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).

Hiring Great People - Do Your Homework

I'm often surprised to see how little time some people and some companies spend on actually preparing for their interviews and hiring decisions. A lot of time there seems to be a gap between the rhetoric of "hire the best" and the actual willingness to invest in some structure and thought in the hiring process. The one place where I saw hiring done really well was at Epinions. At Epinions, each interviewer was designated with a specific area of focus (generally either intelligence, background, or culture fit) and would spend the entire interview process honing down on that one aspect of the interviewee's background. The result was that each interview was very targeted and efficient, the interview process was challenging but fair, and the people we hired were motivated, smart, and great at execution. (having a tough interview process can predispose new hires to think more positively about your company - topic for a different post - but read Influence for the case study)

My version of what I saw work at Epinions involves a little more alliteration, but in general falls into a similar vein. Its all about making the interview process as efficient and streamlined as possible while identifying and bringing in high quality talent. The trick, however, is adapting your filters to fit the roles. It is simply not possible to fill your company with Rock Stars that score 10 every single time across Aptitude, Attitude, and Ability and for many roles its usually overkill. Spend some time thinking about what your real requirements are and what aspects of the candidates you are not willing to compromise on (for example, you are not going to compromise on attitude for a customer-facing role).

Here's how it works for me:

Everyone has a mix of Aptitude, Attitude, and Ability and every position has a different mix of requirements around Aptitude, Attitude, and Ability. A greeter at a restaurant needs to have great Attitude, and a natural Aptitude for being a “people-person”, with limited technical Ability requirements.

Definition:

Aptitude: Aptitude is natural ability - back in the Epinions days it was just "Intelligence", in practice it should depend on the job. In sports it’s the natural ability to run faster, jump higher, or be taller. In modeling it is your natural looks. In the workforce, its your ability to process information. Aptitude cannot be taught – you either have it or you don’t.

Attitude: This could also be called "Culture Fit". In a nutshell, is the individual pleasant to work with? A person doesn’t have to be agreeable all the time, but they do need to approach work with some drive and eagerness. Not everyone has this, but folks that maintain a positive attitude attract a lot of goodwill and are often able to get difficult tasks done more quickly simply based on strength of personality.

Ability: Skills and Experience. Ability is learned skills and the application of those skills. In sports it might be the follow-through of your jumpshot or your footwork in tennis. These are the skills a person has acquired over time either through experience or education. In the workplace, these might manifest themselves in the ability to apply different strategic models to a problem, or produce an Excel worksheet that is functional and easy to modify.

For each position that I am looking to hire I'll jot down my thoughts on what I need from each of these areas. Different roles will need these qualities to varying degrees.

Say I’m trying to hire an analyst, I’ll think about what my ideal candidate might look like:

Aptitude: High-curiousity quotient. Has a natural desire to dig into things and figure things out. This is the no compromise area for me and where I would focus the majority of my time. An Analyst will usually be younger and I need to be certain that they can learn quickly.

Attitude: Positive, can-do attitude. I don't need someone perky for this role, just someone who has that competitive streak where I know they won't settle for being second-best.

Ability: Needs basic excel skills and good problem solving skills. Math and/or statistical training. This would be least important in my mind. Smart folks can be trained to learn how to use analytical tools, folks that know how to use tools can't be trained to be smart.

This is all just common sense but in a number of cases I've been surprised to find that I am the only person that breaks down hiring in this manner. Spending the time in advance to think through the position lets me be that much more prepared to look for the right qualities in candidates. I can apply some structure around the interview process as well as what to look for in resumes.

On the Aptitude side, I’ll be looking for prior historic examples of deep curiousity – books read, discovery channel shows watched, experiments conducted, patents filed, etc… Similarly, on the Ability side I can focus on typical resume items around the skills the candidates have learned over the years. Having invested the time to think about specific proof points gives me a more efficient filter for resumes and interviews. With these notes and my "Gut", I have gotten much better at identifying good people.

One last thing is as a hiring manager I think its important to spend some time to think about a potential career path for people as well. The one thing about hiring great people, is that great people expect to be rewarded for their work, so making sure that a sensible career path exist for people is key. This means that when you create the initial Aptitude, Attitude, and Ability list for a position, you may want to do the same thing for the position’s next logical step up. This is because as subordinates move higher and higher in the food chain sometimes the mix of skills they need to succeed can change radically (sometimes referred to as the “Peter Principle”). Essentially, the combination of Aptitude, Attitude, and Ability that might make someone a good analyst, might also make them a terrible Managing Director. It makes sense to spend the time to make sure your filters are tuned for both the current position and the near-term career path so that when you hire your good person they remain for some time.

Calibrate Your Interview "Gut"

One of the reasons I went to business school is that after working at a few startups I realized that those so-called "soft skills" around choosing people, managing people, and building a positive culture were really as important as people said. (You'll find this a common theme in that generally I don't believe much of what people tell me unless I can prove it for myself - not a particularly scaleable way of learning but it has proven to me over the years that a lot of the people who consider themselves experts know less than you think) At business school I tried to focus a bit more on learning some framework or ways to think about organizational behavior. What I learned, unfortunately, is that it is very, very hard to put a formula around cultural success. Not surprisingly, I also saw clear evidence that those companies that successfully figured out how to build a culture unlocked tremendous positive energy and created that virtuous loop of "good people bringing in better people". Building a positive culture is hard because so many unmeasurable factor contribute to the culture including the way the company messages internally, externally, how the CEO and leadership team conducts day-to-day business, etc... One key component though is always around hiring good people.

One thing each of us can do in terms of hiring good people is to spend the time to take in depth notes on your interviews and calibrate your interview "Gut". Now, I'm not talking about the specifics of how to conduct an interview, there are plenty of books around that talk about how to do interviews in a way that gets you what you want. I'm talking about that sixth sense that folks get when they conduct an interview that tells them "Yea" or "Nay" on the candidate. By all accounts, the interview process is one of the most imperfect hiring tools but its one that we all need to learn how to leverage. Here's the short take on how to calibrate your "Gut".

1. Take detailed notes on the interview
These notes should not only involve the standard notes around what the candidate is saying, but should also contain notes on your own impressions. Don't expect to remember how you felt about a candidate two months down the road after you have worked with them for two months.

2. Track and review notes on those individuals that are hired
After someone has joined the company for some time and you have formed an opinion as to whether or not they are good or bad, go back and check your notes.

3. Keep score
Keep an aggregate account of how many folks you have interviewed and where they ended up relative to your initial impressions.

4. Adapt
After doing this for three or four times (depending on your hiring you may only get three or four chances) you will have an anecdotal feel for how good you are doing as a interviewer and what type of person/personality/background you seem to have a natural affinity towards. Sometimes those natural affinities are useful, but sometimes they are not. Get self-aware about your interview tendencies and adapt

All of this stuff is, of course, common sense. But, that's not an excuse not to do it :)