I spent a lot of years as an employee hearing the phrase “This is business. Don’t make it personal.” I would nod in pretend agreement, knowing that in my situation, at least, I was right to inject some human kindness into the daily grind. I have always been a firm believer in the “we’re all in this together” school of management. The more inclusive you are, the more you share with your people, the harder they’ll work — in good times and bad.
Open-book management is nothing new. And though you might think economic crises are not the ideal time to share all with your staff, there may be no better time to do so. Think I’m crazy? The other day I met a former client for lunch (don’t ever burn your bridges) because he’d had a recent epiphany of sorts and wanted to tell me about it. I found the conversation so compelling I wanted to share it with you.
Tom Markel is the founder of iBank.com, an online small business financing network where customers can store all their financial information in an online “vault” and find lists of lenders willing to make loans. Since there isn’t a lot of lending going on these days, business hasn’t exactly been booming and Markel’s been doing a lot of soul searching.
A few weeks ago he met with several other business owners who were talking about all the people they’ve recently had to “let go” due to the economic downturn. That meeting haunted Markel. He thought about some of the business owners who said they “had” to let people go, yet were clinging to their 12 horses, 5 houses, or extravagantly expensive automobiles. And he remembered the employee he fired in 1989 on Christmas Eve because it was “just business.”
Markel’s company isn’t immune to the recession — far from it. But when he realized he too had to make some cuts, he decided to do things differently. He threw the “nothing personal, it’s business” concept out and instead reflected on his core values. And realizing he had to “share his pain” he put pride aside and opened up to his staff.
About a month ago he told them, “Times are tough and here’s what’s left in the bank. I don’t want any of you to leave, so what can you do to help?” In other words, he asked for wage concessions … and he got them. Employees volunteered to take pay cuts, salespeople went commission only, and 2008 bonuses were eliminated. Instead of iBank providing their usual free Friday lunch, the staff brown bags it during a Friday staff meeting and then gets to leave at 3 p.m. Markel promised when profits return (and things are already picking up this month, or as Markel puts it, “the sacrifices are already paying off”), he will “pay them all back” and return to the previous wage structure. His staff’s reaction? They wanted to know why he waited so long to tell them what was going on.
Markel’s not alone. In the last few weeks I’ve been hearing and reading about other entrepreneurs who are trying to cut expenses and overhead while maintaining head count. This new view can’t be a short-term solution. Markel says you need to trust your people and continue to get their input. Hold open forums and continue to share how things are going. But, Markel adds, it’s important for you, the business owner, to “walk the walk yourself. You can’t be selfish and greedy. Share your struggle; show your staff what you’ve sacrificed.”
Entrepreneurs should do more than just ask their employees for concessions. Markel suggests turning to your vendors as well. Ask for deferred billing or extended pay periods. Your customers can also chip in. Markel says the natural inclination is to charge your customers more. Instead he suggests you go to the people who owe you money and ask, “What can I do to help you pay?” Chances are if your customers owe you money, they’re not going to call you, so check in with them.
All of this is sage advice. But it wasn’t the wisest thing Markel said to me. While he was reflecting, he realized that the most important thing to consider when making tough decisions about employees is to ask yourself, “How would I like to be treated if I were in their shoes?” And there it is, what Markel and I dubbed the Golden Rule of Management. As I’ve written about before, the Golden Rule (“Do unto others…”) is my mantra.
By the end of our lunch we took it even further. Markel thought it was time to flip the pyramid and change the old business hierarchy (boss at the top). We then turned the pyramid into a circle because, especially at times like these, we all need to take responsibility, say “It starts with me,” and then pass it on.
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