How Great Businesses Inspire their Teams

The Baby Boomer generation had the importance of stability drilled into them from an early age. Following the brutality of World War II, their parents and grandparents instilled in them a sense of duty and loyalty. While some rebelled and got lost in the hedonistic excess of the sixties and seventies, many others conformed, becoming ‘company men,’ loyal servants who would dedicate their careers to the betterment of one corporation. Today’s more aspiring and independent ‘millennial’ generation either spend their time hopping from one company to another to climb the career ladder, or from job to job, trying to find a role where they can make the most impact, or receive the most job satisfaction.
“A Gallup report[1] looking at how millennials live and work identified only 29% as being engaged in the work they do”

A Gallup report[1] looking at how millennials live and work identified only 29% as being engaged in the work they do, compared to 45% of traditionalists (those born pre-1946). When some 71% of the generational workforce is not engaged, or are actively disengaged, they are going to start looking for something else to do or another company to work for. Today, the average period a millennial spends at a company is 4.4 years, and with Gallup data showing 21% of millennials changing job in the last year, compared to 7% of the rest of the work force, this is a generation on the move. This lack of engagement and job turnover is estimated to cost the US economy over $30bn a year.

If outstanding firms are built on outstanding employees, how do you keep a good employee from job-hopping elsewhere? It will come as no surprise that some of the world’s most successful companies also rate extremely highly when it comes to job satisfaction. In a 2016 Business Insider poll[2], a staggering 97% of Facebook employees had high job satisfaction, followed by 90% at Salesforce and 86% at Google.

Keeping Silicon Valley employees happy and in one place is notoriously tricky, although in the early days a tacit agreement between the big digital players (Apple, Google, Adobe and Intel) not to poach each other’s staff led to a $415m settlement to underpaid software engineers. Today, almost every company offers a combination of free meals, snacks, laundry, beer, games, childcare etc. But it’s not all about the office freebies. Facebook offers four months paid maternity/paternity leave and free healthcare. Google employees are famously permitted to spend 20% of their time focusing on their own projects, which develops a creative culture.

Netflix offers fantastic perks, giving all employees unlimited vacation time. To set an example, CEO Reed Hastings takes six weeks a year, although a typical worker only takes four weeks off. While most don’t take full advantage of the offer, it’s the implied trust and effect of treating employees like adults, instead of schoolchildren, that keeps workers glued to their laptops long after the official working day has ended.

John Lewis operates as a partnership, which makes every employee from shelf-stacker to CEO invested in the profitability of the business, taking home a share of the upside at the end of each year. Employees are inspired to work harder, develop customer service and input to the running of the business.

However, perks of the job seem to matter less than what the job is. Glassdoor, a website where employees rate the companies they work for, take a look at the best companies to work for every year, and many of the top-rated companies are praised. While the majority of companies in the top 10 are tech or software firms, a few management consultants have slipped through the door. The quote from one of the associate consultants says it all: “Incredibly supportive culture with an incredible focus on learning and mentoring. Highly intelligent, down-to-earth and fun people. Focused on making a real impact for our clients.” They key to inspiring a good team breaks down into three parts: education, environment and stimulation. As Benjamin Franklin said, “an investment in knowledge pays the best interest” and employees need to continue to develop their skills and learn new ones. Environment is key. A successful team needs to be open for debate, the constituent people need to work well together and be able to communicate in and outside of the work place. Probably the most important part of all is stimulation. Individuals need to know they are doing their job well, while managers need to know that they are enjoying their work, and are doing it to the best of their abilities. Which brings us back to the 71% of disengaged millennials who are the future of our workforce, and how to develop their talents and pique their interests.

“According to the 2016 BNP Paribas Global Entrepreneur Report[3], millennials tend to launch their first business at the age of 27, compared to baby boomers at 35”
According to the 2016 BNP Paribas Global Entrepreneur Report[3], millennials tend to launch their first business at the age of 27, compared to baby boomers at 35. The last decade has seen the rise of the entrepreneur; from artisan gins to niche apps, the world has fragmented into multiple start-ups, all hoping that they can achieve that gilded ‘unicorn’ status (a unicorn is a company that reaches a billion-dollar valuation – think taxi-app Uber). So how do small start-ups lure big talent to work with them? Apart from the challenge, it is the promise of a slice of the action – an equity stake in the company, so that if the employee helps propel them into the major leagues then they are suitably rewarded for their endeavours and skills. Sweat equity also allows start-ups to keep costs low at the outset, ensuring that key players are suitably invested in building a business.

But it isn’t just start-ups that offer equity in return for loyalty. In 2015, Alphabet (Google’s parent company) offered around $5.3bn in stock-based options to their employees, a staggering $85,000 per employee. And in 2011, they supposedly offered a $100m stock bonus to a senior executive who was considering jumping ship to Twitter.

When looking at which companies will be successful in the coming years, it is important to not only recognise the key C-suite players, but also the team and culture behind them. Fostering employees who are engaged and empowered has never been more crucial, from the shelf stacker to the CEO, but it is just as important to keep staff turnover low if a business is to succeed. Not simply because the process of recruitment is costly (in terms of money and time), but because those key members staff who are visibly dedicated and passionate, are the beacons that attract new talent – helping the business grow in the right ways.

This article was inspired by a panel talk we hosted at House of Killik Soho in January 2018, with Virgin Holidays’ Head of Customer Experience, Kate Burgess, and Strategy Director for eatbigfish, Nick Geoghegan. It is designed to throw an everyday lens on some of the issues being discussed and debated by investors across the world; it is not research, so please do not interpret it as a recommendation for your personal investments. If something has piqued your interest and you would like to find out more or discuss what investments might be suitable for you, please contact one of our Investment Managers on 020 7337 0777.