6
Do-gooders versus good doers
HIRING THE BEST PEOPLE
As a social enterprise, your operation faces stiff competition from the entire world of non-social enterprises: from traditional businesses in your industry, from socially responsible yet shareholder-driven businesses, and from traditional nonprofits as well.
You may also face competition from other social enterprises. Nothing would be a better indicator of social enterprise health than a marketplace in which multiple social enterprises face off in the same business markets. (Both of the authors’ enterprises have at least one formidable social enterprise competitor, as is true for many others.)
But for now, most of your competition will be from NSEs. Once you absorb this premise, the lens through which you have to look at just about everything else is that of fierce competition. Of all the different ways you must compete, the one that matters by far the most is the battle for the people who are actually going to do your enterprise.
■ UNLOCKING THE FIFTH PARADOX
You can—and must!—win the battle for great people.
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It’s a formidable battle. Traditional businesses—which are masters at externalizing real costs and don’t have the social costs of a common-good mission—can usually offer better wages and benefits, nicer facilities, and the appearance of more job security. Socially responsible businesses can offer all of these, along with a good feeling that the company is being a decent citizen. Traditional nonprofits can offer a sense of meaning, perhaps an appeal to nobility, an opportunity to work with kindred spirits, and in some unfortunate circumstances, even a lack of accountability that certain employees (probably not the ones you want to hire) crave.
It’s a formidable battle indeed—and the one that you absolutely must win.
A social enterprise is a complex, demanding, constantly morphing balancing act. It requires smart people. It requires people who can look at things from more than one angle. It requires people who can live with a certain degree of uncertainty and enjoy some measure of chaos. It requires a team of people who can get through a lot.
At the simplest level of body count, your team is likely to be outnumbered. Clara Miller, whose Nonprofit Finance Fund has dramatically helped capitalize the social enterprise sector, speaks of a key distinction between the nonprofit and for-profit sectors, one that equally applies to the social enterprise and non-social enterprise sectors: “The difference between me and my counterparts on the for-profit side is that on the nonprofit side, we instinctively understaff, and on the for-profit side, they instinctively overstaff if they are going to grow. That speaks volumes.”1
Business enterprises—social ones and otherwise—are becoming ever-more Lean (with a capital L, referring to the Lean Thinking movement first chronicled by James P. Womack and Daniel T. Jones in their breakthrough book by this title). Lean 83principles relentlessly seek out and eliminate waste in businesses, including wasted human resources. (We’ll look at this phenomenon in detail in chapter 8.) You’re already outnumbered, and now your competition is becoming leaner. You must become leaner yet. Better people are your best hope.
Business schools across the land are turning out legions of highly trained, highly motivated operatives—perfect weapons for market warfare. You may or may not decide you want to fight MBAs with MBAs, but you certainly can’t afford to ignore or underestimate them.
Assembling the very best team available offers another advantage to a social enterprise: it is the one and only antidote to hubris, the leading occupational disease of social enterprise leaders. As a lot, we tend to be a fairly bright, confident, focused bunch. We’re leading entrepreneurial ventures, operating in uncharted territory much of the time, gaining a lot of satisfaction from the change we’re creating, and often getting quite an adrenaline buzz from the challenge of it all. We have a lot of the answers and the courage to improvise when we don’t, all of which tends to create an environment in which others might just let us “do our thing.”
■ PRACTITIONER’S TIP
Hire people who will push back!
Yes, half of our ideas are brilliant. But we rarely know which half. We can save our enterprises from ourselves only by making great hires consistently and as a matter of highest priority. Says Jeffrey Hollender,
One of the unfortunate parts of being perceived as being successful or being wise or smart is that people think you know what you are doing. I know that is not the case 84but not a lot of other people do. I try to approach each day remembering that I know very little of what there is to know and look forward to other people helping me to understand the things that I do not understand.2
Running a social enterprise is not for the weak of heart. In every single way we can think of, it is more complicated than running a non-social enterprise. You need better people than your NSE competitors just to play them to a draw. You need much better people to win.
Table Stakes
There is no substitute for good old-fashioned dinero.
Your mission, your working conditions, your ability to inspire and empower as a leader are all great assets. But if you truly intend to compete with traditional businesses, then your pay scales must at least be within a standard deviation or two of your competitors’. There’s simply no getting around it.
Mike Hannigan’s company, Give Something Back, competes with Office Depot, OfficeMax, and Staples in one of the most brutal, price-competitive industries around. He says,
Not only do we compete for customers, but we also compete for employees. Competition for employees is based on meeting the market in compensation, benefits, and everything else. There is a twin dilemma for us. For example, the going rate for a driver is about $12 or $13 an hour for an entry-level driver. Nobody is going to get rich on $12 to $13 an hour. On the other hand, we are not going to be able to get any drivers for $10 an hour, because they are all going to go somewhere else. And if we’re willing to pay $15, we are not going to be in business for very 85long because our competitors who are paying $12 are obviously going to be able to exploit that cost differential by offering lower prices to the customers, who are not subsidizing a higher wage for our drivers.
The marketplace is a good measure of what is available… So if we want a good salesperson and that person can command $120,000 from Staples, we are going to have to pay $120,000 if we want him or her. And frankly, someone who is worth $120,000 to Staples should be worth $120,000 to us… We want to pay as little as we can but to get the people we need to do the job we need to do. We don’t want to overpay them and we don’t want to underpay them. You can’t underpay them, really, because then they will go someplace else. The market takes care of that for you.3
Hannigan clearly understands the idea of value exchange that is at the heart of the relationship between employer and employee just as surely as between company and customer. You need to get something specific done, and getting it done has a measurable dollar value to your enterprise. The exchange needs to be reasonable.
■ PRACTITIONER’S TIP
Respect the value exchange at the heart of the employer-employee relationship.
If you cannot pay for the value, then you cannot expect the value to be delivered. This arrangement won’t work, and it wouldn’t be fair. Nor would it be a good practice for the health of the entire social enterprise sector. Darell Hammond runs KaBOOM!, one of the most meteorically successful social enterprises. He told us,
86I’m pleasantly amazed and also pleased that you can’t pay pauper salaries for program staff or executive staff. You have to pay for their experience and what you are asking them to do. And I think sometimes the nonprofit sector pays people so underperformingly that they move around a lot, or they are a charity themselves. They have to go to the soup kitchens on Saturdays and Sundays and be recipients of what we are trying to solve, not breaking the cycle. We have got to give them fair wages. We have to allow them to invest in the future as far as long-term compensation and retirement savings plans, and that’s the only way that we are going to get ahead.4
The value exchange also needs to be consistent. At the leadership and management level of your social enterprise, this be comes a bit tricky as the general trends for executive compensation become more obscenely out of whack. CEOs of huge companies are making billions and of modest companies are making millions, and the escalation is not limited to the for-profit sector. While the comparative salaries for, say, production workers might be pretty consistent across any given market, the range for CEOs varies wildly from fair and reasonable to insane and incomprehensible.
A simple practice that can help make this issue a bit less sticky is simply to rely on an articulated policy. This removes executive compensation from the realm of the personal and creates an intentional, objective discussion that naturally leads to a fair, consistent, yet competitive solution, like Hannigan’s:
We [the founders] knew we weren’t going to be able to take any money for a year and a half. We had enough savings, and it was in our business plan that there were 87no salary requirements for the first year and a half, except for employees that we hired. And in our bylaws, we limit our compensation. Once we started to think about taking a salary, in the first and second years we took $2,000 a month in salary and then we took $3,000 a month and then we took $4,000 a month, depending on how the company was doing. But the bylaws limit our compensation to no more than 70 percent of what the equivalent job in an equivalent-sized company would get in this marketplace. The big accounting firms can tell you what a CEO of a $25 million office-products company makes. So we are limited to no more than 70 percent of that. But we’ve always been much lower than that.5
■ PRACTITIONER’S TIP
The value exchange must be fair, consistent, and competitive. But it needn’t top the market.
Did you ever wonder why compensation has become so outrageous in some parts of the traditional for-profit sector? Maybe the reason is more than pure greed. Maybe it’s because for-profit leaders are called upon to do things in the name of shareholder value that are so fundamentally revolting to human sensibility that you have to grossly overpay people to get them to do them. It’s not enough that the leaders are overpaid, however. The worker bees must, in turn, execute the strategy and, in the same fashion, be overpaid for their complicity.
You, on the other hand, are running a social enterprise. Whatever your social mission involves, never forget that you are providing a wonderful gift to your team: the opportunity to do meaningful work. Contrary to popular belief, Hannigan points out,
88Most people would prefer to make their living in a way that could provide comfort for them and their families but also enrich their lives and make them feel like they were engaged in the well-being of the life of their community. I think that’s a choice that most people would make. I don’t think the Donald Trump attitude is the prevailing dominant attitude.6
The opportunity to do meaningful work has a value on which you can literally put a dollar amount. It is the spread between the compensation level at the top of the market and the compensation you must offer to get top-of-the-market individuals to do the work of your social enterprise. Don’t underpay, but don’t overpay either.
If you find yourself in a position where you simply can’t pay a competitive amount, then you need to rethink the underlying financial model for your enterprise. If the work that needs to be done is work that can’t be fairly paid for, you have serious sustainability issues. You need to do a reality check on your entire set of operating assumptions, parameters, and projected growth rates. Revise them if necessary to focus on what you can do within the range of what you can afford. Do more yourself. Raise more money. Do something. But don’t build your enterprise at the expense of your people.
You Can Find Them
At this moment in history, you have the wind at your back. All sorts of trends are expanding the pool of great people who would love to work for your enterprise. You have an exponentially growing “cultural creative” or LOHAS (lifestyles of health and sustainability) class.7 The same folks who are creating explosive 89demand for organic food, green buildings, alternative energy, and hybrid automobiles want meaningful work.
You have a growing disgust with corporate America, fueled by post-Enron fallout, Wall Street bailouts, oil wars, and “off-shoring.” You have an entire workforce of people who came of age during wave after wave of corporate mergers and downsiz-ings, who have no concept of working for a paternalistic corporation that can be counted on to look out for their interests.
And you have what may, by now, amount to a majority of the population who, just like you, have come to believe that we’ve got to change things.
These are the people who will make your enterprise soar.
Alfred Wise of Community Wealth Ventures gets the cream of the crop to work for him in his enterprise, a consulting firm that helps other social enterprises thrive. He says he hires “bleeding heart MBAs, people with an established business background who want to do social enterprise work… There is currently more talent than jobs in this kind of consulting work.”8
■ PRACTITIONER’S TIP
The time is right to attract great people to social enterprise.
You’ll find people of every level and with every job skill you might need. Lynch loves to talk about the blend of “beautiful people” that make up his team at Rebuild. He points out that a couple of “graybeards” like him run the finance and program areas. They bring stability, wisdom, and maturity. He has a couple of fresh, technologically savvy, energetic “young pups” doing the development and marketing. And he also has a couple of great success stories, people who have pulled themselves up 90from devastating circumstances through their work at Rebuild, running the production areas. It’s a most unusual combination, but it works because all of these people are very, very good— and very, very committed.
Greyston makes a constant effort to keep some young blood in the building. The last several years have seen a steady stream of MBA interns, some of whom have become full-time employees. They bring energy, high spirits, and new thinking to situations. In some instances their lack of experience is an advantage because they are not limited by what has been tried and failed. You should be so lucky as to have that same “smart naiveté.”
Where to find them? As good a resource as any is the landmark Aspen Institute Guide To Socially Responsible MBA Programs, which profiles over one hundred MBA programs with this focus. (And what a great indicator it is that over one hundred of these programs exist!) Or you can skip the guide and recruit from the best practitioner-oriented school of the bunch, Bainbridge Graduate Institute, a wonderful social enterprise in and of itself, toward which we have an admittedly deep bias and gratitude for the assistance its students provided for this book.
What a Deal You Have for Them
A social enterprise has a certain buzz about it. Notice this in one and you’ll notice it in all. According to Chris Mann, you’ll most certainly notice it at Guayaki: “People like to work with us due to our mission and often take a significant reduction in compensation from what they are used to. Not only are the environmental and social aspects of our business appealing, but so are the attitude and pace of business here.”9
91The attitude and pace that Mann is talking about are often experienced almost as an adrenaline rush. This feeling comes from a place of knowing that the work is important and that the social enterprise’s very existence is carried on each employee’s shoulders. Kevin McDonald was able to capitalize on that at TROSA: “They started coming—the people who, when you are trying to do something, understand survival, who will work sixteen hours a day, whatever it takes. And that’s because of that belief in what you are doing.”10
Mission alone isn’t enough to attract and retain the kind of people you want. It needs to be backed up by well-considered practices in the everyday life of the enterprise—in other words, how you do what you do.
Four practices that are indispensable are aspiration, say, voice, and ritual.
Aspiration
Aspiration is your means of motivating your team with the dream of doing the impossible. You start with the deep and absolute belief that each individual absolutely can make a contribution to the success of the organization and, thus, to the common good. Fred Miller and his organization, The Kaleel Jamison Consulting Group hold a unique perspective on what happens in organizations that fail to understand and appreciate the importance of aspiration.
Nobody says, “I’m going to a new job today. I want to not contribute.” Nobody says, “I’m going to this new job, and guess what? I’m going to try to be the biggest screwup in the place.” What people do say is, “I’m going to this new job. I really look forward to growing, developing, making a contribution, being valued.” Then things happen inside 92these organizations that make a person, who on day one was so excited and wanted to do something and wanted to make a contribution, end up feeling like “If I’m going to be treated like chopped liver, then why should I do anything? Why should I put in extra effort? Why should I think? Every time I think, they tell me to shut up. Every time I want to give them an idea, they say we don’t want to hear your ideas. If that’s the way they are going to treat me, that’s what they are going to get.” And eventually, you have a team member that you look at and say, “My God, why is that person acting that way? Why is that person just sitting in a corner? Why is that person half-doing their job?”
And I always say, When you get there, look first at the organization before you look at that person because that person didn’t come in with that attitude. I can tell you, ninety-nine times out of one hundred, they didn’t come in like that. Some things have happened in the organization to turn that person who had hopes and dreams and aspirations into somebody who is feeling downtrodden as a result of their experience. I know it doesn’t have to be that way… it can be that the person comes in and makes a contribution and feels good, and their work experience helps them enhance their life experience, not only financially, but as they feed themselves as a human being on earth.11
Aspiration is easy to snuff out. Take care not to demotivate your staff. You hired them to do a job. Give them the tools and the resources they need and then back off. They want to perform. Let them.
93■ PRACTITIONER’S TIP
Support aspiration by getting out of the way.
Say
The tensions and trade-offs behind every key decision in a social enterprise are complex and often intense. The more say you award to your staff, the better the decisions and, even more importantly, the better you’ll be able to attract and retain the best and brightest to your cause.
Giving say is one of the harder things you’ll do. As a leader, you’ll frequently believe you already have the answers, and you know what? You won’t always be wrong about that. Nor will you necessarily have a great deal of patience for the process or the time that is necessary for say to be said.
One of the best ways to create say is be intentional about creating forums for it. Rebuild created a forum called the Rebuild Council in which team members regularly sit. Any team member can create an agenda item. The council is augmented by the practice of Wisdom Circles: at any time, a team member can call a stand-up meeting of three council members to assess group conscience and make a quick decision on a pressing or timely issue. And this practice is backed up by weekly (and in some cases daily) meetings between the president and the council members.
■ PRACTITIONER’S TIP
Create intentional forums in which say can be said.
Voice
Whereas the idea of say is primarily an internal one, voice is a powerful attractant that is focused on the external. Voice is the simple practice of making your people spokespeople for your 94enterprise. It is a tool of enormous power. You are changing the world. The people who care most about your work are the ones doing it. Not everyone longs to be a public speaker, but you can be sure that your people consider it a privilege to talk about what you’re doing.
Give them a means of doing that. Introduce them to guests. Bring them on sales calls. Let them lead tours. Send them to trade shows. Feature them in literature. Profile them on web sites. If you’re clear on your mission and you communicate well internally, then there should not be a person anywhere in your organization who can’t be relied on to tell your story and to tell it well—maybe even better, in fact, than you can.
■ PRACTITIONER’S TIP
Don’t hog the fun. Give voice to all.
Ritual
This brings us to ritual, perhaps the most powerful and “sticky” attractant of all and one that is extremely easy to overlook. Ritual is the simple act of celebrating your social impact. Amazingly, the path of least resistance is to take the joy of the common good for granted.
Ritual makes your mission visible and cherished. At Rebuild, ritual is embodied in a weekly ceremony where clean and sober time is recognized, job placements are announced, students share their stories, and hands are held for the saying of the Serenity Prayer. At Greyston, ritual is important as well. All meetings are begun with a moment of silence to honor that the team is a confederation of individuals coming from many different places physically and mentally. The moment of silence allows people to bring themselves, fully present, to the meeting.
95Chris Mann and his team at Guayaki have already identified a grand opportunity for ritual and begun planning for it: “After much work and figuring, this calculation was arrived at: a bottle a day for a year is equal to an acre of reforestation; 275,000 acres of reforestation will be equal to 100 million bottles of mate, and we only have 95 million bottles to go. That day will be a great milestone!”12
■ PRACTITIONER’S TIP
Visualize the common good through ritual.
A Fine Line
At the end of the day, you need people who can do the job. All the passion in the world does not amount to capability. Lynch learned this the hard way in the early days of his first social enterprise, a social-purpose ad agency. When he hired his first copywriter, he thought he’d found everything he was looking for: brains, commitment to the mission, understanding of social issues, and experience. There was only one problem, though: the copywriter couldn’t write!
You need to have it all. You can have it all. The best way to get it all is to hire on talent rather than necessarily on experience. In baseball, you’d call it hiring utility infielders rather than position players.
■ PRACTITIONER’S TIP
Don’t settle for mere talent or experience. Go for multitool players.
Every job is different and unique to your social enterprise. A talented person will take a job that is reasonably matched 96to his or her gifts and make an extraordinary contribution. A really talented person will be a multitasker who can contribute in more than one place. A merely experienced person may do nothing more than continue a pattern of mediocrity.
Fred Miller has a knack for hiring great people, largely by having a simple conversation when he’s interviewing a candidate:
I don’t care what the person has done or what credentials they have, I want to know what they have learned. And that’s what I want to hear: “What have you learned in life? What have you learned about life? What have you learned about you that you could bring to this job, to this situation, to us, that will enhance us and enhance what we are trying to do and enhance you?”13
Get enough interesting, talented, excited people together and you’ll really have something, like the team Darell Hammond has put together to drive the meteoric success of KaBOOM!. But even as you gather that team, Hammond points out, you need to also balance its skill sets and motivations very carefully:
A lot of mission-driven organizations have a very high-intensity culture, and in high growth phases that’s important, but at the same time, so is specialization. So there is always this tension between the do-gooders and the good-doers. I think it’s management’s job in an organization to continuously keep a fresh tension between those two, to have open and honest dialogues and discussions about your age and stage in the cycle, your priorities around hiring, and the type of people that you are hiring—to make sure that you don’t compromise on the type of people so that everybody is in it for the same reason. I have made 97mistakes when I have compromised on people because I thought that they would be good specialists, but they really didn’t support the mission. And if they don’t support the mission, people are going to ferret them out really quick, and their job is going to be really hard.14
It bears repeating that good people are the antidote to hubris. The ultimate measure of your capacity as a leader, according to Kevin McDonald, is your willingness to hire people who are better than you:
I’ve got a really good staff. My COO—he’s so good. That’s the thing: to find better staff than you. And it’s not hard for me to find better staff than me, but what you have to do is, don’t be afraid of them. Go and get them. That way you build your organization. Because it’s not about you as an individual. It’s about your mission. So you have to build the best staff, and that’s what we are trying to do with the resources we have. I think that we have a really committed group here, and we mix it pretty good with the staff and it’s great.15
Mediocrity has no place in an organization with the desire to change the world. Just as you must have the vision to hire the supertalented, you must have the courage to weed out and gently remove the mediocre.
Better people are all around you. Find them, get them on board, and get out of the way.