Saturday, June 28, 2008

The Social Contract Between Employers and Employees

Having the right culture is one of those funny things where "you know it when you see it" but its very hard to define its exact components and characteristics. When the right culture is there folks are more trusting, more open to failure, and more open to admitting their mistakes. Everyone aspires to this and I don't think I've ever been at any startup where the management team didn't say "Our employees are our biggest asset." Unfortunately, I think the fact that this sort of rhetoric is so common is the reason why so many more experienced employees are often so jaded or so cynical about "culture". I'm sure we have all seen or heard of instances where folks put their hearts and souls into a project or company only to be "let go" years later for reasons outside of their own control.

What is the company's obligation in these scenarios? We all recognize that the days of "lifetime employment" at an AT&T or IBM are long gone, but yet we still insist on our employees being as passionate and loyal to our companies as they were before. It doesn't seem unreasonable that if an employee is expected to be passionate about the business and a true "missionary" rather than "mercenary" for the business (see John Doerr's description), that the business shows the same loyalty and passion for the employee. Unfortunately, the reality of business is that risks are taken and sometime those risks don't pay off. In those situations, it is the company's right (and frankly its duty to shareholders) to cut costs, reorganize, and remove parts of the company that no longer make business sense to maintain. However, even those these actions may be correct from a business perspective they are sometimes viewed as being a violation of the "implicit contract" that employees agreed to when they joined. Although, employees all verbally acknowledge the fact that joining a company has its risks, no one ever really thinks that the risk will affect them.

The net result is that remaining employees might be reluctant to invest as much emotional capital into the company and the company loses some of the "passion" of its employees.

I wonder if a way to avoid such a situation is to make that "implicit" agreement of loyalty more explicit early on in a company's development. Instead of asking for employees trust and passion early on in exchange for employment, my hypothetical best case wish would be for companies to make the following commitment to employees:

"We expect every person that comes to work for our company to give 100% of their effort, energy, and passion into their job. While we cannot guarantee employment, we can commit to spending the time and resources necessary to help every individual to improve and better themselves in their jobs and their daily lives. While we cannot promise a growth path for every employee we commit to providing the time and resources to help every individual prepare themselves for the next role in their careers through education, skill development, and experience - whether that job be with us or with someone else."

Along with this commitment every employee would have the following perks:

1. An annual education budget of $5,000(?) to spend where they wish
2. An internal job sourcing / career planning office to assist folks in finding career paths either inside the company or out (embrace employment choice not turn away from it)
3. An official mentor program for providing job/performance advice that is not tied to salary
4. A quarterly 360 degree review for every employee - conducted anonymously and quickly through an online polling mechanism so that every employee gets constant feedback as to how they are perceived at work.

I have no idea if this is realistic (or if its only applicable to the incredibly rich companies out there like Google) but my sense is that if there was something like this in place there would be a lot of potential benefit for both companies and employees. Some things that I think would happen:

1. Employees would be encouraged to use their education budget (sometimes this is offered but privately discouraged) which would provide a constant flow of new ideas and new learnings into the company,
2. Issues within the company would become more transparent to the career sourcing group (folks don't have to be sneaky about interviewing with other companies and would be more open about knowledge and skill transfer in the interim)
3. Employees that leave through the company's job sourcing program would become motivated "alumni" with a strong positive emotional attachment to the company,
4. Poor performers are mixed in with others in the job sourcing program and managed out with relatively little drama
5. Employees that stay are more committed because they are constantly making the conscious choice to stay at the company - reinforcing their commitment and passion
6. The mentorship program would reinforce the idea that mistakes are okay (as long as you learn from it)
7. Quarterly anonymous review would provide peer feedback to employees (which is often more valued than manager feedback - playing more into the "do folks respect / like me?" rather than the "my boss thinks...")

Didn't spend a whole lot of time on this one :) but thought I'd write it down if only for my own benefit so that I can choose to implement it one day (or not).