Create a culture of gratitude

Whether you're a startup founder or a middle manager at a large corporation, remember to thank your employees for their contributions.

Create a culture of gratitude

In the 1989 American comedy film National Lampoon's Christmas Vacation, white collar employee Clark W. Griswold Jr. (Chevy Chase) hosts his entire family for the holidays while anxiously awaiting the arrival of his annual bonus check from his employer. As a loving husband and devoted father living in a middle class suburb of Chicago, he desperately needs this additional compensation to cover the downpayment he already made on a pool for his family. Instead of the presumed bonus he had earned in prior years, Griswold receives a one year membership to the "Jelly of the Month Club". When dimwitted Cousin Eddie kidnaps Clark's boss Frank Shirley and brings him to the Griswold house, it's revealed that the CEO decided to eliminate bonuses as an ill-conceived cost cutting measure.

While the classic movie is intentionally hyperbolic for comedic effect, there are some lessons to be learned for any business owner or manager about how NOT to treat your employees. Part of the enduring appeal of Christmas Vacation decades after its release is how relatable it remains to the average American adult who works in a corporate setting. As I've grown older, the movie has only become more humorous to me having been both an employer and employee in my own career. Aside from being a complete jerk who takes no interest in his employees, the mistake that Frank Shirley made was not cost cutting. Sometimes, difficult decisions need to be made about a business to ensure its continued profitability and success. The leader's error was the lack of clear and candid communication about the company's cost cutting plans in recognition of the fact that such decisions impact employees and their families.

Frank Shirley (Brian Doyle-Murray) in National Lampoon's Christmas Vacation
Frank Shirley (Brian Doyle-Murray) in National Lampoon's Christmas Vacation

Whether you're a startup founder or a middle manager at a large corporation, it's important to never take your employees for granted like this fictional CEO does. It used to be that a steady paycheck was considered thanks enough for a job well done, but in today's global economy that's no longer the case. With the rise of remote work and increased competition for the best talent, employers and those they hire to manage their associates at all levels need to authentically view their people as one of the company's greatest assets. Beyond the usual forms of compensation such as a competitive salary and paid time off, there are effective ways that modern companies can attract and retain the best talent. From my experience hiring and managing people at my own startups and now at a Fortune 500 company, in this essay I reflect on ways to sincerely thank employees for their contributions throughout the year.

Trust employees to make decisions

Among his many famous quotes, Apple cofounder Steve Jobs once said "It doesn't make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do." Yet that's exactly what many employers fail to do. The company's leadership holds closed-door meetings over a period of days or weeks, defines a very specific strategy to solve a problem, and then effectively hands a to-do list to their employees to execute. Sound familiar? Chances are, you've experienced this at least once in your career. While this prescriptive approach might make sense in certain industries or in urgent situations, in most cases it's overbearing and borders on micromanagement. For a company with a product management organization or otherwise aiming to become outcome-focused, operating this way is the antithesis of what it means to be product-led. The smartest employees will recognize this trend, become bored or frustrated, then end up leaving the company if they're simply being told what to do.

"It doesn't make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do."

As a first-time startup CEO, I hurt myself and the business by not entrusting my employees with more autonomy earlier in our journey. According to research published by Harvard Business Review in 2017, workplace engagement and productivity often suffer when employees don't feel trusted. Modern companies aiming to drive innovation and productivity should decentralize decision-making. To do this requires management at all levels to trust employees to not only do their jobs, but to also make important decisions. Moreover, employees should not be reprimanded for mistakes made in the course of making those decisions. There are exceptions to this of course, but in general failure should be encouraged if directionally you're moving in the right direction as an organization. This is why implementing a goal-setting framework like objectives and key results (OKRs) can be transformative for a company aiming to become more outcome-focused. OKRs enable leadership to set, manage, and communicate desired outcomes to their teams which over time can eliminate any need to handhold good employees.

Offer employees ownership

Whether it's profit sharing or equity grants, research shows that giving employees a sense of ownership boosts morale. Aside from annual bonuses, I don't have much experience with profit sharing myself. But I've seen firsthand that personnel who are eligible for programs like an Employee Stock Ownership Plan (ESOP) tend to outperform those who don't, and data from recent studies seems to confirm this too. The National Center for Employee Ownership conducted a survey in 2018 that found employees who participated in ESOP programs had an average retirement balance of $170,326 which is more than double the national average of $80,339. After studying a trove of data about more than 800 companies, business publication Fast Company found that those that offered employees both equity compensation and profit sharing "performed statistically better than the others on a variety of measures."

Admittedly, this is a puzzle I never quite figured out as a startup CEO due to the complexity and cost of the 409A valuation necessary to properly offer stock options to employees at an early stage private company. It's not uncommon for venture-backed startups to offer stock options as a form of compensation to conserve runway (i.e. cash) when recruiting and retaining early employees. Sometimes, that's quite lucrative for the recipient, like the graffiti artist David Choe who accepted $60,000 in Facebook stock options in 2005 which was worth more than $200 million when the company went public seven years later. Fortunately, companies like Carta (formerly eShares) have made this process much easier for entrepreneurs and employees alike with a platform for managing equity incentives and capitalization tables. For more established employers though, rewarding employees for the company's success is a clear win-win for all involved because it thanks the former for their valuable contributions while helping (or at least not harming) the latter's profitability.

Unfortunately, the number of ESOPs has actually fallen in recent years from 7,100 in 2010 to 6,660 in 2016. Meanwhile, just 38% of Americans who responded to the United States government's General Social Survey in 2018 said they received a share of their employer's profits that year. And those who did received an average payout of just $2,000.

Recognize team members' contributions

A former manager of mine used to randomly leave handwritten thank you notes on his direct reports desks. Most times, they were for seemingly small favors like attending a meeting on his behalf when he was double-booked. This small gesture always resonated with me because it felt personal, timely, and sincere. The lesson I learned from this random act of kindness was that a colleague doesn't need to do something spectacular for you to thank them for it. Since my company has been remote since last March due to the COVID-19 pandemic, I've taken to thanking my direct reports and colleagues via Microsoft Teams or during our biweekly one-on-one conversations for a variety of contributions big and small. In the past, I've publicly thanked coworkers during presentations or recognized them during a daily team standup. Like the other tips offered in this essay, this only works if it's authentic.

Celebrate the wins (even the small ones)

During the summer of 2019, it was all hands on deck at Kroger Technology & Digital as we prepared for our biggest launch of the year. After months of design, development, and testing we released the latest iteration of our omnichannel e-commerce platform on September 25, 2019. Referred to simply as 'Seamless' internally and to the press, this release integrated our Ship 1.0 offering with the main Kroger e-commerce websites. The launch of Seamless Ship was a major milestone for the digital organization and company as a whole. For the first time in its history, Kroger was shipping thousands of products directly to customers homes nationwide. To celebrate this achievement, the company rented a local brewery for an evening to host a memorable launch party with free local food and cold craft beer. As someone who worked on Seamless Ship, it was rewarding to know that the company paused to celebrate this moment. For a few hours, this Fortune 20 company reminded me of the startup culture I used to know.

If you want to thank your employees, one of the best ways you can do that is by simply celebrating the wins they helped make happen. Whether a major product release or an impressive milestone tied back to the company's OKRs, showing gratitude for the time, effort, and talent it took to deliver goes a long way with your teams. As I reflect on my own journey as a founder and CEO, I think this is something that I did well. When we launched the first CompleteSet for iPhone app in May of 2015, I took the entire team out to celebrate at a local brewery. We really like craft beer in Cincinnati! When we graduated from Techstars in 2016, I paid to have the entire team in Chicago for Demo Day so they could be part of the experience. We had post-deployment lunches together, celebrated each other's birthdays with gifts and cake, and of course, even had a kegerator in the office for those unexpected victories you sometimes have as a startup. While the company may not have achieved the successful outcome that I had imagined, I am proud of the fact that as a leader we had fun while working hard.

Support their aspirations

I was in a meeting once when a leader literally said "Sometimes the business needs are more important than your aspirations." I had a range of emotions when I heard this tone-deaf statement, from perplexed to morose to angry. I believe in being candid with teams, but this particular wording lacked the empathy that great leaders exude. It only further reinforced my belief that as a business leader it's important to support your employees' aspirations. Being busy and under pressure is no excuse to forget that your team is comprised of human beings with hopes and dreams for their lives and careers.

To show sincere gratitude for your employees, get to know them. Introduce yourself, learn more than just their names, and seek to understand what's truly important to each of them. If you're a manager, this is a crucial skill to have so you can better understand how you can support an employee's continued development and career progression. If you're an entrepreneur, this can be even more impactful because it can attract top talent to your venture. This can be easier said that done if you have a large organization, but it's a worthwhile investment because it enables you to be an empathetic leader.

One of the most heartwarming stories of empathetic leadership that I've seen happened recently during the COVID-19 pandemic. In light of the restaurant closures throughout the year in Kentucky and Ohio, Cincinnati-based restauranteur Jeff Ruby was forced to furlough more than 600 employees in April. Despite the unforeseen loss of revenue due to the closure, Ruby continued to pay 100% of his employees' healthcare benefits. Although this was not out of character for an entrepreneur who is said to know every employee's name by memory, it was inspiring to see someone care that deeply about their people's well-being.

These actions may seem like commonsense to an experienced manager, but in a fast-moving and increasingly distributed workforce it's easy to forget to say thanks when it's least expected. To this day, I still attribute the impressive speed of delivery and exceptional quality of the products we built at CompleteSet to our employees' happiness, but that doesn't change the harsh reality of negative unit economics. I'll share more on that ruthless math problem in another post, so be sure to subscribe to receive my content directly via email.

If you're still seeking a quantifiable return on investment to prioritize a culture of gratitude at your own company, consider that studies as recently as 2019 prove that happy employees are 13% more productive than those who aren't. This can result in reduced turnover, increased sales, and lower costs that all support a healthy bottom line. In that way, investing in employees' happiness by sincerely thanking and rewarding them with more than paycheck is one of the best decisions a business leader can make for their company today.