Profiting From Fun

By Tim Larimer

George Zimmer bounces briskly into the conference hall of a swank California resort tucked among wooded hills with a view of Monterey Bay. The stage is decorated with headless mannequins dressed in suits and sports shirts. There's a clothes dryer, with which an executive has just demonstrated the wrinkle-free quality of a new line of shirts. But the main act is Zimmer, founder and CEO of the Men's Wearhouse, also known as the bearded pitchman with the cornball delivery who ends every commercial for his stores with his signature line, "I guarantee it!," pronounced like a carnival barker as he points to the camera.

Zimmer doesn't care if he's cheesy, because since he opened his first store in Houston 30 years ago, Men's Wearhouse has become the largest men's clothing retailer in the U.S., a $1 billion company with 507 locations. It has outlasted dozens of competitors and survived casual Fridays and a slump in suit sales to show surprising growth this year. Now Zimmer plans to make Men's Wearhouse a $5 billion company that also sells sports clothes and designer wear, rents tuxedos and operates dry cleaners.

As Zimmer takes the stage before an audience of assistant store managers in their 20s and more seasoned store execs, he rattles off the usual list of company accomplishments--the stock had zoomed from $11.95 in January to $27 by August--and generates considerable applause. Then Zimmer veers off in a direction that would make many shareholders squirm, as he explains his unorthodox business philosophy. "You know, at some point we can't pay you enough money to make you want to go to work," Zimmer says, his voice getting quiet. "That's why we have a different feeling at Men's Wearhouse, and the word fun is somehow connected. We take fun seriously. You gotta take fun seriously in business, because God knows everybody could use some lightening up."

Fun. Work. These two words actually knew each other in the roaring '90s, when companies had to pile on the good times to attract and keep the best workers. But in our postbubble corporate coal mines, fun is a memory. Nearly 3 million workers have lost jobs, and the rest of us are nervously glancing over our shoulder in the midst of 60-hour workweeks.

But Zimmer and the CEOs of a few other companies have not abandoned the idea that employees who take business (but not necessarily themselves) seriously stand to be happier and more productive. Fun doesn't save people from layoffs. But it does save them from tedium and stress and can spark creativity. The fun workplace is a concept established by CEOs like Southwest Airlines' Herb Kelleher, for whom audiovisual aids were a lighted cigarette and the clinking ice cubes in his drink. Of course, Kelleher wasn't above handling customer baggage either, and Southwest made tons of money.

Fun isn't cheap. Men's Wearhouse spent $1.8 million on 39 Christmas parties last year and flew either Zimmer or another exec to each of them. When it's time to make a new batch of TV commercials, the company sends a few dozen employees to Los Angeles, puts them up at a Beverly Hills hotel and ferries them around town in limousines so they can be the stars in the commercials. Nepotism is encouraged; the rationale is that if the company hires friends and relatives, everyone will be more likely to get along. Once or twice a year, store managers and assistants are taken to corporate retreats, where they spend a good deal of their time doing silly activities like making small boats out of cardboard, tape and empty milk cartons. Salesmen are encouraged to tune TVs in their stores to sports events, set up putting greens, throw around Nerf footballs and take in doughnuts or pizza for themselves and the customers.

Zimmer isn't on some messianic mission to turn corporate America into a fun house. He just decided a long time ago--contrary to what they tell you in business school--that the most important stakeholders in the company aren't the shareholders or even the customers but the employees. "Look, if the employees are happy and make the stores fun, then that will make it fun for the customers," he says. Many of his customers--men--rank shopping just below flossing. "If they're happy, business will follow, and shareholders will be happy. It all starts with the employees and making it fun for them. Why does work have to be dull?"

Because we're living in an economy only a Puritan could love. When profits began falling, out went lavish holiday parties. Company retreats retreated from Cancun to the conference room. "If, say, on Friday, you announce layoffs and no raises, but hey, next week I'm taking everyone to Hawaii--no, that you can't do," says Bob Moog, founder and CEO of University Games in San Francisco, which has bucked the trend by not emptying the employee goody bag. Economists marvel at the productivity of this new new economy. The Bureau of Labor Statistics announced in August that output per worker increased 5.7% in the second quarter. Translation: we're working harder because companies will not hire more people. Fun? "Phooey! Just give me more time off" is the rallying cry of today's wage slaves.

Back in the dotcom boom days, Yahoo! was the model of the modern fun company. Why, they put an exclamation point at the end of the name just in case you missed the point that it was a crazy, happening place to work. Beer bashes every Friday. Skateboarding in the halls. Frisbee at lunchtime. This kind of culture was the epitome of the new economy, where the players worked hard and the workers played hard, all in a fuchsia-colored office turned Disneyland with all the caramel lattes you could swallow. There was oodles of money to be earned, even if the company didn't make a dime, and the best part was that you could have fun--real adolescent, prankster, thumb-your-nose-at-the-principal kind of junior high school fun. "Hey, we're working, and it's a party!" is how an employee, laid off when his video-services group was axed, remembers the dominant workplace ethos.

And today? Well, uh, "people realized that making money wasn't actually that easy," says a mid-level Yahoo employee. "It has become a bit more corporate." Sure, company co-founder Jerry Yang and crew still let folks take the pet parakeet to work. They're still riding scooters up and down the hallways. You can get a chair massage and all the espresso you want--which is an odd combination when you think about it. So it's still fun, sort of, or as the mid-level employee says, "It's not completely dry." Kind of like saying a party isn't totally boring. "Ninety-five percent of it was all about business and making money." Oh, that.

But these gloomy times may be exactly when fun is most needed, along with profit, when we all need to laugh a little. "Having fun doesn't mean denying reality," says Joni Johnston, a management consultant in Del Mar, Calif., who promotes workplace humor. "There's a time and place for humor," she says. "Having a clown dance around as you are laying off people isn't appropriate."

Media specialist Laura Kane worked at one of those happening places in the '90s, a West Coast advertising agency with high-tech clients. "Oh, we had it all--the masseuse, bring your dog to work, the Foosball tables, video games," says Kane. "The wall of pictures in the entrance was of our employees all making funny faces. But you know what? It wasn't fun! People took themselves way too seriously." Most of us would envy the fun quotient at the places Kane has worked. She was a reader for a soap opera, a TV producer and a member of the team that started ESPN. So she knows from fun. And it's a bit of a shock to hear where she's having fun now--an insurance company.

At AFLAC, the Columbus, Ga., insurance giant where she is manager of corporate communications, Kane has discovered that fun in the 21st century is defined differently from the way it was in the dotcom era. Sure, there are the perks, like on-site health care, dry cleaning, birthday parties with balloons, nature trails and take-out dinners that you actually would want to order.

But at companies that make a fun workplace an integral part of their culture, the emphasis isn't on freebies but on attitude. It's elusive, harder to define but ultimately more effective than all the flashy accoutrements that so many failed companies tried to throw at employees in fruitless attempts to retain them in a hot job market for really bad businesses.

"AFLAC was founded on the idea that if you treat employees well, they will take care of your customers and your business," says Kane. At AFLAC, that means loosening up the office, flooding the place with toy ducks that quack (the duck being the hook on the company's quirky advertising spots), giving workers flexible hours and making people feel comfortable about stepping away from their cubicles to walk around the duck pond.

The basic equation in question is this: Does work plus fun equal better productivity? To Jim Goodnight, CEO of SAS Institute, a Cary, N.C., software developer, the answer is yes. "When we started--the five of us--our idea was, Why not make it fun?" Goodnight says. Yet he admits that sometimes he looks out the window, sees his programmers playing company-approved hooky, and asks, "How soon can we get those guys off the Frisbee field?"

Over the years, SAS has augmented fun perks with others that help employees save time. There's an on-site health clinic with four doctors and 20 nurses. "Instead of taking three hours out of work to go to the doctor, it takes 30 minutes," Goodnight says. The company figures the on-site health care saves it $2,000 per employee annually, because workers get to go to the doctor sooner when sick. The same rationale applies to the on-site barbershop, child-care center, gym and the staffer who arranges for care for elderly relatives. "Every minute I can save a person from doing these kinds of tasks means I get them back to their desk a minute sooner," says Goodnight. Assuming they're not playing Frisbee.

SAS is contrarian in another way. When most software companies were downsizing, SAS was hiring programmers and salespeople. Its employee rolls expanded 6% in 2001 and 8.5% last year. "A lot of good people were on the street looking for jobs, so we decided it was a good time to hire," Goodnight says. Growth is fun too.

It may sound a little devious, snowing people into believing you're being nice to them when really you just want to coax them back to the mill. But employees at SAS aren't that jaded. Maybe it's the free M&Ms, the twice-weekly, on-site discounted car detailing, the art classes, the yoga and the in-house artist. Or maybe everyone just drank the Kool-Aid. But the employees genuinely talk about having fun at work. "If I want M&Ms, I can go to the store," notes Oliver Schabenberger, a software developer. What he values, rather, is a culture that gives him the time and freedom to think and create and collaborate with colleagues from other departments. There isn't a lot of hierarchy at SAS or rigid rules and structures, so researchers are free to do what they like. It's not Foosball. But it's fun.

The companies that value fun are those with enough smarts to see that a fun culture is aligned with their business. Such a fit is obvious at a company that designs games, so when Bob Moog, fresh out of Stanford Business School, started University Games in 1985, he made one of his goals to have fun every day. Over the years, he has taken employees on a cross-country Amtrak murder-mystery tour and flown employees to Los Angeles to watch tapings of TV shows and participate in game shows. When the company faced a cash-flow crisis in the early 1990s, he took them all to Las Vegas, gave each of them about $100 (from two cartoonish bags painted with dollar signs) to gamble away, ostensibly to help earn money for end-of-the-year bonuses. It was a joke, but one that made light of a stressful situation.

After five years, employees are given a month off with pay to do whatever they want. The only rule: they can't check their e-mail or call work. "It's part of an informal social contract between managers, employees and shareholders," says Moog. "People need to have a balance between their home and family and work."

The firm's San Francisco headquarters is festooned with games--a giant Pinocchio marionette, a glow-in-the-dark walk-through cave and a secret bookshelf that opens into another room, like something out of the old TV spy sitcom Get Smart. "We try to inject fun into everything we do," says Moog.

The best part--and the part that should appeal to the thank-God-it's-Friday working stiff--is that having fun pays off for everyone. Jeffrey Pfeffer, a professor of organizational behavior at Stanford Business School, thinks executives like Zimmer at Men's Wearhouse are nothing short of brilliant. "If you have a bunch of surly employees who would rather have a proctological exam than wait on you, then you won't want to shop in the store," he says. "It's hard to build and maintain a positive culture."

Which is why Zimmer is willing to spend big bucks on Christmas parties and retreats and an extra $100 here or there to make his employees happy. Last year the company even flew employees and their spouses from Oklahoma City, Okla., to a party in Kansas City, Mo., because their store was too small to have its own. "We closed the store, flew up there and stayed in a nice hotel," says Dan Johnston, the Oklahoma City store manager. "Amazing they did that." Sure, it cost a few bucks, but guess what? For weeks after that party, sales of suits in Oklahoma City soared. --With reporting by Laura A. Locke/San Francisco and Paul Cuadros/Cary

With reporting by Laura A. Locke/San Francisco and Paul Cuadros/Cary