A skeptic might question whether such measures can really break down the traditional walls between employer and employees. After all, there is still one major difference between Goode and the members of his team: He's an owner and they're not. Nevertheless, he says, the people at the Works Corp. feel, think, and act as if they own the company, and that esprit de corps is what he thinks he would jeopardize by bringing in a lot of new employees.
Robert Catlin of Signature Mortgage also relies on a small, tight-knit team, consisting, in his case, of 16 employees. "When you're small, you can do all kinds of things that build relationships and create a tremendous amount of loyalty," he says. But in contrast to Goode, his decision to stay small had to do less with lifestyle than with efficiency. Formerly a vice president of another Inc. 500 mortgage company, Rock Financial, he'd concluded that a "little power group" of 14 to 16 employees could accomplish as much as a company with 50 to 60 employees, provided he got the right people and created the right environment for them to work in.
So Catlin went out and hired people he'd known, in some cases, for more than 20 years. Several employees are his golfing buddies. Every year he takes the entire team -- together with husbands, wives, and significant others -- on a retreat. In recent years, they've been to San Diego, Las Vegas, and the Dominican Republic. He also pays well. He has clerk-typists with a high school education who earn up to $60,000 a year, including bonuses. The bonuses are tied to productivity, which is extraordinary across the board. Last year, Signature originated more than $18.4 million in mortgage loans per employee, far above the industry average. "You get so much more out of people when you keep it intimate," says Catlin. "I take that for granted, and I shouldn't because I see how the big companies flounder."
The payoff for Catlin is freedom. He says he can go away without having to worry about the work getting done or the cash disappearing. Last year, he took 10 weeks of vacation, and he's no slave to the office when he's at home, either. He says he has plenty of time for his outside interests, like coaching his sons' baseball teams. "If I were to expand the company, I might make an extra few hundred thousand dollars, maybe even a million, but is it worth it?" he says. "You lose part of your life to growth."
Robert Moore of Solid Earth, the MLS provider, reached the same conclusion as Catlin and Goode -- to moderate growth and keep the team small -- but he took a completely different route to get there. For him, the key consideration was his company's ability to provide a high level of ongoing customer service. In the beginning, he and his partner, Matt Fowler, weren't particularly aware of the connection between size and service quality, but they soon learned. A few of the real estate associations they signed up insisted that Solid Earth provide direct support to local agents. As a result, the company's highly paid tech experts found themselves doing basic training for people who'd never used a computer before. "We realized that we can't and shouldn't do end-user support," says Moore. "We're a technology provider. We expect our customer, the association, to provide support to the end users, its members. An association with a strong support staff can offer better service to them than we can. So now we turn away customers that want us to do the end-user support for them."
In addition, Moore and Fowler began to realize that it didn't pay to take on small associations. Although the cost of implementing the system was the same regardless of the association's size, the potential revenue could vary greatly. Even more important than the money was the time involved in setting up a new system. The more time Solid Earth's staff spent on new customers, the less time it had to take care of old customers, most of whom were on three-year contracts. If they were happy with the service they received during those three years, they would renew for five years at no additional cost to Solid Earth. If they weren't happy, they would leave, and the company would have to sign up additional accounts -- at considerable expense -- just to stay even in sales.
So it was vital that the staff have whatever time it needed to maintain a high level of service to old customers, which meant limiting the number of new customers. "We didn't want the growth to kill us," says Moore, "and we didn't want to be the cheap guys in the market. We wanted to be viewed as the guys you go to when all else fails." In effect, the partners decided to position Solid Earth as what Moore calls "the Ferrari of the industry."
There was, of course, an alternative. Moore and Fowler could have hired more people. Yet they never seriously considered the possibility. "I've always found that having a small team works out better in terms of morale, motivation, and productivity," says Moore. "We have a pretty flexible work environment here, but if there's trouble, everybody is available 24 hours a day until we get the problem solved. And there's no bureaucracy. That's why we're able to win whenever we compete against large companies."
That's the common thread among these three fast-growing (and, by the way, highly profitable) companies that have decided to moderate their growth.
Although the decisions were driven by different considerations in each case, a key factor for all of them was the remarkable level of commitment -- and performance -- that a very, very small team can deliver. A labor shortage wasn't the problem. They all could have expanded their work force if they had chosen to. What stopped them wasn't a dearth of qualified people, but rather a preference for keeping the number of employees in the low two digits or less.
That's a choice many people can't understand. "The hardest part is dealing with people telling me I'm crazy," says Catlin, of Signature Mortgage. "The world says, 'Go. Get bigger. Go. Go.' But I know a lot of companies that get too big for their britches and fall flat on their face."
To be sure, there are many companies that grow fast and do just fine. Still, the decision to stay small may well resonate with entrepreneurs seeking a better quality of life and a higher level of customer service. If so, we may someday look back on the likes of Goode, Catlin, and Moore as pioneers rather than odd men out. Will that mean we won't be able to count on growth companies to create jobs? Not necessarily. There will always be people who seek to build the next Microsoft. But if this approach catches on, we may start seeing more small, happy, high-paid teams -- and well-balanced, unstressed CEOs.
