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Kennedy School Review

Topic / Business and Regulation

Building a Better Business


Last year, Netflix made headlines by allowing all employees up to a year of parental leave. In March, Salesforce adjusted the salaries of its employees to the tune of three million dollars to ensure salary equity across genders. Year after year, companies that fall on Fortune or Business Insider’s lists of “best companies to work for” are lauded for perks such as flexible scheduling, professional development, and other arrangements that encourage employee productivity and retention by acknowledging life outside the office.

These advances are laudable and important, but they also send the message that a company should address employee welfare once a sustained period of growth has resulted in profitability. Software and online-services companies grow faster than any other sector, and research by McKinsey shows that sustained, exponential growth is the best predictor of long-term success. However, in an environment driven by profit margins and shareholder returns, growth can often come at the expense of responsible human capital management, particularly for start-ups struggling for air in the marketplace.

When we envision the birth of many of these companies, we see Steve Jobs and Steve Wozniak building the first Apple computer in a garage. Indeed, the idea of starting small, working hard, and making it big is a key ingredient in the American dream. But as start-up entrepreneurship rebounds after a recession-inspired low, small businesses often exempt themselves from workplace standards, and it is large corporations that provide creative benefits to employees. Prior to 1997, more Americans worked for small firms rather than large corporations. By 2015, only 46 percent of private sector employment was at firms with less than 250 employees, and the trend shows no signs of abating.

The birth of a business is the exact time at which founders should establish fair employment practices – not just profitability – as a driving principle. In fact, one drives the other: every year, disengaged employees come at the cost of $300 billion in lost productivity. But a company is more than what it produces. If you are a founder, your employees will spend almost half of their waking hours at the company that you have built. You will influence not only the quality of their lives, but the lives of their partners and spouses, parents, children, and friends. Don’t wait until your company is successful enough to afford workplace standards – build a business that prides itself on its employees as much as its products. Here are a few ways you can get started.

1. Hire your employees full-time. Contingent workers make up 40.4 percent of the U.S. workforce, up from 30.6 percent in 2005. Driving this growth are part-time workers, who have increased by 36 percent in the past 10 years. These are low-wage workers, without employer-provided health benefits, often piecing together multiple jobs to pay the bills. Compared to those in standard jobs, contingent workers are twice as likely to rely on public assistance and almost five times as likely to have been laid off in the past year.

2. If you do have to contract out, verify that the company you are contracting to is hiring its employees full-time. If you’re a small company, you may not need a full-time cleaner, administrative assistant, or driver – if that’s the case, consider contracting through a company like Managed by Q that hires all of its cleaning operators full-time. Parcel offers delivery services from an all-employee workforce, and Alfred and Flycleaners, although more targeted towards individual clients, tout employee well-being as a selling point.

3. Establish flexible working arrangements. Flexibility in working arrangements can manifest itself through flexible scheduling, location, and hours. For our purposes, employers should consider flexible scheduling and flexible location.  Flexible does not mean less work or lower quality work – it simply means that an employee does the same job outside of traditional workplace norms. Flexibility should not be expressed through an “accommodation model,” wherein flexibility is not a company norm, and employees must ask their managers for special work arrangements. Asking may result in “flex stigma,” or the perception that said employee is less committed than his or her peers. However, flexibility allows caregivers – usually women – time to care for parents or children, cuts down on commute time, and accommodates seemingly minute personal needs, like being home to receive a package, that can improve an employee’s quality of life. As demonstrated by a recent study conducted by the Work Family Health Network, proactive flexibility increases employee satisfaction and reduces costs associated with turnover and training new workers.

If you’re an entrepreneur, you probably chose this path because you have a great idea that you want to bring into the world. You will also bring jobs into the world, and hopefully, those jobs will sustain employees and their families for years to come. And as you build your business, consider building us a better place to work.


Marina Zhavoronkova is a Master in Public Policy student at the Harvard Kennedy School. She completed a Dukakis Fellowship in Massachusetts Governor Charlie Baker’s office, where she worked on labor and unemployment initiatives and managed the PENCIL Fellows Program, a youth workforce development program in New York City.




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