I remember when Uber first launched. The first time I tried it I was amazed. “Whoa! I just got picked up in a nice clean car. The driver offered me a bottle of water and gave me a warm welcome. The driver came to me instead of me having to fight for a cab. And I didn’t have to fumble with my wallet when I was drunk!” It was an incredible experience. On top of that, the drivers would always tell me how much they loved Uber. It gave them freedom. It gave them extra money to afford a better life. They loved meeting new people. They felt like they were a part of a revolution. And then it all went wrong.
About a year later I started hearing grumblings from my drivers. “They cut our wages in half! Were all gathering tomorrow morning to protest.” What? In half? Why?! The service was already cheaper and better than a taxi. To be honest I would gladly pay more because it’s a better experience. I loved how passionate the drivers were about the company, and it made me feel good to support them. Why would they ruin that?
Caught up in the ecstasy of incredible growth, they kept chasing the bottom line. In their runaway growth, they took on huge investments from those with the deepest pockets and the sharpest appetite for profits. They were in a race to the bottom at all costs. They turned their drivers into dependent customers, by way of leasing them new cars. They offered financing to drivers with bad credit, a questionably predatory lending practice. If the driver couldn’t make their payments, they would repossess their car, simultaneously putting them without a job or transportation to get a new one. They flagrantly avoided providing any benefits or support to their drivers. As independent contractors, the drivers had no health insurance and no protection from our labor laws. Drivers also had no negotiating power over the prices Uber charged, and the income they made. If Uber decided to slash prices, they could do so without asking anyone’s permission. Uber became drunk with success, and it turned their employees against them.
Now I don’t care if Uber cuts their prices. I refuse to do business with them simply because of their ethics. I would rather pay more to a competitor as long as the drivers tell me that they’re being treated well. Because that in turn creates a better experience for me.
This toxic culture resulted in numerous sexual-harassment scandals, and the outing of their founder CEO. Their brand is tarnished and their trust is broken with both their employees, sorry I mean contractors, and their customers. They are on a downward spiral. They will now be constantly fighting to retain drivers and riders, instead of establishing loyalty.
It’s hard to say whether this culture was there from the start, or developed as the company grew, but one thing is clear. A culture that is focused only on bottom line growth and shareholder value, at the expense of your employees and your customers, may be successful in the short term, but will ultimately suffer an explosive and dramatic demise.
We are living in another Gilded Age, where all the incentives of our public and private funding systems explicitly reward behavior that harms employees. Is your stock price sluggish? Layoff a few thousand employees to get a bump. Profit margins too thin? Slash benefits. Employees starting to complain about poor wages and working conditions? Fire them all and move your operations overseas where employees have no rights. If your only measure of success is the bottom line, then those who exploit, win.
It doesn’t have to be this way, and if we look at investments in the long term, it actually pays to treat our employees well. Let’s look at Costco as a perfect example of this. This is a company, who from the very start, was committed to its employees. They have consistently provided higher wages, better benefits, and a better work environment for their employees. As a result, not only are the employees happier and healthier, but I am proud to tell my friends and family to shop at Costco. I believe I’m supporting a good cause when I shop at Costco. This is a company who sacrificed short-term gains to support their employees, which then generated long-term success. By shaving profit margins to better compensate their employees, Costco created an organization where employees are proud to work, and customers are proud to do business with.
Startups are hard. Money is always tight, and sometimes it’s tempting to make sacrifices in order to make investors happy, or acquire new customers. Your employees are the lifeblood of your company. If you squeeze them, you might get a little more blood in the short-term, but in the long term they’ll run dry. If you can’t afford to take care of employees, then you can’t afford to be in business.
Investing in your employees is a regenerative process. It generates efficiency and momentum, due to a lack of turnover. It creates happy employees, which in turn creates happy customers. It improves quality, because employees take care in their work. It increases productivity, because employees are inspired to do their best. It ultimately creates more growth, as your values resonate throughout the community.
We need to change the way we think about doing business. The loss of workers rights and the race to the bottom have created a toxic culture in our society. We need to start loving our employees, not because we fear revolt (although it may come to that), but because we know it’s the right thing to do, and will ultimately turn into more success for everyone involved.
I am dedicating my life to improving culture and leadership in our companies. If you would like to transform your company culture, contact me at my website and let’s collaborate.
If you’d like to read more of my articles on product development, leadership, and software development process, follow me on Medium. You can also find my conference talks and podcasts on my media page.
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