"Live and Breathe the Culture"
In Wolfe's book, the 9-to-5 policy didn't just keep employees happy; it also made good business sense. "If you work someone until 1 a.m., they tend to spend the next morning undoing their mistakes," he says.
By paying his technical consultants a straight hourly fee instead of simply paying them an annual salary, and then billing the customer about two times above that, Wolfe effectively neutralized the management's incentive to overwork employees. (Having to pay a consultant overtime would reduce the profit margin on that employee's time.) Full-time consultants typically worked an average of up to 40 hours a week for 47 weeks a year, leaving five weeks for vacation and holiday time. In addition, consultants were allowed to work on a flextime schedule that suited them. And Wolfe included full benefits, such as health and dental insurance and a profit-sharing plan.
The hourly pay system helped keep costs down, but there was a pretty big catch--one that in hindsight was bound to limit Sterling's potential for long-term growth. Wolfe didn't have the option of improving profitability (or revenues, for that matter) by squeezing more billable hours out of salaried employees. Instead he focused on improving profits by monitoring the company's expenses, including capital costs (for computers and office space, for example) and administrative costs (such as office support, recruiting, and bookkeeping). And he gave his consultants plenty of incentive to help keep costs down: he offered a generous 50% portion of Sterling's profits to be divided among the entire staff at the end of the year in the form of discretionary bonuses. If the profit pool was high because expenses had been kept in check, everyone benefited.
Even with the company's overt message that overtime was bad, Wolfe worried that some employees might think long hours would translate into a big bonus--which was not the case. So he and Thibodeau went to great lengths to lead by example. Wolfe would try to set the pace by sticking close to his own 40-hour schedule, even if it meant taking work home every so often. But Sterling also had other, more defined policies. For example, travel was not mandatory, and Wolfe confined his marketing efforts mainly to the metro area, making travel virtually a nonissue for the company. For his part, Thibodeau became a self-appointed ombudsman, a confidant for consultants who needed to air grievances. If a consultant was racking up more than 40 hours a week, Thibodeau would check in to make sure that the overtime was voluntary. Wolfe insists, however, that policies and procedures ring hollow unless you have "water carriers" who "live and breathe the culture." Wolfe adds, "These employees help to define the culture and ensure that it gets passed along to newcomers."
The Payoff
Janet Gilmore has carried water at Sterling for nearly nine years, playing the role of project manager, technical consultant, and software developer. In addition to her regular job, she also serves as one of the company's ombudspeople, making sure that communication between the workers and the management is clear.
Before joining Wolfe, Gilmore had been a project manager for the Texas General Land Office, a state agency that oversees all state-owned land and collects royalties from mineral rights. At that office she routinely clocked more than 50 hours a week. "I was skeptical when I first came to Sterling," she recalls. "I just expected that I'd have to work overtime to impress people." But she remembers Wolfe's constantly stressing the need for a balanced life, a message that slowly sank in.
Thanks to her flexible work schedule, Gilmore is able to travel with her husband, who is a musician. She also appreciates her annual bonus, which can equal up to one month's salary. In part, that's why Gilmore does her best each year to maximize the company's profits. For example, she typically seeks ways to pass her training and professional-development tab along to the client, rather than ask Sterling to pay. "If it's not getting billed to the customer, you really think twice about spending time or money on something," explains Gilmore.
With costs battened down and the company growing, Wolfe eased up enough to splurge on managerial talent. In August 1991 he hired Mike Haney as a technical consultant who would be positioned to run the company. The day-to-day grind of managing a business was already growing old for Wolfe, who wished to focus his attention only on the corners of the company he enjoyed most, such as recruiting and strategic planning.
Haney hailed from Baton Rouge, where he had been the vice-president of information systems for a software-development company. Wolfe offered Haney a long-sought-after opportunity: a chance to meld his high-tech know-how with his managerial expertise. "I was attracted to the culture and the business model," recalls Haney, who also makes note of Wolfe's "emphasis on quality of life."
Haney had placed his chips on the right number. In the frenzied high-tech environment that is Austin, growth came fast and furious for Sterling. "There was no lack of customers for us," says Wolfe. Sterling's revenues hit $1.9 million in 1992, having shot up 594% from 1988, just enough for the company to make #463 on the 1993 Inc. 500.
The Strain Begins to Show
But even with the obvious success of Sterling, Wolfe's 9-to-5 business model was already feeling the strain of the increasingly competitive consulting marketplace. Suddenly, it was more costly to attract new customers and recruit talent. At the same time, technology was advancing at a mind-boggling pace, heightening the already-strained imperative to train consultants on a constant basis rather than rely on finding ways to charge training to customers. "It was just getting more expensive to play," explains Haney.
