When it comes to creating and capturing value with the entrepreneurial Big Idea, the right people are absolutely critical to the new venture’s success. A good reward system both motivates employees and, at the same time, reflects the goals of the venture directly as a function of its increasing valuation. But empowering and leveraging employees is certainly not as simple as finding, hiring and situating them in a role with defined tasks. They must be motivated and rewarded so that they are effectively committed, productive and even inspired. What’s more, the ability to attract and retain talented employees is of critical importance, and this depends greatly upon the promise of financial and psychological rewards.

So what motivates people in a start-up or other early-stage company? I think the place to begin, at least philosophically, is with Ewing Marion Kauffman’s principle, “Share the wealth with those who help to create the value and thus the wealth.” Knowing how much to share is as much an art as a science, particularly when it comes to the x-, y- and z- axes of human behavior. So, as Robert Vecchio, a top author of b-school management tomes, presents it below, here’s “What Employees Want from Their Jobs,” which I’ve modified with some additional motivators:

1. Interesting, challenging work
2. A feeling of being “in” on things
3. Job security
4. Competent supervisor
5. Good working conditions
6. Tactful discipline
7. Promotion and growth in organization
8. Appreciation of work well done
9. Sympathetic understanding of personal problems
10. Good wages
11. Involvement in plans or decisions
12. Loyalty and support from management
13. Relevant and timely feedback on performance
14. Clear goals and objectives

Rewards systems can include the obvious financial rewards, such as salary, benefits and even equity ownership, but also (as indicated above) personal and/or emotional rewards including education, increased skills, an energized and enjoyable work environment and even self-fulfillment. The latter more personal rewards can be categorized in terms of ‘valence’, defined as the perceived value a person might place upon a particular workplace outcome and/or reward received as a result of the successful performance of a task.

As this is a foremost a business we are talking about, the rewards and motivators are often doled out in compensation (cash and/or equity), and as such must be measurable. Metrics and rewards are essential to serve as yardsticks for performance, and when the measurements are made the organization can and should reward those people who have been instrumental in the accomplishment.

Above all, the overarching task at hand is not to create fierce competition for the size of one’s slice of the pie, but to instead work together to increase the size of the pie. That’s the real but often misunderstood upside to dilution that so many employees and founders of start-ups dread, and a topic for another day.

Posted by: Colin Mangham

Another key to empowering people is clearly defining what they are meant to do, what they should hope and, perhaps, expect to achieve. This is especially important when the employee is working within a staff of other service providers, as it helps to gain synergies from goal congruency across the team. The resulting cohesiveness can help to empower them to “pull their own weight,” a powerful motivator for many people, as well as ride a wave of camaraderie moving toward the same or similar goals.

Furthermore, service providers can ensure positive results, as Randy Pennington presents it in “Results Rule,” when there is “a set of organizational beliefs, assumptions, and values supporting a commitment to results, relationships both externally and internally, and accountability … mutual respect, cooperation, and a high degree of trust between individuals and their managers, teams and departments … [and] alignment of individual, team and departmental performance with the organization’s strategic business objectives.”

Posted by: Colin Mangham

I’ll admit I have an affinity for the word “empower,” and have even woven this into some of the brands I’ve built, including a bottled water product with the tagline “Empowered Drinking Water” (Perfect Water) and a j.v. partner utilizing the same core technology for home care and commercial cleaning systems, which promised that their “Empowered Water is truly enhanced water, electrolyzed and oxidized to create a powerful cleaning solution, without harmful toxins or chemicals” (Zerorez).

In my experience, particularly with franchise systems, one of the best ways to empower employees is to give them quality materials and training, and provide them an environment in which they can perform. We built a Zerorez (derivative of “zero residue”) service model around this, whereby the carpet cleaners were encouraged and even trained to view themselves more as technicians (not carpet cleaners) who service “clients,” and were empowered to deliver a higher level of quality.

“Dress for Success” is a common phrase in business vernacular in the States. With Zerorez, we helped implement a dress code for uniforms that helped them to look sharp and, to a degree, be sharp. This included clean, protective booties for their feet that they would slip over their shoes before they even walk into the client’s home. Immediately that helps to establish rapport and trust between the service provider and the customer, and those are the foundations upon which the employee can feel empowered even by the customers themselves to do a quality job that’s appreciated.

Posted by: Colin Mangham

Nordstrom department stores are often hailed as the pinnacle of retail customer service with, as their own website promises, a “commitment to an extraordinary shopping experience.” I think it’s primarily because the employees are empowered to make decisions without having to run to the backroom to “ask my manager” – in that time, at that critical moment, a dissatisfied customer might even leave the store and never come back.

These “moments of truth” often critically shape a customer’s perception of the company. I touched upon this in a previous blog regarding perceived quality being realized at the moment of truth, when the service provider and the service customer confront one another at retail. Bottom line, if employees are not empowered to perform to or above certain standards of service the opportunity in that moment of truth is lost.

By the way, while conducting a national research study for an apparel brand, we actually had a focus group respondent say, “Nordstrom? Yeah, they’ll let you return anything. They’ll take a dead chicken back!” That’s some pretty strong word-of-mouth, to say the least….

Posted by: Colin Mangham

“It’s the people behind the brand who make the brand,” says Diana Shaheen of Procter & Gamble (I worked on the Tide detergent account, packaging and early online, in the mid-90s). “The employer must define what (the) business needs from employees to deliver the brand promise to customers … if your internal and external branding messages aren’t aligned, the front line will not deliver on the promises.” Her quote is from “Brand from the Inside: Eight Essentials to Emotionally Connect Your Employees to Your Business,” which I reference frequently. Even the title is a useful distillation of a viewpoint I share. If employees do not at the base level believe in what the company (through them) does, success can remain elusive.

Still, they have to be “empowered” to act on their motivations to deliver upon the company’s mission – ultimately, to make decisions, embrace their responsibilities, achieve results and go from “good to great,” as best-selling author Jim Collins puts it. So it is important that managers effectively articulate and live by the company’s mission to lead by example in empowering employees. And while I’m quoting some highly-accomplished peers, Yamashita and Spataro, authors of “Unstuck,” insist that “everyone must be a keeper of the vision – responsible for delivering on your purpose. Meet. Talk. Publish your vision for everyone to read. Create symbol and stories within your company culture that remind people of what you’re doing – and why. Don’t leave out a single person.” Amen.

Posted by: Colin Mangham

Holistic marketing approaches recognize that ‘everything matters’. In my business, we view everything from a business card, to a website, to a product on a shelf, to a ten-minute troubleshooting session with a service representative, and even a friendly “hello” from the front door greeter at Wal-Mart as an important touch point in the delivery of a company’s service promise.

When a services business is not delivered via a machine or a screen, the human element is of critical importance. From a customer’s perspective, their encounter with service staff is arguably the most important aspect of the service delivery. That said, in my view the key factors favoring a strategy of employee empowerment are:

1. When there is any interaction between an employee and a customer
2. When the employee’s job/role/responsibility involves decision-making that can in turn shape the service delivery
3. Where synergies can be gained when a team of employees can be more productive and motivated to perform the service at or above the desired levels of quality.

More to come….

Posted by: Colin Mangham

Looking back at this week’s posts, I should mention that I have no regrets. It was a time and a place. Plus, I like a steep learning curve and this was at a point in my career when I was particularly keen on strengthening my skills and expanding my network, so this was all very interesting to me and great frontline experience to help me better collaborate with a lot of my fellow entrepreneur clients today.

I also think a lot of our team felt the same way. We were all relatively young, motivated for all the reasons stated in my last post. We were also a very cohesive group — I suppose partly due to the fireworks going off all around us. We enjoyed each other’s company, and usually did not mind working long and late hours. So the social interaction did support job satisfaction. That level of cohesiveness is what many companies are striving to achieve under the umbrella of employer brands and internal branding. But it’s certainly a steeper and slipperier slope today when the external lift of a veritable Gold Rush isn’t fueling the engine.

Posted by: Colin Mangham

It’s funny to look back in a Monday morning armchair quarterback sort of way. If you were to sit in on any of our meetings or take a stroll through our offices in that dotcom you would have thought we were maxing on productivity, all pistons firing. Everyone was fully engaged, working hard and all hours. However, much of this was only transitioning.

Lewin’s View of the Change Process cites three Phases. Phase 1 is “Unfreezing” (recognizing the need for change), Phase 2 is “Changing” (the actual transformation) and Phase 3 is “Refreezing” (results assessment and needed modifications). This all happened so fast that Phase 1 was a week or two start-to-finish, and we never really got out of Phase 2 before ultimately the Chairman opted to shut down the company only a couple of months into the transition.

Change is difficult, costly and, no doubt about, most of us are naturally change resistant. On top of that, organizational change is not always considered by constituents as “for the better” and personally satisfying. This is the case in a majority of the M&A deals we consult on at Daily. Still, somehow, most of us who still had our jobs believed the change was necessary, “for the better,” and we were motivated, at least as far as I can figure in hindsight, by three key factors:

1. Job Security – we had just seen half of the staff fired. The fact that those of us who remained still had jobs was a relief, especially as jobs were also drying up. Many of us had also left more conservative jobs for the New Frontier, and those former employers who did not “make the leap” were not all keen on hiring us back.
2. Trailblazing – what got us into the dotcom madness was also what kept us excited at this point … we really were finding new ways to use technology, especially with the promise of this new business model, and that was exciting.
3. Upside – the other thing that prompted many of us to leave our comfortable desk jobs was the potential to make a lot of money off our stock options in the fabled IPO. I still have a document with 40,000 shares of stock that are worth less than the paper it’s printed on. I know I’m not far form alone in this particular Purple Heart. Anyone want to form a support group?

Posted by: Colin Mangham

Most organizational changes are designed not to so much to transform the organization but to modify it in hopes of fixing its problems. After the company-wide strategic change was implemented, we had too many people whose skills and experience were no longer applicable to the business model. And even then we saw the writing on the wall and recognized that it faced a high improbability that it would actually get funded.

Remember all the new acronyms the dotcom vernacular spawned, including B2B and B2C? Well, we switched from a consumer-centric model to a business-to-business model focused on the development and implementation of tech-based channel distribution solutions for the apparel industry. Basically, we would shift from a B2C e-commerce engine and website to a supply chain support technologies provider for the same industry, but with support all the way through to the bricks-and-mortar retailers. In acronyms, it was now B2B2C.

In his master’s text exploring organizational behavior, Robert Vecchio states that “norms are the expectations for the behavior of the organization’s members, while values are preferences among activities and outcomes.” One of our leaders was the founder and Chairman, the other was the CEO he hired. They seemed to be aligned in views of the opportunity and what needed to be done, and I believe they communicated their values well.

I still hold respect for their positions and approach, although back then I wished I had known more about the company’s fate to be able to prepare my parachute (albeit decidedly not “golden”). The Chairman communicated his values through his actions, with nearly a million bucks of his own money into the venture. The CEO’s approach was more paternal, in a been-there-done-that sort of way, and he was a consummate storyteller, keeping us calm (if not wholly distracted) with his abilities to conjure up cheers and bear hugs in the locker room when we’re losing 65-0 at halftime.

However, what “norms” we had established were mostly no longer applicable — we were too young a company, only about seven months old, when the major shift occurred. You can imagine the underlying tension.

To be continued….

Posted by: Colin Mangham

*i.e., the pressure to change

In the spring of 2000, iWear Corporation, the short-lived but well staffed dotcom company I was working with (and that ultimately gave rise to my current company, The Daily Brand Group), dramatically changed its business model from e-commerce to supply chain management technologies. In basic terms, organizations tend to change primarily in response to external pressure rather than an actual internal desire or need to change. Ours was very much a case of external pressure. Everyone reading this remembers where they were and what they were doing when the dotcom boom spiraled downward to bust. When grossly over-inflated company valuations finally caught up to the stock market, the bottom fell out, and unfortunately the venture firms we were counting on to capitalize our dream scurried from sight.

We actually did well for a while, raising approximately $3.5 million and signing deals with 35 of the top 40 men’s apparel retailers before management began laying off people in all three offices. But we had what Keith Yamashita and Sandra Spataro (authors of “Unstuck”, a current favorite) identified as an “off-kilter” company with respect to organizational systems that are “stuck” and “out of balance”. We were a company that was high performing at the time but caught in a seismic shift in our industry. Our system was “aligned but aimed at the wrong task.”

For a Daily Story on this “Cradle to Grave” click here.

To be continued….

Posted by: Colin Mangham