As part of my thinking about a possible World After Capital, I have been looking into human needs. A framework that is frequently mentioned in that context is Maslow’s hierarchy of needs. It is a great example of something that remains a popular reference point despite being largely a conjecture and having been superseded by subsequent research (which tends to be much less well known).
There are two psychological needs though that appear to be quite robust across different studies: purpose and recognition. Apparently most of us do much better if we have a strong answer to why we are doing something and having someone else recognize our efforts. On this basis it makes a lot of sense why many people in the Rust Belt are suffering. We live in a society that (wrongly) equates work with purpose. So if your work goes away so does your purpose. Add to that the feeling that your plight is not being recognized and you have a toxic combination.
Understanding the needs for purpose and recognition also provides critical insight into management. Employees want to know why they are doing something (how does it connect to the overall vision and mission of the company) and they want to be recognized for doing it (by others inside and outside of the company).
I will never forget the moment that I decided to quit my first job after college. I was working for a management consulting company in Munich, Germany and we were in the office late at night on a project. I went over to a manager and asked why I was doing a particular analysis. I did not understand how it was supposed to advance the project. Instead of the expected short explanation I got a barked and literal “Because I told you to do it.” I realized it was symptomatic of the culture of the place and handed in my resignation the next morning.
One of the most common mistakes I observe among entrepreneurs in leading their company is that they keep too much in their head. They have the whole vision, mission and strategy there and know for themselves how a particular piece of work fits with it (probably my manager knew the answer also). But instead of communicating that again and again they simply keep it locked up in their head. And it is easy to see why that happens. Communicating takes time. Time they feel they don’t have (again, my then manager’s barked remark was a great example of not wanting to take the time to explain).
Recognition is equally powerful. Even when you know why you are doing something, if your work is not recognized you will eventually become demotivated. Recognition is not the same as praising. It starts with noticing and acknowledging. I have watched a few episodes of “Undercover Boss” and while the show’s center of focus is the “boss” the more revealing part to me is how much people light up when they feel that their work many layers down in the organization is (often for the first time) explicitly acknowledged by senior leadership.
For fast growing startups this too is a common problem. Early on the founder knows all the employees. As the company grows new layers of management are added, it becomes more and more difficult to know who everyone is and often recognition is left behind. This is especially difficult for early employees who are being intermediated and go from feeling recognized to toiling away in relative obscurity. To prevent this from happening it is critical to establish a culture of recognition early on. Celebrating successes is part of that but it goes deeper to include ongoing acknowledgment of work (eg career development).
As a society as we are heading away from traditional work we need to think hard about where purpose and recognition come from. In the meantime though as entrepreneurs and investors we should help live this in companies.
