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Are You Willing to Lose Your Best and Brightest Over a Bag of Pretzels?

Are You Willing to Lose Your Best and Brightest Over a Bag of Pretzels?

by Frank Roche on December 28, 2009

in Culture

The Multi-Million Dollar Soda Venturebeat gives us something to think about today.

“Do you know how much our company is spending on free sodas and snacks?” And to answer her own question she presented the spreadsheet totaling it all up. There were some experienced VC’s in the room and I was waiting for them to educate her about startup culture. But my jaw dropped when the board agreed that the “free stuff” had to go. “We’re too big for that now” was the shared opinion. But we’ll sell them soda “cheap.” Uh oh I had lived through this same conversation four times in my career, and each time it ended as an example of unintended consequences.

No one on the board or the executive staff was trying to be stupid. But to save $10,000 or so, they unintentionally launched an exodus of their best engineers. This company had grown from the founders, who hired an early team of superstars, many now managing their own teams. All these engineers were still heads-down, working their tails off, just as they had been doing since the first few months of the company. Too busy working, most were oblivious to the changes that success and growth had brought to the company.

One day the engineering team was clustered in the snack room looking at the soda machine. The sign said “Soda now 50 cents.” The uproar began. Engineers started complaining about the price of the soda. Someone noticed that instead of the informal reimbursement system for dinners when they were working late, there was now a formal expense report system. Some had already been irritated when “professional” managers had been hired over their teams with reportedly more stock than the early engineers had. Lots of email was exchanged about “how things were changing for the worse.” A few engineers went to the see the CEO. But the damage had been done.

The most talented and senior engineers looked up from their desks and noticed the company was no longer the one they loved. It had changed. And not in a way they were happy with.

There’s an important lesson to be learned here, and it isn’t that you should just give everything away forever and ever. The lesson is that if you want to keep your best and brightest, you sometimes have to continue to provide the intangibles. In the example, those intangibles were simple: free sodas and a liberal dinner reimbursement policy made the company a nice place to work. The atmosphere wasn’t overly corporate or controlling, and employees happily provided the labor needed to keep the company moving. When the company stopped realizing that the relationship between doing extra work and a few extra perks were directly intertwined, things moved downhill and eventually ruined the company.

While the person crowing to the executive staff about how they had “discovered” an additional $10,000 that they couldn’t afford, they were ignoring how much that $10,000 meant to the people who drove the company: the engineers. While you could make the case that employees, paid well enough, could afford to buy a soda or a snack, that isn’t really the point. Part of what makes a company pleasant to work for is the atmosphere, and part of what makes the atmosphere acceptable is a tacit understanding that there is a give and take. In this example, the engineers worked extremely hard and put in the time necessary to grow the company. The “free” snacks and sodas made those people feel as if their efforts were appreciated. Engineers surely understood it was a cost for the company, but they (correctly in the real world; incorrectly in this case) understood that the provision of these “goodies” was the company going above and beyond to reciprocate for them going above and beyond. When that stopped, they left because it was no longer a two-way street.

This goes very much toward my video from two weeks ago about employment being a two-way street. It’s fine to look at the bottom line, but not every relationship you have with your employees can be quantified on a spreadsheet. It isn’t always about money, either. Sometimes it really is about principle. Before you yank a perk away from the people who work for you day in and day out, weigh the cost of that perk against losing employees and damaging company morale. If the numbers jive for you, or if you can justify it, then by all means go for it, but don’t be surprised if there is a backlash and you lose some of your best and brightest over a bag of pretzels in the break room.

Today’s article is from KnowHR contributor Vincent Ferrari. Vinnie’s not in HR. He’s a regular working guy. Smart, tech-savvy, straight shooter (he lives in the Bronx — the nice part — but it’s the Bronx, and they call people on BS), and a friend of ours. We’re delighted to have Vinnie’s thoughts here at KnowHR. He’s going to start writing as a regular contributor to this site. You can also follow him on Twitter @vincenzof and at his blog Insignificant Thoughts. Don’t say I didn’t warn you about the straight shooter part! — Frank

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