by Michael Bang Petersen of Aarhus University in Denmark. Women's bicep size had no impact on their views. Men with greater upper-body strength tend to feel more entitled, reflecting a pattern in nature in which stronger males are more willing to assert their self-interest. The researchers studied more than a thousand people in three countries, disqualifying several males for reporting unrealistic bicep circumferences of 250 centimeters or more.

Employee Engagement Does More than Boost Productivity

Improving employee engagement is not simply about improving productivity — although organizations with a high level of engagement do report 22% higher productivity, according to a new meta-analysis of 1.4 million employees conducted by the Gallup Organization.

In addition, strong employee engagement promotes a variety of outcomes that are good for employees and customers. For instance, highly engaged organizations have double the rate of success of lower engaged organizations. Comparing top-quartile companies to bottom-quartile companies, the engagement factor becomes very noticeable. For example, top-quartile firms have lower absenteeism and turnover. Specifically, high-turnover organizations report 25% lower turnover, and low-turnover organizations report 65% lower turnover. Engagement also improves quality of work and health. For example, higher scoring business units report 48% fewer safety incidents; 41% fewer patient safety incidents; and41% fewer quality incidents (defects).

While people define engagement in various ways, I prefer a plain and simple definition: People want to come to work, understand their jobs, and know how their work contributes to the success of the organization.

Jim Harter Ph.D., a chief scientist at Gallup Research explained what engaged employees do differently in an email interview: "Engaged employees are more attentive and vigilant. They look out for the needs of their coworkers and the overall enterprise, because they personally 'own' the result of their work and that of the organization."

Harter, who has co-authored over 1,000 articles on the topic as well as two bestsellers, also says engaged employees "continuously recreate jobs so that each person has a chance to do what they do best." Engaged employees "listen to the opinions of people close to the action (close to actual safety issues and quality or defect issues), and help people see the connection between their everyday work and the larger purpose or mission of the organization." When engaged employee do this they create a virtuous circle where communication and collaboration nurture engagement and vice versa.

Considering the benefits, why do companies still struggle to foster engagement? Harter writes, "Many organizations measure either the wrong things, or too many things, or don't make the data intuitively actionable. Many don't make engagement a part of their overall strategy, or clarify why employee engagement is important, or provide quality education to help managers know what to do with the results, and in what order."

So where do you begin if you're committed to improving engagement — but feel intimidated by that laundry list of pitfalls? One way to simplify it is to focus on purpose. Communicate the purpose of the organization, and how employees' individual purposes fit into that purpose. When employees "clearly know their role, have what they need to fulfill their role, and can see the connection between their role and the overall organizational purpose," says Harter, that's the recipe for creating greater levels of engagement.

Why Companies Should Support the DOMA Ruling

Last week's U.S. Supreme Court rulings regarding LGBT equality resounded throughout the business community, with major brands reacting across the Twitterverse and digital media landscape. Companies favoring the ruling cited many drivers for their support including core values (Mondelez International), diversity and inclusion (Nike), civil rights (Apple), and even a stronger American economy (Goldman Sachs).

Last year, we wrote for HBR that business is increasingly supporting gay rights, and with the DOMA and Prop 8 rulings that sentiment will only grow. In a marketplace where hundreds of leading companies have continued to advocate on behalf of more inclusive public policy, the dialogue continues regarding the business case for and implications regarding the state and federal treatment of the LGBT community. And in our opinion, it's just common sense for companies to come out in support of their equality, for a couple important reasons:

The Supreme Court ruling gives scores of Americans access to previously-denied benefits—making HR's job easier and cheaper. The 5-4 ruling paves the way for same-sex married couples legally married by the states to receive the hundreds of federal benefits (including taxes, insurance, social security, immigration) available to other married couples, which has positive implications for the concerns and costs articulated by the business community.

For example, a resulting benefit from the DOMA ruling concerns the employers who equalize health benefits for gay workers. Prior to the Supreme Court ruling, companies wanting to ensure equal benefits for LGBT employees paid a tax that LGBT employees have owed on the value of health insurance coverage for a same-sex partner (due to DOMA, the federal government didn't recognize same-sex partners as an economic unit). For leading companies (40 for-profit employers, according to the Human Rights Campaign Foundation), the DOMA ruling will literally add money back to their bottom lines.

In addition to financial benefits, hailing the Supreme Court decisions gives companies an edge among the influential millennial audience. At 80 million strong, millennials make up the largest generation in US history. And according to a recent PEW research report, 70% of this audience supports same-sex marriage—a remarkable 22% increase since 2008.

Companies battle every day to break through the noise and reach the elusive millennial generation, both from a marketing and recruitment standpoint. Using the Supreme Court rulings as an opportunity to publicly express support for marriage was a smart move for companies hoping to attract the millennial audience. From a marketing standpoint, millennials, more than any other age group, factor in cause and purpose to their purchasing decisions and expect companies to care about social issues. Equality and inclusion [PDF] in particular are central to their worldview.

Supporting marriage equality is smart from a recruitment standpoint as well, as millennials will be 75% of the workforce by 2025. Companies that promote acceptance and diversity will likely appeal to millennials' preference for open, dynamic cultures that exude a sense of purpose.

But the issue is far from resolved. Despite the business benefits of the rulings, there is still some confusion regarding precisely how some of the complexities will be resolved. Same-sex couples who get legally married in one state, but then move to a state where same-sex marriage is not legal, will be left in an ambiguous place from a business standpoint.

In addition, LGBT equality isn't limited to marriage and the variety of benefits afforded to legally married and federally recognized martial partnerships. It is still legal in 29 states to fire someone simply for being gay, lesbian, or bisexual, and it is still legal in 34 states to fire someone for being transgender. Further, per The Williams Institute on Sexual Orientation Law and Public Policy [PDF], 15-43% of LGBT employees have experienced some form of discrimination on the job. Persistent harassment and discrimination (legal in the majority of states) undercuts not only companies' commitments to provide an equitable working environment, but also has potential implications for productivity and innovation.

Looking forward, there are still a number of issues yet to be resolved and companies will play a central role in establishing the status quo and identifying solutions. But one thing is clear. As the millennial generation, pop culture, and business continue to overwhelmingly support marriage equality policy, the question is not if, but rather how and when, these obstacles will be overcome.

Will Your Leadership Improvements Stick?

Debate rages about how much of what is taught in leadership courses actually transfers to leadership practice. Some have suggested that knowledge transfer is as low as 10%. Other studies show the number closer to 60%. We estimate that 20% to 30% of ideas learned in leadership training turn into practice. Whichever of these statistics you believe, it is clear that the investment in leadership training (as well as coaching, performance management, and individual development plans as well) is not having the impact it could, or should. And the failure comes with a significant cost: An estimated $60 to $80 billion is spent annually on training in the United States alone.



So, how do leaders sustain their desired improvements? Most if not all the leaders we work with know the importance of leadership for their organization's success. Most also want to be better leaders, and this leads them to adopt personal improvement goals, to participate in training and development activities, and to invest in leadership of others in their organization. In leadership workshops or coaching, we often start with three questions:

1. On a scale of 1 (low) to 10 (high), how important is leadership either for your personal or organizational success? Most answer 8, 9, or 10.

2. What specific things do you need to do to be a more effective leader? Most can quickly write down two or three desired behaviors.

3. How long have you known you should improve these behaviors? Most meekly acknowledge that they have known what to improve for three, six, twelve months — or longer (decades for some).

These improvements may come from a stronger desire to lead better or from being able to upgrade the right skills. Unfortunately, none of the initiatives to improve leadership (training, performance management, coaching) sufficiently transfer to practice. Well-meaning leadership training, individual development plans, coaching, or 360-degree sessions tend to be energizing events, but the energy dissipates quickly. Today's biggest unmet challenge of leadership is not learning more about what to do, it is learning how to make sure that what is known is done.

To meet this challenge we began by gleaning lessons from a number of diverse fields that surround the concept clutter about this topic. We organize our findings into seven disciplines that spell the mnemonic START ME:

Simplicity
Time
Accountability
Resources
Tracking
Melioration
Emotion

We think this is apt because for each of us, sustainability starts with me. These seven disciplines turn hope into reality. Leaders who apply these seven disciplines go beyond the why and what of leadership to reach the how.

We are sure we have not captured everything that will increase leadership sustainability, but these seven disciplines inform both personal efforts to be a better leader and organizational investments in building better leadership. When leaders make commitments to change something in training, coaching, or performance management, the impact increases when participants attend to these seven disciplines as they anticipate how to turn learning into action.

We've created a simple free assessment test so you can see how you score against the seven disciplines and how likely it is that your efforts to improve your leadership capabilities will stick and rise above the paltry average success rate. Spend five minutes to take the assessment here and then jump into the comments here to tell us how you scored. We'll contribute to the comments here with further thoughts.

Note: Parts of this post were adapted from: Leadership Sustainability: Seven Disciplines to Achieve the Changes Great Leaders Know They Must Make

When Growth is Deceiving

Although the economy is finally improving, growth is still hard to come by. As the founder and co-chief executive of Panera Bread, I can safely report that the growth challenge looms even larger in the brutally combative restaurant industry, where four out of five new concepts fail. After all, it's not like the country is clamoring for another restaurant.



But not so long ago, I happened upon another reason why growth comes hard: even when you think you're growing, you're probably not.

Let me explain. Like most retailers, restaurants have just two ways to drive customer transactions: get new customers to come through the door or get existing customers to return more often. A couple of years ago, Panera was growing new customer transactions from zero to a paltry one percent. That modest performance took me aback. After all, we had increased investments to improve the customer experience and thereby attract new guests. Why hadn't those investments produced better results?

Only after a deep dive into the data did I discover, to my surprise, that we were operating under the wrong assumption. We thought we were working from a baseline that was zero. In fact, the baseline was negative three or four percent transaction growth. Based on our investments, we should have hit about five percent growth. Instead, our so-called positive growth was mostly negative.

Why? Because most food-service companies compete in a bloody, shark-infested red ocean.The big fish are always looking to make a quick meal out of a laggard; schools of hungry new entrants are always anxious to tear into you. Thanks to the competition, it's not hard to lose more customers than you're gaining, for a net decrease.

To thrive in those hyper-competitive seas, a company must continually unleash value-creating innovations. If you've got a mature retail concept, and you simply continue with what worked in the past, plus a little more, competitors will take a bite out of your customer transactions. The size of the loss will vary by company and market. But rest assured, in our industry, failing to create game-changing products and services will likely lead to a significant drop in customer transactions. With that, the steep descent into the red begins.

Here's another way to think about it. My father was a CPA and amateur poker player. When he retired, he played professional poker in Las Vegas for eighteen months. At the end of that stretch he felt duty bound, as a CPA, to calculate his performance. Lo and behold, he discovered he won about three cents an hour. I was amazed that such a modest result left him ecstatic. But he understood that his nearly imperceptible winnings came only after he offset the House vigorish — the five-to-ten percent commission that the casino extracts from the pot.

In business as in poker, we must all figure out how to beat the vig.

Especially in a challenging business environment, we must continually re-examine our assumptions about how to get real growth. Though it doesn't show up on a spreadsheet, we must still account for the vigorish — the constant round of cuts our competitors extract. Even if we're investing enough to increase transactions by three percent annually, but we're paying a competitive vig of five percent, we're in the hole.

That's why, more frequently than we realize, simply relying on incremental improvements, which is tantamount to defending the status quo, often results in negative growth — even when you think you're getting a modest gain. With market and competitive conditions more punishing than ever, a strategy based on playing it safe is often more risky than betting on an unconventional idea. The better course of action (and the one with the lesser risk) is to innovate break-the-mold products while at the same time calculating the vig to understand your real growth.

True, that once-beloved buzzword, "innovation," has become a little ho-hum, as many executives focus on "running the business" and "execution." But it still bears repeating: Growth is deceiving, especially if we're not factoring in the cost that competitors take. To get the real growth we want to create, we must continually examine our assumptions. Otherwise, the House vig will quickly take its toll.

The Unanticipated Consequences of a Frictionless Mobile Experience

Many of us assume that mobile is essentially business as usual — just on a smaller screen. But often, it's not. The business impact of the switch to mobile can be counterintuitive and difficult to anticipate.

I'm working with several of the world's largest hotel chains to help them generate guest feedback, which we've traditionally done through the desktop PC. With an increasing number of guests now using mobile devices, we created a mobile-native feedback process, allowing customers to more easily join the conversation on their mobile device.

You might think — we certainly did — that improving the experience in this way wouldn't affect overall feedback about the hotel stay very much. We anticipated a slight positive bump by making the survey easier for customers, but overall, a minimal impact.

The opposite turned out to be true. The improvement in the survey experience caused a sudden drop in customer ratings.

This caused quite a bit of consternation among the hotels — whose performance ratings (and, in some cases, compensation) are tied to their guests' experience. We explored a range of different hypotheses: Are we getting faster feedback? Is faster feedback more negative? Are people on mobile devices psychographically different — are they in a different frame of mind, less positive, more likely to leave negative feedback? Are we hearing from different customers? Wealthier? Younger? More business travelers?

After spending a lot of time with the data, we found only one thing these customers had in common: they were less engaged. We'd made it easier for people who weren't as interested in or loyal to the brand to be heard. Previously, they'd see an email requesting feedback, they'd click the link... and their mobile device would show a desktop survey. It didn't fit on their screen particularly well, or it took too long to load. They had had a neither particularly good nor bad experience, and the effort required to provide feedback was just more than they cared to give. It was only the folks who felt strongly about their experience — either positively or negatively — who would complete the process. Now that it was easier to provide that feedback, we began pulling in less engaged customers, and their "average" experiences resulted in lower scores.

In general, declining metrics don't inspire optimism. But in this case, the hotels were getting feedback from customers who previously hadn't even bothered. Lowering the friction of communication by becoming more mobile-friendly helped these hotels identify frictions elsewhere in their business. Guests who would have silently never returned because of an entirely fixable problem could be contacted with an apology and resolution, which turned many into loyal customers.

There's an instructive lesson here as the mobile paradigm shift — more smartphones are shipped annually than tablets, notebooks, and desktops combined — continues. Mobile, especially an experience designed for it, makes it easier for people to do things they might not have done otherwise: offer feedback, make a purchase, check sports scores. But you're not just getting more of the same customers you already had — you're adding new ones who represent not just a demographic shift, but have fundamentally different engagement levels.

The distinction may sound subtle, but precisely whom you draw in via mobile has very important ramifications for the way you design your experience... and the way these new customers will — or will not — interact with your business.

Do Adverse Events Give You Greater Resilience?

A history of a moderate number of adverse life events, such as parental divorce, death of a loved one, or even physical assault, seems to make people more resilient in the face of stressors, says a team led by Mark D. Seery of the University at Buffalo. In a study of undergraduates, for example, the pain and unpleasantness of putting the hands into ice water were highest for people who had experienced no adverse events, and least for those who had experienced about 5 such events, with higher numbers of negative experiences being associated with greater levels of pain and discomfort. Overall, the research subjects reported having had up to 19 adverse events; 7.5% reported experiencing no adversity.

We All Need Friends at Work

Survey after survey shows that employee engagement at work is at an all-time low. One way to help improve engagement at work is to foster friendships. We all know them: the good old fashioned friendships created when we chit-chat, hang-out, joke, and have fun with co-workers.

Tony Hsieh, the CEO of Zappos, the online shoe retailer with over $1 billion in sales, fosters fun and friendships as part of his corporate culture. The core values of Zappos help create a positive environment for employees and cost very little to implement. These values include embracing and driving change, creating fun and a little weirdness, pursuing growth and learning, and building a positive team and family spirit.

Research shows that workers are happier in their jobs when they have friendships with co-workers. Employees report that when they have friends at work, their job is more fun, enjoyable, worthwhile, and satisfying. Gallup found that close work friendships boost employee satisfaction by 50% and people with a best friend at work are seven times more likely to engage fully in their work.

Camaraderie is more than just having fun, though. It is also about creating a common sense of purpose and the mentality that we are in-it together. Studies have shown that soldiers form strong bonds during missions in part because they believe in the purpose of the mission, rely on each other, and share the good and the bad as a team. In short, camaraderie promotes a group loyalty that results in a shared commitment to and discipline toward the work. Camaraderie at work can create "esprit de corps," which includes mutual respect, sense of identity, and admiration to push for hard work and outcomes. Many companies are engaging in corporate challenges, such as bike to work day, wellness competitions, community service events, and other activities to help build a sense of teamwork and togetherness. Best practice companies also communicate widely about corporate goals and priorities to unify everyone.

Friends at work also form a strong social support network for each other, both personally and professionally. Whether rooting for each other on promotions, consoling each other about mistakes, giving advice, or providing support for personal situations, comradeship at work can boost an employee's spirit and provide needed assistance. A recent story in the Fairfield County Gazette in Ohio highlighted the power of workplace friendship for brain cancer patient Tracy Lee. Three nights a week, one of Tracy's co-workers from the Fairfield County Board of Developmental Disabilities stops by with dinner for the family. Notes containing loving messages such as 'miss your smiley face' cover her office door. This type of support also creates a strong sense of community within the organization.

Some companies — among them Google, DaVita, Dropbox, and Southwest — have built reputations for fostering comradeship at work. Creating comradeship at work hinges on the leaders of organizations. That is, companies can and should create and value camaraderie as a competitive advantage for recruiting top employees, retaining employees, and improving engagement, creativity, and productivity.

I recently spoke with Gary Kelly, CEO of Southwest, who outlined some key points on how a leader can help foster a culture of camaraderie. First, Kelly notes that is it important for the leaders of the organization to have a vision for the culture. His advice is to "be clear in your mind on what you want the culture to be within your organization." At Southwest, they want a culture where employees feel they are part of a family. Kelly suggests leaders must "model the culture: spending time with employees, treating people with respect, having fun, being there for them personally and professionally, and putting people first — with empathy, kindness and compassion." Finally, Kelly notes it is very important for organizations to have products and services around which employees can feel proud and that organizations need to leverage the talents of the employees by letting ideas come forward.

People in organizations need to work together. So, managers and employees need to foster collaboration, trust, personal relationships, fun, and support. In an increasingly global and virtual environment, challenges for employees and managers will be to cultivate these personal relationships. Fostering friendships takes proactive effort.

Are there downsides to friendships at work? Sure, there can be bumps: professional jealousy, groupthink, negative cliques, split loyalties, loss of work time to socializing, and broken friendships. However, these are all manageable and the benefits of positive relationships far outweigh any negative outcomes.