The Weird CEO
Page 17
Luck can even improve your health. Robert Emmons of the University of California and Michael McCullough of the University of Miami undertook an experiment in which three groups were asked to keep diaries.[cviii] The first group recorded events that made them feel grateful; the second group things that irritated them and the third included both. After 10 weeks, the second two groups noted no change in their well-being. However, the first group had less frequent and less severe aches and pains, and improved sleep quality. They also felt more outgoing and compassionate, less lonely and isolated, and were happier and more alert.
So, where does luck fit into implementing WEIRD? It is necessary to provide an environment within which we are able to take advantage of opportunities when they arise.
At times, this can accelerate change. Recently, as a result of our growth, a number of communication issues have arisen within the company. This allowed me to argue that a move away from departments to units (as described earlier) would improve communication. Because people were in the right frame of mind, the next stage of our change process came about sooner than I had originally envisaged.
The hardest part about any change process is getting other people to catch up with your thought process as to why change is required. Those who understand and agree can act as advocates (or at least positive sounding boards). Finding these colleagues, and taking time to explain to them what you are trying to achieve, is vital. They don’t have to be senior, but their opinions do need to be respected by others.
Business is uncertain. Positive or negative factors can arise at any time during the process of change. So, although we must always be prepared to take advantage of opportunities, we must also be willing to put things on hold if the timing is wrong.
A company culture is like an organism – it is continuously evolving and requires constant nurturing by taking advantage of the opportunities that arise while being careful not to undo the company’s culture and values if bad luck hits and the company is struggling.
D)
CULTURE AND VALUES
“Why is culture so important to a business? Here is a simple way to frame it. The stronger the culture, the less corporate process a company needs. When the culture is strong, you can trust everyone to do the right thing.”
Brian Chesky – Airbnb CEO
This quote is particularly relevant for a company pushing a self-management culture, which depends upon the CEO’s actions, rather than words.
A company’s values form the basis for its culture, and each employee needs to understand what these are before any mission or vision statement can be formulated. The surest way of understanding the values of a company is to ask employees. We did this recently by asking our employees to submit their top three perceived values. These were: 1) Trust, responsibility and openness 2) Freedom and flexibility with respect to work times, location and dress code; and 3) Team.
These happen to be our values. Each company will have different values, but there are a number of steps that can be taken to guarantee an authentic culture.
The recruitment process is a vital step – employing people who fit the culture is essential. This doesn’t mean that all employees should have similar characters and personalities, but rather individuals who share the same core values as that of the company, and therefore by extension other colleagues. There should be a number of interview questions aimed at assessing whether potential employees fit the company culture – these can be more important than the skills that any individual brings to the company. Our HR Director places a quote from Peter Schultz at the bottom of his email signature: “Hire character. Train skill”.
However, regardless of each individual’s character or the unique culture of each organisation, a few key factors are always pertinent. The first is that everybody joining Pod Group must understand the need for respecting others (a certain degree of humility is helpful here). A simple guide is that each person should treat others as they would wish to be treated. Similarly, caring about others is required to build trust and engender teamwork. After all why would you trust somebody if you know they don’t care about you?
A third requirement is honesty. A lie (or even an exaggerated truth) can undo a company culture faster than anything else. Culture is rather like a reputation – it can take years to build but only a few minutes to destroy. A transparent culture facilitates honesty – as nothing needs to be hidden. This in turn improves communication.
Building a culture is, of course, about much more than just values – but without each person living the values of the organisation each day, the organisation will be built on a foundation of sand.
Having established those values, the CEO then needs to trust others to carry the organisation forward.
E)
LEARNING TO TRUST
“The best way to find out if you can trust somebody is to trust them.”
Ernest Hemingway – writer
Trust is two sides of the same coin.
Within a company, trust must come from the CEO and management to the employees. Specifically, they should allow employees to make the decisions they see fit without contradiction or control.
The other side of the trust coin is harder to obtain – as it is in the gift of the employees; namely that the employees trust the CEO and the management.
Ricardo Semler in conversation with Tim Ferriss talks about the creation of trust in the early days in his change to a self-management company.
His company used circuit boards that included silver on the boards. The problem was that, despite limited access and a sign in/sign out process, theft of these boards was high. Semler removed the need for signing in and singing out and thefts went up. So, he removed the lock on the door and thefts increased still further.
However, after a couple of weeks the level of thefts dropped.
Two different aspects of human psyche can be learnt from this example. Firstly, if you show people trust, generally they will repay that trust. Secondly, most people want to do the best they can at work.
By removing security on the stockroom, Semler said “I trust you”. In return, most employees returned that trust. Those that carried on stealing were pushed out by colleagues who wanted to do a good job but were prevented from doing so because the materials they needed were being stolen.
The political and security climate around the world at the moment is creating an environment where the assumption of innocent until proven guilty is being reversed. I have no idea how to resolve this at a societal level beyond trying to set an example, but at a company level, CEOs and managers should actively resist punishing 98% of employees due to the actions of 2%. Punishing in this case means enacting rules, processes and procedures, pushing decision-making up the hierarchy and removing the ability for employees to take initiative and ownership of their work.
The assumption of trust on the part of CEOs can be summarised easily. They should assume that people are inherently good, can be trusted and will do their best to do the right thing. As long as a CEO believes this, then trust can be given. If at any point the CEO does not believe this – there is no point starting or continuing with a WEIRD process.
But trust needs to flow the other way as well. So how does a manager or CEO earn the trust of the employees? Part of the answer lies in showing trust first, and another part relies in showing that there is no hidden (selfish) agenda by the CEO. However, there is more.
When implementing change, the temptation is to set out a schedule for the process. However this would be a mistake because the timings will depend upon how the process evolves. Several times I have had to explain to frustrated employees that, although they think we should move forward faster, not everybody agrees and other people need more time for their thoughts to mature. It is important therefore not to make deadlines which may be missed – this will erode trust.
The timing of any change process will always be difficult when there is a business to maintain. However, undertaking the process when good news (
and profits) are high makes it easier as people are confident, not worried about their jobs and less likely to resort to old practices (the true test comes when things are not so good).
It is necessary to build up a bank of trust for when things are not going so well. At this point, the CEO may need (ironically) to be more authoritarian to stop people resorting to command and control. An example of this would be to stop a manager creating a need for decisions to be passed by him or her. Keeping faith in what has been started can be testing – many will want to persuade others to transform away from the self-management practices that have been built. With a bank of trust, a CEO can keep employees on track during bad times.
Unfortunately, there will always be a minority of people who will not return trust regardless of how you treat them. Likewise, there are other people who will always assume that all business is bad, or that entrepreneurs will always maximise their personal profit at the cost of employees. So how do you treat these people?
The answer to this is easy – the same way as you treat everybody else. If they don’t want to trust, that is up to them – but if they are suspicious, that won’t change until you have proven your trust in them. If, however, it becomes clear that these 2% are damaging the potential of the 98% and they refuse to change, then you need to consider dismissing 2% of employees. The other 98% will thank you and feel a greater sense of ownership towards the company.
F)
TREAT EVERYONE AS AN OWNER AND CEO
“A leadership culture is one where everyone thinks like an owner, a CEO or a managing director. It’s one where everyone is entrepreneurial and proactive.”
Robin S. Sharma – writer
I am not a fan of communism (I saw first-hand the effects of it when I lived in Russia soon after Perestroika). Forcing common ownership encourages a sense of unhealthy entitlement and ultimately demotivates those you want to motivate.
However, employee ownership promotes the type of motivation that allows employees to take control of their destinies. Telling a colleague when asked for advice, “you own part of the company, take this into account when you make your decision” has a great deal more impact on their decision-making process than “make a good decision, even though you will not gain from the additional value that you create as a result of that decision”.
The amount of ownership given to employees is less important – after a certain point, giving more has no effect on motivation anyway. What is more important is how equity is split between the employees. As with salaries, the amount of equity is not necessarily the important aspect – what is key is how much each person gets compared to their peers. I found that the easiest way to facilitate the division of shares was to provide a pool of shares for employees and allow them to choose how that pool should be divided.
The other benefit of providing equity to employees is that the grass needs to be a lot greener on the other side for somebody to leave the company. Our lives have become a great deal more transient than even ten years ago. As a result, the building of a really effective team based on trust has become harder. However, providing ownership (alongside great working conditions) encourages people to stay.
Finally, ask yourself what you are really losing by giving away equity (the same question needs to be asked for giving up control). Some years ago, I got into a conversation with a friend about what amount of money constitutes success (he was already a multi-millionaire). He genuinely couldn’t answer the question but instead was focused on making millions on his next venture. His boyfriend asked a more pertinent question – how much money do you need to be happy?
Not having enough money leads to stress and unhappiness. To quote Mr Micawber from Charles Dickens’ play David Copperfield:
“Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
But how much expenditure (when less than income) leads to happiness? My own rule of thumb is to be able to afford any reasonable purchase or activity without having to think whether it can be afforded. The word ‘reasonable’ is obviously open to interpretation – but choosing a standard of living – and being happy with it – is a good start.
The goal of most entrepreneurs today is to build a company that can be sold – preferably for a large sum. Which brings up the question: How much of that large sum is it necessary to keep? Ricardo Semler has a fairly easy formula which is that you need to have assets equal to twenty times your annual expenditure. Whether you take that formula or another, if you build your company successfully (which is more likely if you incentivise your employees), there is a very strong chance that you won’t have any need for the equity that you gave away to your employees.
In a conversation with the CEO of one of my competitors, who had recently been bought by a private equity group, he was genuinely surprised by the amount of satisfaction he gained by sharing some of the money from the buy out with his employees. I got the feeling that the day he gave out the bonus cheques to employees was probably one of the most satisfying of his business career.
This chapter has focused on some of the soft skills that help implement an environment of WEIRD. But as with other parts of the WEIRD methodology, nothing can be prescriptive about the soft skills required. There is much more that could be written on the subject of WEIRD but, at some point, every book must come to an end.
CONCLUSION
We are facing a very uncertain world over the next 15 years.
Automation will allow industries to scale which may create new jobs in disruptive technologies, however Artificial Intelligence will destroy millions of jobs. It is unlikely that the creation of new technologies will overcome the loss of jobs – especially in the short term. Unless we change, many people will be forced to take unwanted jobs or have no employment at all. There is already a major division between the very rich and those who are struggling to survive; and there is a strong chance that the effects of Artificial Intelligence will widen this gap. Therefore, we need to look seriously at whether the Universal Basic Income is not only practical but also necessary in order to avoid civil breakdown. Employment in the future will either be oriented towards tasks that require creativity, Emotional Intelligence and initiative or the opposite – of such low value that it is not worth investing in robots or computers to undertake the work.
Despite being able to foresee these changes, our education of children is still based on the principles (and sometimes materials) of thirty years ago. Finally, social media companies such as Facebook and Twitter use envy to persuade us that we should be better versions of ourselves, which leads to stress, mental illness and other societal issues that we should be avoiding.
On the positive side, despite what the media may lead us to believe, worldwide there is less poverty than at any point in the history of man. Globally, we are safer, richer and healthier than we have ever been. Millions of people are moving from merely surviving to having (albeit limited) choices about where and how they want to live. New generations have a greater sense of their rights, money is not the key motivator and they expect their employers to act honestly – otherwise they will move elsewhere.
It is this new generation that will create the change in how we work and live – most of all by continuing to create the companies that will challenge the old way of working. Man is an innovative being, and this innovation will help us survive and thrive.
I hope, by suggesting an alternative way to deal with the future of work, that I might touch the imagination of one or two people. Many will accuse me of being at best optimistic, at worst delusional.
Perhaps they are correct. It is the right of each of us to choose how we wish to live our lives, but what I hope I have set out is a vision of alternative future of work that I firmly believe could lead to happier lives and a better world.
Good luck on your WEIRD adventure. However it turns out – it will be your journey.
Dedication
Sandra, Ana & Sofia – This wouldn’t have happened without you.
Acknowledgements
Creating this book has ended up as a team effort, for which many thanks are due.
Amy Garcia is (I think) to be thanked for pushing me to write the book in the first place and has been a force in organising its promotion alongside David Clare and Connor Mitchell at Tyto PR. Jan Wade and Chris Cartwright have given invaluable editorial advice alongside my colleagues Sally Meadows and Ned Richards. Thank you also to Lara Marques for the cover design and graphics included within the book.
However, this book would not have come about without the willingness of my colleagues at Pod Group as we ventured into the unknown. An army officer’s evaluation comes to mind – ‘his men would follow him anywhere, but only out of morbid curiosity’.
Special thanks must go to Charidimos Spourdalakis who has been an inspiration and sounding board throughout the process of implementing our WEIRD methodology and has tempered some of my more insane ideas.