How To Treat Employees Like Owners
This article appeared in the October 1997 issue of Tom Peters Fast Forward, published by TPG Communications. You can reach TPG Communications at 800-367-4310 or
© 1997 TPG Communications.
Reproduced on this web site with permission of the publisher.
Looking for innovative ways to attract and retain top-level employees? Take a cue from Expert Support, a Mountain View, Calif., consulting firm that offers employees the best of both worlds: the flexibility an independent contractor enjoys and the security and benefits that come with full-time employment.
In 1990, when partners Denny Brown, Jake Brown, and Jan Clayton first began hiring, they chose senior-level employees with a lot of maturity and savvy. “We picked people who possibly would have decided that their next step was to go out and do independent consulting,” says Denny Brown.
The partners realized that independent contracting often requires budgeting for an unstable cash flow, as well as being responsible for selling your services. “Instead of each person trying to do it on their own, we put together a group to minimize the downsides while maximizing the up-side of independent consulting,” says Denny.
As Denny and his partners began talking to potential staff members, they discovered two distinct personality types. One type wanted to be able to count on steady work with two weeks of vacation every year. The second type considered freedom and flexibility as higher priorities. Denny explains, “The attitude is, ‘I don’t care about salary. If I want to go sit on the beach somewhere for six months, I don’t work—and I don’t get paid. But when I do work, I get paid—and I get the lion’s share.'”
The partners realized that creating a flexible employee program that kept motivation and job satisfaction high was crucial to landing the senior-level people they wanted. So, from the beginning, the partners divided their employees into two groups, which they identified as D2 and D3. “D2s are salaried individuals,” says Denny. “These people are our core group. They participate in profit sharing. If we have a lot of profit, the group as a whole grows a little fat if we’re not doing so well, the group as a whole tightens its belt and gets a little skinny.”
Denny adds, “Our D3s make a base salary plus a percentage of what they bill. So, if the person sells the job themselves and manages the customer themselves, they get a bigger share of the pie. If we bring the job in, then we take a little bit more.” The bottom line for the company is a direct link between performance and revenue.
Basically, this plan allows any employee to run her own small consulting business within Expert Support’s. The company gets a piece of the action whether an employee wants to work half time all year, full-time, or even overtime—anything goes. The system allows each person to take responsibility for his or her income. And surprisingly, the income per employee seems to level out fairly evenly across the two groups.
Expert Support has a third group in its staff network. Independent consultants are called as needed if the company experiences a work overload. Or, the same outside consultants have an open invitation to contract with Expert Support if they are overloaded. The company subcontracts in either direction.
The range of options wows new employees. After all, who would pass up the opportunity to enjoy corporate support, benefits and solidity without giving up the independence and freedom of running your own shop?