(This is a business case study. It will be used to guide discussions during the session: “Building Teams in Founder Driven Organizations” at the Vendo Partner Conference in Barcelona on September 16th.)
Steven was feeling the lethargy around him. Like nothing was moving. It was that middle-of-a-hot day feeling.
That’s how Sergio Leone would set up the opening scenes in the old spaghetti westerns starring Clint Eastwood. A small dusty town. Nothing happening. Just the sound of a rattlesnake and a horse swishing flies with its tail. It called for an action hero, for drama to start.
Steven felt angry at the situation. Clint Eastwood angry. “All of my efforts have come to this?” he asked himself. He was tempted by knee jerk reactions. He had to do something to get his company moving again, to produce results, to start hitting targets that were always on the horizon and never being met.
He felt an impulse to bust open the door of the saloon and shoot a couple of people, then throw a fair and repaint the town. These days that means firing two employees and upgrading the office to something like Google’s. At the 2014 Vendo Conference he shared his concerns and developed other ideas to try first.
He decided to start by understanding what was happening. After his experience of opening up to advice from others at the Conference he brought in an industry executive to give him an independent opinion, an audit, of his staff and operations. The executive went through the company and interviewed everyone. “I thought I needed to let go of two people. But I discovered that I had put the boss of those employees in a position that he couldn’t fulfill. It turns out the two guys weren’t the problem at all. In fact, today they are two of my top performers,” recalled Steven.
His next move was to send everyone home. “My friend Shay suggested switching to remote working over dinner. My head literally started hurting from thinking about all of the implications. I just hadn’t ever thought about it before. My idea was to have a much nicer office in LA at great cost. But each employee who came to the office was actually in their own world with headphones on,” Steven said. “The next day I talked with key staff and they loved the idea.” How did the transition go? Steven recently completed an audit. Eight months later all but one person is doing better than ever.
His third major move was a tiered bonus system. It ties compensation bonuses equal to 3%, 5%, 8% or 10% of their salary to hitting progressively more challenging team goals. It’s led to much closer collaboration between team members because they all want to hit the goals they’ve set for themselves like lowering chargebacks or increasing revenue. “It really helps people focus,” said Steven. There is little additional cost since the bonus replaces an ineffective annual bonus that wasn’t tied directly to goals.
“It’s tempting to go with a knee-jerk reaction. I would have fired the wrong people and moved everyone else into an office they didn’t want or need. The main thing I took away from the Vendo Conference was the value of talking with other executives in the same position. That’s what has led to these great changes for me and my company. This year at the Conference I’m going to propose that we start doing external audits for each other. That we go on site and give each other feedback. I’ve been able to make incredible changes in the past year. I hope that other people can get the same benefits.” Steven concluded.
Questions for discussion: What tools can I use to build great a culture? How can I do it in a company dominated by strong founders?