I recently interviewed at one of the many companies trying to improve the US healthcare. Their office was in a historic building overlooking the river with beautiful views, so I really didn’t want to leave… but I digress.
While I was there, interviewer after interviewer kept repeating their mantra of “treating their customers (that is, patients) as if they were their family”. What I think they meant by that was not to invite the customers for a Thanksgiving dinner, but rather to make treating them well and with dignity a guiding principle for all business and technical decisions the company makes—above, say, maximizing the profits and the market share.
What if we, running a company, apply a similar approach to our employees? What if (as a thought experiment) we would treat our employees as human beings first, the way we treat our friends—with respect, dignity, and concern about their well-being—rather than as resources a manager would deploy to achieve a specific business goal? My friend Carty wrote about something similar that he calls Loving Organizations, but I think he is mostly treating it as a moral imperative. I’d like to take a slightly different tack here and explore treating people well from a more pragmatic standpoint. Is it a viable approach to building a company? Does it make business sense?
It is true that many companies—many start-ups—start kind of, sort of like that. You come to an interview, and you hear how well people are treated here. Like a family! At some point, a foosball table makes an appearance, or maybe even free beer. Life is good in the ’hood.
But then at some later point in time the investors’ money starts running out, and “the management” comes under stronger and stronger pressure to do something. It’s at that point where even originally well-intentioned companies often start breaking down culturally. The employees see fewer hard numbers at the all-hands presentations, more closed-door meetings they are not invited to, and then some of them are shown to the door.
They are quite surprised. What happened to being treated as a family and all that free beer? Well, maybe down the road, when it happens to them again and again, they will stop being surprised and will start seeing the free beer for what it really is.
The layoffs themselves may have nothing to do with how people are treated: after all, if the company can’t afford to pay its employees, something has to give. It is how the people are treated during this stressful time, how they are held in the dark, how they are treated as mere pieces on the board: all of that really uncovers what the company is about.
The moral of this story, which many of us saw unfolding around us, is not that some particular companies are evil, or turn evil, but rather that treating people well is hard, and it is something that is easy to lose under pressure.
To me, it was a discovery of sorts. Many (all?) of us think about ourselves as decent people, but decency in a business setting somehow doesn’t just happen on its own. It takes constant, deliberate effort to maintain it, and a deliberate, conscious decision to always prioritize it higher than other business objectives.
And then, it is suddenly not hard anymore! In the software business, we know very well how to deal with prioritized lists of tasks and requirements. If treating our people well is on top of the list, then we will do that first. If my boss explicitly expects it from me, I internalize it as a part of my job, and will make sure to do it.
That was one of the lessons that the founder and CEO of my last company taught me. Don’t take treating people well and respectfully for granted. Make it an explicit goal. Tirelessly keep reminding ourselves that this is our highest priority.
And by ourselves I mean the management. As much as I would prefer the relationship between employees and their managers to be symmetrical, the reality tends to be different. Power, real or perceived, tends to flow one way; and regardless, it is the specific responsibility of managers and leaders to care about their people.
Now, as a cynical Russian émigré, I am always very suspicious of constantly telling the people themselves how well they are treated. Stop proclaiming that you are building—or that you have built—the best company in the world to work at. If this is somehow true, your employees will surely figure it out on their own, and will really appreciate that, and will tell their friends all about it; and if this is not true, constantly repeating hollow slogans will only make people to treat everything else you say as hollow. (They will certainly tell their friends about that, too.)
For the leadership themselves, though, it does make sense to constantly remind of their leading principles. And if it is treating people well above increasing the shareholders’ value, then there is a chance of building a different company.
What does it actually mean to treat people well? To me, it is thinking about your people they way you would think about your friends in a social setting. Always being open and honest; not having hidden agendas; caring about the other’s well-being, present and future; being ready to overlook their small drawbacks; tactfully helping them to improve.
Being open and honest is probably the simplest (but not necessarily easy!) thing to do, and the one that goes really long way. By not holding anything back, you treat people as adults who are capable of making their own conclusions based on the full information.
This is, by the way, where I would expect some reciprocity from my employees. As I, for example, commit to give them the earliest possible warning about coming layoffs, I would equally appreciate if they give me the earliest possible notice of them potentially leaving the company.
Even having such a conversation is only possible in the environment of mutual trust and respect. It is much more typical for an employee to keep mum about looking for a new job out of fear that if the boss finds out they would be fired right away. Likewise, the executive would keep upcoming layoffs under wraps not to effect employee morale.
We want to build something different: an environment where people are not afraid to share their problems and concerns. This is a concrete example when it is actually good for the business. I value my employees and don’t want to lose them. If they are not hesitant to communicate to me their discontent, it gives me a chance to make things right before it’s too late.
And if there is nothing I can do to stop them leaving, I will happily use my own network to help them find a new, better fitting job for themselves—the way my own bosses had done for me in the past. I want my employees to know that I will always help them to the extent possible, and will always prioritize their interests. Creating such a culture is exactly what allows them to initiate difficult conversations with me, expecting help rather than fearing retribution.
Being open and treating people well starts with the hiring process. Indeed, as we established in the previous posts, hiring done right is the chance for both parties to get to know each other and to evaluate the mutual fit. To that end, I would always do my best to be brutally honest with a candidate, and not to become carried away by the “hiring is selling” paradigm.
In fact, I came up with something I call a negativity session. When I am ready to make an offer, and I verbally established with the candidate that he or she is ready to accept, I would invite them for one last meeting, where I would spend an hour trying to convince them not to join my company. I would talk in depth of all problems, of all risks and uncertainties, of everything I personally don’t like about my company. If they are still excited to join us after being through that—well, first, my conscience is clear that I never misled them; and second, we have established the relationship of trust from the get-go.
Sometimes, treating people well comes with a price tag. If you have to lay off a loyal employee, she might deserve a generous severance package. You pay it because it is the right thing to do, even though it might affect your runway.
But more often than not, doing the right thing is delightfully free. Coming back to transparency: how many companies boast of being fully transparent with the employees, and show them some financial slides at the monthly all-hands meetings? And then somehow the slides fail to appear? We solved this problem in a different way: just shared the live copy of our financial model spreadsheet with the entire company. Anyone could open it at any time, and see for themselves when exactly we would run out of money. It cost us nothing to do, and from what I heard the employees really appreciated that. I know I did.
Transparency is a complex subject, and there are many ways to approach it, ours being one of them. In the context of my argument, transparency is not necessarily a goal in itself, but rather the means to achieve a more important goal: honesty.
What are the practical benefits of such people-oriented environment? For one, better employee satisfaction and better retention: the company wins.
I talked above about picking the right leadership principles for you organization, for example prioritizing treating people well above increasing the shareholders’ value. In fact, I believe that is a false dichotomy. We build successful organizations by attracting good people and creating the right environment for them to perform well. This is exactly what the shareholders will appreciate in the long run.
There are also benefits to you personally as a leader. I do fundamentally believe in karma; but if we want to stay more practical, let’s call it reputation. If you go out of your way to treat people with respect, they will notice. (If you don’t, rest assured they will notice it too!) As your reputation grows, people who care about being treating well will come to you, and happily work with you, and bring their friends.
It is obviously completely unrealistic to expect every single company to prioritize employees over revenue, or every single manager to care deeply about his or her karma. Some companies are just genuinely not interested in the human aspect of the business. Some lose their commitment somewhere along the way. In particular, as a company grows and has to scale hiring and make the org chart more complex, there is often pressure for more formal, more transactional processes, where employees deliver certain value for the company, get compensated for that value, and there is nothing else to the employee/employer interaction.
Imagine, then, a world where these two trends run long enough to reach a stable state. In this world, people who want to be treated with respect and compassion would go work for companies that prioritize treating employees well—based on the reputation of the companies and their leaders. And people who prefer a more transactional style would go work for more transactional companies. (Those companies would still have to compete for good employees, and might deploy foosball tables and free beer in order to attract them, but nobody will get confused about what it really means.)
Wouldn’t that be a great world for everyone?
And is that world really so different from ours?
Just keep working on your karma.