The Secret To Change Without Rebellion

A growing company must constantly change to adapt to its market, but change is scary for employees and they will oppose it as their default position. The painful experiences I will share with you below can be avoided by utilizing a key lesson I learned after repeated failures.

Unveiling a positive change for employees:

Standing in front of my twelve person team in my home office loft several years ago, I said, “Alright folks, let’s get this meeting started.” I switched on the projector that pushed my laptop’s screen onto the wall behind me. “I have great news! I have planned a big improvement for you; I am going to add a profit share program to our company that will pay up to 50% of our monthly profits out each month! The profit share amounts will be determined by my new key performance indicator – or KPI – system. Each of you will be rated on your work performance each month and will receive an additional bonus based on how you did.”

Most of my team members stared at me blankly. A couple looked down at the hardwood floor.

I continued on, “This KPI system will also help us determine who gets promotions and raises or who needs additional coaching.” Several minutes later, I wrapped up laying out all of the details of my plan.

“Does any of you have any questions on how this plan will work?” People shook their heads no. Meeting adjourned.

A few days later, feedback started to trickle in. One copywriter, Lynn, told me, “We think this profit share program is just you trying to manipulate us to go along with this KPI system.” The most positive reaction was from a Digital Producer, Hugo, “I guess I’ll wait and see how this pans out. More money is always nice I suppose. Might be good.”

I told my girlfriend later that week, “I am shocked by the lack of enthusiasm people had at having the opportunity to get massively more money than they had originally signed on for and had any reason to expect. I actually feel rather bitter about it towards them. Shouldn’t they be thankful?!”

Unveiling a negative change for employees:

A few months after I presented my new profit share program, I organized another company meeting.

The whole team pulled up their chairs in the open office kitchen area where we held meetings.

I drew a deep breath, held it for a second, then released it.

“Team, we are going to start using Time Doctor company-wide. As you know, Time Doctor is a tool that takes a screenshot of your computer every three minutes and a webcam shot of you working every ten minutes.”

My managers wouldn’t look at me or the team.

The team sat in shock for a moment, then one outraged team member said, “So you’re going to spy on us now like Big Brother?!?!”

I stammered, “I don’t see it as spying this helps us be more accountable to our clients and the company.”

People scowled at the ground or looked at me with disbelief. The next half hour was spent with me on the defensive, arguing with team members about why I thought it was important that we should use Time Doctor.

Feeling uncomfortable and angry, I shut down the discussion saying, “If you have nothing to hide then why do you care?”.

Over the next few months, I lost half of my team members. Quotes from our Glassdoor reviews at that time included these statements:

  • “Coalition Technologies has fallen prey to the cheap and narrow-minded nature of its CEO. He creates a prison-like work environment and expects employees to work every single second of the day: breaks and interactions with your coworkers are highly discouraged.”
  • “Trust your employees more and be more transparent with the company mission.”
  • “It’s a shame, because the employees are great. The CEO is just a terrible leader.”

Ouch.

Unveiling a possible negative change a few months ago:

I looked around at all of the Copy Strategy team members in my office. Staav, with her red hair, sat on the couch. David sat in the chair in front of me in his neat button down shirt. Jason and Constante called in through Google Hangouts and I could see their heads bobbing up and down on my screen.

“Team, here’s the challenge we face. As you know, we have our copy processes laid out in spreadsheets right now. The benefit is that we all can access them and change them and customize it to our needs right?” Heads nodded.  “However, as we’ve grown we are starting to have a hard time knowing exactly which pages have been approved by a client and which pages have been published, right?”

Staav spoke up in agreement, “Yes, some clients have copy we wrote four months ago still waiting on them to finally approve it!”

I continued, “We also aren’t clearly tracking how much results each individual page of copy is getting once it does go live and we don’t have a clear understanding of exact traffic increases compared to before it went live right?” A chorus of yeahs.

“Here’s my idea: Let’s take our current copy process we are using and build it into our php web application Scoretask. Then we can have automatic reports that tell us how many pages of copy are live, and what results they are generating for clients individually and in aggregate. What do you think?”

Jason, our Copy Strategy Team Lead replied, “I think that would be really helpful for us! I think that we should also allow the clients and copy contractors to use the system.”

Constante, a remote full-time Copy Strategist suggested “Can the system remove access to copy contractors after they are done, when we start doing our editing?”

We worked together on the plan quite extensively. Jason provided me a comprehensive layout of how he thought every page should look. All of the Copy Strategists partook in testing the system and finding features they wanted to add or bugs they wanted fixed.

Taking the system live meant a big increase in workload for the month before and the month during this change for our Copy Strategy team. They would have to import all of our old copy, find and deal with bugs, work through all of the myriad problems that would come up.

Change is always difficult, but the copy team was excited and all on board with what we were doing.

Why did the copy changeover in the third example go over so much better than the first two situations? What was the secret?

  • First, I involved everyone affected by the new copy system right from the idea stage. I didn’t get up in front of a group and suddenly unveil a finished system.
  • I allowed everyone to share their feedback and influence how the idea turned out. This gave each of them ownership of it. Everyone is much more excited about something they had a hand in.
  • Give them credit for their great ideas

The secret to getting your employees on board with change is to be transparent from the start, invite them to help shape the change throughout the planning process, and to give them credit and ownership for the change.

My First Good Developer

I lost him after a tragedy. Before any of that though, when I first met him, he came to his interview well prepared with a binder full all of his portfolio items. He was one of the first people I skills tested, by actually having him code a site while I sat next to him and watched (turns out there are more efficient ways to skills test…). Hiren’s designs looked great and his development code was spot on. He was hired.

Hiren was of Indian descent, with a short and compact body. He was a solid basketball player and a generally decent person.

Over the course of a couple of years, he proved to be very reliable. He rarely missed work and would put in extra time when needed to make sure deadlines were met.

One day he asked me to step outside with him. We were working in our office on right next to Ocean Avenue in Venice with a view of the beach and the ocean. We went outside into the warm, sunny day and he told me his brother was suffering from a debilitating disease. I have three brothers myself, so I immediately was overwhelmed with sympathy.

A few months later, there was a 5k walk  fundraiser for the disease his brother suffered from. The Laker girls came and Coalition attended and donated a substantial amount of money.

Hiren missed work for the first couple of times as his brother’s health declined. The day his brother passed, he let Tara (my girlfriend at the time who also worked for me at the time) and I know. He invited us to the funeral in Bakersfield and offered to let us stay free at his parents motel. We accepted and went to the service and learned more about his brother and his life. There was a big Indian dinner then a bit of an Irish wake the evening after the service. The next day Tara and I drove back to LA.

Hiren resigned a short time later. I had never lost an important team member before and tried to keep him on board without success. One thing I have learned in business is that once someone has decided to resign, almost nothing will keep them – not money, title, career, work changes. If you want to keep someone, you need to make sure they never get to the point where they want to resign. Keeping team members motivated is an area I struggle with to this day.

 

 

Internal Tool Building

The more I build internal tools to help automate our processes here at Coalition and bring greater efficiency to our clients and employees, the more areas I see that I can improve! I now have probably a year of programming work… probably need to hire another developer to work with me on these improvements.

Landlord Lease Buyout – My Initial Offer

My landlord wants to buy me out of the awesome lease I have. Their goal is to redevelop the whole massive property into a booming retail & residential & office complex that will multiply their square footage as well as what they charge per square foot. I spent a year hunting hard to find the best possible office space for my company with the most long term benefits. The landlord stopped by today and had a conversation with me about all of this. Here is my opening thoughts to him on what the lease buyout could be structured like. What do you think? Also, I included his initial response.

Name changed for privacy:

<Landlord’s name>,

I really enjoyed our meeting today! It was by far the best start to a relationship we have had with anyone representing <Landlord Company> so far. Being pressured by other <Landlord Company> employees in the past to leave my lease was very unpleasant. I think we will be able to figure out something that is fair and makes sense for both of our businesses so you can get a much better use out of the property here. It’s much better to work as allies than the other options.

I understand that you are thinking it will probably be 18 months till you want to break ground and begin the redevelopment. I mentioned it took me 12 months to find this place, so the sooner we get a plan of action together, the easier I think everything will go.
Building a new residential / retail complex and rebuilding our office building should be highly profitable for <Landlord Company>. You can multiply the square footage available for rent while also greatly increasing the rent per square foot. The increased property value will be many millions of dollars.
My thoughts on Coalition’s cost / compensation factors for exiting our lease:
  • We took possession of the property in April 2014 and the lease runs through to April 2024 I believe. We have a little over 7 years left. Approximately 87 months left on our lease I believe. It sounds like you guys would like to begin construction perhaps when we have about 70 months left on the lease, so you would like us out before then? We currently pay something like $2.10 per sq ft. A comparable space will probably cost us $4-6 per sq ft per month. (estimate: $4.50 – $2.10 * 70 months *5000 sq ft = $840k)
  • We also have the expense of the disruption to our business:
    • Probably a couple of months of lost revenue from the time and effort and downtime and distraction of moving (estimate: monthly revenue of $250k * 2 = $500k)
    • Changing all of our marketing & sales & advertising materials ($30k)
    • Informing all of our clients and employees and prospects (??)
    • Losing employees who don’t want to move to the new location (anticipate 20% staff losses of in office people with related expenses) (estimate – we have 20 employees, based on my experience last time I would lose 4-5. Cost of recruiting 4 * 20k = $80k)
    • Losing clients from the distraction of the move / clients who like being in close proximity / etc (estimate: based on last time we lost 5-10% from the disruptions .. included probably in the first bullet with lost revenue)
    • Paying contractors / construction to build out the new space ($50k?)
    • New furnishings / desks / chairs / decorations / art in the new office ($40-60k?)
    • Breaking our multiyear contract with the fiber provider (not sure)
    • Loss of easy access to the metro station which was a major reason in why we selected this location – makes us much more attractive by removing the commute from lots of areas of the city (not sure)
    • Increased cost of parking in new location. We pay $75 per spot and the local garages were asking $200 when I asked for a spot for new employees. (probably $1k a month over the remainder of the lease = $70k)
    • Loss of easy access to all the local partner companies, as well as the great restaurant and social scene here. (not sure)
    • Moving company expenses & breakage (not sure… $5k?)
Those are just my initial thoughts, I’d need to really analyze it further to see what else can be come up with. Ballpark might be around ~$1.6m. I know in a lot of markets tenants are getting crazy offers based on the landlord’s multi-million dollar gains, but I think we could possibly approach it from the cost to Coalition perspective I outlined above. If we leave, <Landlord Company> gains 70+ months of the entire property renting for far more which would probably put a buyout at several million dollars rather than the number I came to from cost calculations. What do you think?

 

P.S. – Also one factor I forgot to include would be tax implications. Perhaps also legal issues with a less favorable lease?

The landlord’s response:

Joel

I also enjoyed our meeting. Great to know you are a UW guy!

As I said, we have a lot on our plate right now in terms of development and quite honestly don’t know that I can recommend to the family to move forward with everything at once!

We have other tenancies in the buildings that will also be looking for compensation on a move-out.

I will take your notes below in to consideration but at first blush it is higher than I would have anticipated

Lets keep the dialogue open and friendly

All the best

Matt

 

Growing the Business

I just made the decision to send out quite a few job offers. We have had a lot of great applicants recently and I am hoping Coalition continues to grow strongly in the first quarter. We will definitely have a very robust team to service all of our clients! I am anticipating growing my team 20% in the next couple of months.

The Programming CEO

A CEO who knows how to program has superpowers over those CEO’s who don’t. The fundamental job of every CEO of a company with over a couple of dozen employees is to structure the company so that it runs efficiently and well. A lot of this is building systems and processes so that your employees know what to do and your customers know what to expect and for you to make sure that quality stays high. A CEO who can program can build customized tools for his or her own business that can help it leapfrog the competition. That is what I am trying to do with Coalition.

Operations Management

I have spent most of the last four years working in Operations Management for Coalition. Basically, I am trying to make sure that all of the promises we make to our clients are fulfilled. The single biggest area for me for a long time was recruiting. Recruiting continues to be a major time commitment for me most workdays. I also am building tools to help support our teams workflows and make sure that the right items get worked on for each client. For my business, having excellent team members who are well trained and understand what priorities need to be worked on is pretty much the whole of what I am responsible to deliver.

Hiring

I have had about 19,000 applicants apply to work at Coalition over the last year. About half of that number have taken my skills test. We have hired probably 70-80 people. I think we have one of the most stringent and effective recruiting processes of any company I have seen; certainly far superior to traditional outsourced recruiting. We have a truly awesome team now.

Todo management application

I have been building an internal todo management application for Coalition. The key difference between my todo application and others out there is that it has automatically sortable priority lists by client and by user that synchronizes across multiple users and multiple clients. I am also tracking a user activity log and going to sync it with Basecamp. Hopefully it helps my team focus on their top priorities better.

Process Aging & Updating Processes

It’s amazing how quickly time goes by. The last time I updated our “Company History” document was two years ago… feels like I just updated it yesterday. We have created 390 GB and hundreds of thousands of tracking, process, and other docs on our Google Drive. Some of these have aged and need updating. I spent all day yesterday updating our primary processes we use for running the company and I still have a lot left to do. For core processes we do over and over again for clients, I am building Laravel web applications for managing these going forward so all of the data can be stored and managed in one place.