(FORTUNE Small Business) – At first glance, Graniterock's insistence on recognizing employee contributions may seem contrived. Of all the companies submitting applications for our Best Bosses issue, it was the only one that did not nominate a CEO or president. Instead it submitted "Graniterock Team Members"--all 700 employees. But talking to Bruce Woolpert, CEO and grandson of the company's co-founder, it quickly becomes clear that this supplier of construction materials such as rock, gravel, and sand really does let its employees call the shots. Anyone on the staff can suggest changes, fix problems, or talk to whomever they want--even Woolpert--about anything they feel can be improved.

As a result, the Watsonville, Calif., company has collected a slew of awards, including being named to Fortune's "Best Companies to Work For" list every year from 1998 to 2002. (It would probably still be on the list if Fortune hadn't changed one of its criteria to a 1,000-employee minimum.) In 1992, Graniterock won the prestigious Malcolm Baldrige award, an annual recognition of quality awarded by the U.S. President, with a roster of winners that includes Ritz-Carlton Corp. and Merrill Lynch.

Despite such accomplishments, Woolpert, 52, says Graniterock's people deserve all the credit, not himself. "This is not a public relations game I play," he says. "It's a misrepresentation to focus on me. If I got run over by a Greyhound bus, I think the company would continue to be very successful." We talked with Woolpert about his approach to leadership.

Management fads come and go. What is Graniterock's philosophy, and how is it different?

Some businesses have an approach that basically teaches dependency among employees. Our experience tells us that independent people are the only ones who can really make a profound, important difference. It's the idea that "my involvement mattered" that makes employees truly happy and fulfilled.

We have an open-door policy that's grown over the years to mean the absence of lines of authority. Graniterock people with ideas talk to whoever they feel can be helpful or may have an interest in that suggestion. There's no expectation that management either directs or authorizes such changes. Each person is responsible for whatever improvements he wants to make, without having to get approval.

Can you give us an example?

That's easy. We made more than 4,000 improvements to the company last year alone, but here's just one. We deliver ready-mix concrete to construction sites using our trucks. The backup lights on those trucks are no better than those on an ordinary car, which can be a big problem. When we get to a job site, we back into it. Our drivers couldn't see well enough, so they had to get out of the truck to see where they were, get back in the truck, and go another few feet. They had to go very slowly.

But one of the drivers came up with a solution. He and a mechanic reviewed various lights in parts catalogs, ordered sample sets, and put them on a truck, and the driver assessed their effectiveness for a couple of weeks. When they settled on lights that worked well, they were added to all our trucks. That's helped reduce delivery times.

But how much of an impact can something like that have? It's only a minute or so per stop.

In our business, delivery times are crucial. When we first started managing the company this way, back in the mid-1980s, we thought the quality of our concrete was most important. It's used in projects like San Francisco's Bay Area Rapid Transit system. But when we surveyed customers, they told us that being on time was just as important. They measure their productivity by yards of concrete placed per hour, so our delays cost them money.

After that survey in 1988, we started trying to get faster. We set what we thought was an easy target: 85% of all deliveries within a half-hour of the scheduled time. But when we measured, we found that only 68% were within that window. Since then we've taken steps to improve each year, mostly through a lot of little details. Whenever new houses go up in an area, for example, the local fire department always gets the new maps first, so we made sure we were second (an employee idea). Over the years our delivery times have gotten better and better, and this year our goal is 96% made within 15 minutes of the scheduled time. So far we're ahead of that.

Does an employee ever make an improvement that actually causes extra problems, rather than solving them?

Yes, that happens. For example, we're always looking for ways to protect the steel in our equipment. The rock material is so abrasive that it tears right through the steel. A few years ago two mechanics from one of our quarries suggested using a new plastic material to line a steel hopper used to hold rock and dirt. It worked very well--even after two years the liner showed few signs of wear. The mechanics knew that the material might be flammable, but it wasn't until later that we learned just how flammable. There had been some welding going on near the hopper, and some of the plastic shavings from the liner ignited and caused a fire. Ultimately, the two mechanics asked the manufacturer to reduce the material's flammability, which it did. And we still use that type of liner.

Given that the impetus is on employees to make improvements, how much training do you have to do? After all, quarry workers, drivers, and many of the folks in your industry might not have a lot of analytical skills.

At most companies you get recommended for training by your manager. That always seemed to me like being treated as a child. So when we made training available, we said, "You make your own plan about the training you want. You don't have to have any goal. But be aware that because of the rate of change in our industry, you'll eventually find your knowledge out of date." The program started slowly, but now team members elect to be trained in management, quitting smoking, and parenting. Some even earn university degrees. Last year Graniterock spent $1,122,595 on training, or $1,700 per person.

It took five years before the first person let us know that he wanted to learn how to read. I thought he meant read faster. But he had dyslexia and had just never learned how. I asked why he didn't say something sooner, and he said it took him that long to realize the company wouldn't make fun of him or penalize him. Many of the kids who overhaul their Mustangs and become mechanics or laborers never liked school because they couldn't read. So they gravitate to fields like ours. To date more than 20 Graniterock people have learned to read after having struggled with dyslexia for decades. Another 15 are learning English as a second language, and three others are learning basic mathematics.

Graniterock has been around for more than 100 years. What caused you to start making such radical changes?

Actually, it happened just after we had finished celebrating the company's 85th birthday. One of our managers said, "It's interesting. I wonder if we're doing the things necessary to take the company forward into the next 85 years." I thought about it, and the answer was no. We were a traditional business, very top-down, and we were insulated from our customers. So we set some goals. Our only goal in 1985 was to earn a profit. In 1986 we added 14 others. I remember thinking, "This is really hard." But this year we have 60.

The first lesson we learned was that if you put more on managers' plates than they can do themselves, they'll start to delegate just to survive. Once you get to delegation, trust goes up. It took us about six years before we had really strong self-leadership. Now I hardly get a call all day asking what to do about that customer or what to do about something else. I used to get calls on what kind of hubcaps to buy. Seriously. The second lesson is that 85% of all improvements cost less than $500.

When people share their ideas with one another, there's a unifying force. It's as intimate as you can get in a business setting. When that happens, blame and competitiveness go out the window. It's not how to beat Joe in the other department--it's how to improve the company.