Economist Milton Friedman said in the 1970s that the only purpose for a company was to turn a profit. Companies today challenge that notion--whether by giving back a la Toms' one-for-one method, refusing to do business in states with discriminatory laws, or just making a company a generally nice place to work. 

Human company design is a way of creating a company that focuses on the people who work for it. "It's not culture; it's not warm fuzzies," said Sara Holoubek, founder and CEO of innovation consultancy Luminary Labs, at the Northside Festival in Brooklyn, New York, on Thursday. "It is a formal management approach that creates value when investing in people." Holoubek shared the stage with Ernest Ng, senior director of employee success at  Salesforce, and Alex Cavoulacos, co-founder and COO of career website The Muse--two more companies that employ the philosophy.

And the benefits go beyond feeling like a good person. "Companies are making an economic argument to their investors," Holoubek says, "that these human-friendly policies produce a better return through customer retention, employee retention, and efficiency." 

Here are the five steps to building a human company, according to the trio.

1. Make a conscious decision.

Founders don't create human companies by mistake--it's a choice that's made on day one. "These companies decide they're going to create a new model that flies in the face of conventional wisdom," Holoubek says. How to form and hire for the company, how to fund it and distribute equity, how to operate--these decisions all begin with the founder and operate from the top down. 

2. Have a compass.

Founders should create a lens through which all business decisions are made--one that be easily summarized in the form of a refrain your employees can memorize. "Sometimes it's borderline religious," Holoubek says. At The Muse, the refrain is simple: "No assholes," says Cavoulacos. They won't hire someone who shows an inkling of rudeness, no matter the skill level, qualifications, or the urgency of the company's needs at the time--even if it means temporarily short-handing the company or missing out on a great worker. In the rare event that a hired employee turns out to not fit with the model, they're sent packing. And it's no secret: The Muse puts its "No assholes" motto directly into its job descriptions.

3. Create formal policies.

Lots of company leaders claim to want to close the gender pay gap, but Salesforce founder and CEO Marc Benioff put his money where his mouth is. When a 2015 internal analysis of the company's 20,000 employee salaries revealed some gender discrepancies, Benioff shelled out $3 million to raise the salaries of the women in question and had Ng build a tool to track the data going forward. No one is crying songs of sorrow for the $52 billion company for doing what should already be a given, but it's rare for a company to take such swift action--and it exemplified Benioff's stated people-centric business philosophy.

At The Muse, employees work hours that align with their personal life and sleep habits. Late risers--Cavoulacos is one--can stroll in at 10, and morning people can cut out at 4. And for those employees who check their email after hours, Cavoulacos encourages others to indicate when appropriate that responses can wait until morning.

4. Be a role model.

Policies mean little unless employees see leadership carrying them out themselves. Out of the office, Benioff donates to charities and gets involved with the local community, and within it, he installed rooms on every floor of the office where he and other employees can meditate. At Luminary Labs, Holoubek makes sure that sick days mean sick days--if she can't make it into work, she doesn't call into company meetings. Cavoulacos is sure to admit when she doesn't know something so that other employees will deprogram themselves from viewing it as a sign of weakness. "I'll send an email that says 'I realize this is something I need to work at,' " she says. "It can be viewed as vulnerable, but your employees need to see that."

5. Offer what you can.

Being a human company means investing in people the way you'd invest in a product--improving as you can afford to. When you're small, offer small perks--birthdays off, for example--and then add more, like 401(k) benefits and a matching program, as they become feasible. At Salesforce, Ng leads a department specifically designed to prepare the company for five years down the road, including the increasing types of perks people will want and what the company will be able to afford. The Muse offered benefits when it was a five-person company, and then grew them over time. "We didn't have any money, we didn't have an office, but we were offering health insurance," Cavoulacos recalls. Eventually, a six-week paid parental leave policy became 12 weeks, plus the option for another 12 weeks unpaid. "Be responsible with your resources," she says, "and evolve your policies over time."