There are easier places to work than Atomic Object. We don’t specialize in one industry or technology domain, so we’re constantly learning. We push hard to build the best app possible for a given budget, and ideas always exceed budget. We all contribute to our marketing efforts through the company blog. Everyone’s expected to understand the economics of the company and make smart decisions with their time. We push ourselves constantly to develop professionally. In short, we have high expectations of ourselves and each other.

So why do talented people with lots of employment choices choose to be Atoms? Daniel Pink’s three dimensions of motivation are part of the answer. We score high on mastery and autonomy, and we adopt our client’s purpose for the duration of each project. A serious commitment to sustainable pace keeps the intensity manageable. Lastly, and perhaps most importantly, we have strong bonds to each other. Those bonds were strengthened last year with an experiment I called “pair lunch”.

With thirty-five employees in our Grand Rapids office we could no longer rely on the natural mixing of project starts and stops to make sure everyone worked closely together even once a year. If they don’t have projects together, I thought, let them eat lunch!

When I started the experiment, I kept the rules as simple as possible:

1. The company would buy lunch for any two employees who hadn’t lunched together in the last month.
2. You can’t ask anyone about other rules or guidelines. Trust your judgment.

I encouraged everyone to use pair lunch to get to know each other as individuals, talk about non-urgent company stuff, and generally avoid making lunch a continuation of project work.

Pair lunch has been very successful in making connections between people who wouldn’t otherwise have had an opportunity to get to know each other. The image above illustrates the overall success of the experiment because of the richness of the connections. The nodes represent individuals, the lines show who had lunch with whom, and the line weight indicates how many times they had lunch. By making it a benefit, and giving it a name, people seem to feel freer to initiate lunches with no particular agenda or need to meet. This seems particularly valuable in a company with a fair number of people who aren’t naturally inclined to initiate a social event.

This mail from Brittany is typical of the many comments I’ve received on pair lunch:

[Pair lunch] is one of the better ideas you’ve ever had.
Drew and I pair lunched today and we shared lots of good conversation about usability testing, AO culture, and many other topics.
[This is] something we never would have done without the encouragement to do so.

New employees

One of the things I do for new hires is to facilitate pair lunches in their first two weeks of work. I do this by asking three or four people to initiate a pair lunch with the new employee. I hope these lunches, along with our Culture Pair assignments, smoothes a new employee’s entry into the company. Having the lunch initiated by other employees (versus me arranging them) also teaches the practice.

Fun stats

As with everything we do, pair lunch started as an experiment. It didn’t take long to see this experiment was successful, and pair lunch has become a highly appreciated benefit. Here are some stats for the first 12 months:

• Total number of participants was 47.
• Total number of unique pairs having lunch was 216.
• The most lunches participated in by a single person was 26.
• The fewest lunches participated in by a single person was 2.
• The largest number of distinct lunch partners for a single person was 22.
• The number of lunches per person averaged 9.5.
• The maximum number of lunches for any single pair was 4.
• The average cost of lunch was $28.

Cost

A year of lunches, $6,782. Personal connections in the company, priceless.

For comparison, we spend approximately $10,000 each year on the parties that follow each company quarterly meeting.

There were 242 lunches in the first year. At roughly $144 per participant per year, pair lunch is not only an inexpensive benefit, it’s helped build and maintain the personal relationships and strong bonds that keeps Atomic working.

We measure things like test coverage, project test status, billable hours and utilization, and we track revenue and profit margin. These are all strongly determined by or related to successful projects and happy clients. And happy clients, in turn, presuming you employ people with the right skills and expertise, derive from content, satisfied, happy employees. This might be the most important thing I should be measuring.

So what should I try to measure in people? Contentment? Satisfaction? Fulfillment? Joy? Happiness? — since I’m not sure, I decided to stick with the most general term, which is happiness.

Admittedly, measuring happiness of a group of people isn’t straightforward. But suppose I could reliably measure the aggregate happiness of my company. What would it tell me? Would it be reliable? Would it be helpful?

How I’d use a happiness metric

If I had a reliable measure, over time, of the aggregate happiness for the company, I believe I’d have a valuable tool to help make and time the implementation of big decisions, and a measure of the impact of significant policies and new initiatives.

While the absolute value of my happiness metric would be meaningless, I believe changes of that value over time would be meaningful. Since the metric I’m imagining is an aggregate metric, I would rely on first-hand investigation, conversation, and group discussion to understand the root cause behind the change I was measuring.

Introducing change

Part of the job of a company’s leaders is to keep an eye on exogenous forces (clients, the market, technology, the world in general) that may impact the company’s health, or which present a valuable opportunity. These pressures or opportunities from outside the company sometimes require change inside the company. Given that change is generally stressful for people, and the absorption rate for change by any group of people is finite, tracking happiness over time could be very helpful when trying to decide when the introduction of change will be successful or particularly stressful.

New initiatives

Strategic initiatives such as new service offerings, major new internal policies, expansion to new markets, or new partnerships, put stress on the company. They may require extra work, or establishing new relationships, or some travel burden. Tracking happiness over time would give me a measure of that stress, when it peaked, and when it receded.

Structural impact

I’d like to have a happiness metric to gauge the long-term impact of structural changes like company ownership, changes to our service offering, the kind of clients and projects we take on, or how we schedule and assign projects.

How I do this now

I measure happiness of the company now in a very ad-hoc fashion. I watch how people interact after standup. I observe laughter and frowns. I chat casually with probably half the people in our office in any given week. I ask others how they think the company is feeling. I watch how well attended company parties are. I visit with spouses. While these measures are helpful, they are inevitably distorted by sampling error and my own feelings.

I could be disciplined about talking to everyone in the company regularly, in a formal fashion. But in a company with 40 or so employees, that would not only take a significant amount of my work week, but it would still be subject to my personal interpretation, relationships, and position. It would be difficult to quantify consistently, and it might be hard to learn the truth, given my role.

A better measure?

What if instead I anonymously asked every employee a simple question?

How happy do you feel right now?

I imagine an interface that makes it possible to answer this question on a simple three or maybe five point scale in less than one second.

I don’t want people to spend a lot of time thinking, I want them to simply react, as close to unconsciously as possible.

I don’t want to ask people to segregate work from personal happiness.

I don’t want people trying to average out their feelings over a period of time (e.g. month, quarter or year).

I want to make it easy to answer spontaneously.

I don’t want people to have to write in order to respond.

I will rely on the aggregation across people and time to make the metric meaningful.

Possible implementation

I’m envisioning something that integrates with our time tracking tool, PunchIt. Since everyone in the company interacts with this tool multiple times per day, it seems like an obvious place from which to sample the population.

The image below is my crude mockup for how this might look superimposed on PunchIt. A single mouse click on one of the faces would send the result anonymously, to a web service, dismiss the happiness poll widget, and return focus to PunchIt.

My guess is that sampling everybody once or twice a week would be sufficient to capture meaningful data while not making the polling a burden. I believe that varying the time when the polling occurs would both improve the accuracy of the data as well as make it less obtrusive.

An immediately obvious measure of happiness is retention. But waiting until you lose people seems dumb. Presumably a significant, sustained, drop in happiness would indicate that we’re at risk of losing talented people. The aggregate measure I’m contemplating wouldn’t tell me who I’m at risk of losing, but it would be a signal that something was up, and that I should investigate. Atomic doesn’t have a retention problem^*, but we don’t have a profitability problem either, and I measure that.

In my casual research on what other people have done to measure employee happiness, I’ve found companies using net promoter scores, traditional surveys (e.g. 65 statements, 2 open-ended questions), and short interviews or reports. I’ve not found anything as simple as a single question with a spontaneous response.

Displaying the metric

I’m envisioning something on our open office information radiator that charts aggregate happiness over time. Displaying this where everyone can see it would help all of us understand the mood of the office, and know when we should be having conversations about what’s going on.

If the aggregate measurement was accurate, I’d also have a way of gauging the significance or breadth of an individual’s observations about the broader group. I’d know how much credence and weight to give to statements like “the company is stressed”, or “everybody feels this way”, or “I hear a lot of people grumbling.”

I might see interesting patterns. For example, I might learn that I can time company meetings or important emails (that that have the potential to trigger stress or confusion) for parts of the week where aggregate happiness is higher.

Consider the two scenarios below. In the graph on the left, the mood of the company has improved over the long-term average (dashed line). That’s not only nice to know, but might tell me that the change introduced recently has had a positive impact. It might also tell me that the company is mentally able to tackle a new initiative or wrestle with a difficult challenge. In the scenario on the right, the aggregate happiness has decreased markedly and is trending down. I’d be arranging company-wide conversations to find out what’s bothering us, and whether we should be doing something about it. I’d be worried about stress levels and looking for ways to smooth things out and not to introduce new stresses.

Conclusion

What I’m proposing is a radically simpler measurement of overall company happiness. It would be a metric that is subject to all sorts of factors (health, traffic, mood, caffeine, personal relationships, clients, bugs, sunshine, colleague interactions, etc); a measure of the whole person. My hope is that it would becomes meaningful and useful as these tiny, easy-to-do, spontaneous samples of personal happiness are aggregated across many individuals over a period of time.

I don’t intend to stop gathering anecdotal evidence about the company’s overall happiness. And of course no metric replaces the action of conversations with individuals, groups and the company as a whole. I see my happiness metric as the canary in the coal mine — an early warning about something dangerous in the air.

Am I nuts? Do you think tracking this metric over time would provide me meaningful data to gauge the overall emotional state of the company?

^*In the last five years we’ve had some involuntary turnover, but we’ve only had two people who left because they thought they’d be happier somewhere else.

I think it’s very important to always be open to firsthand questions, complaints, clarifications, and discussion. Shutting that down would be an abdication of one of my main leadership responsibilities. The change I’m describing here, and the new solution I’m proposing to experiment with, does not effect my openness to firsthand feedback and conversation. Nothing can replace a direct conversation between two people to build empathy and understanding.

I’m also not talking about the tricky problem of leaders getting honest feedback on their performance. That’s a separate, thorny issue that I’m not considering here.

The problem

My problem is with secondhand reports of employees who are confused, unhappy, or complaining. What I’m no longer interested in hearing are things that sound like this:

I’ve heard Joe complaining about the expectation for blogging.

A lot of people are feeling stressed about work hours.

People are confused as to why you mailed the company about making a case for professional development support.

The company is feeling tense or stressed.

I’m no longer open to hearing these sorts of statements because: they aren’t actionable, they may not be accurate, they might be disguising the source of unhappiness, they may only be temporary, they are easy to over-react to, and they could cause me to slander, through unsupported extrapolation, the many great people I work with.

Not Actionable

When I learn secondhand that someone in my company is confused or complaining, I can’t directly approach that person without compromising my “source”. Everyone has bad days, and following-up, even with some cloaking and sensitivity on the things I’ve learned, might be unnecessary and unhelpful.

Telling the person reporting the observation to me that they should follow-up with the complainer, shifts the burden to a person who may be neither responsible for this sort of work, nor equipped to do it well.

Not accurate

By definition, getting a complaint secondhand is getting it less accurately than from the source. The reporter colors the report. Even when well-intentioned, it isn’t possible for one person to fully and accurately characterize the feelings of another.

Any claim that involves more than one or two people is probably an exaggeration. “Many people” and “a lot of people” and, most extreme of all, “the company”, are approximations that imply much more knowledge than is usually true. How many times, I wonder, has someone passing along secondhand complaints actually talked to more than two or three other people? My guess is, not often. I think it’s very easy, and very human, to exaggerate the count of your observed population. I’ve been guilty of that myself.

Disguised source

The temptation to represent a complaint or negative feeling of your own, more safely through another, is all too human, but not particularly noble.

Only temporary

Who doesn’t occasionally complain about something or feel down? That’s pretty human too; as is returning rather quickly to a more even-keeled attitude. Hearing about, and reacting to, a snapshot of negative emotion could be unnecessary, possibly intrusive, and a burden you don’t need to bear.

Overreaction

Stories of individuals — their words, their emotions, their actions — are powerful, and hard not to react to. The more you know and have relationships with individuals, the easier it is to overreact to their individual distress or complaints. But for a company larger than, say, 10 people, it’s probably inevitable that at any point in time at least one person is unhappy or confused about something at work. Assuming that a single individual’s complaint is universal is a mistake I’ve been guilty of, and overreacting is a potential consequence of that mistake.

Crazy extrapolation

When I’m feeling stressed or off-center, I’m more likely to make the mistake of extrapolating one person’s complaint or confusion to a group or even everyone I work with. Here’s how my crazy thinking might spin up: Joe doesn’t seem to understand why working 40 hours a week is important? Damn! Everyone in their 20s seems to be clueless about what a full-time job means! How can they not get it? What’s wrong with this generation? What new action should I take to get the point across? (fume, fume)

This mistake amounts to slander, pure and simple, even if I don’t speak the words openly.

My new approach

Seeking secondhand information, or simply being open to receiving it, has had negative consequences for me, and possibly my company. With any group of more than 10 people, it is probably impossible to communicate anything of substance without being misunderstood by at least one person. Through crazy extrapolation and over-reaction, it’s possible to come to the conclusion that either I can do nothing right, no effort is good enough or appreciated, or no else gets it. None of those are true, of course, but those negative feelings building over time can be both discouraging and bad for the company.

Given that the secondhand information isn’t actionable, has negative consequences for me and others, and doesn’t achieve the original goal of keeping me accurately in touch with my employees, I’ve decided to shut this channel of information down.

What I’d like to create in place of this secondhand channel is a culture of distributed responsibility for encouraging people with complaints and confusion to seek first-hand clarification and conversation. For example, if person X hears person Y complaining, or making statements that are at odds with person X’s understanding of a situation or communication from a company leader, then instead of person X bringing that to the leader, person X should share his or her perspective with person Y and encourage them to stop verbalizing their complaints and instead talk directly with the leader who’s confused or confounded them, and who has some ability to clarify or rectify a situation or problem. In short, I hope everyone becomes willing to say, “I hear your concern, I respect you, and I want you to take positive steps to resolve the issue productively. Go talk to the source.”

I believe my original motivation for being open to secondhand feedback was a good one: How do I, as a busy leader of a company of many individuals, stay in tune with how people are feeling and the general tone and temperature of the company?

How happy or satisfied or fulfilled people are feeling at my company and whether this feeling, in aggregate, has gone up or down recently, seems like a really important thing to know.

We track a couple of financial KPIs (key performance indicators) so why can’t I figure out a KPI for probably the single most important thing at Atomic?

In fact, I think I have. Stay tuned and I’ll share this idea with you in my next post.

Atomic doesn’t use a commission approach to compensation for the people who sell our services. But in the spirit of regularly challenging ourselves on closely held beliefs and business practices, we recently considered what using an at-risk model of compensation for our sales people would mean. Below I list some of the downsides I see with commissions. At the end I describe how we handle sales at Atomic Object.

Downsides to commission sales

Limited inventory

Service firms have a clear limit on how much they can sell. Once the capacity to provide service is committed, there’s nothing more that can be sold for a given time period. If a salesperson’s compensation is tied to commission, this puts a hard constraint on their income regardless of their success in selling. Selling more isn’t possible, and this isn’t fair to the salesperson.

Commissions no doubt work better for software product firms that can sell any number of licenses or copies of a product. With a digital product, there’s no limit to the product that can be sold. That’s not true when the product being sold is the skill and time of the people in the firm.

Maker happiness

It is easier to sell development time than it is to sell projects that are interesting, challenging, and satisfying to our highly skilled and committed employees. In the long-term, our success depends on recruiting and retaining the best makers (our generic term for those who create value for our clients).

Honest budgets

It would be easier to sell projects if we took an overly optimistic (i.e. unrealistic) view of their total cost. This would push the unpleasant discussion on realistic budget levels off to another day and to the makers in general and project leads, in specific.

Small clients

The time and effort in upfront work for a small client is often as much as for a large client, with size measured by revenue from the project. A rational salesperson compensated mostly on sales would favor larger clients, even when a project from a small client might fill a capacity hole and keep makers busy.

Long-term client relationships

A small project for a client that may provide a large amount of work in the future may be valued differently by a salesperson compensated on the immediate value of a sale than a salesperson thinking of the lifetime value of a client.

Worthy but small clients

Clients that may not be monetarily valuable to the company, but are judged worthy in some other dimension (mission, community, long-term potential, etc) may not get the attention they deserve.

Marketing vs sales

Though they are often on the frontline and in a perfect position to market the company, salespeople who receive commission have no real incentive to do so long-term. They benefit most from focusing on short-term sales that directly affect their bottom-line.

Idle capacity

Salespeople compensated only on selling will have no concern for the ultimate goal of a service company, namely, to keep their makers busy. This means they are de-coupled from the ultimate goal of company profitability.

Sharing opportunities

Unless specific rules for compensation address sharing, salespeople would rationally prefer to horde sales leads and handle them individually, even when the odds of a successful sale are increased by involving more than one person.

Maker help

Involving a maker is often very helpful in closing a sale. The time of makers must be carefully balanced between billable projects, sales, and everything else. A salesperson compensated only on sales, and not company profitability, would have no incentive to use a maker’s time wisely.

Sales at my company

Atomic Object has four people who “sell”. Our system for selling involves:

1. taking inquiries from people with software development needs
2. determining whether there’s a good match between their need and our capacity and abilities
3. determining a budget and timeline
4. selecting the appropriate team
5. kicking off the project

We think about this as the upfront work of each project. We often work together on sales opportunities. When those four people are not selling, they’re checking in with teams and projects, working on marketing, cultivating client relationships, recruiting, contributing to client projects, managing people and processes, and thinking strategically. Direct time on sales takes approximately 20-25% of our time. (That’s theoretically equivalent to one full-time sales person supporting 35 or so makers. In practice, I don’t believe a single human could last more than a few months doing this work alone.)

The compensation for the four people who handle the “upfront” project work for Atomic is an hourly wage approximately 20-30% higher than our senior maker salaries. To me that differential acknowledges the difficulty and stress of our upfront role, and the unusual blend of skills it requires.

The upfront team has no compensation that is determined directly by their success or failure in selling. However, each member of the upfront team has a significant equity stake in the company, so keeping the company profitable (i.e. busy) results in nice quarterly distributions.

We count on the individual judgments of the upfront team to make the right short-term decisions between clients relationships, opportunities, marketing, projects, maker happiness, and strategic initiatives to create long-term value. Their equity stakes align well with this.

No one way

I know firms like Atomic that are successful with a commission model. I can readily imagine firms that would fail with something like our model. As with most complex human endeavors, success or failure ultimately rests on the individuals involved.

If you’re a founder and you don’t like doing sales, or you’re ok with sales but want to get back into technical work, you might decide to hire a salesperson. I’d suggest looking first to your current employees regardless of their current role. The traits of a successful salesperson might surprise you.

If you do need to go outside, you should think very carefully about the drawbacks of a commission model. It might be hard to hire someone who identifies as a salesperson if you don’t offer commission. But you can also view this difficulty as a filter for selecting someone who will take a long-term view of your company’s success, and gain satisfaction from their work beyond their paycheck.

It’s clear what works best for us here at Atomic but I’d love to hear how others handle this problem.

Software service firms naturally look to create software products in their quest for the holy grail of recurring revenue. Unfortunately, the fundamental differences between product and service companies makes doing both under one roof very difficult. I only have anecdotal data, but my observation is that most service firms either fail at creating and maintaining successful products, or convert entirely to product companies and drop their service offering. A well-known and very successful example of the conversion strategy is 37Signals. I know many more cases of service firms that have failed to establish successful mixed service/product companies — this is a hard nut to crack.

Spec dev

Atomic has pursued a “partnering strategy” to increase our financial leverage while respecting and nurturing our services core. We do this by giving up some project revenue in exchange for equity, a royalty, or a revenue share. By taking on some of the market risk alongside our clients, we are exposed to the potential upside of the product we help create. We’ve been making speculative development investments, or “spec dev”, as we call them, since 2003. In that time we’ve made 10 investments, and are on the cusp of an additional two. The image below is an approximate graphical representation of our spec dev investments. Projects colored yellow generated some returns, but weren’t particularly good investments. Gray projects were complete losses. Blue projects were very good investments and Red are too early to judge.

The internal rate of return of Atomic’s portfolio has been approximately 27% to date. Several recent investments are too early to have paid off, and my return calculation doesn’t include any future value for existing investments. This rate compares very favorably to the single digit or even negative returns that venture capital funds have averaged in the last decade.

The Shining Star

Blue Medora is Atomic’s most successful partnership to date. The company makes middleware that allows monitoring and management systems to connect with critical enterprise applications like PeopleSoft, Siebel, Citrix XenServer, EC2 and SAP. Having grown to 12 employees on a solid royalty business with IBM, Blue Medora’s CEO, Nathan Owen, saw the opportunity to leverage their expertise and grow the business substantially in the Oracle market. Rather than slow organic growth funded by earnings, Nathan and I decided to pursue our first outside funding for the company.

Blue Medora closed on an investment round of $1,250,000 at the end of 2012. We’ll use the money to hire staff and build product to exploit the Oracle opportunity. In addition to the satisfaction of a quick, successful, capital raise (3 months from pitch to close), I’m particularly happy that we were able to raise all the funds locally, in West Michigan. Start Garden invested $500,000, its biggest single investment to date. Grand Angels came in with $725,000 from approximately 20 of its members and its co-investment sidecar fund.

How we play

We never commit more than 10% of our capacity to spec dev investments, so we’re not gambling with the company’s existence. We hold the assets in the company’s name and run our returns through our standard profit sharing plan, so everyone in the company benefits when they pay off. We value our spec dev assets very conservatively for the purposes of our internal ownership sales. We report on our investments at every company quarterly meeting.

I recently gave a talk in Detroit for a D-NewTech meeting where I described our spec dev strategy, what we look for in partners, lessons we’ve learned, and how our portfolio of investments has performed. My talk starts around the 5:00 minute mark of the video.

Our spec dev investments have not only boosted our financial results, but they have become an interesting and valued part of what working at Atomic means.

2012 was a big year for Atomic Object on the ownership front:

• we declined an opportunity to sell the company to outsiders
• we broadened our employee ownership from 8 to 15 people
• we said goodbye to an owner for the first time
• I went from 83% ownership to 53% ownership
• Shawn and Mike laid the groundwork to launch an Employee Stock Purchase Plan

Atomic now has 15 employee owners with a 1% or greater stake in the company. Those 15 people represent about 40% of all employees, and everyone who has been with us for at least six years. Our advisory board has remained the same size (9 people) and composition, making more clear the distinction between ownership and governance.

Since I believe strongly that ownership should be sold, not given, I have a whopping tax bill (you get taxed on the entire sale in the year it occurs, even if, like me, you finance a portion of the sale and receive the money over time.) The financing plan we devised aligns the interests of buyer, seller, and the company, while keeping both the burden of bookkeeping and interest paid inside the company.

Starting in January, our new ESPP will allow everyone who has worked for us at least one year to purchase up to $500 of stock per quarter through payroll deduction. This offers the potential for a further broadening of ownership across the company. It will also require a lot more employee education on taxes and valuation, in addition to the usual “Economics of AO” training we offer periodically. How many people will participate? How will it make them feel about the company? Will it have an impact on their daily work? All great questions that we will only gradually learn the answers to.

The most common question I get about our ownership plan is whether or not ownership has changed people’s behavior. I’m happy to report that, by and large, Atoms behave the same way they always have. I attribute this to what I’ve always felt: Atomic Object had an ownership culture long before we had non-founder owners. I would say that I’ve seen changes in the intensity of those ownership feelings, and that’s been ok. But I don’t believe that any ownership plan would have created an ownership culture had it not already existed. I do believe that by bringing actual ownership into alignment with our de facto culture of ownership, I’m nurturing that culture and helping to protect it in the long run.

Perhaps this reveals our industry’s relative immaturity but I also think it says something about the differing views we have on what exactly it is we offer clients. I got thinking more about this in a recent conversation with a potential customer. He found it curious, in his national search for a vendor, that every company he’d talked to had a different way of describing themselves.

I thought it would be interesting to gather some data. The names below are from companies that compete in some way with my company, Atomic Object, and were compiled based on either my first-hand experience (I heard someone use it) or its use on their website. Interestingly, a very common identification used on websites is nothing at all — in other words, the company doesn’t say what it is, just what it does.

Innovation services firms that build software for their clients are critical elements of a competitive national economy. It seems strange that we don’t have a consistent name for them.

Which are your favorites? Any new candidates to suggest? Take the poll below to see the current results.

I don’t think it should be terribly surprising that friendships arise at work. When you have a shared purpose, common goals, perhaps common enemies, and you spend roughly half your waking time together, the ground is fertile for friendship to grow. If your company has a strong culture and selects people who are well-matched to that culture, friendships are all the more likely to form.

The good

When people work with their friends, I believe, there is a greater sense of loyalty. In fact, several of my employees told me they’ve chosen to stay in Grand Rapids, or even returned from other cities, because their friends work for Atomic. It stands to reason that spending time with our friends makes us all happier. Our Atomic Object value mantra “share the pain” might very well have arisen out of a strong commitment to people who are more than just colleagues. No one wants to let their friends down, so standards are high and commitments are met. Also, it’s often easier to ask a friend, than a stranger, for help. Especially when done over a beer.

The social atmosphere of work can be a factor in hiring. That’s not just nice, but strategically critical these days with the technology skills shortage. While most socializing at Atomic is un-scheduled, we also have a Friday evening event once a month for employees, significant others, kids, clients, friends, and recruits. Every quarter we follow up our company meeting with a dinner for everyone and their significant others. And last year, for our tenth anniversary, the whole company had an awesome weekend together on Lake Michigan. I don’t necessarily think these events create friendships, but they do seem to nurture them.

I believe friendship can be a hugely powerful factor in building a positive company culture that results in sustainable success.

The bad

There are certainly some challenges to having interwoven webs of friendship in the office. For example, while friends are good, cliques are bad. Other issues that can arise are often more complex. At Atomic, we’ve wrestled with all of these questions:

• Can new employees establish friendships easily?
• If friendships are good, is it incumbent upon everyone to be friends?
• What happens if a friend at work isn’t doing well at work?
• Should you be biased towards hiring your friends, or blind to that consideration?
• Can friendships act like golden handcuffs and discourage a person who perhaps should leave the company from doing so?
• How do you resolve conflicts between your work interest and your friendship interest?
• How is work affected when friends hit a rough patch in their personal relationship?
• Should you evaluate candidates with an eye towards friendship, i.e. could I be friends with this person?

The ugly

Managers, CEO’s, company founders, and other people in positions of authority are particularly challenged by friendships at work.

Tom Rath, from Gallup Research, found managers are more effective when they are friends with, or at least friendly with, their employees. Being friends with the boss is good for employees and for company results. But is it good for the boss?

As a boss and major decision maker, I control or influence important levers of power: project assignments, travel approval, standards, expectations, raises, and hiring. For a number of reasons, I need to treat everyone equally without regard to friendship. The most reliable way of doing that is to limit my friendships. Having friendly relationships, instead of true friends, achieves the company goals that Rath cites, while eliminating potential conflicts of interest or questions of fairness. Segregating my work life from my social life, however, creates what I think of as a highly ironic, founder-specific dilemma.

As the founder of a successful company with a strong culture, I’ve carefully selected and assembled a group of value-sharing, high-quality people with whom I’m going to spend a lot of my time. Of course, I’m likely to find myself making friends. I’d probably be friends with these people in whatever context I happened to meet them. And, of course, they develop friendships with each other.

You can choose to separate your social and work life. Maybe you need to maintain some emotional distance between yourself and the people you hire, manage, and fire. Or maybe you feel as though putting your net worth and friendship eggs in one basket is risky. Or maybe you notice that you can be a bore at parties because all you talk about is work. In any case, taking this route puts you in the ironic position of having created an awesome club that you can’t be a member of.

If, on the other hand, you indulge in friendships with your colleagues, then at some point you inevitably wonder and worry about the effect of your position and power on those relationships. The irony here is that, by even thinking these thoughts you are insulting the integrity of your friends and the people you are closest to at your company. Some friend you are!

I know that at times when I’m feeling tired or vulnerable, I’m susceptible to the dark thoughts of what my friendships at work mean, what might motivate them, and whether I’m naive to trust in them. I wish it weren’t so, but it is. I worry that I may be manipulated or patronized, and hence made to look foolish. I start thinking about the safer strategy of segregating my social and work lives, of taking some eggs out of the Atomic basket.

Then I take heart, and say “fuck that”.

(The strong language helps defeat the dark thoughts.)

I choose to live fully, in both work and friendships. I make things personal, and I get close to people I like. I pick colleagues and friends who have integrity, and I treat them accordingly. I am delighted by a life that lets me work and play with some of the same people. As Steve Jobs reminded us in his Stanford graduation speech, a life lived in fear of failure, embarrassment, or pain is a life lived less fully.

Life is short; death is certain. No surprise, my friendship choices expose me to both risks and rewards. By choosing to live this life, the only thing that should surprise me about dying is the timing.

Once I started looking, I found many examples of how Atomic Object and our clients benefit regularly from the absence of a bad event. For example:

• The bug that our customer’s users don’t experience.
• The user you didn’t lose last week because of a poorly designed interaction.
• The customer relationship that didn’t get difficult because of the project leader’s years of experience.
• The stress you aren’t currently experiencing because someone helped out by taking a project off your plate.
• The high employee turnover you don’t experience because you treat people respectfully.

What’s common in all these cases is that the absence of an event or experience isn’t likely to be noticed and appreciated. In the fight for your attention, these “missing” bad events can’t compete with events that do happen, either positive or negative. For example, when was the last time you got a call from a customer saying, “hey, just wanted to mention how great it was that the app didn’t crash yesterday,” or you heard from a current employee, “I’m not looking for another job because I trust you.”

It pays to recognize the absence of bad events so you can nurture and promote the underlying activities that cause their absence. Here are some activities that might contribute to the lack of bad events above:

• Writing automated tests takes time; one advantage for doing so is the absence of bugs in production.
• Validation of an application’s design improves a user’s experience with an app, but requires specialized skills and time.
• Employing senior people may seem expensive compared to juniors, until you remember what their experience may help avoid.
• Knowing when you have too much on your plate, and asking a colleague to help, requires discipline, self-knowledge, and a certain level of staff redundancy.
• Maintaining good benefits and investing in your employees takes time and costs money, but it also contributes to their productivity and loyalty.

The risk of the invisibility of bad events or experiences that never happen is that you come to take for granted the policies, culture, practices and effort required to maintain the value you gain from their absence.

What’s the role of the company leader in maintaining the value that comes from bad things that don’t happen? I think it’s two-fold. First, be aware, raise attention, look for opportunities to celebrate the absence of negative events. Second, enlist the help of other senior people in the company to renew commitments and maintain the practices underlying the hidden goodness. As the leader of a company, you have finite time, energy, money and political capital to spend. You need to be sure to allocate some of these resources to maintain the status quo that causes the lack of bad events. It’s easy, when you don’t notice their absence, or when the policies or practices that cause their absence are expensive or difficult, to shift your resources somewhere else.

What you do well may suffer when you collectively lose that focus. The people responsible for the good work may lose their appreciation for and memory of why you do things in a particular way. As you grow, particularly if you hire junior people, it becomes even easier to under-appreciate the causal link between the way things are done and the positive outcome of bad events that don’t happen. After all, if you’ve never experienced the bad event, it’s less likely you’ll appreciate the activities that created their absence. As a leader you need to promote the activities that provide value as a result of bad things that never happen, and you almost certainly need to enlist help in remembering, honoring, maintaining, and passing down the importance of these activities.

I formally named our values in 2009 after a discussion with Jeff Patton. When describing our somewhat lengthy Values Atomica document to him, he suggested distilling the ideas it contained into smaller, handier phrases. It was easy to name our first, and perhaps most strongly held mantra: “give a shit”. That name has also given me pause at times. The sentiment could be expressed as “care deeply”; the meaning is close, the wording less controversial and memorable.

Many job candidates respond positively to our first mantra. I generally get a laugh when I use it in a talk, and positive comments afterward. On the other hand, I’ve heard from at least one experienced employee at a largish client of Atomic’s that it makes us seem immature. Therefore, I have to assume there are some potential clients, who I may never talk to, who read or hear Atomic’s value mantras and have a negative reaction.

Using the name of the mantra as it exists internally is consistent with another closely held mantra, namely to “act transparently”. “Give a shit” connotes active participation in life and work, an essential behavior for all Atoms. It thus seems like the right way to describe Atomic. On the other hand, there’s no good to be done by offending people externally.

I’m very curious what GNB readers think. “Give a shit” or “care deeply” — which name would you use in public, and why?