The New Commandments of Change
If you really want to keep employees from leaving, you have to do much more than heap benefits on them. Which is why the company Rick Born has built looks so different from yours
Just 48 hours before Rick Born was scheduled to come into "a whole lot of money," he began thinking seriously about how not to. "It didn't feel right," he says.
No, Born's pending windfall wasn't the result of some heist he had come to regret. And on principle he had nothing against either wealth or the indulgences it allowed; one of the two airplanes he owns previously belonged to Elvis Presley. But he was about to sell the technology-consulting company he'd started six years earlier, in 1990, and he couldn't help dwelling on what he'd lose once the deal was done.
By stretching three lines of credit, a mortgage, and a cashed-out 401(k) plan, he had bootstrapped Born Information Services into a $21-million business. And after signing the letter of intent with the prospective buyer, he'd gained a deeper appreciation of just how unusual a company he'd built.
In another words, "he had a classic case of seller's remorse," proposes Eliot Stark, an executive vice-president at Compuware Corp., the then-$530-million software giant that was due to acquire Born's business. But to Born, it felt as if he was coming to his senses. "As we peeled away all the layers of the onion, all it came down to was a bunch of money," he says. Granted, it was a whole bunch. Compuware had agreed to a deal valued at roughly $30 million, and Born owned 86.5% of the company.
The remaining stock was held by his cofounder, Dale Holmgren, the company's president and chief operating officer. Theirs was a classic partnership, with Holmgren--who, like Born, was a college dropout--keeping a steady eye on the kinds of details Born loathed. Several times a day, they were in the habit of wandering into each other's office, tossing a rubber football around or engaging in a putting contest while hashing out business. "That day," says Born, remembering their meeting of January 30, 1996, "there was no football. That's how serious it was."
Born shared his doubts with Holmgren, telling him of several recent events that had combined to intensify his anguish. Newly recruited employees--ones who'd turned down jobs at companies like Compuware--had voiced concerns about whether their chosen employer would lose its distinctive character. A key customer experienced in the world of mergers and acquisitions had sharply warned Born that he was being naive. "It's too bad," the customer had added, "because you guys were different." And just a few days earlier, the company's recruiting director, Jana Bertheaume, had told Born of being approached at a job fair. "Now you'll be just like the rest of us," a competitor had taunted. "I'm not sure we want to be just like the rest," Bertheaume retorted. And she was far from the only one who felt a strong attachment to the company--or so it seemed to Holmgren from all the E-mail he was receiving. "Employees were saying, 'How could you sell our company?' " he says. "They felt it was theirs, too. When we struck the deal, we had missed that reaction."
That reaction possessed the power to stop Born and Holmgren cold: it was exactly how they had always wanted their employees to feel. From the outset, Born had structured the business around what he regarded as the critical issue facing anyone building a growth company in the technology-consulting industry. "Customers," as he says, "are the relatively easy part of this." But as he had learned while working for a previous employer, "turnover was expensive and hard," Born says. "You lose revenue because new people aren't billable right away, and your reputation with customers suffers because you're not a reliable source of people. Low turnover makes a successful company in our industry."
And so Born set out to differentiate his business by "being the very best company to work for." Countless CEOs start out with such vague intentions, passing out the same benefits that Born and Holmgren heaped in the laps of new recruits: a generous health plan, free dental insurance, life and disability insurance, tuition reimbursement, revenue sharing, stock options, $750 referral bonuses, and a $500 clothing allowance for new employees. (It's since been reduced to $250.) But Born's commitment to employee satisfaction went beyond perks, guiding key decisions he made in growing Born Information Services, which is based in Wayzata, Minn. Employees didn't stay at Born because of what the company did for them; they stayed because of the kind of company it was.
DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.