In the unlikely event that you have never heard of Mad men, it’s  a TV show taking place in a growing advertising agency in the early 1960’s. the show is known for its attention to details and the general sense of nostalgia it projects for the way things were back then. If you start seeing an uptake of smoking and drinking in company meetings, you now know where it came from. In one of the episodes, one of the account managers is fired for poor performance (related to falling asleep on his desk due to chronic heavy drinking). In order to fire him, one of the founders and the top manager take the to-be-fired guy to dinner to break the news and explain how they actually intended to do this a while ago but waited until his wife finishes her radiation treatments. After the employee argues that it’s just a temporary slip, he’s been in the company for a long time  and basically they are all having alcohol issues anyway, the big surprise comes when his managers agree to put him on temp-leave until he cleans up.

While not necessarily a realistic scenario even back in the 60s, i am sure the creators put the scene there to get some extra nostalgia points in contrast to the scenario we know today of “thanks you for the last X years of work with the company, here is a box, here is there security guy, 15 minutes and you are gone”.

Fast forward to the 90s and one of the strongest anti-corporate sentiment was portrayed in the classic sci-fi movie The Matrix. The hidden criticism was that Corporates and employees relationships today are much more resembling the human-matrix relationship as portrayed in the movie. The background story is about a computer system that has taken over the world and is using humans as sleeping batteries while giving them the illusion of a real-world life through a software that is plugged to their brains. To be fair the analogy breaks as employees today tend to jump companies with just as much ease and frequency as companies let go of employees so the relationship is a bit more symmetrical than in the movie.

Bottom line is easy to understand, a company running with a group of people with a delicate social fabric versus a group of human resources governed by strict pre-set rule system in which managers and computers could be easily exchanged.

Why should start-ups care to be more Mad Men and less Matrix?

In his recent book, Predictably irrational, the economist Dan Arieli makes a case for the value of social rewards vs market rewards. He proves in his experiments that when people feel a social reward from the success of the group they belong to, they will work harder even though (and in part because) they are paid less (and thus get lower market value than say in another company).
Efficient start-ups always strive to have employees stay through sickness and poor and not because they give the biggest paycheck (which is impossible to sustain on the long run) and in a close knit social fabric lays the secret to a start-up’s efficiency and success.

3 things to think of when putting the social fabric of the start-up together:

1. Best team vs best individuals
The most common mistake when putting together the team is to go after the “dream team” model in which each employee is the best we can find in his area hoping that will make the best team over-all. As the 2004 olympic basketball dream team (made out of the best players in the world) performance showed (losing to Argentina among other dream-free teams..), having the best players helps but does not make you the best. when hiring people, prefer people you know or someone you know well recommends (one degree of separation), people who come from your existing social landscape are more likely to fit together and bond which in turn will make them care more, work harder, stay in the company longer and require less formal process to communicate as the transfer of information becomes part of the regular and enjoyable social interaction.

2. Business and personal are one and the same

Why is it that it would be odd to be given a friend guidebook when you join a new group of friends while it is so common when you join a new company (a given for a big company and less so for startups). The reason is the similar to why we don’t need a guidebook for walking yet it takes so many lines of code to create a walking robot that still falls much easily than any 3 year old. By not creating the separation between business and personal we allow the company to enjoy the best employee rule system without ever sitting in training or reading the HR books. Treat employees as individuals with unique needs required some management overhead and flexibility in the organization but in turn gives back efficiency, motivation and commitment. More gut feeling management, less looking for the guidebook next time the employee has special working hours requirement or needs time off to deal with family issues.

3. Corporate politics vs. family politics

No group of people, be it family or work, are free of politics, it’s just human nature. so why is it that big-company politics are often sighted as the main frustration source with people working in such big corporations? the distinction is pretty clear and you know have crossed the line from normal politics to corporate politics when employees start weighing potential personal benefit and risks over the company’s. The detachment between employee’s goals and collective company goals is best examplified by that employee whose suggestion was not chosen and would rather see the company fail just to get the acknowledgment of his superior opinion that wasn’t considered. The family type politics would mean that everyone fights hard to get their opinions through (since they are sure it’s for the best of the company) but as soon as a direction is chosen, each employee contributes as much as they can to make sure that the company succeeds even if the plan is less than optimal. the to-do in this case is to keep looking for such employees, and defuse them before the situation deteriorates. It is amazing how much listening by management as well as prividing transparency help reduce such frustrations and prevent big-company policies to take place, which in turn, destroy any social fabric previously set in place. it is also important to note that once such employees are identified and no resolution is available (sometimes you just find some employees being too “trigger happy”, especially those that have spent a big part of their career in a “hostile” corporation), this is the point where intervention is in place and letting go is the only way to save the body from the infection.

Bottom line – eventually, as companies grow beyond what social fabrics can handle, you need rules and regulation. your employees will only stay if the pay is good (plus whatever perks are fashionable in the next bubble) and your company will become a big-corporate (still better than it dying..). Untill then, you gotta keep it simple, friendly and human. it’s the only way start-ups win.