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Is the ROI of happiness HR's answer to strategic relevance?

Den Howlett Profile picture for user gonzodaddy November 23, 2014
Summary:
The pursuit of happiness sounds vague but it can mean demonstrable profit. Will HR pursue what to some might seem a hopeless ideal?

Shawn Riegsecker
Shawn Riegsecker - CEO Centro

Tom Foremski, late of FT and now 'on the dark side' with Weber Shandwick pointed me to one of its clients, Centro and its CEO, Shawn Riegsecker who talked about the ROI of Happiness in 2013. It's a stunning, fact laden video (see at bottom of this story) that demolishes the current wave of asshole-ism that seems to be permeating Silicon Valley and beyond.

Then and now

Coincidentally, Foremski published his unique perspective on the changes that have happened in the Valley in the 10 years that he has been a journalist-blogger. Given the pre-eminence of the Valley as a global tech center, it is hard to avoid what happens there. Foremski says:

The culture of Silicon Valley was different then [2004.] The software engineering community was more radical than today, and far more socially conscious. The open source software movement was very strong among engineers and there was overall an anti-commercial attitude and a respect for protecting an open commons...

...Today's Silicon Valley culture is dominated by a peculiar amorality, a narcissism that claims Ayn Rand for its aspirations, even though few have read her books or even their dust jackets.

It's as if everyone has forgotten, "What the right thing to do is." And Google has worked hard to play down its "Don't be evil" rule.

The culture of Silicon Valley today sits somewhere on the autistic spectrum and exhibits the elemental qualities of water. Water will always find its way, it will find the unseen cracks, and find ways through obstacles and even tear them down, as a tiny leak can bring down a mighty dam.

This comes off the back of the Uber broculture issues and the many questions that raises about leadership, culture and the current 'win at all costs' view that seems to excuse all and any questionable corporate behavior short of reported physical abuse or overt criminal acts.

Taking this one step further and out into the area of public service consumption, Bobbie Johnson taps into the visceral reality of why some of us hate Uber, even when we see the people behind it behaving like assholes:

...whatever we do, we can’t stop ourselves from making it [Uber] bigger and more successful and more terrifying and more necessary. Uber makes everything so easy, which means it shows us who, and what, we really are. It shows us how, whatever objections we might say we hold, we don’t actually care very much at all. We have our beliefs, our morals, our instincts. We have our dislike of douchebags, our mistrust of bad behavior. We have all that. But in the end, it turns out that if something’s 10 percent cheaper and 5 percent faster, we’ll give it all up quicker than we can order a sandwich.

In short, we have reached a point where convenience trumps being on the right side of decisions. As a word of warning, that's how dictatorships flourish.

Cultures collide?

But step sideways for a moment and consider this:

  1. In a recent partner story, Mike Ettling pointed to research suggesting that compensation remains the principle driver for job candidates and will likely do so at least through 2020.
  2. Our own Derek duPreez consistently argues that money isn't everything, a sentiment that reflects many studies around millennial people's views on the workplace. Other studies suggest that people willingly sacrifice pay for better work/life balance and other 'soft' benefits.

How can these seemingly opposite points of view both hold validity in the same space and time? After all, in Ettling's world, you need a totally self-interested kind of individual who really doesn't give much of a shit about his/her employer. Right? You can argue the same in duPreez world but that doesn't necessarily hold true because the values duPreez wants are far more likely to be aligned to a culture of inclusion and, in some sneses, a return to the Silicon Valley culture of the early noughties.


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ROI of Happiness?

We see plenty of examples where desired qualities of leadership are laid out. This example from the list friendly Inc.com is a breezy case at point. Author Lolly Daskal randomly lists communication, efficiency, character, empowerment etc. Almost as a footnote, she says:

Your leadership does not matter until it is built on the things that matter. Great leadership is synonymous with high-performing companies, teams, and businesses.

The more you invest in leadership the better decisions you will make, the more you will get done in less time and with less cost, and the more you will achieve with better results.

Nowhere does she emphasize the requirement to be profitable and run positive cashflow or even how the qualities she outlines get you from nowhere to somewhere. And therein lies the main problem with much of the discourse of today. We understand very well how being an asshole translates into super efficient potentially profitable business, Nowhere do we see fact based discussions around the ROI of Happiness.

It wasn't until I watched the whole of the Riegsecker video that I understood something that I've not heard aired before. There is an ROI of Happiness built it is built upon purposeful principles that in turn develop a specific type of culture. Here is a paraphrased selection of what Riegsecker had to say:

Dollar value

When he founded the company in 2001, Riegsecker spent a great deal of time figuring out what he wanted the company to look like and what the necessary ingredients would be in order to shape the workplace of tomorrow. He concluded that successful business is fundamentally about people and that happiness is what drives real value.

  1. Up until the company got to 150 employees, he interviewed every candidate.
  2. The average age of all employees is 28 (after 14 years in business.)
  3. Sales people take close to 12 months to become 'earners' but the industry as a whole expects salespeople to last no longer than 18 months. That's a huge loss of investment.
  4. The voluntary attrition rate at his company is 4%.
  5. Centro has no typical HR related issues on an ongoing basis.
  6. Centro spends more than $1 million a year over and above industry norms on healthcare and 401K provisioning.
  7. He encourages a 'hire slow, fire fast' culture.
  8. It is better to have someone who fits in but isn't up to technical snuff than a rockstar contributor who's an asshole.
  9. Company employees are actively encouraged to form friendships with one another that spill into personal lives.

In short, Centro's culture is living the dream of what the duPreez's of the world are looking for and doing so profitably. And while I am not a fan of industry awards, it speaks volumes that Centro has been voted best place to work in Chicago four years on the trot.

One curious statistic that was missed - what is actual staff turnover, given the number of years in existence and the average age of employees? That's one for another day.

Is Centro unique? Not at all.

I could boast about the things we try and do at diginomica (and often fail) but that's a tale for another day. I have seen how fast growing companies like Workday exude a culture that sets itself apart from broculture and how that is a winning combination when measured against growth. I regularly hear from ex-employees who still have a soft spot for the company that did right by them.

Speaking personally, I vowed in 2003 that I would never ever do anything that I didn't enjoy - that has turned out to be a wildly successful strategy. I just didn't know or understand the impact at the time I made that decision, what it would mean or how I would execute against that determination.

My take

Riegsecker's example puts a lot of related topics into perspective in a way that makes sense to me and to the enterprise that's wrestling with multiple HR issues.

Just as Foremski has seen a 180 degree change 0ver 10 years in attitudes and behavior in Silicon Valley there is nothing to say that the pendulum might swing back the other way.

That only happens when enough people are prepared to look at the true cost of supporting an asshole culture or where management realizes that the financial upside to moving away from 110% attention to building empires in the sky is a really good idea.

When you think about it from a US perspective, and quoting liberally from Wikipedia it seems that what Riegsecker and others have really done is to go back to the American Dream and infuse their businesses with the spirit of the great leaders of the past:

"Life, Liberty and the pursuit of Happiness" is a well-known phrase in the United States Declaration of Independence.[1] The phrase gives three examples of the "unalienable rights" which the Declaration says has been given to all human beings by their Creator, and for which governments are created to protect.

That's not where we're at today but I firmly believe that HR can take a strategic role in fostering, nurturing and building the management and leadership that deliver on the ROI of Happiness. It need not take very long. And as an accounting type thinking about sustainable business, that is way more attractive than the pressure cooker environment of an asshole led business.

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