WSJ's"Top Small Workplaces 2008"

It's here the "Top Small Workplaces 2008". No this is not a list of companies that have tiny office space & small novelty office supplies. I assure you these companies have full sized offices & office equipment. However they are on this list (produced by The Wall Street Journal & Winning Workplaces) because they maintain the small business collaborative culture & give you an alternative to taking that gig with the giant multi-national. (Disclaimer I urge you to look into the methodology as to how this list was compiled before determining that these are in fact the "best" I recommend this report as more of an eye opener reinforcing the fact that there is more out there than just the Fortune 500)

It's never been harder to create a great workplace. With all the turbulence in the economy, business owners are spending more time trying to boost sales and cut costs than fretting about the well-being of their employees.

But creating a rewarding work environment has also never been more important.

The Top Small Workplaces Winners

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The Top Small Workplaces awards showcase a diverse collection of businesses with a common goal to create happy customers through happy employees. We look at this year's winners and why they succeed. (Oct.12)

Motivating and engaging workers -- and giving them opportunities for professional growth -- helps a business retain the best people and ultimately boost the bottom line. And don't forget, we're in a changing working world. New generations of workers expect their boss to respect their input and their need for work-life balance. They also want their employer to act socially responsible in the marketplace.

So, what companies are best at delivering all of that? For the second year in a row, The Wall Street Journal teamed up with Winning Workplaces, an Evanston, Ill., nonprofit that helps small and midsize companies create better work environments, to identify 15 small employers that have built exemplary workplaces.

These companies tend to offer generous traditional and nontraditional benefits, share profits with employees and constantly hunt for new ways to make the employee experience better.

Executive Summary

• Read highlights from a report examining the innovations and practices of the employers recognized in Top Small Workplaces 2008.
• The 15 Top Small Workplaces
• Slideshow
• The credit crunch | Gen-Y employees
• Nominate a small company or nonprofit for 2009
• Join the discussion | See the full report

The Journal Report

• See the complete Small Business report.

If you're still skeptical about whether such practices are worth it, look no further than these companies. They're more than great employers; they're also profitable, growing enterprises -- even in this difficult economy. Here's a look at the practices that put them at the top.

ATA Engineering Inc.

BUSINESS: Engineering consulting
BASED: San Diego
FOUNDED: 2000
EMPLOYEES: 84
2007 REVENUE: $16.1 million

Managers often talk about the merits of "teamwork" and a "flat" culture. But few can claim to implement those practices as well as ATA Engineering Inc.

When ATA spun off from another engineering firm in 2000, the new leaders -- managers from the former firm -- wanted to preserve the collegial and collaborative spirit they had as part of a bigger company. So, they sought out practices that emphasized equality and teamwork in compensation and decision making.

In 2004, the 28 employees from the former firm agreed to make the company 100% employee-owned by starting an employee stock-ownership plan. What's more, every ATA engineer, manager and executive is paid on the same engineering pay scale -- there's not a separate scale for managers. So there aren't big differences in pay between managers and the people they supervise.

Slideshow: Top Small Workplaces

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An ATA Engineering team at an Extreme Gravity Racing event (left); Decagon Devices employees enjoying a game of soccer (top right); a meeting in session at Integrated Project Management (bottom right)

Bonuses also have an egalitarian flavor: All workers receive an equal percentage of their salary as an annual bonus. The setup works that way for a couple of reasons. ATA leaders believe that every employee should reap the rewards of the whole team. Managers also feel it's too hard to accurately assess how much one employee deserves a bonus over another; singling people out could result in unfairness and resentment.

"It's a controversial topic, but what we've found is it's extremely difficult to be fair and consistent if your bonus policies are too differential," says General Manager and Chairman Jeff Young. "Someone who made a big splash may be compensated, but someone who was silent and didn't speak up wouldn't be."

Mr. Young puts his money where his mouth is. A few years ago, he was nominated for a local "Entrepreneur of the Year" award. But he turned down the honor, feeling he shouldn't take all the credit for the company's success.

The company also believes in group decision making. At least eight to 10 ATA employees are involved in interviewing every job candidate. If one employee objects to the hire, the candidate may not be offered a job unless that employee changes his or her mind.

Sometimes, even the biggest company decisions are made by workers. When the lease was up on the company's building, for instance, ATA formed a committee of employees to address the issue. The group decided to stay put, after determining the current location was convenient to the majority of employees.

Part of ATA's flat, ownership culture also means allowing employees to make important decisions without needing massive amounts of approval, as well as allowing all engineers to lead projects at various points. So, even senior managers could end up working under one of the people who report to them.

Ronan Cunningham, ATA's director of business development, says he can pursue projects that he feels are good for the company or that he's personally interested in without needing more than one person's approval. For instance, Mr. Cunningham says he can talk to ATA's engineers and find out what types of technologies they want to develop and then he can find ways to get grant money for those projects.

"I think in other companies you have a lot more red tape," he says.

Decagon Devices Inc.

BUSINESS: Scientific instruments and sensors
BASED: Pullman, Wash.
FOUNDED: 1983
EMPLOYEES: 72
2007 REVENUE: $8.1 million

This instrument maker is a family-run business. But Decagon Devices Inc. goes out of its way to make sure all employees -- actual kinfolk or not -- feel like family.

"The way that we like to see it is that as we add employees, we're just adding members to the family," says Tamsin Jolley, chief executive, who is the eldest daughter among nine children of company founder and former Washington State University soil scientist Gaylon Campbell.

A big part of creating a familylike feel, Ms. Jolley says, has been sharing the wealth so employees feel they play a role in the company's success. The company divvies up 20% of pretax profit among employees each quarter, depositing about one-third in the employees' 401(k)s and giving two-thirds as cash. All employees also get a year-end cash bonus based on the company's overall performance.

Then there are day-to-day activities that bring workers closer together. Each Wednesday, some employees take turns bringing home-cooked meals to work for their colleagues. Then, all the workers eat lunch together. The weekly meal is an opportunity for managers to share news about the company, introduce new employees and teach workers how to read the company's financial statements.

The company also encourages employees to socialize at work. The office has a ping-pong table and slot-car track, and there's a long tradition of employees playing soccer on their breaks. "Their culture I rated as the highest of anyone," says Top Small Workplaces judge Corey Rosen, executive director of the National Center for Employee Ownership.

Ms. Jolley says another part of the secret to creating a familylike atmosphere is providing strong benefits and making sure employees' own family members also feel connected to the business. The company pays 100% of the premium for employees and their dependents' health-insurance coverage, with a $500 annual deductible for individuals and $1,500 for families. It also hosts an annual catered summer picnic for all families, as well as an annual Christmas party. And each employee gets a complimentary membership to Costco Wholesale Corp.

The company has also accommodated several families who wanted to work together, often hiring employees' spouses, offspring -- or even their parents.

In 2001, Bill Scotson retired from his 31-year career at a grocery-store chain. He and his wife hoped to relocate from Walla Walla, Wash., to Pullman to be closer to their grandkids. Decagon already employed his son-in-law and daughter, who got him an interview at the company. He now is a shipping clerk for Decagon, and works directly under his daughter. "They treat their employees like human beings," the 64-year-old Mr. Scotson says. "Not like numbers."

Integrated Project Management Co.

BUSINESS: Project management
BASED: Burr Ridge, Ill.
FOUNDED: 1988
EMPLOYEES: 78
2007 REVENUE: $13 million

Many companies give employees feedback once a year in a performance review. At Integrated Project Management Co., feedback is a very frequent -- and highly structured -- process.

Each IPM employee sits down for a weekly one-on-one meeting with his or her manager in which they discuss work progress, the employee's performance and the skills that need improvement. Managers also regularly provide employees with an "event summary" in which they evaluate how an employee handled a specific task such as leading a company meeting and provide concrete steps for improvement.

After six months of employment and then annually thereafter, managers give their teams a "Performance Summary & Development Plan" -- a lengthy document that evaluates them in a range of areas, such as how well they've adhered to company values and ethics, and lays out specific skills to work on and training recommendations.

The reason for all this feedback, says founder and Chief Executive C. Richard Panico, isn't to intimidate or make employees feel inadequate. It's more like coaching, given in a "very encouraging" manner, to help employees get the skills they need and move up into leadership roles, as well as to instill company values.

"When we sit down with people and give them feedback on an ongoing basis, honesty and integrity are the first two on that list," Mr. Panico says.

Along with all the feedback, the company provides ample on-site and off-site training. For instance, in 2002 the company sent Mike McLeod to Northwestern University's Kellogg School of Management to get his M.B.A. to help prepare him for a management role. The company paid about $50,000, or roughly two-thirds of the cost, he says.

Mr. McLeod, who started at IPM as a project manager in 1994 and is now vice president of operations, says all the coaching has helped him become less introverted and learn key leadership skills such as effective communication and relationship-building. "It's good to be with a company that really stretches you and lets you take on responsibilities that allow you" to move up, the 40-year-old Mr. McLeod says.

J.A. Frate Inc.

BUSINESS: Regional trucking
BASED: Crystal Lake, Ill.
FOUNDED: 1971
EMPLOYEES: 88
2007 REVENUE: $8.7 million

Our judges liked this company's attitude. Trucking, they say, is a gruff business, where drivers often come and go and don't feel recognized for their effort. J.A. Frate Inc. tries to make sure its most dedicated drivers feel valued and want to stay for the long haul.

The company was founded by Chief Executive R. Douglas Jennings, who says he has always run J.A. Frate with the goal of treating employees as fairly and kindly as possible.

One of J.A. Frate's truckers, driving a big rig (top left); a Jackson's Hardware mechanic at work in the repair shop (right); a project lead at Jump Associates explaining a concept to colleagues in a meeting (bottom left)

Managers hire only experienced truck drivers -- those with at least two years on the job -- and those who dress and act professionally, Mr. Jennings says. The company then motivates its 50-some drivers to do their best by giving recognition and prizes to those who show special effort. Each month the company's Driver Recognition Committee selects "Drivers of the Month" and usually divvies $200 in Wal-Mart gift certificates among them. The recognition is based on a point system where drivers can be docked points for issues such as damaged freight, tardiness or sloppy log books.

Each year, one driver is designated "Driver of the Year" and wins a larger prize. Joe Rhamey, a driver who's worked with J.A. Frate since 1991, won in 2006 and 2007. Last year, the company bought a new truck tractor for him to drive but added about $4,000 of embellishments that drivers usually don't get, such as satellite radio, power windows and chrome wheels. "They just come up with these things, and you think, 'Wow, that's nice,' " says Mr. Rhamey, 54.

Employees are also encouraged to suggest changes, with the top three suggestion makers each quarter winning $100, $50 and $25, respectively.

All of these efforts pay off in employee retention. The average tenure of current employees is 7.3 years.

Judges were especially impressed with how the company handled one particularly challenging predicament. Soon after the Sept. 11, 2001, terrorist attacks, J.A. Frate lost two big clients and laid off six drivers -- the only layoffs in its 37-year history. The board of directors then asked remaining employees to vote on taking a 10% pay cut, promising to reinstate their normal wages after three months. The majority of employees voted for the cut.

Within six months, the company rehired all the drivers it had laid off and reinstated their pre-Sept. 11 wages. In 2006, it reimbursed the missed income to all employees who had taken the 10% pay cut, as well as those who had been laid off.

Jackson's Hardware Inc.

BUSINESS: Hardware retailer
BASED: San Rafael, Calif.
FOUNDED: 1964
EMPLOYEES: 63
2007 REVENUE: $18.3 million

It's hard for an independent hardware store to survive among today's big-box retailers. But Jackson's Hardware Inc., a 50,000-square-foot store 12 miles north of San Francisco, not only survives -- it thrives. And it does so by grooming long-term employee "owners" with a deep understanding of the hardware business.

In the late 1980s, founder H.C. Jackson decided to sell the business to his employees, who now own 100% of the company through an employee stock-ownership plan. As part of creating an ownership culture, Jackson's spends ample time teaching employees about the benefits of ownership, says President and Chief Executive Bill Loskutoff.

The company has a committee whose role is to educate employees about stock ownership and how their work is directly related to the success of the business -- and thus their own financial well-being. Jackson's also puts out an annual ownership-plan newsletter and selects an "Employee Owner for the Month" who receives a gas card and $600 toward a weekend getaway and dinner or store purchase.

Each year, the company makes a contribution to the ownership plan based on company profits; the average annual contribution since 1997 has been about 20% of employees' total wages. On top of the stock plan, the company pays 100% of the health-insurance premiums for employees and their dependents -- a rarity in the retail business.

Jackson's tries to encourage shared ownership in its practices, too. Some vendors give employees gifts, such as products or clothing. Instead of letting individuals keep the gifts, the company asks them to put the goods in a special room. The gifts are then divided among employees at the end of the year.

The competitive advantage of offering strong benefits and creating a strong ownership culture is the ability to keep employees over the long term. The average tenure of current employees is about 11 years.

"There's not many retail institutions that can say they have that kind of tenure," says Mr. Loskutoff. And that helps the business: Longtime employees understand the hardware business and the products Jackson's sells, and can then better serve customers.

Top Small Workplaces judge Judith Cone, vice president of emerging strategies at the Ewing Marion Kauffman Foundation, was impressed with how the store's strong employee-owner culture seemed to create a strong customer loyalty.

"You can know as a customer you're going to see some of the same faces" each time you come to the store, says Steve Hossfeld, a 51-year-old operations manager who has been with Jackson's for 18 years.

Jump Associates LLC

BUSINESS: Innovation consulting
BASED: San Mateo, Calif.
FOUNDED: 1998
EMPLOYEES: 48
2007 REVENUE: $8 million

When the four founders of Jump Associates LLC were building the company, they wanted to avoid the ultracompetitive, sometimes back-stabbing, atmosphere found at other high-energy consulting agencies. So, early on, they began adopting a series of practices that promote considerate collaboration.

Every morning, all employees meet for a "scrum" -- a short get-together where they're briefed on company news, do yogalike exercises and then play a quick brain-rousing game that forces them to think on their feet.

Jump employees are also subject to a "no zinger" policy that bans them from saying anything demeaning or hurtful about another employee. What's more, employees are asked to occasionally do so-called affinity exercises, where employees ask others to declare one thing they like about them and ask other ice-breaker-type questions. The person who responded then poses those questions to the person who originally asked them. And a coach stops in the office a few days a month to help employees with any issue, such as improving their communications or resolving conflicts with a colleague.

"There are companies that try to systematize the nastier instincts in people," says co-founder and Chief Executive Dev Patnaik. At Jump, "we try to put in systems that make people better than they otherwise would be."

The layout and interior design of the office are also meant to spark team building. All employees, including all senior management, sit out in the open in "neighborhoods" of five or six workers.

Senior management also believes in relying on the latest team-building research and methods to improve effectiveness and camaraderie. New employees all take learning and skills-assessment tests. Everyone's strengths are then listed on a poster in the office in hopes that those skills will be used and talked about on a regular basis to improve team performance.

The test told Colleen Murray, a 35-year-old project lead who started in 2003, that among her top strengths are being disciplined, responsible and deliberative. Her disciplined nature, she says, makes her a natural at spearheading projects and setting goals and deadlines. Managers say they took those qualities into account when moving her into leadership roles.

King Arthur Flour Co.

BUSINESS: Flour
BASED: Norwich, Vt.
FOUNDED: 1790
EMPLOYEES: 160
2007 REVENUE: $61 million

Bakers of all stripes have made King Arthur Flour Co. a popular brand name. But the company aims to get its employees revved up about baking as well.

The 218-year-old company, started in Boston, was family owned for five generations. But starting in the mid-1990s, the family began selling shares to an employee stock-ownership plan, and today the company is 100% owned by workers.

Company executives believe that teaching its employee owners about baking and baking culture will give them an enthusiasm that will spill into how they perform their jobs and deal with customers. Even employees who don't work directly with flour are encouraged to learn about baking. "It just helps bring home what we're doing as a company," says Chief Executive Steve Voigt, who started at King Arthur in 1992 as vice president of finance.

Employees are offered about 15 "Brain Food" classes each year, in which workers teach their peers everything from how to bake whole-grain breads and pies to more general-interest topics such as reading company financial statements and managing personal finances. The classes are voluntary and held during work hours, but all employees are encouraged to attend. What's more, employees can attend classes the company offers for professional and home bakers when there's room available.

Paula Gray, a 54-year-old instructor for King Arthur who travels to middle schools around the U.S. teaching students about bread making, has sat in on more than a dozen classes, including one recently about yeast and the chemical reactions involved in bread making.

"The more we know about our product and the more we know about what we sell can help us teach our customers about it," Ms. Gray says.

Employees also receive free products, in hopes that they will become loyal ambassadors. Each worker gets a five-pound bag of flour each month and free loaves of bread, as well as a 10% to 40% discount at the company store, which includes a wide array of baking supplies and baked goods. (Employees also receive a bimonthly baking newsletter with seasonal recipes.)

In another effort to make employees feel proud and connected to the brand, workers who reach pinnacle anniversaries with King Arthur, such as five or 10 years, are "knighted" at the annual holiday party by Mr. Voigt. (One accountant was dubbed "Lady Patti, Countess of Spreadsheetshire" on her 10-year anniversary.) And when employees are fully vested in the stock plan after seven years, they get a King Arthur Flour vest.

Landscape Forms Inc.

BUSINESS: Commercial outdoor furniture
BASED: Kalamazoo, Mich.
FOUNDED: 1969
EMPLOYEES: 248
2007 REVENUE: $55.5 million

From suggestion boxes to "open door" policies, managers frequently claim they solicit input and new ideas from their employees. But few companies generate -- and implement -- as many ideas from their employees as Landscape Forms Inc.

The commercial-outdoor-furniture manufacturer was originally formed to provide winter work opportunities to summer landscaping crews in snowy Michigan. In the early 1980s, the company adopted Frost/Scanlon principles -- a set of processes developed by university researchers to improve organizational effectiveness, such as teaching employees the importance of taking part in workplace decision making. The object is to create a participatory work force that understands and feels connected to the goals of the organization.

Today, the company still practices and teaches those principles and has devised several of its own ways for employees to be actively engaged in decisions that affect their immediate work. One way: an employee-suggestion system dubbed "muda removas." A play on a Japanese term, it translates as "getting rid of waste."

In this process, developed by Landscape management, employees and their teams come up with ways to make their jobs more efficient and effective. If the whole team agrees on one employee's idea, it can be implemented -- without approval from senior management.

Landscape documents how many muda removas are implemented and publishes them in its employee newsletter. So far this year, the company has implemented more than 1,400. Many are small changes, such as slightly altering the manufacturing process in a way that makes assembly easier, but they can make a big difference in one employee's job satisfaction or efficiency.

"What happens in traditional suggestion systems is you hand suggestions off to some group and then they tend to pile up," says Landscape President Bill Main. When people don't see their suggestions acted upon in a timely manner, "they get discouraged."

Landscape has also encouraged the use of its muda-remova procedures to enlist employees to come up with cost-saving ideas in their immediate areas that would save the company money, at a time when it's struggling to compete with companies moving manufacturing overseas.

Mardi White, a 57-year-old customer-service representative, has worked at Landscape for 21 years and says she's had "many" of her ideas implemented. Last year, she realized how time consuming it was to find furniture-assembly instructions in the computer system when talking with a customer by phone. She suggested that the company put a customer's assembly instructions and other information in one computer program, so they were easy to access. Her manager consulted with the IT department to see if it was feasible. It was.

"If you can find ways to make your job easier, the company is very open to that," Ms. White says.

Landscape also nurtures a participatory culture by sharing a generous chunk of its profits with employees. The company divvies up 28% of its net income each quarter among employees; over the years, the bonus has averaged around 10% of employees' annual compensation.

Lundberg Family Farms

BUSINESS: Organic rice products
BASED: Richvale, Calif.
FOUNDED: 1937
EMPLOYEES: 198
2007 REVENUE: $48.9 million

This organic-rice-products business has been family owned for 71 years -- and is set on keeping things that way. But Lundberg Family Farms -- formally known as Wehah Farms Inc. -- also offers employees who aren't family members the chance to build long, fulfilling careers.

Employee appreciation is a big part of that effort, says Grant Lundberg, chief executive and grandson of founders Albert and Frances Lundberg, who started rice farming after moving from Nebraska during the Great Depression. The company shows employees that they're valued in many ways, including an employee garden where they grow fruits and vegetables, an annual bonus tied to company performance and an extensive wellness program.

Rice cakes being sorted at Lundberg Family Farms (bottom left); a Landscape Forms employee finishing some furniture (top left); King Arthur Flour employees showing off a cookbook and a selection of desserts that they made (right)

The company also works to make sure all employees have ample opportunities to move into management positions and provide input. The "Above and Beyond" program gives $200 cash prizes each month to employees who suggest ideas that are implemented or who do something exceptional. (One employee won for helping a choking colleague.) And, once a month, Mr. Lundberg hosts a "Meet the CEO" event where a small group of seven or eight employees chats with him to provide feedback and discuss any concerns.

"I think that's been a good way for me to continue to stay up with all the employees and get a sense of what they're experiencing on the job," Mr. Lundberg says.

As for compensation, the company gives employees an annual bonus every November, which in 2007 was 9.3% of employees' annual compensation. Then there's a profit-sharing plan tied to the company's 401(k).

The company also wants to show it cares about employees' families. Workers' kids in school get paid rewards of $5 for each A on their report cards in core subjects such as English, science, math and history; each B brings $4, and a C brings $2.

The effect of all these benefits and incentives: long tenures. The company currently has 22 employees who have been there 20 years or longer and 60 employees who've been there more than 10 years. The average tenure is about eight years.

Diana Lopez-Vega, a 24-year-old quality-assurance technician who has worked at Lundberg for six years, says she's saving her annual bonuses -- $2,500 last year -- as a down payment on a home for her and her husband. She held three positions at the company before her current one and likes that Lundberg is amenable to employees moving into different roles and pursuing jobs they're interested in. "They aren't just employees -- they're actually very important parts of the operation," Ms. Lopez-Vega says.

New Belgium Brewing Co.

BUSINESS: Craft beer
BASED: Fort Collins, Colo.
FOUNDED: 1991
EMPLOYEES: 320
2007 REVENUE: $96 million

Kim Jordan and Jeff Lebesch, the husband-and-wife founders of New Belgium Brewing Co., envisioned building a world-class beer brand while minimizing the company's footprint on the planet. Nearly two decades and 320 employees later, they have built a workplace where employees are engaged and enthusiastic about supporting the company's environmental cause.

Their secret: finding fun and communal ways for employees to be involved -- not preaching from the top. "I think it's very important not to be heavy-handed" and instead set an example that employees can follow if they want to, says Ms. Jordan, chief executive.

The company gives employees ample ways to be environmentally conscious at work and in their free time. And it ties those efforts into its signature beer -- Fat Tire -- by encouraging bicycling. Each New Belgium employee is given a cruiser bike after one year of employment, and roughly half of the Fort Collins-based employees commute by bike in the summer months.

What's more, every summer the company hosts an 11-city event called Tour de Fat, where New Belgium employees dress in costumes and lead local residents on a bike tour. (Still, not all of the company's travel initiatives are centered on bikes. New Belgium leases Toyota Prius hybrids for the sales force to drive to meetings.)

The company also tries to make environmental sustainability a big force at the workplace. An on-site recycling center allows employees to recycle goods such as old car batteries and motor oil. The company also donates 1% of its profits to 1% for the Planet, a global philanthropic network.

One challenge has been keeping the feel of a close-knit community, even as the company grows quickly and adds employees in cities outside the Fort Collins "mother ship." Each month, New Belgium holds a videoconference meeting for all employees to discuss new developments, and every employee gets invited to an annual retreat. After five years of employment, each worker gets a one-week complimentary trip to Belgium to learn about Belgian beer culture.

Ms. Jordan says employee ownership has also helped boost engagement. Employees own about 32% of New Belgium through a stock-ownership plan, and the company practices open-book management, hosting monthly meetings where it walks employees through the company's financial statements.

Chris Winn, 33, the self-titled "event evangelist" for New Belgium who has worked there about six years, says the company has made the work environment fun and collaborative by letting employees be themselves and by not setting strict rules for employees to follow. "There's a lot of very different, dynamic people here," Mr. Winn says. "There's no element of them trying to beat that out of you."

Paducah Bank & Trust Co.

BUSINESS: Community bank
BASED: Paducah, Ky.
FOUNDED: 1948
EMPLOYEES: 140
2007 REVENUE: $22 million

Kerri Brotherson came to Paducah Bank & Trust Co. as a teller in 2000, considering it a temporary job until she figured out exactly what she wanted to do. But three promotions later, Ms. Brotherson -- now a commercial loan officer -- expects to spend the rest of her career at Paducah. And she wants to continue advancing in management at the bank.

Workers sampling beer at New Belgium

"They've always listened to me and helped me move into areas I wanted to move into," says the 35-year-old Ms. Brotherson.

Long careers are commonplace at Paducah, which spends considerable time and money on training and developing its employees into leaders. Average employee tenure is about nine years.

Senior management at the five-branch bank considers internal development a way to keep the best and the brightest around so they don't migrate to other banks or careers. It's also a good way to instill an ownership mentality among employees -- who own 23% of Paducah through a stock-ownership plan -- and teach them how a bank functions.

Overall, about 80% of Paducah's management jobs are filled from within. Employees hoping to advance their careers at Paducah or stay long term can apply for a leadership-development program; about six to eight people are selected for each class. About 24 employees have completed the program, which meets monthly for about 18 months, for four or five hours at a time.

The course not only teaches the fundamentals of banking, such as liability management, but also sends participants to outside conferences to learn more about leadership skills and complete a project. Ms. Brotherson's class, for instance, came up with a plan to better market the bank to women. The company also foots the bill to send some employees to school; Ms. Brotherson took courses at the Kentucky Banking School.

Along with imparting skills, the bank's numerous training opportunities are intended to make employees feel valuable to the company and feel like owners, rather than just employees, says Chief Executive Joe Framptom.

"I think the most significant thing that we've accomplished is not just the development of that knowledge, but just the intrinsic value of, 'Oh, I'm important,' " Mr. Framptom says.

Paducah also tries to maintain a familylike ownership culture by holding a short "Owners' Meeting" every morning in each department at each location. At the meetings, they discuss bank events and how to improve customer service, and celebrate employee birthdays and other milestones.

The Top Small Workplaces judges were also impressed with the role Paducah played in revitalizing its local community. Starting in 2000, the bank provided low-cost financing to attract artists to a dilapidated historic neighborhood in the city. The neighborhood is now a thriving artists' district, with galleries, restaurants and shopping.

Phenomenex Inc.

BUSINESS: Chromatography
BASED: Torrance, Calif.
FOUNDED: 1982
EMPLOYEES: 477
2007 REVENUE: $107.2 million

Fasha Mahjoor, founder and chief executive of Phenomenex Inc., wanted to build a workplace that was more than just a place to clock in every morning and clock out every evening. He wanted to create an environment where employees could have lots of fun together and feel appreciated.

"Our company is not one where you just come to work," says Mr. Mahjoor. "It's one where [employees] love coming to work."

Team sports are a central part of the culture. The company hosts an annual soccer game and the PhenOlympics, where employees compete in 10 athletic contests. The company also organizes recreational trips, such as an annual skiing and whitewater-rafting trip, for employees and their families. The trips are often free or highly subsidized by Phenomenex.

Mr. Mahjoor says he likes to keep things "spontaneous," and so he encourages employees to organize their own events at work, if they wish.

The company also provides a host of "soft" benefits, such as a $15,000 stipend for employees who adopt a child, $2,000 for first-time home buyers and an on-site concierge service that's available to employees. (Employees still have to pay for the services offered by the concierge.)

Another perk: Phenomenex maintains apartments and homes around the world -- from Bologna, Italy, to Paris to Mammoth, Calif. -- for business purposes. Employees can stay at those company homes, free of charge, for vacations.

While some of these benefits are expensive, many cost the company hardly anything and are just a way to make the employee experience better, Mr. Mahjoor says.

As for financial compensation, the company shares a portion of its profits with employees, basing the amount that employees get on their tenure with the company. Last year, for instance, the company distributed about $475,000 to its U.S.-based employees, Mr. Mahjoor says. A 10-year employee would have received about $10,000, a five-year employee about $3,000 and a two-year employee, $600.

As the company grows internationally, it tries to keep the fun-loving culture going by recruiting current employees to open new offices and encouraging them to host events for their colleagues.

"About every six weeks we have a little event," says Donna Valenzuela, a 32-year-old customer-service representative who has worked at Phenomenex's Torrance, Calif., offices since 2005.

Ms. Valenzuela sits on an employee committee that helps come up with trips and company events. That might be a family picnic in the summer, for instance, or a trip to a Los Angeles Dodgers game.

She says all the activity helps break the monotony: "Here, it's not just work, work, work, work."

Rainforest Alliance

BUSINESS: International nonprofit
BASED: New York
FOUNDED: 1987
EMPLOYEES: 265
2007 REVENUE: $21.5 million

Nonprofits are known for focusing much more on their philanthropic missions than on career development and employee satisfaction. But Rainforest Alliance has managed to create a workplace where even the most junior administrative staffers are able to take on challenging projects and can forge a fulfilling career path in the organization.

"We encourage them to come up with good ideas and implement them," says Tensie Whelan, Rainforest Alliance's executive director. "Then [others] see that success and they want to do it, too."

One of the biggest challenges for Rainforest Alliance, which helps product makers employ sustainable land practices, is quick growth. The organization has roughly doubled in size to more than 250 employees over the past five years. That has forced the organization to think strategically about how to formalize its practices and grow smartly. The organization recently devised a formal managerial staff and salary structure.

A Rainforest Alliance employee at work teaching in Guatemala

For many employees, the growth spurt has led to promotion opportunities. Rainforest Alliance gives many junior employees the chance to spearhead research and other initiatives for the organization, later promoting them to oversee those initiatives. Of the nonprofit's U.S. staff, roughly half have received promotions or new positions within Rainforest Alliance at least once during their tenure, and many of them have received multiple promotions.

Julie Baroody, the 27-year-old coordinator of Rainforest Alliance's new climate initiative, started as Ms. Whelan's executive assistant in 2005. In that role, she was asked increasingly to take on more responsibilities, including doing more research on climate change -- a topic that fascinated her.

Ms. Baroody then was promoted twice before her recent promotion to her current job, which includes traveling at least once a month to represent senior staff at conferences. This month, for instance, she's attending conferences in Barcelona and Uganda.

Top Small Workplaces judge Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania's Wharton School, was impressed with how Rainforest Alliance allows employees to be entrepreneurial in their jobs and take ownership of projects in topic areas they are passionate about, such as Ms. Baroody's oversight of the climate initiative.

Junior employees are also given exposure to many aspects of the organization, as well as to new experiences. With about 56% of its staff outside the U.S., Rainforest Alliance offers an internship program in which U.S.-based employees can do stints in foreign offices to learn more about the organization and work on the front lines. Many junior employees also are charged with attending meetings of senior-level staff and conferences.

"There aren't any jobs that are strictly administrative," Ms. Baroody says.

Rainforest Alliance also encourages employees to take initiative in making the workplace more fun and enriching. Staffers in New York, for instance, have taken it upon themselves to start a book club, join a softball team and host regular salad lunches, where employees each bring a different ingredient for a salad.

Redwoods Group Inc.

BUSINESS: Specialty insurer
BASED: Morrisville, N.C.
FOUNDED: 1997
EMPLOYEES: 100
2007 REVENUE: $16.4 million

For many people, work and community service are two completely separate endeavors. Redwoods Group Inc. tries to attract people who want to bring the two together -- by giving volunteering and social awareness a starring role in the workplace.

Each full-time Redwoods employee is required to do at least 40 hours of volunteer work annually for nonprofits of their choosing -- on company time. (Part-time employees are required to do 20 hours.) The company, which sells insurance to and consults with YMCAs and Jewish Community Centers, also involves employees in many volunteer projects over the course of the year, whether it's river cleanups, collecting food for local food banks or rebuilding houses in impoverished areas.

What's more, the group's "Dollars for Doers" program donates up to $300 annually per employee to charities where employees volunteer on their own time. It also matches up to $1,000 per year of employee contributions to charities, with an unlimited match on United Way contributions.

Founder and President Kevin Trapani says he built Redwoods' workplace culture from the beginning to be socially responsible. He felt he was performing an important function in employees' lives that so many other workplaces actively avoid: engaging employees in their community and encouraging discourse about current issues like politics, the environment and race relations.

"I feel like if we're taking these people away from their spouses and children, we need to give them something to feel really good about when they come to work and really help them grow as people," Mr. Trapani says.

Julia Alston, 53, a lead underwriting-services specialist, says she never actively volunteered until starting at Redwoods seven years ago. Last year, she did 30 hours of volunteer service outside of work and helped lead an employee initiative to write letters and send bracelets to U.S. troops who are serving in Iraq.

"It has taught me that I do have something to give and not all the time is it money," Ms. Alston says.

Beyond its volunteering efforts, the company hosts employee meetings on various timely issues, including discussions about the current political races, and tries to tie the events to the company's social-outreach work. In celebration of this year's Martin Luther King Day, for instance, one Redwoods employee with an interest in U.S. race relations led an employee discussion on the topic.

Redwoods also sent four employees to the National Civil Rights Museum in Memphis, Tenn. They gave a presentation when they returned, and since then some employees have organized a discussion group about race relations that meets regularly.

Redwoods also tries to make sure its employees feel taken care of, like the community they're serving. The company matches 50 cents on the dollar, up to 6% of an employee's pay, for every contribution he or she makes to their child's college-savings plan. And Mr. Trapani caps his own salary at 10 times that of the lowest-paid employee. He currently earns $250,000 annually.

Resource Interactive

BUSINESS: Digital marketing
BASED: Columbus, Ohio
FOUNDED: 1981
EMPLOYEES: 232
2007 REVENUE: $38.5 million

This marketing firm got its start working with high-tech companies like Apple. So, when building Resource Interactive's workplace culture, founder and Chief Executive Nancy Kramer modeled many of her own practices after the spontaneous, energetic and creative environments she saw at so many Silicon Valley firms.

"I loved the whole vibe that a more open environment allowed," says Ms. Kramer. "It's our own little version of the Googleplex," she adds, referring to Google Inc.'s storied headquarters.

A big part of Resource's culture is hosting varied -- and frequent -- employee celebrations. Every so often, the company throws a "jungle breakfast" where bags containing small boxes of breakfast cereal and mini-doughnuts are hidden around the office for employees to find. Recently, in honor of the company's 27th anniversary, Ms. Kramer had the offices toilet-papered before the jungle breakfast and stashed tickets to a Columbus Crew soccer game against the Los Angeles Galaxy in 25 bags.

What's more, each year the "Orbie Awards" give workers a chance to nominate employees they think most embodied each of the company's seven core values in the previous year. The winners get recognized at the annual meeting in January and are awarded a custom-designed trophy and prizes, such as iPods and Wii game systems.

While all the events allow employees to bond, they also encourage a youthful spirit and demonstrate that the company embraces a culture where new ideas, initiative and differences are embraced -- not punished.

"I think that people are really willing to go the extra mile because of a lot of the celebrations that we have at Resource," says Jamie Barcelona, the 32-year-old account-strategy director, adding that she likes the "work hard, play hard" atmosphere.

Resource also offers many work-life benefits. Employees are allowed to bring children and dogs to work. The company also offers other occasional perks, such as bringing in a massage therapist or providing healthy lunches.

Ms. Kramer also wants to ensure employees are invested in the company's success -- which ultimately means having a stake in clients' success. In 2006, she launched the Resource Employee Equity Fund, or Reef. Here's how it works: The company buys stock in each of its 20 or so publicly held company clients. On employees' first anniversary, they each get one share of the Reef, which includes one share of each client's stock and 1/100th of a share of Warren Buffett's Berkshire Hathaway Inc. Class A shares. Each Reef share is worth about $1,900 right now, she says.

Ms. Kramer adds: "It is pretty powerful to say to a client that every one of our associates is a shareholder in your business."

—Ms. Spors is a staff reporter of The Wall Street Journal in South Brunswick, N.J. She can be reached at kelly.spors@wsj.com.