Thanks mostly to Silicon Valley startups and tech companies, it’s trendy now for companies to offer laundry lists of perks, including foosball tables, on-site yoga classes, company-sponsored happy hours and, yes, laundry and dry cleaning services in the name of creating a positive, engaging company culture. Those perks certainly look attractive on paper, but they don’t guarantee an engaged workforce. Plus, they can be costly line items that get cut when the economy takes a hit. If you want employees who will stick with you when the lunchtime karaoke tournaments are cancelled, creating a company culture that encourages risk-taking is one way to do it.
Look at REI with its “Opt Outside” campaign last year. The outdoor retailer did the unthinkable: they closed all 143 stores on Black Friday and gave all employees a paid holiday to spend time outdoors with family and friends. Whether or not that risk paid off financially, you can easily argue it was a success, from the massive publicity to the outpouring of support and praise from customers to the gratitude from employees to even a few other companies following suit.
If you want your company to adopt a similar attitude and reap those rewards, read on.
Risks Lead to Empowered Employees Lead to Engaged Employees Lead to Profits
Allowing employees to take risks requires trust from senior leaders and executives. It’s crazy when you think about how many standard policies and procedures show a lack of trust in workers—dictating exactly when they show up for work, minute details about their appearance, what needs to go in their email signatures. In contrast, look at some of Netflix’s policies, which are short, sweet, and put a lot of trust in its employees to make smart decisions.
Or look at Facebook’s former mantra, “Move fast and break things.” They’ve since altered it to the less-catchy “Move fast with stable infrastructure,” but in the tech giant’s early days, that spirit gave a brand-new employee the opportunity to write the code to fix a bug and make it live on his second day, with minimal oversight or approvals from supervisors. Seeing the impact he had on Facebook and its users—almost instantly—helped him get personally invested in his role at Facebook.
The benefits of engaged employees aren’t hard to see—having them is a good way to make it on the Fortune 100 Best Companies to Work For list, for one. Gallup polls also show positive relationships between employee engagement and customer ratings, productivity, turnover, safety incidents, absenteeism and more. Companies with high levels of engagement also have more success weathering economic downturns and higher earnings per share.
Finally, Millennials—the largest segment of the workforce—want to feel like they’re able to use all their skills for their company, especially leadership skills. A survey by Deloitte shows that millennials are more likely to stay with companies that encourage ideas among all employees. Companies that refuse to reward risk-taking are in fact risking alienating a massive group of workers that have to potential to be excellent employees.
Attract and Keep the Best Employees
Netflix famously gives its employees a ton of responsibility and autonomy—but that comes with high expectations. Employees that don’t perform up to their standards are let go quickly. Netflix has found that in this environment, high performers rise to the challenge and excel.
Adopting a culture that encourages risks can lead to better employee learning and development as well. Ericsson’s “Light It Up” campaign invites employees to submit “game-changing” ideas. If leadership decides to move forward with one of these ideas, the employee who submitted it gets matched with an Innovation Coach to develop and execute the idea. In doing so, the employee develops research and presentation skills and gets insights into a different aspect of the company.
It Comes from the Top
Senior leadership must fully buy-in to taking and encouraging risks with their words and actions. Employees need to see their higher-ups testing and implementing new ideas before they’ll feel comfortable coming forward with their own. When they do, managers must listen and push the (good) ideas forward. Amazon tells its managers that their default answer must be “yes” when employees propose new ideas and experiments. In order to say no, the manager needs to explain why with a two-page thesis.
Extended Stay America’s CEO, Jim Donald, gave employees “Get Out of Jail Free” cards that they could use when they wanted to take a big risk for the company. Handing out the cards showed employees that upper management valued risks and would support them if they took a chance.
To show employees your commitment to trying new things, you can create a specific email address where employees can send ideas and suggestions. Put together a team of leaders to review and discuss each one, and send a personalized reply. If the answer is “no,” explain why so the employee is better informed when she sends her next idea.
Toyota and other Japanese companies ask and expect employees to look for “small problems” and take responsibility for fixing them on their own. Small changes, like tweaking processes to be just a little more efficient, add up and result in major savings. When employees feel trusted to handle small problems, they’ll feel more comfortable approaching managers about bigger ideas and initiatives. Taking small risks can also make it easier to ease employees and leadership into fostering a risk-taking culture.
Instead of asking people to change the company overnight, challenge employees to identify one small change they can make—a more efficient way to process expense reports, a more streamlined CRM system, getting different snacks in the break room—and implement it within one week.
Give Employees Creative Time
Countless features and products on Facebook were originally created during its hackathons, which gave engineers the chance to work on something not related to their day jobs. Many of Google’s most successful and innovative products, from Gmail to Google Glass, were the result of giving employees 20% of their time at work to create and develop side projects, outside of their regular projects. Whether that policy actually exists or how many employees take advantage of it is up for debate, but other companies have recognized that giving employees the freedom to brainstorm, instead of dedicating every hour at work to their current projects, leads to innovative ideas and discoveries.
20% is a lot of time (one full workday!), but you can probably find a way to invite employees to put aside their to-do lists and think about big picture ideas or side projects. They could be given one afternoon a week (or one lunch meeting, or one full morning each month) to come up with new ideas that will help your company. Ask them to share ideas with team members or managers to spark collaboration.
Crystal Clear Communication
Many leaders worry about asking employees to share or work on new ideas because the ideas may not be that good, or (seemingly) completely unrealistic. If this is your concern, it would help to ensure that every employee fully understands your company’s mission and its quarterly and annual goals. When ideas are proposed, review them in light of those criteria.
Ad agency Omelet produced a feature-length documentary about ex-gang leaders who are working to rebuild their communities—not to increase its bottom line, but because their brand values creative storytelling and not being a traditional agency. When an employee proposes a new idea, challenge him to explain how it will help the company or department reach its goals or why it aligns with your mission and purpose.
You can also define what risks are acceptable. Tech and creative companies usually can get away with more, while highly-regulated industries like finance or medicine require companies to be more conservative. Explain to employees that, for example, publishing a Facebook post without getting a manager’s approval is okay, but setting up a new customer loyalty initiative still needs to be vetted and reviewed.
There’s obviously a difference between smart, calculated risk-taking and reckless risk-taking. It’s important to educate your employees on the difference and coach them to think about the possible impacts, good and bad, their ideas could have on the company. When deciding to implement new ideas, you can test them on a small scale first and have employees also develop a “Plan B” in the wings in case things go wrong.
Thoroughly vet ideas when they’re in the planning phase—ask someone to play devil’s advocate, have a round-table discussion to look at alternatives, and develop back-up plans before rushing forward.
Track and Reward Risks
If “taking risks” is truly a company goal, it must be tracked. At Amazon, each department keeps track of how many experiments it runs each quarter (and how many succeed). Some companies add a “risk taking” component to annual performance reviews or create an “innovation portfolio” to measure and track each new idea submitted or implemented.
Ask managers to keep track of how many ideas their department receives, tests, and implements. Once you have some baseline data, you can even create benchmarks and expectations for how many new ideas each department should test each quarter or year.
Flip the Language from “Avoid Failure” to “Celebrate Learning”
The most challenging roadblock to overcome when creating a risk-taking culture might be to overcome the fear of failure. Employees don’t want to fail and the company overall doesn’t want a lot of (costly) mistakes on its record.
Companies can combat this by focusing on the learning opportunities from both successes and failures. Employees shouldn’t be disciplined after taking a risk that doesn’t work out, but challenged to explain what they learned from the failure. After each test or implementation, teams can meet to discuss what went wrong and right, what they could have done better, and what insights they can use going forward.
Proctor & Gamble and Tata offer annual rewards for the “failures” that result in the greatest learning opportunities for the company. When learning is embraced like that, even if an idea flops, employees will be excited to share their insights and lessons with the rest of the company.
In a Nutshell
“Risk taking” seems like one of those fuzzier aspects of a company culture that’s easy to talk about, but much harder to put into practice—because it is! It’s easy to go for superficial “perks” to engage employees like weekly Ping-Pong tournaments, but in the long run, allowing and empowering employees to share and execute their ideas lead to a stronger company. Once you get executives to buy in, you can start small and build on initial successes (and learn from failures).