Face to Face
Even when it's reduced to an anecdote, Michael Bloomberg's story has the potential to become a late-20th-century business legend. In 1981, Bloomberg was fired by the only employer he's ever had--Salomon Brothers, the elite investment bank where he'd thrived for 15 years despite (or perhaps because of) self-described "wiseass" tendencies. "Time for you to go," Bloomberg's boss told him in the wake of a merger-prompted management restructuring. Thankfully, the blow was cushioned by a check--a share of the spoils that all Salomon partners netted from the buyout. Bloomberg's cut happened to be $10 million. The night he walked out of Salomon for the last time, he bought his wife a sable jacket. (Job or no job, "we're still players," he wanted her to understand.) The next morning, settling down to work at his customary 7 a.m., he launched Bloomberg Inc. Over the ensuing years, Bloomberg built his eponymous company into a $1.3-billion, 4,000-employee provider of global news and financial and business information--in the process challenging and then besting one of the great franchises in business, Dow Jones & Co., on its own turf. After starting with dedicated interactive information terminals for financial-industry pros, Bloomberg's company expanded its offerings to include on-line services, radio and television broadcasting, and print publishing, all while--or maybe thanks to--nurturing a company culture bent on conquest. For Bloomberg, business is personal: "While you're reading this," he writes in his book, Bloomberg by Bloomberg (John Wiley & Sons, 1997), "we're thinking about how our competitors are plotting to take the food from our children's mouths."
Bloomberg, like a lot of founders, describes a business world consisting only of "us" and "them." But his conception includes a third class of characters, for whom he reserves a special circle of hell. Call them "those who used to be us"--the people who, by leaving Bloomberg's company to work elsewhere, have contravened his code of loyalty. He won't rehire them. He won't permit a good-bye party. He won't even--if he can help it--shake their hand. "Why would I?" he asks rhetorically. At a juncture in management-science history when the old social contract between employer and employee has been judged a museum piece, and when every worker is urged to think like a "corporation of one," Bloomberg is a throwback. Loyalty, he's convinced, is everything.
Is he right? Cause and effect can be hard to isolate, but the evidence certainly doesn't hurt his case. His company boasts a stratospheric growth rate, and its annual employee turnover is less than 10%. Plus, what honest business owner won't admit to feeling at least a little betrayed and threatened--OK, furious--when a key staffer departs? Wouldn't a culture of fanatical loyalty just plain feel better?
It does to Michael Bloomberg, whether anyone else thinks it's realistic or not. And his conviction should pose questions to companies of any size: Have we all given up on old notions of loyalty too soon? Is there a competitive advantage in making whatever sacrifices are necessary to cultivate loyalty--in both directions--between employer and employee? And are owners just kidding themselves if they think, from a purely personal perspective, that employee disloyalty shouldn't hurt?
Inc. executive editor Michael Hopkins spoke with Bloomberg in his New York City office.
Inc.: When somebody comes into your office and announces that he or she is leaving the company, what do you say?
Inc.: That's it? You say, "OK"?
Bloomberg: That's the end of the conversation. Then I sit there. If they want to stagger on for a couple of minutes and tell me why, that's fine. But I think "OK" is an appropriate answer. To say, "I understand"--that would be lying. I don't understand why anybody would want to leave. Say "Good luck"? Obviously, I would never do that. Tell them to go screw themselves? That doesn't make a lot of sense. It's over and done with. As for asking why, I don't much care.
Inc.: Why not? Why wouldn't that be valuable information for you?
Bloomberg: I've got enough valuable information. How much information can you process? It's just the view of one person out of 4,000. So that person doesn't like the color of that wall. What do I care? If I saw that I had a big problem--like a whole office leaving--then I would be interested. But one person? Nah. Just look him or her in the eye: "OK." There's nothing else to say.
Inc.: What if he or she reaches out to shake your hand?
Bloomberg: I make a point of not putting them or myself in an embarrassing position. If somebody stuck their hand out, I would not be so rude as to refuse to shake it, but I would prefer not to do it. I don't like hypocritical gestures. Every one of our employees expects--and has a right to expect--that I will take care of "us." You leave and you become "them."
Inc.: What if somebody--someone you highly value--comes to you a step or two before deciding to leave the company, and that employee says, "I'm dissatisfied."
Bloomberg: I would say, "You gotta do what you gotta do. In the end, you have a responsibility to yourself and your family. But...let me give you some ideas as to how you can fix where you are or find someplace else for yourself in the company." Even if I don't know who you are, the fact that you're working here says that your boss thinks you're good. If you're working here and your boss doesn't think you're good, I don't think your boss is any good. I want him to go --the boss--not you.
Inc.: How would you describe the loyalty that the company owes to employees?
Bloomberg: You have an obligation to do everything you can, no matter what it costs. They get into trouble, you pay their legal fees. They have a financial problem, you help them out. They have an emotional problem, you provide the best doctors and counseling. They have a physical problem, you get them into the best hospitals--and if your insurance plan doesn't cover it, you pay for it.
Inc.: Is there a point at which that obligation ends?
Bloomberg: Well, the logical point is where it inhibits your ability to help others in the company. If I bankrupt the company, I hurt everybody, so you have to draw the line before that point--but I'm not sure I'd draw it very much before that. As long as you're profitable, no, there's certainly no limit.
Inc.: How do you think the loyalty demonstrated by the company to employees here changes the way people work?
Bloomberg: I think they really think that this is their company. I remember when I worked at Salomon Brothers, and for years and years afterward when I saw the Salomon Brothers name on a tombstone [announcing Salomon's involvement in a deal] I got a little rush. That was my name. I really believed that it was my name. These 4,000 people think that Bloomberg is their name. So they work harder. They're more flexible. They're longer-term and firmwide thinkers. They help others in the organization.
Inc.: I understand that you don't rehire people.
Inc.: You wouldn't consider rehiring even if somebody quit for a good reason? Say a person quit because he or she got an opportunity elsewhere that couldn't be matched inside. Or say somebody approaches you before quitting to let you know he's been offered an opportunity to do something that Bloomberg can't give him a shot at right now.
Bloomberg: I'd tell him, "You know this company offers opportunity, but we can't satisfy everybody's needs immediately all the time. Sometimes you have to be a little patient. But you've got to do what you've got to do. Just let me know when you make a decision."
Inc.: So if this person comes back, a potentially better employee, two years later?
Bloomberg: That person ain't going to get away with it. Can't do that. Two years later! We wouldn't even remember who he or she was.
Inc.: But what if this is somebody who's exactly what you need, exactly the sort of person you'd have recruited?
Bloomberg: You can't have a set of policies that you believe in and that you think are good for the organization, and then constantly make exceptions. You can't have it both ways. Take your pick.
Inc.: Imagine you're talking to the owner of a 10-employee business. He or she has been persuaded by listening to you that valuing loyalty highly--and practicing it unbendingly--is going to create a culture that in the long run will be enormously beneficial to the company. But now some key people have left--people who have special relationships with the company's only major customer, say--and this CEO is really scared and wants to re-recruit those people, win them back. However, he or she knows that doing so would break the rule. What would you say to that CEO?
Bloomberg: I'd say, "Why'd you let that happen?" That manager should have been thinking, "OK, we've got 10 people working in our company; what happens if Sally or John or Jane gets hit by a truck?" That truck could be driven by a stranger, or it could be driven by management, but what do you do if that person doesn't show up tomorrow morning? When I go over the reviews in my company, I always ask managers, "Who's your replacement? If you get hit by a truck, who should I put in?" If they tell me they don't have a replacement, I tell them, "You'd better get one, and you'd better get one in the next three months. Because I will not leave that office exposed to having you die at your convenience. I'd rather drive the truck and kill you now; at least that way I can be in control." A good manager always has a replacement ready, and the best managers always have somebody who's better than they are.
Inc.: But this is a very small business we're talking about, in which it's tough enough to muster the resources necessary to compensate the star. What if it's not possible to maintain his or her potential replacement on staff?
Bloomberg: Then know who you'd bring in from outside. Just because you don't have the would-be replacement on payroll doesn't mean you can stop asking the question, What if Joe leaves? It's one of the basics. OK, so he's got a unique relationship with your biggest customer. Well, why'd you let that happen? At Bloomberg, our TV broadcasts have different on-air presenters every week because I don't want to depend on one personality. How could I look everybody here in the eye and say, "Well, I'm sorry, guys, you can't get a bonus this year because our television star left, and I was stupid enough to bet the company on that person." These people would lynch me. And they should. No manager should put a business in that kind of jeopardy.
Inc.: Let me back up a minute. Is it your experience that employees these days generally don't expect to be loyal to a company the way they might have been back when you started at Salomon?
Bloomberg: My observation as an outsider is that the turnover on Wall Street is much higher than it was and that the family feeling is gone from that industry, but I don't know if I could agree that loyalty is devalued in general. People who come here generally turn out to be loyal. Now it's true that we've done better every year; I don't know how loyal people would be if we didn't. I don't ever want to find that out. My job is to make this company constantly go for new products and grow.
Inc.: If you were talking to somebody just starting to grow a company, how high on the list of attributes or philosophical commitments would you put the idea of loyalty between a company and its employees?
Bloomberg: Number two would be so far down that it would be hard to find.