Thrive turns five this month. Five years of successes. Five years of pivots. Five years of bootstrapping. Five years of failures. It hasn’t always been easy. There have been times when we have made decisions that were short-sighted because we needed the work (in our early years we made websites and managed social media). But the majority of our decisions have been made with the long game in mind.
We see what the next five and ten years could look like – maybe the horizon is a little foggy – but the four of us are aligned. When we find ourselves losing focus or facing a decision that could be a trade-off between short-term gain and long-term vision, we circle back. We get clarity on our purpose, values, and long-term vision and make decisions based on those agreements. And then we move forward. For the long-term.
And it’s not always easy, right? No one is immune to the pull of short-termism. I mean, who doesn’t want to make a quick profit to solve cash-flow problems (even if you would normally say no to the work)? Who wouldn’t consider taking on a project for a client who isn’t value-aligned because it keeps your people working? Aren’t HR consultants always telling us to fire quickly (to get the wrong people off the bus)? Shouldn’t we be cutting costs and pinching vendors to stay competitive?
Every one of our businesses are up against some version of these decisions that allow us to deliver short-term results and that, unfortunately, erode long-term value. But wait – how exactly do the challenges above erode long-term value, you ask? Let’s unpack that quickly.
- Taking work (that you would normally say no to) takes employee time and effort away from developing strategies to increase opportunities for work that you DO want to take on. Steve Hall, CEO of Drivers Select, told us on a recent webinar that he credits their immense success to saying no to anything that doesn’t align with their purpose. Listen to Steve here.
- Taking on a client whose values aren’t aligned with yours puts both your reputation and your employee morale on the line. Building trust with the public and with your employees means you have to consistently walk the talk and create shared value.
- Firing quickly is wasteful both in terms of time, effort and money. The Society of Human Resources Management did the math for us and found that it costs 50% of an employee’s salary to replace them. So for a position that pays $75,000 you should expect to incur $11,750 in direct costs and $29,250 in lost productivity which brings your grand total to $41,000 for one lost employee. By contrast, investing in training and development of that employee would cost you much, much less. In fact, cultural and employee development is the linchpin for how the company Barry-Wehmiller created a multi-billion dollar company using a no-fire policy! Cutting dead weight and demonstrating to your team that you will not tolerate mediocre work may seem like a good idea in the short term, but in the long term this approach contributes to a workplace culture in which people hide mistakes, pass the buck, and keep an eye out for opportunities in other companies. None of that is good for business.
And big business are even less immune to these pressures. But many are tackling it head-on. On his first day as CEO of Unilever, Paul Polman announced that they would no longer report earnings quarterly because pressure for quarterly profits erodes investment in the long-term. He would later quip that he made that announcement strategically because “I figured they couldn’t fire me on my first day.” Polman has gone on to spearhead the 10-Year Unilever Sustainable Living Plan. And the results are extraordinary. In 5 years, Unilever went from 10% sustainably sourced to 60%.
Taking the long view is not easy. For any of our businesses – big or small. But keeping a few critical questions in mind when you are facing trade-off decisions helps us. Here are some we’ve used ourselves and some we’ve gathered along the way:
- Do you have a clear, measurable vision for where the business is going? Does this decision support or undermine that vision?
- Does this decision support a workplace culture that prioritizes learning and improvement?
- Does this decision enforce a strong, collaborative relationship with your partner/vendor/client/customer?
It’s been five years. And we hope to be writing a very similar message five years from now. And the only way to get there is to take the long view.