Why Costco is so loved

Keeping customers, employees and investors happy is no mean feat writes The Economist

image: getty images

Feb 15th 2024 

In the nearly 40 years that The Economist has served up its Big Mac index, the price of the McDonald’s burger in America has more than tripled. In that same period the cost of another meaty treat—a hot-dog-and-drink combo at Costco—has remained steady at $1.50. Last year customers of the American big-box retailer devoured 200m of them. Richard Galanti, Costco’s longtime finance boss, once promised to keep the price frozen “for ever”.

Customers are not the only fans of Costco, as the outpouring of affection from Wall Street analysts after Mr Galanti announced his retirement on February 6th made clear. The firm’s share price is 430 times what it was when he took the job nearly four decades ago, compared with 25 times for the s&p 500 index of large companies. It has continued to outperform the market in recent years. What lies behind its enduring success?

Costco is the world’s third-biggest retailer, behind Walmart and Amazon. Though its sales are less than half of Walmart’s, its return on capital, at nearly 20%, is more than twice as high. Charlie Munger, a famed investor who served on Costco’s board from 1997 until his death last year, called it a “perfect damn company”. Mr Galanti, who describes Costco’s business model as “arrogantly simple”, says the company is guided by a simple idea—hook shoppers by offering high-quality products at the lowest prices. It does this by keeping markups low while charging a fixed membership fee and stocking fewer distinct products, all while treating its employees generously.

Start with margins. Most retailers boost profits by marking up prices. Not Costco. Its gross margins hover around 12%, compared with Walmart’s 24%. The company makes up the shortfall through its membership fees: customers pay $60 or more a year to shop at its stores. In 2023 fees from its 129m members netted $4.6bn, more than half of Costco’s operating profits.

Joe Feldman, an analyst at Telsey Advisory Group, a research firm, argues that the membership model creates a virtuous circle. The more members the company has, the greater its buying power, leading to better deals with suppliers, most of which are then passed on to its members. The fee also encourages customers to focus their spending at Costco, rather than shopping around. That seems to work; membership-renewal rates are upwards of 90%.

Next, consider the way the company manages its product lineup. Costco stores stock a limited selection of about 3,800 distinct items. Sam’s Club, Walmart’s Costco-like competitor, carries about 7,000. A Walmart superstore has around 120,000. Buying more from fewer suppliers gives the company even greater bargaining heft, lowering prices further. By limiting its range, Costco can better focus on maintaining quality. Less variety in stores helps it use space more efficiently: its sales per square foot are three times that of Walmart. And with fewer products, Costco turns over its wares almost twice as fast as usual for retailers, meaning less capital gets tied up in inventory. It has also expanded its own brand, Kirkland Signature, which now accounts for over a quarter of its sales, well above average for a retailer. Its margins on its own-brand products are about six percentage points higher than for brands such as Hershey or Kellogg’s.

Last, Costco stands out among retailers for how it treats its employees. Some 60% of retail employees leave their jobs each year. Staff turnover at Costco is just 8%; over a third of workers have been there for more than ten years. One reason for low attrition is pay. Its wages are higher than the industry average and it offers generous medical and retirement benefits. Another is career prospects. The company prefers to promote leaders from within. Although Mr Galanti’s successor has come from outside, the rest of Costco’s executive team has been with the company for more than 20 years. The late Mr Munger was confident that Costco had “a marvellous future”. Its customers could be enjoying $1.50 hot dogs for many years to come. 

The bosses who silently nudge out workers

 By Alex Christian in BBC.com

Employers are often reluctant to fire employees for myriad reasons. But quietly side-lining them in the hope that they’ll quit often leads to even greater harm.

W

When marketing manager Eliza returned from holiday, she received an email from her boss asking her to arrive at work early the next day. “I instantly feared the worst,” she explains. “I knew the job wasn’t the best fit. I’d had my probation previously extended; there was an expectation of weekend working and post-work drinking that didn’t suit me. I thought he’d used my time off as an opportunity to fire me.”

However, when Eliza arrived at her boss’s office, she wasn’t immediately let go. Instead, she was informed of a company restructure – her job description was being completely rewritten. Someone else would take over her tasks, and she would be expected to work remotely in a new admin role. 

In the weeks that followed, Eliza’s professional life became much quieter. Instead of formulating the London-based events agency’s marketing strategy from the office or attending live shows as part of her remit, her main duties now consisted of simply being available between 0900 and 1800, sending the occasional email and completing the odd routine task from home. 

Eliza had effectively been frozen out by her employer. Barely a month later, she quit. “It was humiliating – I was made to feel worthless,” she says. “It was the worst experience of my career: I’d rather have been just fired on the spot and paid off than have to go through that.”

There may not always be a good fit between jobs and the workers hired to do them. In these cases, companies and bosses may decide they want the worker to depart. Some may go through formal channels to show employees the door, but others may do what Eliza’s boss did – behave in such a way that the employee chooses to walk away. Methods may vary; bosses may marginalise workers, make their lives difficult or even set them up to fail. This can take place over weeks, but also months and years. Either way, the objective is the same: to show the worker they don’t have a future with the company and encourage them to leave. 

In overt cases, this is known as ‘constructive dismissal’: when an employee is forced to leave because the employer created a hostile work environment. The more subtle phenomenon of nudging employees slowly but surely out of the door has recently been dubbed ‘quiet firing’ (the apparent flipside to ‘quiet quitting’, where employees do their job, but no more). Rather than lay off workers, employers choose to be indirect and avoid conflict. But in doing so, they often unintentionally create even greater harm.

The path of least resistance

For myriad reasons, bosses have long tried to nudge workers they perceive as underperforming or being a bad cultural fit out the door. “This has been happening in workplaces for decades,” says Christopher Kayes, professor of management at the George Washington University School of Business, based in Washington, DC.

The tactic means firms and managers can end up saddled with workers they don’t want, leading to managers engaging in behaviours often seen as passive-aggressive

The reasons for this are complex. If workers behave in ways that violate their contracts, for example, companies can terminate their employment. But if bosses simply dislike workers, or see them as middling or mediocre performers, taking action to remove them is more complicated, often requiring lengthy processes involving performance management programmes and multiple warnings.

“Companies are usually reluctant to let a worker go,” says Kayes. Firing leads to an “immediate sense of sides being created” which, at worst, can land the company in court if the worker contests it, potentially generating negative headlines about the working environment. “It’s often easier to simply let the underperforming employee stay in the job than to go through the process of firing and potential litigation.”

Employers often don’t want to expose themselves to risk or conflict, adds Suzanne Horne, partner in employment law at legal firm Paul Hastings, based in London. “Subtly encouraging someone to leave is seen as the easier option. If the employee eventually resigns, it’s the ‘no-fault approach’: severance doesn’t need to be paid, conflict is avoided and both parties are ultimately happy.”

Managing perceived poor performance, working with the employee to improve their output and turning them into a useful resource for the company would be an alternative way to deal with the problem. However, Kayes says bosses are often ill-equipped to do this, whether through a lack of time or training. “Organisations tend to be bad at preparing leaders to take on the responsibilities they’ll need in the job. So, they often find themselves without the resources they need to be effective and deal with employee underperformance.” 

In this situation, with firing seen as a last resort and managers unable – or unwilling – to turn the employee into what they want them to be, they often follow the path of least resistance: quiet firing. “Much of it is ultimately an avoidance behaviour and comes down to procrastination: managers in most cases are wanting to avoid having difficult conversations,” points out Kayes. “Ironically, they worry that firing a worker will reflect poorly on them, so they quietly fire them instead.”

To push out workers, managers may sometimes set up workers to fail with impossible tasks, or take away their jobs altogether (Credit: Getty Images)

Why it often backfires 

By engaging in quiet-firing behaviours, managers are likely to be playing the long game. In theory, it’s low risk and minimal effort; the hope is that by withdrawing support, the worker soon realises they don’t have a future at the company and moves elsewhere.

However, this approach can have collateral damage. The tactic means firms and managers can end up saddled with workers they don’t want, leading to managers engaging in behaviours often seen as passive-aggressive, says Kayes. “You stop offering the employee opportunities to advance; you stop inviting them to certain meetings; you stop providing them important work and feedback.” 

There is also the risk of creating an ‘us and them’ mentality, potentially harming workers not targeted for quiet firing. “You have the engaged employees, and then those just quietly left there, sometimes without their knowledge,” says Horne. “It doesn’t create an inclusive or high-performance workplace culture.” 

Quiet firing can affect a firm’s reputation, too, even if a worker departs without apparent conflict; employees may well share their experience in an online review. “There’s a greater awareness of employment rights today,” says Horne. “People are now more willing to call out workplace issues, especially following the pandemic.” 

An employee subtly nudged out the door isn't without legal recourse, either. “If you were to look at each individual aspect of quiet firing, there’s likely nothing serious enough to prove an employer breach of contract,” says Horne. “However, there’s the last-straw doctrine: one final act by the employer which, when added together with past behaviours, can be asserted as constructive dismissal by the employee.”

More immediate though, is the mental-health cost to the worker deemed to be expendable by the employer – but who is never directly informed. “The psychological toll of quiet firing creates a sense of rejection and of being an outcast from their work group. That can have a huge negative impact on a person’s wellbeing,” says Kayes. 

Eliza agrees. “I was made to feel worthless and useless being quietly fired,” she says. Now happily employed elsewhere, she’s realised that her experience “was a reflection of having a terrible boss, rather than me”. But other people who experience quiet firing over the longer term, in more insidious ways, may not see things so clearly.

I was made to feel worthless and useless being quietly fired – Eliza

“Over time, an employee may figure out something isn’t right if their one-to-one meetings are always cancelled, their manager never makes time to talk about development and performance or they’re always overlooked for promotion,” says Horne. “They face a daily drip feed of their employer trying to make them resign – it’s absolutely gruelling.” 

'A self-fulfilling prophecy'

Quiet firing may be the easiest option on the table for bosses – especially in a remote-work world, where excluding employees is even easier – but it’s not a good solution for firms or workers.

“Employers can end up damaging their business’s morale, productivity and culture while risking litigation proceedings anyway,” says Horne. “For employees, there’s a mental-health impact of feeling excluded, frustrated or angry. They can lose their confidence and it becomes a self-fulfilling prophecy: their performance declines even further.” 

Fixing it requires better-resourced managers, greater HR support and the acceptance that workplace confrontation is sometimes best. However, the time and cost needed to educate managers on how to better motivate employees and deal with difficult situations means that, realistically, quiet firing may be here to stay. “Training is expensive,” says Kayes. “It takes huge investment and requires leaders to be open to it; an acceptance that they need to ask themselves hard questions.

Human psychology plays its part, too. Ultimately, quiet firing is the avoidance of difficult emotions. “There can be the implication that the manager is being nasty or manipulative when they quietly fire an employee, but there is a person on either side of the table,” says Horne. “And people generally like to avoid hard conversations.” 

Eliza is using one name for career-security reasons

What Ray Dalio Misses in his Analysis of Empire

 

Marx's Flaws

 

Time spent in the pub is a wise investment

Sarah O'Connor in The FT

When I joined the Financial Times as a trainee in 2007, I spent a lot of time learning about credit default swaps and a similar amount of time in the pub. The CDS knowledge proved useful in the ensuing financial crisis, but 13 years later, I am glad of the hours spent in the pub too. 

It was how I got to know my colleagues, who taught me the FT’s folklore, its funny anecdotes and its subtle power dynamics. I just thought I was having fun, but an economist would have said I was building “social capital”, defined by the UK’s statistical office as “the extent and nature of our connections with others and the collective attitudes and behaviours between people that support a well-functioning, close-knit society”. 

Social capital is a fuzzy concept and hard to measure. But Covid-19 has made us think about who has it, who doesn’t, how we build it and how we lose it. 

I was near the end of my maternity leave when the pandemic started, so it has now been almost 18 months since I last worked in the office. I’m grateful every day for my store of social capital, which has helped me to stay connected, though I do get a twinge of anxiety with every new byline I don’t recognise. 

It has been much tougher for people starting out this year. If it is hard to maintain relationships via video calls, it is harder still to build them from scratch. I spoke recently to some senior accountants about their new crop of trainees. They were learning their trade, but there was no opportunity for general chit-chat before and after virtual meetings, and the trainees seemed to find it harder to ask “daft questions” in video calls than when “sitting round a table with a packet of biscuits”. 

Next year, employers will have to think creatively about how to help new employees “catch up” on forming social capital, especially in a world of “hybrid” work where people stay at home for several days a week. 

Inadequate social capital is a problem for organisations as well as individuals. Research suggests that social capital boosts efficiency by reducing transaction and monitoring costs. In other words, “society wastes resources when people distrust and are dishonest with each other”, according to Dimitri Zenghelis, leader of the Wealth Economy project at Cambridge university, which explores social and natural capital.  

I am often struck by the inefficiencies of distrustful workplaces. Companies using screenshot and mouse-tracking software can end up in a cat-and-mouse game with resentful workers using tech workarounds of their own. Employers who doubt the honesty and motivation of their staff compel line managers to hold “return to work” meetings with employees after every sickness absence, even of only a day. Factories and warehouses often have long queues at shift changes as staff go through scanners to prove they are not stealing. Covid-19 might push some employers further in this direction, particularly if they decide to use more offshore workers with whom they have no prior relationship. 

On the other hand, this year’s forced experiment with homeworking has made some employers realise their staff can be trusted to work productively without oversight. The key will be to hold on to that trust, and the efficiencies it brings, rather than slip back into old habits of micromanagement. 

Social capital matters for economies, too. For his book Extreme Economies, economist Richard Davies travelled to nine unusual places, from a refugee camp in Jordan to an Indonesian town destroyed by the 2004 tsunami. He was struck by how societies with higher social capital were more resilient when disaster struck. In Glasgow, by contrast, he argued that the replacement of tenement homes with tower blocks had dismantled the social capital of the people who lived there, making it harder for them to cope with economic decline. 

For both individuals and economies, social capital is an important buffer against unexpected hardships. Yet in the UK, where the Office for National Statistics has been trying to track various indicators of social capital over time, the trend has not been good. We exchanged favours or stopped to talk with our neighbours less often in 2017/18 than we did in 2011/12. Our sense of belonging to our neighbourhoods also fell. Parents became less likely to regularly give help to, and receive help from, their adult children. 

The pandemic has strained our ability to maintain the bonds between us, but it has also reminded us just how important they are. Any plan to “build back better” when the crisis ends should include plenty of time in the pub.

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Why the Indian Supreme Court Has Found Itself in an Embarrassing Controversy

There is an important question before the judiciary: Who will be the custodian of the custodians? Rajeev Dhavan in The Wire

Chief Justice of India Ranjan Gogoi (centre). Credit: PTI



Between December 2018 and April 2019, certain controversies concerning the Supreme Court of India have surfaced:

The first concerns the dismissal of an employee for taking casual leave and protesting against her transfer.
The second surrounds the scandalising of the chief justice of India by the said employee.
Third, the remedial action taken by the Supreme Court suo motu (on its own) under the writ jurisdiction of the court with the chief justice on the bench but not passing the order signed by Justices Mishra and Khanna.
Fourth, involving the exclusive in-house procedure for high court and Supreme Court judges.
These controversies are ongoing and may in, as much as they can, put the very notion of justice on trial. Our Supreme Court has often quoted Lord Atkin’s observations in a contempt case of 1936:

“Justice is not a cloistered virtue: she must be allowed to suffer the scrutiny and respectful, even though outspoken, comments of ordinary men.”

This article is not intended to obstruct justice or bring into disrepute our justice system – with the Supreme Court at its apex – or the high office of the chief justice of India. It examines issues of due process and procedure.

Dismissal of an employee

An unprecedented controversy has arisen concerning an employee, who was transferred from the CJI’s ‘home’ or residence office, was suspended and later dismissed from the Supreme Court’s service. The charges against her included questioning her transfer, bringing/soliciting undue influence from the president of the Supreme Court Employees Welfare Association on her transfers and taking leave without approval.

Her response was that she had been transferred three times, she had gotten leave for her daughter’s function and was asked to attend office for a little while but couldn’t and the branch officer was informed, and she had spoken to the president of the employees association to find out what was happening but not to influence outcomes. After her suspension order on November 27, 2018, she was asked to appear before a departmental committee hearing on December 17, 2018, but collapsed outside the door due to anxiety and was told on December 19, 2018, that the charges against her had been proven.

The next day her husband wrote to the officer concerned to present her defence statement. However, on December 21, 2018, she was dismissed from service. In another part of the story, with which may not directly be concerned, her husband and brother-in-law were dismissed from the Delhi police on a basis unconnected with the Supreme Court; namely a prior incident of 2012 which had been mutually settled and for links with undesirables.

Also read: Why the Panel to Investigate Sexual Harassment Allegations Against CJI Is Problematic

Far from being a drop in the ocean, or a storm in a teacup concerning an employee, it concerns the administration of justice by the Supreme Court’s administration. I assume that the Supreme Court Officers and Servants (Conditions of Service and Conduct) Rules 1961 apply. Dismissal from service is a major penalty, though it is not clear from the information available whether her dismissal would disqualify her for future employment (under Rule 11).

It is arguable that such a major penalty should not have been imposed; and although formal procedures were followed, they may have been insufficient and hurried. That can only be found when we examine the record of the inquiry which statutorily would include the charges, a written defence, oral and documentary evidence, orders of the Disciplinary Authority and a report.

Thereafter, due process would have dictate whether a major penalty must be imposed – which would normally follow if there is conviction on a criminal charge or “where the Disciplinary Authority is satisfied for some reason to be recorded in writing it is not reasonably practicable to give to the Court an opportunity of showing cause before (awarding) any of the (major)… penalties…” (Rule 13).

Until we have the full record, we shall not know of the details of the rigour of the due process that were followed or the reasons for not doing so, bearing in mind that the woman had the same protection that civil servants under Article 311 of the constitution possess. For the present, the internal justice meted out to the employee seems in violation of due process and prima facie excessive. This is becoming more and more evident as information is coming out that she was not given a proper hearing and crucial witnesses were not examined at the inquiry. At the age of 35, her chances of further employment have been diminished.

Though not part of the charges, in the Supreme Court, it transpired that an FIR was filed against her on March 3, 2019, allegedly for taking a bribe from the informant (NK) who gave her a part payment of Rs 50,000 (part of Rs 10 lakh to be paid) to secure a job in the Supreme Court. She was granted bail on March 12, 2019, but the case was transferred to the Crime Branch which moved for the cancellation of her bail. In turn, she complained, later in March, of harassment by the police, writing letters to the prime minister, National Human Rights Commission and others. If this is a case of victimisation, it would raise more issues.

It could be argued that a little injustice here or there will not dent the majesty of the law. But surely the motto of any court action in its administrative or judicial side must be: “We, who fight for justice must ourselves be just.”

Scandalising the court justice

According to the law of contempt, if a person or media makes any allegation against judges or justice system which brings them in disrepute can be punished for scandalising the judiciary. This offence was invented by Justice Wilmot in 1765 in a draft order never delivered in the John Wilkes affair, but published in 1802 by his son.

Since it covers the media, it is a species of constructive contempt. It is included in the definition of criminal contempt under India’s Contempt of Courts Act 1971 (Section 2 (c)(iii)), and in any case also draws from the high court and Supreme Court power as a court of record with the specific power to punish for contempt (constitution Articles 129 and 215) and any other power in addition to the powers under the Act of 1971.

In a 1899 Privy Council case, English judges said this offence was “obsolete” for England, but may be relevant in “small colonies consisting principally of the coloured population”. This redemption for English justice was short lived and scandalising the judges was revived, but used sparingly in recent years. In India, the scandalising jurisdiction is used more frequently, despite the caution of Justice Krishna Iyer in the Mulgaonkar case (1978).

With this introduction, let us turn to our case. On April 19, 2019, the woman who was dismissed wrote to 22 judges of the Supreme Court detailing sexual harassment and sexual advances by the CJI in October 2018, giving explicit details of events when advances were made. She claimed further humiliation by being forced into apology under pressure for her insolence and that her dismissal was a case of victimisation, since the alleged major embarrassing incident took place on October 11, 2018. For our present purposes, we need not elaborate on the details.

Also read: Why CJI Gogoi Should Step Away From Judicial Work Till In-House Inquiry is Complete

What is important for our purpose is that when the media sought clarification from the CJI, the relevant response of Secretary General Sanjeev S. Kalgaonkar (apart from denying victimisation, and asserting that her family had criminal antecedents and treating the allegations against the CJI as an after thought to her dismissal) categorically stated:


“The allegations regarding 11th October 2018, as well as other allegations as can be discerned from your emails are completely and absolutely false and scurrilous and totally denied… the motive behind these false and scurrilous allegations is obviously mischievous.”

Whether this response was shared with the CJI before or after it was made is not clear, though no Secretary General would normally make such a public reply without consultation. One must, therefore, take this statement as the official response of the Supreme Court in consultation with the CJI. Hence it was the CJI’s response as well.

It is necessary to add that after the Vishakha case (1997), cases of sexual harassment are to be dealt with by a special procedure. But the Supreme Court’s Gender Sensitisation and Sexual Harassment of Women Regulations 2013 exclude complaints by employees in that Regulation 2 (a) defines an aggrieved person to exclude “a female already governed by the Supreme Court Service regulations”. This is a significant exclusion, denying the rigour of sexual harassment procedures which are applicable to non-employees within the precincts of the court but not the employees.

Be that as it may, the #MeToo movement has advanced the presumption that the complainant’s version be treated as prima facie bonafide. A sexual harassment case against CJI Gogoi needs to be moved forward.

Procedure for scandalising

We must pause here for a moment because the Secretary General clearly felt that a case of scurrilous scandalising is made out, the procedure ahead is clear. Under the Contempt of Courts Act 1971, a case of criminal contempt can only commence if the Attorney General or Solicitor General permit or if the Supreme Court does so on its own motion (Section 15 of the Act 1971). The way forward was simple. Issue notice of contempt to the woman and anyone else who repeated the alleged scandalising comments including the media. But the court did not initiate a notice of contempt nor did the Solicitor General present such a motion to the court.

Therein lies the problem. If such a notice was issued, the contempt proceedings would normally be in open hearings. Both the Mulgaonkar case concerning the Indian Express (1978) and Shamlal concerning the Times of India (1978) were about exposing the pusillanimity of Supreme Court judges during the Emergency. Except Chief Justice Beg, no one wanted this. Two of the judges (Justices Chandrachud and Bhagwati) were in line to become CJIs. Justice Krishna Iyer, behind the scenes, and in his judgment counselled restraint to avoid further publicity, which is inevitably one of the consequences of contempt hearings in open hearings. No less, the views aired at the time were that even though truth was not specifically a defence, it would be invoked against the justices.

Justice Krishna Iyer told me he was well aware of this consequence. His judgment constitutes what have come to be called the Mulgaonkar guidelines. No contempt – no controversy. After the amendment of the Contempt of Court Act 1971, in 2006, Section 13 of the Act specifically allows truth as a defence. The relevant portion reads:

“13. Contempts not punishable in certain cases – Notwithstanding anything contained in any law for the time being in force … (b) the court may permit, in any proceeding for contempt of court, justification by truth as a valid defence if it is satisfied that it is in public interest and the request for invoking the said defence is bonafide.”

This would create awkwardness in the proceedings, to say the least. ‘Truth’ as a defence is available “in any proceeding for contempt”. In our present context, it would mean that the woman would present all the detailed evidence in her favour for invoking truth as defence, even thought the proceeding would be to protect the judge, not the complainant.

This was the only remedy by and through which the Supreme Court could have proceeded, but it chose not to do so. Treating this case as a purely contempt case would have proved hazardous for the CJI.

The Supreme Court’s suo motu action

Instead of a case in contempt for scandalising, the Supreme Court processed a writ petition as a “Matter of Great Importance touching upon the Independence of the Judiciary – mentioned by Tushar Mehta: Secretary General of India”. No petition was filed. It is clear that even if the CJI was the master of roster, he could not have handpicked judges and certainly not sat on the bench.

It cannot be overlooked that Justice Gogoi was part of the four judges who protested in public then Chief Justice Deepak Misra’s abuse of his power over the roster. Chief Justice Misra had also handpicked Justice Arun Mishra, who appears to have been picked in the present case in the special Saturday hearing on April 20. The less said, the better.

For the moment, let us assume that the petition was maintainable and that either (a) someone’s fundamental right was infringed upon, or (b) that this writ was part of the undefined power of the Supreme Court as a Court of Record, which specifically includes the power to punish for contempt. But since these proceedings were in lieu of contempt for scandalising, a new procedure was evolved at the instance of the CJI, albeit on the mentioning of Solicitor General Mehta.

In the hearings of the suo motu case, the Supreme Court did not caution a censorship of details which were in the public domain but invited the cooperation of the media by stating in its order of April 20:

“Having considered the matter, we refrain from passing any judicial order at this moment leaving it to the wisdom of the media to show restraint, act responsibly as is expected from them and accordingly decide what should or should not be published as wild and scandalous allegations undermine and irreparably damage reputation and negate independence of judiciary. We would therefore at this juncture leave it to the media to take off such material which is undesirable.”

This is not a gag order, but a request to be respectfully treated as a gag: In the Sahara case (2012), the Supreme Court assumed a power to postpone reportage where criminal proceedings were pending, under the court’s inherent power as a Court of Record. The inherent power seems to be increasing by leaps and bounds. This invisible reservoir of power is slowly becoming visible and subject to diverse uses.

What needs elucidation is that the court’s proceedings of April 20 were specially held on a Saturday morning with the Attorney General K.K. Venugopal, Solicitor General Tushar Mehta and president of the Supreme Court Bar Association, Rakesh Khanna being present. What seems astonishing is that CJI Gogoi was also part of the bench, but not a signatory to the order. No person can be a judge in their own cause or hand pick a bench. At best, it could have gone to some other bench without the urgency of a Saturday hearing. Master of the roster or not, I think the proceedings in this writ petition are sufficiently tainted and should be closed.

Instead of closing this suo motu writ petition, whose sole purpose was to quiet the storm of protest arising out of the CJI controversy, on April 23-24 the Court issued notice to advocate Utsav Bains who filed an affidavit in which he asserts that there was a wider conspiracy involving a corporate figure who, along with an alleged fixer Romesh Sharma, tried to “frame the Hon’ble Chief Justice of India in a false case of sexual harassment to pressurize him to resign” and that Bains was privy to documents under sealed cover to prove this. On April 24, the bench consisting of Justices Arun Mishra, Nariman and Gupta summoned the highest officers of the CBI and police. The simplest solution would be to ask the CBI to investigate and file an information to this effect without the ensuing drama which has now become a part of the crisis.

The in-house procedure

Since the judges did not want complaints to be aired ad lib against them short of impeachment, an in-house procedure was created as a result of the agitation of the Bombay bar concerning the chief justice of Bombay in the Ravichandran Iyer case (1995). This in-house procedure was to protect public faith in high court judges. The question posed by the judgment was:

“When the Judge cannot be removed by impeachment process for such conduct but generates widespread feeling of dissatisfaction among the general public, the question would be who would stamp out the rot and judge the Judge or who would impress upon the Judge either to desist from repetition or to demit the office in grace? Who would be the appropriate authority? Who would be the principal mover in that behalf? The hiatus between bad behaviour and impeachable misbehaviour needs to be filled in to stem erosion of public confidence in the efficacy of judicial process.”

The purpose was to prevent public discussion by the media or agitation by the Bar and to protect judges by harmonising free speech rights. The judgment, therefore, explores self regulation: “It seems to us self regulation by the judiciary is the only method which can be tried and adopted.” The trajectory was an in-house inquiry following which matters could eventually be acted upon by the CJI until when the Bar was to “suspend all action”. The court said,

“The Chief Justice of India, on receipt of the information from the Chief Justice of the High Court, after being satisfied about the correctness and truth touching the conduct of the Judge, may tender such advice either directly or may initiate such action, as is deemed necessary or warranted under given facts and circumstances. If circumstances permit, it may be salutary to take the Judge into confidence before initiating action. On the decision being taken by the Chief Justice of India, the matter should rest at that. This procedure would not only facilitate nibbing in the bud the conduct of a Judge leading to loss of public confidence in the courts and sustain public faith in the efficacy of the rule of law and respect for the judiciary, but would also avoid needless embarrassment of contempt proceedings against the office bearers of the Bar Association and group libel against all concerned.”

Of course, in our case, it is the CJI who is involved. In a better-late-than-never initiative, the CJI passed the controversy to Justice S.A. Bobde (senior-most judge after the CJI), who will now assume the role assigned to the CJI in the Iyer case. Since Justice N.V. Ramana said he will not be a part of the panel, its constitution remains in question. Who will the panel report to? Surely not to CJI Gogoi? We are compelled to raise the further question as to whether CJI Gogoi was fully involved in the creation of procedure in this case.

Also read: Charge Against CJI Gogoi Should Be Handled Correctly If SC Wants to Keep People’s Faith

This procedure was also used in the Bangalore crisis and Justice Gupta (then chief justice of Kerala who inquired into it) told me that nobody wanted to depose against the judges. In the Madhya Pradesh case, such a committee was appointed against high court Judge ‘X’ who was later absolved. How would the woman complainant fare in a committee examining the case against a CJI noting that (a) the Supreme Court’s Secretary General has already taken a view that the allegations are scurrilous and (b) truth in its totality would not be a defence. I really think this in-house procedure was directed against the Bar in Iyer’s case in a particular situation and its extension is dangerous and undesirable as a clandestine in camera process.

No in-house procedure can be a substitute for a sexual harassment case.

Reviewing the controversy

This controversy is embarrassing in many respects:

I believe the dismissal proceedings against the woman employee were unfair.
The Supreme Court through its Secretary General had already taken a view that her comments were scurrilous presumably with the CJI’s knowledge since it aired his defence.

The procedure adopted on the Saturday hearing was unfair and tainted and must be closed.

If the Supreme Court felt the court was scandalised, the court should have issued contempt proceedings giving the accused woman the right to invoke truth as a defence.

The in-house procedure under the Iyer case is clumsy and unfair.

No in-house procedure can be a substitute for a sexual harassment case. The woman would have little chance and it is a moot question who would depose against the CJI under these circumstances.

There remains the question of whether during his investigation, the CJI should continue to sit in his judicial or administrative capacity. I am strongly of the view that we should continue to discharge both these functions in the confidence that he will not interfere with any procedure further. We have yet to learn the manner in which the in-house procedure will proceed.

We have seen that the CJI is likely to have known of the dismissal proceedings. He was certainly instrumental in constituting the suo motu bench. He is likely to have known of the Secretary General’s statement in his defence that the allegations were scurrilous. He had a choice to proceed in contempt as he did in the Justice Katju case, but may have felt that this might be perilous in the present case. He may have been right to pass on the controversy to an in-house, procedure, as an alternative because after the hearing on April 23, the judges of the first five courts appear to have met in conclave while hearings in those courts were suspended. The CJI seems to be in the know of the choices of procedures to deal with the crisis – each more inventive than the other.

In any case, this is a no-win situation. If the in-house procedure results in his favour, it will be sought to be questioned – but there is no forum for doing so. If it goes against him, the embarrassment will be greater, leading to resignation or impeachment.

Looking to the future

Having said this, there is a need for a judicial accountability mechanism for the high courts and Supreme Court through a constitutional amendment, as in so many countries. There must be a procedure to answer the adage Quis custodiet ipsos custodes: Who will be the custodian of the custodians.

Labour’s just declared class war. Has anybody noticed?

Aditya Chakrabortty in The Guardian

You’d expect a declaration of class war by the main opposition party to merit at least a mention in the country’s tabloids. After all, on Sunday night Labour announced a SIX BILLION POUND RAID ON BUSINESS – the kind of thing one might reasonably hope to be screamed in huge font across the front pages and condemned in fist-shaking, bloodcurdling editorials. But nothing. Barely a squeak.

Just why that should be I’ll discuss in a moment, but first there is the policy itself – and a big, bold thing it is. At Labour conference on Monday, John McDonnell declared that he plans to force all companies with more than 250 staff to put 10% of their equity into a fund for their workers. Each employee will then be entitled to company share dividends worth up to £500 a year. Any extra will go back into public services.

The sums involved are massive: Labour calculates that 10.7 million workers covered by the scheme will get about £4bn a year in share dividends by the end of Jeremy Corbyn’s first term in government, while the public sector will receive an annual £2bn.

This also represents a big shift in Labour’s thinking. A few days ago, I met a senior aide to the previous party leader Ed Miliband who talked for a while about how, for all the rhetoric deployed by the new team, little of substance had changed in policy. “Apart from this stuff about a worker fund,” he mused. “Now that is big.” 

Big indeed. This isn’t just about giving employees more money; it’s handing them a stake and a voice in the enterprises on which they spend most of their waking hours.

To do so, McDonnell will use the stick rather than the carrot, compulsion rather than encouragement over china teacups. His argument is that shareholders are not the only ones entitled to company profits: the employees and the rest of society (which pays for the infrastructure used by businesses and allows them the great privilege of limited liability) also have a claim. No wonder business lobby groups are furious, with Confederation of British Industry director general Carolyn Fairbairn decrying a “diktat” that will have investors “packing their bags”.

For decades, the British have practised a carelessness that lets the people wielding the biggest chequebooks buy whichever assets they like and do whatever they want. That attitude has allowed Philip Green to strip BHS to the bones, Kraft to run Cadbury into the ground, and Thames Water to be picked over by a consortium of international investors.

The rewards from all this carnage have flowed to one group: shareholders. In 2015, Bank of England chief economist Andy Haldane charted what has happened to workers’ share of national income over the long-run. He found that labour had been getting smaller and smaller slices of the pie: from 70% in the 1970s to 55% now. By his reckoning, employees get proportionately less now than they did at the very outset of the Industrial Revolution in the 1770s.

Had workers’ wages kept track with the rise in their productivity since 1990, the average employee would today be 20% better off. Or they could have three-day weekends all year long and still get paid the same.

To secure a real rise in wages will require more than waiting for the economy to recover from its decade-long slump and the labour market to return to “normal”. Hence today’s announcement. This is not to say I think it’s perfect. It won’t touch the likes of Google and Facebook, because they’re listed abroad. It’s not clear to me how it will affect Amazon, which has relatively few direct employees but warehouses full of agency workers. Labour says it has suggestions – I’m not sure Jeff Bezos will be listening. The opposition’s key challenge remains largely unaddressed, which is how to get private sector businesses to behave as if they’re part of the society in which they operate.

Like Labour’s tax on second homes, you can see what the party is getting at even while thinking that the proposals as they stand are likely to be gamed.

At the same time, it’s especially difficult for Theresa May to oppose. Don’t the Conservatives boast of being the party of shareholder democracy (even though share ownership has become less widespread since Margaret Thatcher came to power)? Didn’t David Cameron commission a report into companies owned by their employees, the first line of which read: “Employee ownership is a great idea.” ? And doesn’t all the evidence show that companies owned by their workers are more productive and stick around for longer?

The Tories’ uneasiness over how to respond accounts for part of newspapers’ silence on this Labour proposal. Add to that the agonies over Brexit that will be played out over the next two weeks of conference. But the closer Labour edge to power, the more scrutiny ideas like this will receive.

As far as I know, McDonnell’s policy has been tried in one other comparable situation. In the early 80s, Sweden’s Social Democrats promised to give 20% of company shares to workers. Named after its architect, trade union economist Rudolf Meidner, the policy was popular with the party faithful.

But in this polite and outwardly cohesive country, it caused outright war, writes Robin Blackburn in his classic history Banking on Death: “Business leaders were intensely alarmed and spent five times more money attacking the plan than the cash laid out by all the parties on the 1982 election. The privately-owned press ran a sustained and vigorous campaign … under assault, support for the scheme ebbed and the Social Democrat leaders believed that it was prudent greatly to dilute the scheme…” By the mid-90s, the policy was dead.

A warning there for all those gathering in Liverpool this week – and for anyone who believes workers should receive a greater share of the stuff we produce: get ready for the onslaught.

The workers who bought out their bosses – and secured their futures

By Aditya Chakrabortty in The Guardian


It had all been going so well. In this smoothest of seductions, John Clark and Alistair Miller hadn’t had to do a thing. There they were, itching to sell their business and get on with retirement. Then one day in the middle of 2015, this American firm – big-time, way out of their league – swung by the factory outside Glasgow and asked: what price do you have in mind? This was followed by an invitation back to the multinational’s European headquarters in the home counties.

So off popped Miller. The two sides were inching towards the dotted line when he casually inquired what the Americans would do with their new Scottish premises. This one question sent the needle screeching across the record. 

As soon as the managing director across the desk started talking about “exploring possibilities” and “transferable technologies”, Miller knew what she meant. Their Scottish operation would run for another six months, a year tops. Then it would be shut – and the order book and the technology shifted down south. And when the factory disappeared, so too would the jobs and the livelihoods of 60-odd workers and their families. Selling up would hand the owners a huge cheque, and leave their staff on a tiny giro.

“You’d be sitting back with your piles of cash,” says Clark, “but at some point you’re going to bump into those guys. Some of them have been there longer than me. I know their families.”

“Those guys” helped to build this place. Since its launch in 1986, Novograf has gone from printing signs for vans to working with some of the biggest chains in Britain. It has become expert in the branding that envelops you while shopping, eating or holidaying, but which you never take in. Walk around a Co-op supermarket, and the signs guiding you to the wine and beer or fruit and veg aisles will be Novograf’s. Pop into a Pizza Hut and the wood-look flooring will have been made and laid by Novograf employees. Stay at an Ibis Styles hotel and the big fat number on your room door probably comes from their East Kilbride factory. Then there’s Greggs, Iceland, Tesco, Waitrose …

Miller and Clark hadn’t poured six decades of their combined lives into this venture only to leave a plump carcass for others to feed on. But the two sixtysomethings had run smack into one of the central problems of British capitalism: how to ensure a company’s owners look after it. Pretty much any spiv with a chequebook can buy a business in the UK and ruin it as they want. Westminster will ask few questions, expect even less accountability, and never learn any lessons. That fanatical British adherence to open markets and property rights leaves the staff, the suppliers and the public counting for little. 

The publisher of Horny Housewives, Richard Desmond, bought the Express stable in 2000 without New Labour ministers raising an eyebrow. A once-great paper was wrecked and hundreds of journalists lost their jobs, but Desmond pocketed nearly £350m before he sold it to Trinity Mirror this year.

In 2005, Manchester United football club was snapped up by the Glazer family, who paid for it by borrowing hundreds of millions that they loaded on to the club’s balance sheet – before shifting its headquarters to the tax haven of the Cayman Islands, a 10,000-mile round trip from the club’s Old Trafford stadium.

Philip Green may strip BHS bare; Cadbury can be ravaged by Kraft; Australian investment bank Macquarie can run Thames Water into the ground then, as a reward, get the public’s Green Investment Bank. Each time owners damage a business, employees and often customers get shafted, and local economies suffer – while a handful right at the top cash in.

But Miller and Clark can tell you how much depends on the simple fact of ownership. It helps shape the business model, the ethos and culture of a company. However, even as they tried to secure a careful owner for their business, all the plausible options were a no-go.

Sell to a rival? Their staff and values would be discarded like used wrapping paper. Cash out to private equity? A green light for a corporate ransacking. Neither man’s children wanted to trudge in their dad’s footsteps, and senior management were not in a position to buy them out.

‘I could be sitting back on piles of cash. But at some point you’re going to bump into those guys. I know their families.’ John Clark, chairman and former owner of Navograf. Photograph: Murdo Macleod for the Guardian

Just then, a postcard flopped on to the doormat. “Thinking of exiting your business?” it asked. When the man from Scottish Enterprise, an agency of the Holyrood government, told them about worker ownership, he got blank faces. The biggest employee-owned firm in the UK, John Lewis, was a Novograf customer, yet all Clark knew about its structure was that once a year the company would be on the news for paying “partners” a tax-free bonus. Which was lovely, Clark and Miller thought, but what did that have to do with them?

Employee ownership is as simple as selling a company to its staff. Over 300 British firms have done it, from Arup architects to Waitrose. But it is as radical as giving the people who create a business’s wealth the right to share in it. That wealth is no longer handed over to remote shareholders in the form of share buybacks and dividends.

When Clark and Miller “got off our butts” and visited a few of the 95 Scottish firms now owned by their employees, “we learned that their productivity was higher, that they were more resilient in bad times, that they were more inclusive of all their staff”.

Giving workers control over their companies doesn’t just make the firms more successful, it also makes the workers a lot better off. Last year, the California-based National Center for Employee Ownership analysed US jobs figures and found that younger workers who are worker-owners enjoy 33% higher wages and 92% higher median household wealththan those who aren’t owners.

The British government knows much of this, because it commissioned a report that told it so. The very first line of Graeme Nuttall’s 2012 review reads: “Employee ownership is a great idea.” After lobbying by Liberal Democrat ministers, two years later chancellor George Osborne scrapped capital gains tax for employers who transferred a majority share of their business to workers. This was back when Osborne and David Cameron would hymn “the John Lewis model”.

Just like “the march of the makers” and the “big society”, the fad has left little trace. Of the 2,617 full-time equivalent civil servants at the Department for Business, not one is dedicated to promoting worker ownership, as advised by the Nuttall review. The same report also recommends “the appointment of a minister responsible for promoting employee ownership across government”. Yet this department confirmed to me that not even its most junior minister holds any such brief.

That silence partly explains why employee ownership remains so exotic. When Clark and Miller announced their idea for selling the company to their staff, they hired a local hotel, put on fancy nibbles and gave a great presentation. “The very first question we got was, ‘Have we still got a job?’” remembers Clark. “Nobody had a clue what it meant,” recalls factory technician David Anderson. “People assumed that everyone was going to have to get a mortgage to buy the company.”

Four hundred miles north of Whitehall, the far smaller Scottish Enterprise employs eight full-time staffers to promote and advise on worker ownership and other “inclusive models” of organising companies. The SNP government is full-square behind it, and the Herald, the Record and the Scotsman newspapers trumpet this Inverness holiday resort or that Hebridean jewellers being taken over by its employees.

Just two decades ago, newly devolved Holyrood paid through the nose for inward investment and prayed that the multinationals would repay their lavish subsidies with lasting jobs. They rarely did. Hewlett Packard, Chunghwa Picture Tubes and many others pulled the corporate equivalent of a one-night stand.

 ‘Everyone received a decent tax-free bonus last year, and also took part in the first-ever staff survey, which led to sick-pay and leave entitlement becoming more generous.’ Photograph: Murdo Macleod for the Guardian

Holyrood can still relapse – such as when it gifted Amazon £2.5m of taxpayers’ money and got back a distribution warehouse in Dunfermline. But Scottish Enterprise’s Sarah Deas talks of fostering a Mittelstand – a German-style dense network of medium-sized businesses that think long term and honour their social obligations.

Which is a reminder that British business is not some political monolith – that it can break left as well as right. White-haired Clark is appalled at “the FTSE guys”, the chief executives paid 100 times the average wage of their workers. “What are they doing to deserve that?”

Clark is not, he says, “some paternalistic capitalist” or a “crusader”. He’s “hardnosed”, and with Miller got a fair price for Novograf. But they’ve also taken big risks to ensure their workers could afford it. It proved impossible to raise cash upfront for the purchase price. “Not one of the major banks was interested. Not even our own.” So Clark and Miller turned themselves into a bank – handing over the company shares while allowing employees to pay them back over a few years, with interest. And with conditions: as long as the pair retain an interest in the firm it cannot relocate more than 200 miles away, “because that would defeat the entire purpose of the deal”.

At the end of 2016, all the shares in the company were transferred from the two original owners into a trust held on behalf of all staff. Just over a year later, the all-new, same-old Novograf still feels eggshelly, as if everyone is trying to gauge what’s changed. Its new managing director, Jennifer Riddell-Dillet, has to tell employees: “Remember you’re an owner.” She both manages and works for her staff, one of whom sat on the panel that interviewed her for the job.

Novografers like to tell you that this isn’t “some socialist paradise”, that there are still bosses and workers; but the priorities have changed. Formerly a senior manager for two PLCs, Riddell-Dillet says: “Public companies are only about external shareholders. There, employees are the asset of the business – but they’re a sweatable asset. Here, you think, ‘If I just drive them into the ground it will be less fulfilling, less rewarding and it will be more ruthless.’”

Everyone received a decent tax-free bonus last year, and also took part in the first-ever staff survey, which led to sick pay and leave entitlement becoming more generous. Anderson, a Novograf lifer, says: “The people on the factory floor definitely feel more in control than before. Anybody can now say, ‘I don’t see why things have to be done that way’ – and someone’s got to answer.”

That power requires some growing into. Production manager Michael Carr has become a director of Novograf, and has struggled to get his head around the accounts. And with no previous experience, Anderson and business development manager Margaret Nelson now make up half the trustee board. The other two trustees will be Miller and Clark, until they’re finally paid off. “It’s obvious that they know what they’re talking about and we don’t,” says Nelson. “Challenging your old boss is an intimidating thing.”

But employees will challenge on their expert subject: their daily work. Just last week, an employee showed Carr a cheaper and quicker way of assembling signs. They would never have spoken up before, he says, yet that one simple thing could save “a few thousand pounds in man-hours and material”.

In its first full year of employee ownership, Novograf’s sales shot up 20% and the company took on an extra 22 people. That success followed on from a strong performance in 2016, but Riddell-Dillet reckons their direct stake in the outcome did drive employees to put in “the blood, sweat and tears”.

Not all the savings are strictly necessary. Not so long ago, now-chairman John Clark, while washing his hands in the gents, reached over to the soap dispenser. He remembers a thin jet of lotion flying out – “Whoosh ... it hit me amidships” – all over his stomach. He charged over to the man responsible for ordering in supplies and told him the new soap was far too thin. While Clark stood dripping, the man nodded. “Aye, that was me,” he said. “I’ve watered down the soap by half to save money.”

The stupid, avoidable mistakes that make good employees leave

Travis Bradbury in Quartz

It’s tough to hold on to good employees, but it shouldn’t be. Most of the mistakes that companies make are easily avoided. When you do make mistakes, your best employees are the first to go, because they have the most options.

If you can’t keep your best employees engaged, you can’t keep your best employees. While this should be common sense, it isn’t common enough. A survey by CEB found that one-third of star employees feel disengaged from their employer and are already looking for a new job.

When you lose good employees, they don’t disengage all at once. Instead, their interest in their jobs slowly dissipates. Michael Kibler, who has spent much of his career studying this phenomenon, refers to it as brownout. Like dying stars, star employees slowly lose their fire for their jobs.

“Brownout is different from burnout because workers afflicted by it are not in obvious crisis,” Kibler said. “They seem to be performing fine: putting in massive hours, grinding out work while contributing to teams, and saying all the right things in meetings. However, they are operating in a silent state of continual overwhelm, and the predictable consequence is disengagement.”

In order to prevent brownout and to retain top talent, companies and managers must understand what they’re doing that contributes to this slow fade. The following practices are the worst offenders, and they must be abolished if you’re going to hang on to good employees.

They make a lot of stupid rules. 

Companies need to have rules—that’s a given—but they don’t have to be shortsighted and lazy attempts at creating order. Whether it’s an overzealous attendance policy or taking employees’ frequent flier miles, even a couple of unnecessary rules can drive people crazy. When good employees feel like big brother is watching, they’ll find someplace else to work.

They treat everyone equally. 

While this tactic works with school children, the workplace ought to function differently. Treating everyone equally shows your top performers that no matter how high they perform (and, typically, top performers are work horses), they will be treated the same as the bozo who does nothing more than punch the clock.

They tolerate poor performance.

 It’s said that in jazz bands, the band is only as good as the worst player; no matter how great some members may be, everyone hears the worst player. The same goes for a company. When you permit weak links to exist without consequence, they drag everyone else down, especially your top performers.

They don’t recognize accomplishments. 

It’s easy to underestimate the power of a pat on the back, especially with top performers who are intrinsically motivated. Everyone likes kudos, none more so than those who work hard and give their all. Rewarding individual accomplishments shows that you’re paying attention. Managers need to communicate with their people to find out what makes them feel good (for some, it’s a raise; for others, it’s public recognition) and then to reward them for a job well done. With top performers, this will happen often if you’re doing it right.

They don’t care about people. 

More than half the people who leave their jobs do so because of their relationship with their boss. Smart companies make certain that their managers know how to balance being professional with being human. These are the bosses who celebrate their employees’ successes, empathize with those going through hard times, and challenge them, even when it hurts. Bosses who fail to really care will always have high turnover rates. It’s impossible to work for someone for eight-plus hours a day when they aren’t personally involved and don’t care about anything other than your output.

They don’t show people the big picture. 

It may seem efficient to simply send employees assignments and move on, but leaving out the big picture is a deal breaker for star performers. Star performers shoulder heavier loads because they genuinely care about their work, so their work must have a purpose. When they don’t know what that is, they feel alienated and aimless. When they aren’t given a purpose, they find one elsewhere.

They don’t let people pursue their passions. 

Google mandates that employees spend at least 20% of their time doing “what they believe will benefit Google most.” While these passion projects make major contributions to marquis Google products, such as Gmail and AdSense, their biggest impact is in creating highly engaged Googlers. Talented employees are passionate. Providing opportunities for them to pursue their passions improves their productivity and job satisfaction, but many managers want people to work within a little box. These managers fear that productivity will decline if they let people expand their focus and pursue their passions. This fear is unfounded. Studies have shown that people who are able to pursue their passions at work experience flow, a euphoric state of mind that is five times more productive than the norm.

They don’t make things fun. 

If people aren’t having fun at work, then you’re doing it wrong. People don’t give their all if they aren’t having fun, and fun is a major protector against brownout. The best companies to work for know the importance of letting employees loosen up a little. Google, for example, does just about everything it can to make work fun—free meals, bowling allies, and fitness classes, to name a few. The idea is simple: if work is fun, you’ll not only perform better, but you’ll stick around for longer hours and an even longer career.

Bringing It All Together

Managers tend to blame their turnover problems on everything under the sun while ignoring the crux of the matter: people don’t leave jobs; they leave managers.