People Ink

Passionate people = a profitable company

September 1, 2011: 5:00 AM ET

Keeping employees happy isn't easy, but the payoff is huge.  Consultant Ann Rhoades has a few tips on how to make it happen.

Interview by Beth Kowitt, writer-reporter

FORTUNE -- Having an attractive corporate culture will do more than just land you on Fortune's 100 Best Companies to Work For list. It's also a competitive asset. A 2009 study by Gallup found that companies in the top decile for employee engagement boosted earnings per share at nearly four times the rate of companies with lower scores. But growing an environment that attracts and keeps employees is tough, especially because the return on investment is not always clear. Companies must build their values directly into their business plan, says Ann Rhoades, the former chief people officer at JetBlue Airways and Southwest Airlines. She now runs consultancy People Ink and works with the likes of Juniper Networks and Chase's retail banking division. Here are her tips on creating a strong culture in your company.

Live what you preach

One of the big values at JetBlue (JBLU) is integrity. A few years ago we had issues with planes sitting on the runway for hours. We were very clear it was our mistake and took ownership. It cost us a great deal of money to fix. But if we had gone to the press and blamed everyone else and we had integrity as a value on our wall, what would that have signaled to our people? Be specific about the values and behaviors you expect from people. Don't just put them up on a wall. Live and breathe them at all levels.

Don't let bad seeds germinate

If employees show up the first day and are told that people will behave a certain way and only half do, they're not going to believe in the culture. Don't be afraid to let someone go if he doesn't fit in. At Southwest (LUV) we hired someone in the IT department with great technical expertise. He came to see me 30 days into the job and said, "I can't stand it here. People are friendly -- they want to talk in the hall. I just want to get to my cube and do the job." My recommendation to him was that he start updating his résumé.

Hire around values

When we began working with one of the country's largest health care systems, we took a look at its transporters. They're the ones you first meet when you come to a hospital, the people who take you in on a stretcher or wheelchair. We analyzed the A players to figure out what set them apart, such as their willingness to risk their job by telling the truth. We started asking interview questions to see whether a potential hire had those A player qualities. Once we began hiring to those behaviors, we cut turnover from high double digits to single digits.

This article is from the September 5, 2011 issue of Fortune.

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