So a few weeks ago one of my friends who is a CTO at a very successful consumer facing startup was talking to me about how they do vendor selection. We were discussing this as my team was pondering an upcoming vendor selection for a new project. It was apparent almost immediately our two companies had *very* different approach to vendor selection.
One of us posed the argument that it was better to use more established companies with a track record and strong customer base, while the other said that it was better to select a hungry startup. Here were our arguments:
Established company
- Track record — if they have customers bigger than you there is no doubt they will be able to service your needs
- You know they will be there in 6 months, 1 year, 2 years
- Less bugs/issues in a mature product
- Products are more likely to be stable and meet SLAs
- Less room to negotiate on price
- May or may not build the feature you need/want
Hungry Start-up
- Premier Treatment — if you are their biggest customer (or one of their only customers) they are going to respond to any of your issues very quickly
- Better pricing — hungry companies are going to be willing to work with you more on price
- Better chance of getting “your feature” implemented
- If they don’t have enough funding they may not be around (and then you will have the cost of adopting something new)
- Earlier stage products can have more bugs or stability issues
Both sets of criteria seem valid and certainly represent a sound way of thinking about picking a new vendor. What mechanism do you choose? Do you use criteria like amount of funding, number of employees/offices/servers, etc?
Recently a friend of mine suggested I take a look at a slideshow Netflix put together on their culture. The slide show is long (128 slides) but I definitely think it is worth the pass through as it embodies and codifies a lot of traits most organizations would like to adopt.
Some of these are familiar to me–encourage passion and innovation, give people a framework and let them have the freedom to grow within it, and keep your top talent (and let go of the others). But some of the methods they use were not ones I had encountered in my career. The innovations I found most intereting tended to pertain to their take on compensation:
- One of their philosophies is to pay top of market. I have yet to work somewhere where that is the case for any position. In fact, many of the places I am familiar with have paid below market for the “privilege of working on interesting problems” or some other such statement. I loved this idea because it means that no one is ever going to leave for financial reasons–so many people measure their worth based on compensation and so by paying the top market rate no one on your staff can feel undervalued or unequally compensated.
- Another approach they took was to treat compensation like a pile of beans–a person can then use those beans to buy stock, get health insurance, etc. Doing this helps employees see the value of things like good health care, or stock options. Doing this effectively does away with “golden handcuffs”, since the stock vests right away and your compensation year over year is your compensation. I think this is much harder to adopt for startups where you don’t have the flexibility of allowing employees to choose different health care options, and stock options are more optimistic–but it is definitely a good way to help employees see the value in the benefits that come with a job outside of raw salary. Maybe if you are a small company, you could actually list the costs as line items or something? Certainly food for thought.
- And finally, give generous severance packages. The reason they do this is that it allows managers to let go of an employee and not feel bad about the decision. I wonder how generous is “generous” though? I would think it would have to be at least 3 months if not more (since a lot of people need that long to find a new job). I am not sure if this makes sense for a small company though (since you don’t always have the money for those big cash payments). However, there is one thing I am sure of–as soon as you know a person isn’t the right fit or doesn’t have the right skills it is best to let them go. Sometimes coaching can help, but in small companies where there is little margin for error you don’t necessarily have the time to coach someone.
There is a lot of other great material in the slide deck on setting the right tone for your company and managing your employees. I would strongly suggest going through the presentation for anyone in a management role.
So recently I came across this blog post on customer service that said:
Make it easy for your people to serve customers…Instead, be the Ritz-Carlton. Each employee is given an individual, daily budget to create a wow experience for a customer, or for “service recovery.” (That’s to fix, or even over-fix, an error or problem for a customer.)
I started reading through the comments about all “these things” people learned about customer service from the Rtiz Carlton and that got me thinking about what these things were (since customers are crucial to the success of any company).
Here are some of the tips I found:
- Creating an emotional bond with customers through the frequent use of their names
- Treat colleagues and coworkers with the same respect and courtesy you would extend to a hotel guest
- Empower employees to step out of their roles to do what it takes to “wow” guests. This includes a large budget (I read as much as $2,000) given to each employee to be applied at their discretion (mentioned above).
- Each day/shift starts with a line-up where employees discuss and tell annecdotal stories that demonstrate one of the tenets of the hotel (these are called gold standard and you can find them here). This improves communication among the staff and reinforces their philosophies and values.
- Give feedback. Employees are encouraged and rewarded for speaking up and giving their opinions on process. And supervisors are trained to listen and follow up.
- Publicly praise, privately criticize. And when delivering criticism sandwich it between praise so the employee still feels motivated and will want to improve.
- Share “wow” stories. By sharing their successes with their peers it reinforces this type of behavior and rewards the individual that has the achievement.
- There is never a second chance to make a first impression. Employees don’t exhibit body piercings or crazy hair, and each looks pulled together and representative of the hotel’s brand.
And the Ritz Carlton has such amazing training for their employees, for a fee they will allow non-employees to participate in their leadership training–you can register here.
Overall it is pretty neat how they have created an organizational culture of great customer service though consistently reinforcing the traits and behavior that created it. It is a good lesson in great customer service and I am sure most organizations can pick up a tip or two from the above list.
