If you own a business, check your business culture: How does your business feel about people who leave the team to take a different job? What about people who leave your business to start their own business? Are they your team alumni? Do you wish them well? Do you take pride in their new successes?
Of course ongoing businesses generate ex-employees for lots of different reasons. People move on, get better jobs, and change. Teams break up. People evolve and needs evolve.
Ask yourself this: Are ex-employees more likely to be enemies or friends of the business? Do you see a trend? What does this tell you about your management style?
Do you own a business? Do you run a business? Then I recommend you follow me through this simple math and some reasonable conclusions.
Assume you have a person making a $50,000 gross salary. Assume their true cost — including health insurance, overhead, work space, computers, Internet, electric power, payroll taxes, etc. — is $80,000. That person costs your company about $40 per hour.
For that calculation, I divide the $80,000 by 49 to calculate the weekly cost of $1,633 (I take off two of the 52 weeks in a year for vacation and another for national holidays). I divide that weekly cost by 40 to get $40.82 per hour. And then for convenience I round that to $40 per hour.
So, with that hourly cost in mind, I’d ask myself these questions:
Thinking about computers and Internet connections: Do I really cut costs by having employees working with old technology?
Books and magazines: I’m betting $15-20 per business book, or annual magazine subscription, on saving my people some time, generating good ideas, helping them work better. So the marketing books for the marketing team, programming magazines, business magazines, how expensive are they, really? How much do they have to help to pay for themselves?
Meeting expenses: how much does it cost me to start a meeting 10 or 15 minutes late? Is it worth it to bring lunch into a meeting to save my team members the time of going out to lunch?
My conclusion: spend the money. Keep your technology up to date, encourage employees to get whatever books and magazines or website subscriptions help them, and combine meetings with meals a lot.
I was lucky. As Palo Alto Software grew up it found some good people along the way. Some of them stuck with us, and some were related to me, a second generation. We had a sense of community that seems, now that it’s grown, vital to that growth.
But I’ve never really understood about managing employees. When I was in business school, oh, so many years ago, what they taught was organizational theory, which we called “touchy feely,” and it didn’t relate well to what happened to us as we built a company.
You work shoulder to shoulder with people and you care about them. It’s hard to give good feedback on both sides (negative as well as positive) of the performance. It’s hard to stay at arm’s length, even though that’s what all the texts and literature and common sense suggest.
So here is some of what I take out of 25 years of building a company, points related to being an employer and having employees:
Choosing people to fill jobs is really hard. People are unpredictable. Resumes don’t work very well, and job interviews don’t work very well either. And the legal advice all companies get from good attorneys, like all the questions you can’t or shouldn’t ask, make that even harder.
“Fit” as in employee fit, is vital but also overrated, and too often used as a rationalization. You want people unlike you, not people like you. But you like people like you.
People change. Long-term loyal and trusted employees grow in and out of the job, sometimes. Sometimes people find themselves and grow and get better and need more. Sometimes they get tired and stop caring as much.
Sometimes you hire the right person for the wrong job. If so, you’re lucky. You find the right job and that problem is solved. Sometimes you hire somebody just for who they are, not how they fill the job description.
When family business works, it’s great. When it doesn’t, I’m told, and we all know the stories, it’s hell. But it’s worked for me and Palo Alto Software. As the company grew up some family members grew up as well, finished college, worked in the industry, and came back to be a second generation of management. When that happens and you have a smart, loyal, trustworthy second generation, its great. How sad that some people assume there’s something wrong with that. Why?
English doesn’t have formal and informal like Spanish and German and French. One of my mentors would never use the informal you. “Because I might have to fire you tomorrow,” he would say. There’s wisdom in that, I think, but then one day he jumped out of a high hotel window to his death.
You can change the job, or move the person to a different job, but you can’t change the person. The people change on their own.
Suspicion, hearsay, jumping to conclusions is dangerous. You don’t get to act on the smoke. Wait for the fire.
Firing people is the hardest thing you do. And the hardest firing is the loyal and honest and hard-working employee who just doesn’t get the job done, or keeps making the wrong decision, and doesn’t fit another job. You were supposed to stay arms-length, remember? I still don’t know how people do that.
It’s easier to fire five people in a single day than just one person ever, except when that person’s had a bad attitude.
I’m troubled by the concept of “fit” and how it works with growing a company and hiring employees.
It’s not a new concept, and I should have figured it out, by now, since I’ve watched Palo Alto Software grow from nowhere to 45 employees.
But I haven’t. And I don’t think it’s just me. I think there are two very different sides to the same idea, one perfectly logical, the other sinister, and threatening.
The good side of fit is what you look for when you invite a new employee to join a small company. You want a good fit with team spirit, cooperation, and working together. Values are extremely important. One of the best ways to build a company is to build it around values — like a mantra, a meaning, how your company makes the world better — and to bring together people who share those values.
The dark side of fit is a rationalization, a code word for favoring one kind of person. It’s code for discrimination. It gets used as a catch-all phrase to exclude people who are different.
The answer to the puzzle of fit is that a good fit on a team is not sameness or similarity. A strong business grows through diversity, finding people who bring new skills, new ideas, and new points of view. As you move from a one-person company to finding that second person, you want somebody different, not somebody like you. That’s the foundation of the business value of diversity.
It’s scary to me how often diversity ends up as a political football, and “fit” as an excuse. Diversity is not just good policy, it’s also good business.
Just do the math. Think about how much more a single person affects company culture in a company of one, two, three, or four people, compared to a company of several hundred.
2. Building by shedding jobs
We’ve used the shedding jobs strategy as we built from a one-person-do-everything business to a software company with 45 employees. The first job I shed and our first hire was sales, because that’s not my favorite thing, but I was doing it. Next I shed the tech support job and hired someone to do that for us, for the same reason. Then bookkeeping. Followed by programming, and then marketing. What I was getting, most of the time, was my own time back.
3. Create your own workplace environment.
As the company grew, I wanted a workplace atmosphere that felt good to me when I would arrive in the office in the morning. Happy people, sharing the vision, working together.
4. Occasionally you fit the job to the person, instead of vice-versa.
Sometimes you run into somebody who you want involved in the company, and you adjust the job description. For example, one person was hired to do tech support, but ended up as documentation manager.
5. Projects make great introductions.
Sometimes jobs can begin with consulting contracts for specific projects that you need done. That makes a comfortable introduction. Like having a cup of coffee together before you decide to take a weekend trip.