Employees want a larger share of the pie as they stick with a company.
Ray Zinn, Silicon Valley’s longest serving CEO, maps out the right way to balance employee expectations with company growth.
Guy Smith: Hello again and welcome to another episode of the Tough Things First podcast. I am your guest host today. Guys Smith. Former Silicon Valley alumni and now a Silicon Valley refugee. And as always, we’re chatting with Ray Zinn, the longest serving CEO in Silicon Valley. And today we’re going to be talking about some interesting aspects of employee motivation and growth. But before we jump into that, how are you doing Ray?
Ray Zinn: Doing fine. Thanks for being on the podcast today Guy.
Guy Smith: Oh man, this pretty much highlight of my week. So here’s one thing I have noticed about businesses in general. Startups in particular, employees expect increasing rewards for their work, for their effort, for their genius, for their longevity in many cases. But growth is uneven in companies. So how does the leader of a company, especially during times of down cycles in the GDP times when the company itself is not growing. How do they keep rewarding their employees who are expecting more when maybe the company can’t deliver more or at least not deliver to the fullest of the employees expectations?
Ray Zinn: It comes when you’re fair. If you’re fair with your employees, you’re keeping them informed. They know there are ups and downs. And so what I have found that the way I got the loyalty of my people is, by just being fair. They know if they have a fair salary, or a fair wage, if they have a fair benefit, vacation policy, holiday policies. Everything is comparable and fair. They will work with you. And so, I think the concern comes is when you know that there’s not an ongoing growth in your particular business. Let’s say your business is stable, year after year or year, your revenues aren’t increasing particularly and your profit margins remain the same. But yet the employees, they want to see that annual increase or they want to see more vacation or more holidays or for more medical benefits.
So that’s the challenge is when your business is not growing and hasn’t been growing and won’t grow on into the future. How do you deal with that? How do you get your employs to understand that? Well, one good thing about companies that are stable is that a lot of employees like to work for a stable company and they’d rather do that and have their income more stable than constantly being laid off or having to give back benefits or whatever.
So if you are a stable company, make sure that how you reward your employees is stable. For example, these government organizations, their obviously not profitable for darn sure. How do they keep their employees, you know, working for them in this kind of a market. There’s been recently this, you know, the teachers in Oakland have gone on strike, and the Oakland teachers management or schools management has not been able to provide the funding that the school teachers want. And so now they’re out on strike. And so that’s the danger. If your employees decide to strike on you and they’re demanding more and more. Where do you get the money?
Well you have to go back to the tax payers as you would. And I use that example because that’s a very stable kind of business. That’s something that’s not growing. There’s no profit in it. And so, how do you reward your employees or keep rewarding your employees when there’s no growth or no way to increase the budget?
Guy Smith: Well, you know, the risk of gang into a political topic. I have in-laws who were government employees and we’ve had some very frank discussions about the fact that the traditional trade off about being a public employee was that you may have not have gotten a bigger salary. You may have not gotten a huge bennys in the past, but you had such rock solid stability in your employment that that was the key benefit that you got out of it. And it seems that that equation may have kind of gone off kilter and in many parts of the United States as public employees seem to want the best of both worlds. The stability and the financial rewards similar to the private sector. But that’s my little rant for the day. So-
Ray Zinn: [crosstalk 00:05:56] This happens though Guy. Whenever the economy’s doing well, if the economy’s not doing well, then people pretty well sit back and just take their lumps. But if the economy is doing well, the stock market’s booming and everything’s going great, you’re going to find the people and the teachers in the public school system or the government workers getting more antsy. They’re saying, “Well, my neighbor just got a big increase and they got a big stock option and they made a lot of money in the stock market and blah, blah, blah.” And so then they go back and they started haranguing their management about, “How come you guys can’t do something to help us out. We don’t have any stock options. We don’t have these big bonuses that come through.” So the public sector has to compete to some degree with the private sector and that’s the rub.
And that’s kind of what we’re alluding to here in this podcast is, you know, how do you deal with your public or private company? How do you deal with a very stable business environment and yet, because the economy’s doing well, then how do you compensate your people? And that’s difficult. I mean sometimes, you can’t and they will either leave that public sector and move back to the private or they’ll go on strike on you.
Guy Smith: Hmm. One thing which I’m curious about are going to be the millennials and the generation Xs. One of the things that we’ve seen about them is that their perception of the work life is geared a lot towards what social good they are doing. How does that fit into the equation? Because they are not necessarily motivated by the old reward system, you know, generous Christmas bonuses, constant pay raises, blah, blah, blah. What can leaders do working with this next generation of workers to make what I’ve kind of called alt rewards a part of the equation?
Ray Zinn: Well, giving them flexible hours. Working from home as you would or at least a few days from home. Finding other ways to compensate them. Allowing them to have more time off for childbirth or for … Actually working with them, with regard to a complex family situation. There are other ways you can do it without having to put money out of your pocket per se to compensate them. So it’s a matter of just finding ways, being creative and looking for ways to compensate people without actually having to take the money out of your pocket to do it.
Guy Smith: Well. And I think that kind of leads into some of what we saw during the great recession. I saw a couple of very metric driven companies who had tremendous amount of trouble maintaining employee morale during the great recession because the metrics no longer mattered. The revenue was down on the top line so far that the employees could have still been performing at 100% of non financial oriented goals. And there was no way to compensate them for that continued stellar effort. So give us some ideas as to how you can compensate employees when there’s just a lack of growth due to external factors.
Ray Zinn: Well, it’s what I said before, you just have to be creative, maybe flexible work hours or letting them work from home or finding other ways to compensate them. Either through creative medical plans. That’s about all there is. I mean there’s … If you don’t have any money, no way to actually fund it, then you’re going to have to do it through other means. And you know, a necessity as a mother invention and you’ll just have to go out and find out what works best for your people.
Guy Smith: So speaking about what works best for your people. Let’s talk about Zen of Zinn for a minute. For the listening audience, Zen of Zinn is Ray’s second book. That’s Z-E-N of Z-I-N-N. Talks quite a bit about people in the interrelationship between them, their companies, their community, a society at large. Tying this back into the whole non expanding pie. How do employees perceive themselves continuing as part of a family, which is the company so to speak. And how does that keep their motivations high even when they’re not being financially rewarded?
Ray Zinn: People like to feel wanted and that they have value and so you know, praising your people. Regular communication with them as far as how businesses and making sure that they have the right tools to work with. Making the environment a peaceful place to work as opposed to a hostile. Just ensuring that their needs are being met and making it feel a bit like home is the key to keeping your employees happy. Because what I’ve found in studies of boring this out, is that most employees leave a company because they don’t like their supervisor. Not because of financial or because of promotions or anything else. It’s really they just disliked their supervisors.
So as their supervisor or if you have a number of people that do manage other people, just make sure that those managers have a culture of showing love, kindness, and humility when they supervise and work with their subordinates.
Guy Smith: Well, and this touches upon a different way of stating the problem. Everyone strives for a certain amount of happiness in their life, but happiness comes from a lot of different factors. And it would make me believe that if one’s generally not happy with their work environment, if they don’t feel loved, respected. If they don’t feel fulfilled in their job and whatnot, they’ll seek greater satisfaction through more financial rewards. So if you don’t have that healthy corporate culture to begin with, then the lack of a financial reward becomes an immediate perceived burden. And that’s when people start to get grumpy. Whereas, if you’re in a great corporate culture, you know the down cycles are livable because the rest of your work day is pretty nice.
Ray Zinn: Well, if you enjoy working around the yard, if you enjoy just picking the flowers and pruning the hedges and so forth. Then work doesn’t become a drudgery. But if you don’t like that, if you don’t like mowing the lawn and taking care of things, then it’s going to look like a drudgery and your yard will go to pot as you say. So you know, you love what you do and you won’t work a day in your life.
Guy Smith: So on that closing note, for all the founders who are out there, all the entrepreneurs, all the people who were thinking about launching. Love, what you do is part of the reason that you’re becoming an entrepreneur. And one of the ways love what you do is to know that you’re going to be good at it. And one of the best ways to know you’re going to be good at it is to get educated on what it means to be an entrepreneur. And that’s my way of saying that you need to get a copy of Ray’s book. Tough Things First. There is no better end to end guide on the art of being a leader, the art of being an executive. How to start your business, how to launch, all the pitfalls that you can conceive of as you are going down this journey.
So if you’re thinking about launching, if you’ve got that great idea, if you want that entrepreneur’s life, get a copy of Tough Things First, right away. Make it your required reading. You’re going to march out there and face the entrepreneurial life with a smile on your face and Ray, through teaching you how to do the tough things first is going to make every moment enjoyable because you’re going to latch onto that joy of being so deeply involved in your business and seeing how all the puzzle parts fit together. That every day that you go to work is going to be a blessing.
Ray Zinn: People have asked me how I’ve managed to run the company to such a long extent. I was well into my 70s when I sold the company and that’s because I love my company, I love my people and I didn’t want to leave. I would have worked until the day I died. But I did enjoy it, and I would still be there if God willing and things would’ve worked out otherwise, I’d have still been running the company even now in my 80s.
Guy Smith: Well, and the fact that you ran the company for 37 years, 36 of them profitably, even though I think that one down you were in my mind, technically profitable. I think that really attest to it. You had that joy, that vibe that carried you and the entire organization forward step by step through the entire journey. And to our audience. Not only should you tune in next week for the next episode of Tough Things First, but by all means, rate and review us, on iTunes, Google play, Stitcher, wherever you get your podcasts content, and we will see you again next week for Tough Things First.
