Steve Blank relates a story, one which is all to frequently repeated in American Boardrooms, where the new CFO comes into a startup company that is finally making a profit, and decides to end the provision of free soda to employees, which saves $10,000 a month, but chases away the experienced staff:
Sometimes financial decisions that are seemingly rational on their face can precipitate mass exodus of your best engineers.
……………
I had lived through this same conversation four times in my career, and each time it ended as an example of unintended consequences. No one on the board or the executive staff was trying to be stupid. But to save $10,000 or so, they unintentionally launched an exodus of their best engineers.
This company had grown from the founders, who hired an early team of superstars, many now managing their own teams. All these engineers were still heads-down, working their tails off, just as they had been doing since the first few months of the company. Too busy working, most were oblivious to the changes that success and growth had brought to the company.
The Elves Leave Middle Earth – Sodas Are No Longer Free
One day the engineering team was clustered in the snack room looking at the soda machine. The sign said, “Soda now 50 cents.” The uproar began. Engineers started complaining about the price of the soda. Someone noticed that instead of the informal reimbursement system for dinners when they were working late, there was now a formal expense report system. Some had already been irritated when “professional” managers had been hired over their teams with reportedly more stock than the early engineers had. Lots of email was exchanged about “how things were changing for the worse.” A few engineers went to the see the CEO.But the damage had been done. The most talented and senior engineers looked up from their desks and noticed the company was no longer the one they loved. It had changed. And not in a way they were happy with.
The best engineers quietly put the word out that they were available, and in less than month the best and the brightest began to drift away.
Truth be told, I’ve never worked a company that gave out free sodas in the break room in the first place, and if I were to start a company, I would not choose this as a benefit for the employees, but it is American management that would create that would chase away its most valuable employees by counting pennies this way.
To the degree that the United States has achieved economic success since the end of the 2nd World War, it has been in spite of management, not because of it.