“The difference between an employee who was having a great experience and an employee who wasn’t — was the leader. As a leader, you can create a great experience or you can destroy all motivation that a person can bring to work every day.” – Michael C. Bush
Scaling a business after funding is probably one of the hardest things, especially for first-time startups.
I like to compare startups with children — they may be struggling financially but they are enjoying the advantage of freedom and playfulness of a child. Founders can experiment and build close relationships with core teams while growing.
However, at one point on that road, our startup offspring needs to outgrow the warmth of parental home and accept the challenges of the fast-spinning world around it. This usually happens after the capital from outside flows in. This is when the real growth begins and, by this time, the child needs to be aware and ready for the greatest transformation of its life.
As we set out to explore the topic of scaling, we wanted to exude the most relevant insights and stories around it. One of them, and arguably the central one as we all agreed is — How to create a sustainable company culture that will endure the challenges of scaling and how to be the leader that everyone loves to work with.
Even though this may sound like two separate stories, it is actually just two sides of one and the same coin as we are about to find out in our conversation with one of the greatest global experts and influencers in the field of corporate culture — the CEO of Great Place to Work, Michael C. Bush.
It was a nice and sunny day when I set out to meet Michael at the headquarters of Great Place to Work in Oakland, California. What entails is the conversation we had about scaling businesses, company culture, technology, the people we work with and what it means to be a great leader.
Michael’s story at GPTW begins 4 years ago when he was hired by the company’s founder, a man called Robert Levering who wrote a book over 20 years ago titled The 100 Hundred Best Companies to Work for in America, which is really what started the business of measuring the employee experience. Known for his reputation of doing small company turnarounds and success in selling businesses, Michael was hired to sell the company.
However, being the shrewd entrepreneur that he is, he quickly realized that the company had what no other company in the world had, which was a tremendous amount of data about the thoughts, experiences, hopes, and wishes of working people all around the world. Over a hundred million employees were in the database!
Six months later, together with his partner, Michael bought GPTW and set out on a journey to make the company what it is today — the number one authority on corporate culture, surveying millions of people around the world about their satisfaction with their jobs and the companies they work for, thus producing the annual Fortune 100 Best Companies to Work For list as well as the analytics and coaching necessary for the positive transformations of involved workplaces.
Analyzing the vast fields of data he now possessed, the data spoke to him, as Michael recalls, and he soon started to see the recurring patterns and general sentiments, and what they said to him was:
“#1, that people are essentially the same in terms of what they expect around the world and, #2, if you looked at the difference between an employee who was having a great experience and an employee who wasn’t, it was the leader.”
Leaders hold a lot of power, they need to learn how to use it
Armed with the unrelentless truth of the data, Michael set his company on a mission to help leaders become better at their job, which is to motivate people and create great places to work for all.
“I also knew that, from my own experience, if we can create a great experience for people, the financial results will be outstanding and they would stay outstanding. But so many people find it hard to accept that you can turn business around, you can create growth, simply by the experience that people are having. I knew the power of it and loved the idea of using data to help other leaders learn about that power and achieve outstanding business results by treating people great at the same time.”
I remarked that it must be hard to tell leaders that there is something missing in their approach and that they can do better at making employees happy, which Michael confirmed and continued to explain that there are things we all do that make someone feel respected or listened to or that we are being fair, honest and transparent, there are things we do that make people feel more of those things or less of those things and that’s why the data is very powerful.
“You can actually see the experience you are creating for others. And because we’ve been doing this for so long, we know what to suggest to a leader to create a different experience. It’s easy to go through life just being yourself. It’s harder, as a leader, to always be looking to change and improve.” — Michael asserted.
Leaders react differently to the feedback they get from GPTW. Many of them are genuinely excited about the change, about being a better leader. There are some who are curious about it, sometimes they just want to know what’s in it for them because every change is risky, and then there is a group of leaders who have no intention of changing whatsoever.
Pride and human connection is what we all care about at work
When I asked about the most common drivers, what makes people feel satisfied about their work, Michael immediately singled out one trait that connects all the dots — people who feel pride in what they do generally tend to be more satisfied and more ready to work through though conditions and hardship at work. This is a kind of human experience. People have a sense of making the best out of a tough situation and that pride is global. People are proud to have the job, they talk about it, they care for and feel generally cared for by the people they work with. This is very important.
The two things actually define work experience — who we work for, that’s about 70% and who we work with, the remaining 30%. Of course that salary and perks matter, but human connection, cooperation, and support are essential.
So, a lot has to do with the leader and communicating with someone who’s doing a job that may be trivial or it seems that way, how important it is to do the job and to do it well. That’s the point of leadership.
The other 30% comes from who we work with and there are some times, in fact, it can be flipped. Meaning someone can say: “I really don’t like the person I work for, they aren’t respectful, they don’t treat me fairly, but I love the people I work with.”
In that sense, it’s not just leaders. We all have a role to play. But a leader can set an example and a standard of the desired behavior that employees can follow.
How to scale culture-consciously
But once we reach that point when we are happy with the culture we have created, how do we keep that culture and the quality of people at scale? How do we ensure that core company values are equally distributed to new team members and teams? The situation gets even more complicated when we start acquiring companies in different cultures. This is the burning issue of many businesses today and the central point of my discussion with Michael.
I feel like I owe you his exact thoughts on this:
“There are some great leaders like Marc Benioff at Salesforce, Aneel Bhusri at Workday, Julie Sweet at Accenture, who will all say the same thing — always hire based on values, then look at the technical proficiency, not the other way around. And do that when you’ve got 5 employees and when you have 55,000 employees. Always hire based on values.
But, the challenge is — when you’re growing fast, then, sometimes people will not pay attention to the values and take a technical skill. Because they need it and they will say: ‘I don’t have time.’ In fact, you actually don’t have the time to take the wrong person. But that’s not the way it feels in the moment. So, it’s a common mistake, especially at a time like now when there is very little unemployment around the world, especially for talented people.
Our survey results are showing for the first time in 2018 and early 2019 that employees feel that a lower quality of employee is being admitted into their organization. This is a global trend that employees who 3 years ago said: ‘I think management does a really good job of hiring.’ now are saying, in those same companies: ‘They’re not doing as good a job as they used to.’ It’s not technical proficiency that people are commenting on, it’s something about the people and their ability to fit and adapt into the organization.
So, hiring based on the values is always the best practice, but it’s the one that actually limits your ability to scale. Because innovation, agility, adaptability, excellence, all those things come from people having a common set of beliefs about the customer, about how you treat each other, about integrity, how decisions get made, and what the priorities are in the organization. And as most people know who have had some experience at work, when it’s time to terminate an employee, it’s rarely because of their technical proficiency. It’s normally there’s something else. And people will say: ‘They just didn’t fit in here’. While they’re really commenting on the culture and the values.”
Innovation by all, ideas to explore
From here, the talk naturally led us to Michael’s concept of “Innovation by all”, because innovation is what matters the most today. Something that the survey data shows as well. To become better at innovation, organizations need to find great ideas and be able to implement them quickly. And the way to find great ideas is to have many many ideas. To find one idea you need a thousand. The only way you can get a thousand is from all the people producing ideas.
“Companies normally ask for ideas and never give employees any feedback about those ideas — why they were accepted, tried, or rejected. That feedback is very important.
We studied that phenomenon and came up with a concept of “Innovation by All” that everybody who has a smartphone should be innovating on your behalf in the organization. That’s the notion of it.” — Michael remarked.
Transparency is important, sharing of information, and fairness. And then this notion of emotional, psychological and physical safety. It’s the best predictor of earnings and innovation. If someone feels like they don’t matter as much as other people or their pay is not fair or promotions are unfair then they will feel unmotivated to produce and share ideas.
The market has responded very well to this concept because it is what every CEO needs. They need a lot of ideas and they need people who will quickly try ideas, which means agility. They are going to run fast and when the org says stop, they will stop.
As it turns out, other benefits are important, but employees already expect them.
According to Michael, “Human connection is far more important than pay and benefits in the long term. People will leave for more pay, but they’re looking for meaningful work, people that they enjoy working with, and more importantly, a leader who wants to develop them and cares for them to improve which shows they matter as a person. They want those things far more than just the benefits.”
From here, we touched base on the startup approach to innovation and agility.
What Micheal defined as the main issue with innovation is that when startup reaches a certain number of people they cannot experiment quite as much and in the same way as they used to. It is easy to be agile when you are just a few people. When the organization hits 50 people, it begins to change because at that point you need people who can inspire others, develop others, teach others, recognize others, reward others, and you need to attract people who are good at doing that. As you grow, that just continues.
“Because of the cash flow, some part of the business has to be stabilized and produce cash to fund additional innovation. So that business is no longer abandoning and trying new things, it’s proven to be offering a product or service that’s useful, now you need a different kind of behavior, the one that can sustain, be stable, reliable, repeatable and predictable so it can provide cash for the parts of the business that are still full of high expectations and new products and R&D and things like that. This requires often a different kind of leader.”
As some of you may know from experience, this is a breaking point for many startups.
At that point, Michael advises, the founder who was really good at fostering innovation and early entrepreneurship, needs to either get coaching on how to run the business on a larger scale which requires procedures and structures in place to run a tight ship or he or she needs to give up the position and let someone else take over.
“If it’s a venture capital-backed startup then that founder is going to be replaced by someone who’s better at building structures that will enable you to really know where the business is at all times and have more control, be more disciplined about spending, and also better at holding people accountable, and managing projects, and getting work done through people. It’s a transition that’s very hard for technical, especially tech founders.”
VC influence on startup culture
And so I asked about when venture capital comes in how does it affect the company culture and the psychology of a founder.
From Michael’s experience, VC bets on the idea and the founder’s ability to develop the idea or develop the idea from one idea to a totally different idea. When founder proves the ability to be the right kind of leader, the relationship between VC and the founder is like heaven on earth. The founder is feeling new support that they haven’t had before. Not only in the capital but also new ideas and access to people and experience.
If things start going badly and the company starts losing clients, Michael advises founders to talk to VCs and their network in this critical time and learn how to better navigate the allocation of capital and people. Sometimes drastic measures may need to be taken. But the most important thing is to preserve the relationship of respect, trust, and credibility between VCs and founders. If this relationship breaks, VCs will usually replace the founder.
Consultants or coaches when scaling?
My next question revolved around whether founders and CEOs need to hire consultants or coaches to help them in the time of changes, especially when scaling.
Do you bring in a consultant who can help teams work better or should you bring in a coach who can help leaders of teams work better?
Michael’s response was that when you are in a period of high growth it’s better to hire coaches to work with leaders. And the reason is that there is some leadership behavior, an ability that an organization needs, and leaders need to develop that. This ability is geared towards creating a high trust environment, where everyone feels safe, everyone feels heard, nobody feels more powerful or smarter than others, everybody is needed to achieve an impossible goal. Coaches can help leaders achieve that.
This being a very captivating topic, we figured that it deserves a whole new conversation to cover in its entirety. For now, we had a different agenda and we moved on to talk about the fear of AI.
Are people afraid of AI influence on future workplaces?
As it turns out, GPTW asks this question a lot. What we learned from Michael is that people who are in the technology business have very little fear of AI, holding a belief that AI will have a net positive impact on the overall employment. However, the rest of the world, the majority that does not work in tech, has a great fear of AI and regard it as a job eliminator. Even the jobs that AI might create are far different than current jobs and there is a natural, human fear of this change.
Michael’s advice for leaders is to not talk people into how great the world is going to be for them when the dream of AI is fulfilled, “Because you do not know it and people know that you don’t, so they become highly suspicious. What we can tell them, as leaders, is that it is going to improve certain areas of our business and enable us to navigate it more successfully and if it comes to that, layoffs will be the last resort. We will provide retraining, learning new skills, and so on. This is how leaders can build credibility and trust in the time of uncertainty.”
Speaking of AI, software, and data science, I was curious to hear about the impact that these technologies have on GPTW itself and its future as a company.
Data science at the service of great workforces
As if he had seen this coming, Michael shot the answer right away saying that leaders want to know what is happening in the experience of an employee that will make them likely to leave a company and that GPTW has a tremendous amount of data that they are able to use for machine learning and AI to accurately predict employee behavior and how it might impact customers and business going forward.
In order to fully leverage on the data and to advance their analysis and predictions, GPTW has built the product Emprising together with the engineering team at HTEC. HTEC provides the expertise and technical ability to support GPTW’s vision and create a product that helps organizations navigate their business and employee relationships.
Michael described our collaboration as a huge success, resulting in the creation of an exceptional product, Emprising, which is now being used by close to 2,000 companies in the US in less than 2 years after being brought to the market.
“The enthusiasm, entrepreneurism, and commitment that HTEC brings is the reason we have an exceptional product today. The top analytics firms in the world are using Emprising. It has been revered and reviewed as the state of the art product in capturing human experience and providing a platform for leaders to know what they need to do to create a great place to work for all and a great launching pad for machine learning and AI to enable the prediction about employees as well as how that’s going to impact customers.”
Michael concluded with a joke that made us both laugh: “Without Emprising, you won’t be here today because I would be out of business and it would be a podcast about how do you take a business and make sure it goes out of business. And I would be an expert on that!”
Joke aside — with Emprising, GPTW has managed to establish their business as a market leader in the US where it is tested, tried and endorsed by their customers and it is now ready to take on the world.
Survey consistently and act based on the results
Having access to Emprising, we wanted to know how often should we survey our employees and once we get the results, how do we effectively go about changing the culture if needed. Our leadership at HTEC, obviously, also uses Emprising to test the sentiment among our colleagues.
The answer was — at least twice a year.
Some Emprising customers, like Workday, survey their employees every Friday, asking only two questions, with an incredible response rate of 90%. A great example of a listening culture!
Surveying employees twice a year gives you the advantage to learn what’s happening, create a strategy around it, give your team enough time to implement the strategy for improvement and measure its effectiveness after 6 months.
Once you get into this practice, you will see the area where you need to go deeper and then focus your survey around this particular area. At this point, you can reduce the number of questions and ask only the ones that will help you uncover problematic issues. Pulse surveys are very popular now because they are short, targeted, and effective.
So, when you get the data what do you do?
The questions are structured in such a way that the survey results will show the exact areas of improvement that leaders need to work on — whether it’s communication, listening, recognition and rewards, or something else, the data will tell you.
GPTW can help a leader either through a coach or an HR assistant to practice these new behaviors. And once they do, the best thing is that they can and should measure whether it was the right move or not.
Finally, it made sense that I checked how much of what Michael preaches he actually practices at his own company and how great a place to work GPTW really is, and so I did.
Michael seemed very happy with this question because he takes a lot of pride in what his team does and what they have achieved so far. When he joined GPTW, about 4 years ago, 3 out of 10 people said that it was a great place to work. In the last survey they did about a month ago, 9.2 out of 10 people said it was great! The results are published regularly on their website for transparency. As a matter of fact, as soon as the survey is closed, the results are online and available for everyone to see.
My hope is that we all learn from GPTW and adopt the practice of surveying employees every once in a while, keeping an open relationship with our teams about where we can all improve. Be transparent and be fair, treat people like adults because they can handle it. Employees want to be informed consistently about the things they do well and where they can improve.
For the end, I’m leaving you with a quote from Michael: