A Foundation of Trust
Take one look at Morningstar's Web site and you'll see that it is not your usual buttoned-down financial services company. The Chicago-based investment research firm does not have a set vacation policy. It does not have a sick leave policy. It doesn't even have set office hours. Time off is left to the discretion of employees and line managers. When it comes to vacation time the company simply recommends that each employee take off at least three weeks per year.
While such a hands-off approach may be vulnerable to abuse, that doesn't worry Chief Financial Officer Martha Dustin Boudos. "If we have someone who's not getting their work done, usually vacation time is just one item on a list of problems that person has," says Boudos. "You never think, wow, that person is a great employee, but boy do they take a lot of vacations."
According to Human Resources Director Cathi Rezy, the average Morningstar employee takes the recommended three weeks off per year. "Some take more, some take less," she says. "Some may be taking too little time off."
As far as the company is concerned, however, it is not how much time off their employees take, but the quality of their work that matters most. "Our core philosophy is to hire good people and trust them to do their jobs," says Boudos.
Because of this belief, Morningstar has few explicit workplace policies. "You can't have trust and policies," says Boudos. "If you trust people, you don't have to articulate. You don't have to catalog what is or is not allowed."
While Morningstar does not rely heavily on written guidelines, they are very selective in their hiring. The company employs a rigorous and lengthy screening process. Each applicant goes through multiple rounds of interviews, meeting everyone from senior executives, such as Boudos or CEO/founder Joe Mansueto, to human resources representatives to peers – or in the case of management, subordinates. As a result, prospective employees get to meet representatives from top to bottom in the organization, and the company has an opportunity to evaluate the applicants from a variety of perspectives.
Morningstar also employs a rotational training program designed to attract higher-quality candidates into entry-level positions such as product support.
"When you hire someone right out of college and ask them if they want to take a job answering our 800 line for the foreseeable future, you get one kind of person," explains Boudos. "If you hire people and tell them, we are going to expose you to our customers – who we think are critically important no matter what position you are in at Morningstar – you'll spend a year there, get to know our products and services, and then you'll get to move on, you hire a very different kind of person."
In addition to coordinating an extensive recruiting process, human resources dedicates a lot of time to counseling managers on negotiating the gray areas that result from having few explicit guidelines.
"I think that not relying on policies makes our managers' jobs more challenging," says Boudos. "It is a lot easier to tell an employee that you can't take that vacation because you already have taken 10 days and that's all you have. It is much harder to say: We need to get this done and you taking that day of vacation is going to impact our ability to meet our deadline, so I am making the judgment that you can't take it."
"We put a heavier burden on managers to be upfront and make tough decisions," adds Boudos.
While Morningstar is a sizeable organization with more than 800 employees, some of its most progressive workplace initiatives have been around since its humble beginnings. CEO and founder Joe Mansueto started the company in 1984 out of his apartment. Believing that giving his employees a chance to pursue outside interests would both recharge them and provide a powerful retention incentive, he initiated a six-week sabbatical program for employees with at least four years at the firm.
Producer Mark Arendt has taken two sabbaticals in his nine years with the company. While he dedicated his first leave to rest and relaxation, his second took him on a whirlwind odyssey across Australia and Southeast Asia.
The trip began in Sydney, Australia, where he participated in the 2002 Gay Games, an event modeled after the Olympics that features 31 sporting events and more than 11,000 athletes. There he posted a personal best in the triathlon. Mark then traveled to Malaysia, Cambodia and Vietnam. It was this final leg of his trip that he says had the most long-term effect on him. "To go to Southeast Asia was very different and it was something that I was nervous about," says Arendt, "but to realize that I could face this fear and get past it was a really great experience."
The sabbatical program provided Yi Wang, a technical lead in Morningstar's Data Services business unit, with a chance to fulfill her life-long dream of visiting Tibet. She attributes her ability to get away from work and enjoy such an experience to having good people who can keep things running smoothly in her absence. For Wang, who was always a very hands-on manager, learning that the sky would not fall if she left her work to others has not only improved her work/life balance but her team's productivity. "It made me recognize a better way of working," she says, "which is having more people involved."
Company: Morningstar
Web site: www.morningstar.com
Industry: Financial services
Location: Chicago, Ill.
Number of employees: 800
Sales: $110 million
