The following is a conversation between David Hassell, founder and CEO of 15Five, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.
Denver: We speak often of the critical role that corporate culture plays in the effectiveness and success of an organization. So, it’s always a pleasure to speak with someone who understands it, can identify what’s really going on in an organization, and knows how to go about improving the situation. One of the most highly regarded of those people is David Hassell, the founder and CEO of 15Five, and he’s with us now.
Good evening, Dave, and welcome to The Business of Giving!
David: Good evening, Denver. Great to be here. Thank you.
Denver: Tell us about 15Five. First, the significance of your name… and then what the company does.
David: Absolutely. So, the significance of the name is actually… it’s from an old business practice the founder of Patagonia popularized back in the late 1980s– actually written about in the 1988 issue of Inc. magazine. The title of the article was, I’m Sorry, Yvon is Out Surfing. Yvon Chouinard, the founder of Patagonia, every time the reporter called to ask for an interview, he was out surfing, and when they finally got him on the phone, “How do you go surfing and climb mountains for half the year and still run your company?” The answer was actually 15/5. He’d have every employee in his company spend 15 minutes a week writing a report that takes their manager no more than five minutes to read. And by creating this lightweight, agile feedback mechanism between his managers and employees, he ensured that the communication was flowing; that he would know what’s going on throughout the organization even when he was out… basically being out in the field testing all the gear.
I really liked the concept, the simplicity of it, when I came across this in, I think it was 2011. And we built software with the purpose of trying to create better communication, better company cultures through improving the relationships between managers and employees, and bridging the gap between frontline employees and senior executives. So, that’s where the name came from. So the product and the company evolved out of that with that very simple basic practice at the core, with the broader intention of: How do we create thriving, high-performing teams where people are supported and doing their best work and being their best selves? That’s what we’re all about.
It’s very important as an organization to have good objectives and strategy and metrics and all of the externalities that we might be able to measure about whether a business is successful. But unless you have a positive, strong culture, you’re never going to reach your potential as an organization. More often than not, it’s actually going to thwart your ability to succeed.
Denver: That’s a great story. Well, corporate culture… or workplace culture today… that’s a bit nebulous for a lot of people. How would you define company culture?
David: It is nebulous the same way that emotions and pain are nebulous inside ourselves. The best that science has come up with to, say, when you walk into a hospital and you have some pain as they say: what’s your pain level on a level of one to ten? There’s no pain measurement; there’s no way to… it’s a subjective thing that we might feel; it’s real, but you can’t measure it.
Culture is very much the same way. You can feel when you walk into an organization… one that’s teeming with aliveness, where people are engaged. They’re leaning in. They’re excited. They’re positive. They’re productive, and they are working together collaboratively and creatively. And you can feel it when you walk into a company, and it feels like people are checked out and it’s just quiet, and people aren’t really engaged. That’s an aspect of company culture. It can be difficult to measure, but it’s not impossible to measure.
There are certain things you can ask people about… their relationships with other people, with how they feel about the company. Do they feel the company cares for them? Do they feel like they’re aligned with their greatest strengths in their roles? And are they connected to a higher mission? Do they feel intrinsically motivated? These are all different things that you can check in about with people to determine… And Peter Drucker famously said that “culture eats strategy for breakfast.” It’s very important as an organization to have good objectives and strategy and metrics and all of the externalities that we might be able to measure about whether a business is successful. But unless you have a positive, strong culture, you’re never going to reach your potential as an organization. More often than not, it’s actually going to thwart your ability to succeed.
We are tribal beings. We like to be associated with something.
Denver: Absolutely. What are some of the processes in an organization that affect the culture?
David: The first part is: you have to understand, there has to be some sort of ethos about what the company is and what it stands for. We are tribal beings. We like to be associated with something. So, the first part is actually having a strong “why.” There’s a great TED Talk by a guy named Simon Sinek who is a friend and investor in 15Five. You can look him up. He’s had something like 40 million views, and 13 minutes will give you this concept. It’s really by articulating: this is the reason we exist. Profit is the outcome. All businesses exist to create profit. That’s true. But there’s a deeper purpose about what we are actually creating in the world, who we’re serving and why. The company really needs to know that and have that clarity, and the people in the organization need to feel connected to that if you’re going to have what I call a very high-performing culture.
The next piece of it is understanding that not all cultures are the same. There’s no universal characteristics or values that make one great culture over another. What actually makes a great culture is that there’s consistency of that and this clarity of what those values are. So, for example, in 15Five, some of our values are: find the leverage. Our background is being a very small, scrappy team without raising a lot of capital to do what we do. So, we have to be highly creative. Organizing on principles, I believe, is like: constraint drives creativity.
How do we actually be really creative and find the leverage? Then also: cultivate health and vitality. A lot of companies might have beer and pizza on Friday. We have smoothies and green juices. That doesn’t make one right or wrong. It just means that that’s the kind of people that we like to be with, and we believe is one of the keys to our success. Having the why, having the values, but then also having a way to have people feel connected to one another, to their managers, to feel like they’re supported, and that there’s a level of what I call psychological safety in the organization.
Some companies inadvertently create problems in that area by doing things like forced staff rankings and saying: we’re going to fire the bottom 10% of the workforce just like GE did for a long time. But they’ve more recently backed off of that practice. But those types of situations where people are constantly fearful for their job or fearful of making mistakes because they’re going to be reprimanded and there’s going to be consequences; those people don’t take risks. Those people are focused more on protecting themselves than actually doing their best work in serving the company. How do you create an environment where people feel like they’re safe and accepted, and they’re supported and they’re connected to one another?
What you’re seeing in Silicon Valley, and that’s now starting to spread outside of the tech industry, is the new discipline of HR that’s more strategic… or what I call more people- and culture-oriented. And in fact, the more progressive leaders are eschewing the name “human resources” altogether.
Denver: I don’t think people appreciate how often people stay at an organization for one another. Mission’s important. Leadership’s important. But it’s really their peers in so many cases that really band them all together.
David: That’s so true.
Denver: Many listeners have a pretty fixed idea of the human resource function; the HR function within organizations. Is that function changing, Dave? And if it is, in what way?
David: I do believe it is changing. So, human resources historically in most larger organizations– and as the disciplines of all– have evolved to be very focused on compliance and protection. So, it’s about making sure we have all the legal things in place. If something happens that’s…someone’s not performing, how do we let them go? How do we rate individuals? How do we protect ourselves if something goes wrong… those types of things. What you’re seeing in Silicon Valley, and that’s now starting to spread outside of the tech industry, is the new discipline of HR that’s more strategic… or what I call more people- and culture-oriented. And in fact, the more progressive leaders are eschewing the name “human resources” altogether.
Denver: No question.
David: Rather than calling themselves VPs of HR, they’re saying I’m a VP of People or VP of People and Culture. And that’s usually an indication that they are more progressive. They’re more strategically oriented. The compliance stuff is important. But they’re erring more to the side of: how do we actually support our team and our culture and our people and doing great work? And our company predominantly aligns with that.
You know, one of the things that I think? Language is very, very powerful. If you look up the definition of “resource” in Wikipedia, it says: A resource is anything that you can use to transform into value that in the process may be consumed or made unavailable. Like oil. You burn it up. That’s not a really good word for a person in an organization. We don’t want to burn people up, and at the end, they are consumed and made unavailable. But honestly, that’s how companies have existed for a long time, and it comes out of industrial revolution assembly-line thinking.
We didn’t have robots, so we needed people to actually be part of the assembly line to put things together and mirror parts of the machine. Often used analogies in business that are either like the Military; we’re winning territory or capturing this or doing that… or cogs, like we think about the business as a machine and people as part of that machine. I think what’s happening now is we’re moving beyond that. But those things still linger. And I actually think “resource” is not a great term to use for people. And I think a lot of the more progressive companies are realizing that too and moving away from that language.
Denver: I think you’re absolutely right. Human capital. Wasn’t it Henry Ford who said, “Every time I want a pair of hands, why does it have to come with a brain attached?” Which is one of the great lines.
Well, your website, 15Five, has many wonderful resources; one of which is the eBook of Employee Questions. Why is it so important to ask your employee questions? And what are some of your favorite questions to ask?
David: Great question. Questions are I think one of the most powerful linguistic tools we have as human beings because: you just asked me a question; now, all of a sudden, my attention is focused specifically on that. We’re now having this very unique conversation. Just from that simple question. We tend to think the same thing 98% of the time day to day to day to day. We get into these thought patterns and belief patterns and the way we view the world, and a question can immediately snap you out of that and start to focus you on something else.
So, to give an added background, one of the things is that we’re generally wired to be looking for what’s wrong and what the threats are. When you’re in that mode of: what’s wrong? what are the threats? you can get into a place… you’re snapped out of your higher-level-brain thinking where creativity and collaboration, those things, really originate from.
Denver: The amygdala has taken over.
David: That’s exactly it. The amygdala has taken over. It is more often than not, the study of positive psychology shows that we can actually retrain our brains. We’re not running around in a world… our brains evolve for a time when there were real physical dangers often. We might get eaten by some animals. It’s just not what’s going to happen right now, but we’re still wired that way, and now, we still get triggered into these fight or flight modes very frequently even when there’s no physical danger at hand.
And so, one great question that I love to ask is: If a lot of folks will go into a one-on-one and say: Okay, where are you struggling? What’s wrong? Let’s get right into the challenge. I prefer to start with what’s right, so we’ll start a meeting with… “okay, let’s do a round of wins.” What are the wins we had this week? is the question. I might sit down with an employee and say, “Okay, what’s going really well right now? Where do you feel like you’re actually succeeding? And getting rooted in that and training ourselves to look first for the positive can really shift the orientation and culture, one question at a time. And then of course, it makes sense to then go on into the challenges and the negativity… but coming from a more balanced perspective.
Denver: Yeah. You change the whole dynamic when you start off on a positive foot like that. Many organizations have continued to use the annual performance review. And I know that many others have abandoned them altogether in favor of continuous, real-time feedback. And still others are using some kind of a combination, and this somehow is all tied with employee engagement. How do you look at the relationship amongst these?
Davis: There’s definitely been a backlash against the annual performance review for good reasons. Traditional annual performance reviews were designed in a time where they made a lot of sense. Business moved a lot slower than it does today. People stayed at companies longer than they do today. It made sense to check in on an annual basis because things weren’t changing that much.
We’re now in a very, very different business environment; yet we’re still doing what’s always been done, and it’s finally hit a breaking point. A few years ago, there was an article that came out that was put out in Harvard Business Review called Reinventing Performance Management. As a result, major companies like GE and Adobe and Microsoft started dropping their annual performance reviews. Many companies came to us and said, we need continuous feedback. What you guys are doing is great. But as often happens, sometimes the pendulum swings a little bit too far to the other side, and folks were coming to us and saying, “All right, well we gave up our annual performance review; we’re doing this continuous feedback thing, but I feel like we’re still not getting what we need.” We’ve always said, we believe that it’s not the fact that you’re stopping to reflect on a periodic basis that’s the piece that’s wrong. The piece that doesn’t work is doing it so infrequently, in a way that’s very cumbersome, and in a way that actually goes against creating that sense of psychological safety for the employee. Because generally what the performance review means is: I’m going to grade you for what you did. I’m going to give you a score, and then you’re either going to get fired, or you’re going to get a promotion or a bonus or something. Something may happen, and this is a really big deal.
Denver: Stressful for everybody involved, people giving the review too.
Davis: Yes. And it’s also so out of their workflow, they’re not trained to do it. They’ve got to spend all that time to do these things. It’s stressful all around. Nobody likes it. The most common term associated with annual performance review is “dreaded.” We have customers coming to us and saying, “Look your product is so beautiful that it uses this lightweight weekly check-in, and it’s really transformed our company. Can you do something like that for the performance review?”
And that’s a big challenge because this is something that’s been around for a long time, and people have their own versions and views of it. And so we sat down and said, “What would we invent if we were to do this, starting today? If in this environment, if there was no such thing as an annual performance review, if we actually wanted to create an organization where people were supported and growing and developing and thriving… being their best selves, what would we create?” We said it would be lightweight. It will be easy to do; it will take an hour. It would happen on a regular basis, ideally, every three months instead of every year because frankly, there’s a psychological condition called the recency bias where we only remember the last few weeks anyway of the last quarter anyway.
So, if you’re rating someone on the year, it’s not very accurate to begin with. So, it should be regular. It should be lightweight, easy to use, and it should actually be supportive of the employee improving their performance, not necessarily causing the anxiety of giving them a grade relative to compensation. So it’s separating it out from the compensation conversation. And what we actually came up with was what we released just less than a month ago. It’s something called The Best-Self Review.
We believe that our goal as leaders, and certainly leaders in the space of performance management, is actually to help create high-performing teams; and high-performing teams are a result of people becoming their best selves. How do you that? You have to have an orientation like I said around positive psychology and understanding of what drives intrinsic motivation and creativity and collaboration. And a lot of that is actually oriented to what we call a strengths-based orientation. So, while it is true that we all have capacity to grow in almost any area of our lives, we don’t usually have capacity to grow equally in those areas. Unlike our training from childhood, it’s actually much more effective to figure out what you’re really really good at and get better at that than try to just improve all your weaknesses. We’ve built our product around that concept.
Denver: When do you hope to have some metrics on The Best-Self Review in terms of the impact that it is having for organizations that are using it?
David: We did our best to work with a number of high-level HR and people, VP people leaders, as well looking at all of the Social Science research that’s related to this discipline in terms of our design, and we released this at the end of November. We’re hoping to have some really good metrics by middle of next year. We have a lot of very enthusiastic customers we’re working closely with who are already adopting it for the end of this year, and we’ll be doing either quarterly or biannually in 2018. But we’ll need to go through a couple of cycles, get feedback, iterate, but certainly by middle of next year, we should have some really good preliminary results. Right now, just like everything, just similar to when we launched 15Five in the first place, when we didn’t have a lot of empirical data, we have a number of very enthusiastic early adopters who get the concept and want to come along with us on the ride.
Denver: You definitely have passionate followers. There’s no question about it. You talked a little bit about the corporate culture of 15Five. Is there anything that’s really distinctive or unique about it that you have particular pride in?
David: The thing that I’m really most proud about: we get our own company together for an annual retreat every year, and we’re doing our next one up in Lake Tahoe in January. Last year, everybody on the team essentially asserted they believe that they were better versions of themselves from having worked at 15Five the prior year. Our why, we say that our why is to create the space for people to be their greatest selves. Our vision is unlocking the potential of every member of the global workforce. So, we’re really big believers that if we can actually support people with getting aligned with their roles…where they’re naturally strong at, and they’re supported and growing and developing themselves– they’re going to be more enthusiastic. They’re going to have better family lives. They’re going to be better contributors at work. It’s just an upward spiral. I’m most proud by the fact that we’re actually delivering on that.
One of our core values– we talked about core values before– is always be learning and growing. So one of the things that we do to express that is every year, on somebody’s birthday, we give that person a $500 stipend that they get to go out and spend to learn something that they wouldn’t maybe spend on their own to do, and not work-related. So, this is something where they actually get to acquire some skill for their personal lives and go spend money on training or a class or something like that. And it’s just so fun to hear the stories of what people do with that and what they’re taking on. Everything from martial arts to skydiving to pottery-making, or what-not.
Denver: Let me ask you this, what did you do with your $500?
David: I actually did a Qigong course, energy training for myself. It was great.
Denver: Fantastic. David Hassell, the founder and CEO of 15Five. Thanks so much for joining us this evening. Tell us about your website and the kind of information that visitors will find there.
David: Absolutely. You can find us at 15Five.com. You can also find us at the same handle on Twitter and LinkedIn. If you go to the 15Five website, you can go to visit various sections there where we have content, and our blog is very, very popular. We have a number of eBooks that you can download to give you an overview of our ethos and philosophy. You can also sign up for a trial. One of the things that we love to do is just let people play around with the product and see if it works for them. You can easily just sign up right there and use it with a few people on your team to see what kinds of things can shift.
One of the things that we constantly hear from managers and CEOs when they use 15Five is even just from the first two weeks. They’re just really shocked and surprised that what they learn from their team that they didn’t know was going on beforehand because for some reason, people just feel more safe and secure sharing things that maybe wouldn’t come up in a one-on-one, wouldn’t come up naturally in a group or a team meeting. So, it just creates this big boost of transparency and connection just in the first few weeks.
Denver: That’s great. Thanks very much, David. It was a real pleasure to have you on the show.
David: Likewise. Thanks so much.
The Business of Giving can be heard every Sunday evening between 6:00 p.m. and 7:00 p.m. Eastern on AM 970 The Answer in New York and on iHeartRadio. You can follow us @bizofgive on Twitter, @bizofgive on Instagram and at http://www.facebook.com/BusinessOfGiving