Creating A Workplace People Actually Love

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1:33There's no safe like SimpliSafe. From Entrepreneur Media, this is Problem Solvers, a show in which entrepreneurs do what entrepreneurs do best, solve unexpected problems in their business. We were completely wrong. And I'm just like, it's not selling. It was like, we have to start from scratch. I'm Jason Pfeiffer, the editor-in-chief of Entrepreneur Magazine.

1:59Everybody at some point is working a job that they don't really love, and they think to themselves, if I was the boss, I would do things totally differently. Erin Wade certainly thought that. I was working as a very unhappy corporate attorney. A very unhappy corporate attorney who always dreamed of opening a restaurant and really loved mac and cheese because that's what her dad made, and it became her comfort food. And then one day... I actually lost my job as a lawyer and had this turning point of asking myself, hey, why was I fired? Why did I lose my job? And it was because I hated my job and you can't be good at things you don't enjoy.

2:36And so she started... And like I said, this is a path many people follow. They are unhappy working somewhere. They think if I could do this better, I would. I want to be the boss. And then they go and be the boss and build a company that they love. But the reason I'm talking to Erin today is because she went a step further. She didn't just build a company that she loved. So she did that too. It is a mac and cheese restaurant called Homeroom, which you'll hear more about in a moment. But she started to think there has to be a better way to build teams, to manage employees, to create a workplace culture that people actually want to come and work in.

3:11And so she started to think very differently about what that is. And so Homeroom was really not just about bringing this joyous food product forward and into the market, but it was also about creating a place to work that would be meaningful and interesting and fun and the kind of place I always wish I had worked but hadn't for both myself and for other people. Erin wrote a book about this experience. It's called Mac and Cheese Millionaire. By the way, if you want to try her mac and cheese, you can do that in the Bay Area. Homeroom has locations in Berkeley and in Oakland. But today we're having a conversation on problem solvers about what Erin did to rethink the work experience and to create a work environment that did the impossible, especially in the service industry, which is that she created a restaurant where employees stay and thrive because they are treated completely differently and because the team is structured completely differently.

4:11It's a really interesting conversation for anybody who is in any kind of position of management because Aaron will force you to rethink what people's incentives are and how we should treat them and what a team really even is. And that's all coming up after the break. All right, we're back. Today I'm talking with Aaron Wade, founder of Homeroom, Mac and Cheese Restaurant, and also the author of Mac and Cheese Millionaire. And we're gonna start this conversation by talking about why people are so dissatisfied at work, like Erin was when she was a very dissatisfied corporate attorney. She had told me before we started recording that back in her lawyer days, when she was just really unhappy, she didn't exactly have the language for why she was unhappy or what made her so unhappy.

5:02I think a lot of work is based on some really antiquated values and principles that I think just don't apply as much this day and age. honestly, and we just haven't updated the way we work things. I think the thing that was missing for me was really a deeper sense of meaning, purpose and connection. I started Homeroom with this very utopian ideal of, oh, I hate these other places that I work, but I really didn't have a model. Like I didn't have a better model. I knew what I didn't like, but I didn't know what I did. And the book is really my somewhat ridiculous and funny journey to figuring it out because the only way you can learn how to do it differently if you don't have a model is by screwing it up.

5:41And So trying, failing and doing a little bit better. I think I have learned like how to create that meaning, that purpose, that connection. And that was really the missing ingredients from other places I had been. And the person who I have in mind listening to this right now is an entrepreneur who, like you, wanted to build something in contrast to anything that they had experienced before. I think about this, even in my own leadership style, how I define myself as a leader in direct contrast to the worst leaders that I worked for. I know what I hated about working for them. And I want to make sure that I am not passing that along to the people who now work with me.

6:29And so I'd love to start with, as you were building a better experience and environment for yourself and for others, what was in your head? You had described, for example, a moment ago, a lot of antiquated ideas about what work should be. So maybe you had identified some of them and then were starting to think through what would it mean to do that differently? What were those things? Yeah, I think I could give probably two examples that might be helpful. I think one is an overarching story that I think encapsulates the kind of leadership I'm talking about and then a really concrete example of a difference.

7:08So the overarching story I always share is I do talk in my book about I came to realize that honestly, something that was missing is feminine leadership values because a lot of work was historically built around men. Those were the only people allowed to work for a long time. And when you look at big companies today, that's still who's running most of them. So an analogy I give is I'm a big surfer and surfing is very much like business where it is very male dominated. It's mostly men in the water. The rules were made up by them and the sport is practiced mostly by men today. And if you don't know anything about surfing, it's very cutthroat and winner take all.

7:49So the first person to get on a wave, it's just all theirs. They get it all to themselves. So it makes it very competitive and it's really focused on the individual, right? You get the wave all to yourself. And this one day years ago, I happened upon this surf break and very randomly, it was all women. And none of us knew each other. But without saying anything, I got in the water and it was like the rules of the sport had been totally turned on its head. So instead of trying to elbow each other out for waves, we started just take turns. We started sharing them. We started communicating about who to get on them, how we could share them, whose turn it was.

8:27We cheered each other on and it became this practice of collective success. And the reason I tell the story is I think the truth is there's lots of people of all sorts of genders that would rather surf a different way, right? It's not, oh, this is only for women and that's only for men. But I think to me, it really encapsulates what was missing. I had worked in these very cutthroat hierarchical places. And the thing missing was that collaboration, that collective success, the celebration, really like the focus on how do you build collective success, group success, a team, communication, collaboration, and like a meaning that's greater than about just personal achievement.

9:05Okay. Love the analogy and the mission. Now execute it for me. Sure. One of the things, so really the things I started breaking apart were Or how do you, so how do you build something different? And so an example, I think that's a good one, is a really traditional structure. Every workplace has to deal with people screwing up, right? Like how do you deal with people who have made mistakes, who are late for work, who are causing problems, right? It's like the worst issue that anyone ever faces as a leader or manager. And a lot of our structures are, again, very antiquated based on punishment. Someone does something wrong, they get a write-up.

9:49They get three write-ups, they get fired. Maybe they get doc'd shift. Maybe they get doc'd pay. Maybe they don't get a raise, whatever it is, right? And it's not just businesses. That's how school is set up. That's how our prison system is set up. It's everywhere. And so when you think about that concept of communication, collaboration, collective success, like how could that look different if we got a little creative? On this one, actually, Joanne, my background is an attorney, and there's a system in criminal justice called restorative justice. And so we started using that in place of traditional punishment in discipline.

10:22And for example, if someone is late for a shift under traditional discipline, we would write them up, maybe send them home, maybe dock them a shift. That's how you'd handle it. So they're just punished. And I'd say the problem is, again, it's just about their individual behavior, their individual punishment. It doesn't really do anything for the restaurant as a whole. And I don't think they learn very much. Mostly it's just an ineffective deterrent. And with restorative justice, the idea is to right the wrong to the extent possible. So you have to, at that point, sit them down and set up a write-up, you basically have a conversation.

10:58You're like, hey, who is impacted when you relate? And they have to reflect and have to answer. And the truth is their fellow staff member who had to pick up their work for them, the customer probably got crappier service. The manager is now having to waste their time having this conversation instead of doing their other work. These are all injured parties, right? Right. And so then the next question you ask in restorative discipline is, okay, what are you going to do to make it right? And they have to come up with this. And people would come up with all sorts of creative solutions. Oh, maybe I could help with so-and-so side work.

11:32Maybe I could cover them for a future shift. Maybe I can just go in and apologize to the team. Maybe I can go to the customer and get them a free dessert. Maybe I can apologize to their table that they got from your service. Maybe. And oftentimes, we'd also get the person to do their own write-up. That's a way to take it off the manager's plate, make themselves accountable, write up what their plan is, write up what's going to happen if they don't do the plan so that they can take that burden off the manager. And so the idea is all of a sudden this person is realizing, hey, I'm part of something bigger than myself.

12:01I'm part of a community. I need to make it right with that community. And I think not only is that a lot more interesting, it's more fun. It's a more enjoyable way to do this. And it's more effective. We had incredible longevity on our team. Like the average tenure in the industry is 90 days. Ours is two and a half years. And profitability in the top 1 % of our industry, I think it shows in the results. Yeah, because when your only experience with the systems that you work in are punitive, nothing good happens if you do things right, but bad things happen if you do things wrong. then your relationship with it starts to feel like obligation only.

12:49And you had said that you can find this kind of dynamic of everything is about punishment everywhere, including in our justice system, in schools. The very first thing I thought of was how I, as a student who would grow up to be a professional communicator, absolutely hated writing in school. And you know why I hated writing? It was because I was writing essays for one person and that person was only reading to see if I did something wrong. And that was it. That was literally the only purpose of the work that I was doing. And that is so dispiriting that it made me hate this thing that ultimately, it turns out I love to do just as long as it was for an audience that reacted differently.

13:38So I can see how that can port over to the relationship that you're then creating with employees and an employer because you're saying, hey, look, my relationship with you isn't just about policing you. My relationship with you is about making sure that you are a valuable and valued part of this collection here. And I imagine that's pretty revelatory for the people who were working there. Yeah, it's mind-blowing. Because again, most of what we've all been in is a lot like what you're talking about, where it's about pleasing someone, it's about getting punished if you don't do what they want you to do.

14:21And it is, it's a really meaningful experience to be like trusted, to be held to a higher standard, to be like truly accountable to other people, to see yourself as part of something that's bigger than yourself. Yeah. And realize that your actions have the ability to make that thing better or worse every day. What was it like trying to implement something like this with hourly workers, I assume they're hourly workers, who surely had never encountered this before? I can say that I think the beauty of everything in the book is this was all implemented and the hardest industry to make money with some of the worst turnover numbers with like employee base that is often maybe less educated, has less work experience, all those things.

15:08So I do think if it worked for us, it can work anywhere. But I found that people are really grateful, frankly, because they haven't been given the opportunity and to like, they haven't been given a chance at greatness most of the time. And so I do a new higher culture orientation. It was two hours long. And we do all these different exercises in that time. And for many people, it might be the only time I'm really working with them because I didn't work on the floor. I was CEO of the company. But I wanted to have a touch point when we started so that people knew, hey, this is so important that you're going to meet with the owner, the founder, the CEO your first day.

15:44And this is what they're going to talk to you about. And people are just so grateful. They would be like, wow, I never thought about this that way. wow, no one has ever trusted me with this kind of stuff. I think it's meaningful and it's not hard stuff to understand for anyone in any place in their life. What's your advice to someone for how to create a system that didn't exist before or that isn't common? There are a lot of books that you can find on how to run a system with hourly shift workers, but it sounds like you were creating something somewhat from scratch. You were taking concepts that existed elsewhere and then figuring out how to apply them in this space.

16:26Did you create a kind of master book for yourself? How did you create these systems you then started implementing? Yeah, definitely through a lot of trial and error. And like I said, that's really why I wrote the book. I was like, God, I spent 10 years doing this. I hope someone else can learn from it and spend a decade figuring some of these things out. But I'd say as a general rule, something that I learned or like a guiding principle when creating a new like system or structure when I'm not sure what to do is that I think of the concept of a paint by number, a coloring book and a blank sheet of paper.

17:03And so a paint by number is something it's always going to look the same, right? You should put this color in this place. If you give 10 people I paint my number, you're going to get 10 carbon copies of the same image. A blank sheet of paper, you're going to get something different from every single person, right? But a coloring book, you're going to have the same picture, but it's going to look really different because all the colors are going to be different within the lines. And so I often think of like my job as a leader is to figure out like, where should the lines be? What kind of picture are we drawing here?

17:39what are the boundaries within which people have the freedom to express themselves? For instance, that disciplinary system, it's really just a system. It's here's the structure, here's the boundaries, here's the questions we're going to expect you to answer and the conversations we're going to expect you to have. But the way everyone's going to make it right is going to look really different, right? That's where they get to have their creativity. And I could apply that same principle to address code, to any kind of decision I was going to make is the goal is to create the right structure within which people have the freedom to be themselves.

18:11What did you learn that you didn't expect as you started to implement systems that came out of a great intention and mission to build a better workplace? I'm sure you slammed into a whole bunch of challenges along the way. Yeah, I'd say that the biggest and earliest learning was because I was reacting to these highly structured, highly hierarchical workplaces that I really didn't like. At first, I really swung the pendulum too far in the opposite direction. I just really lacked structure. And the truth is like a workplace with too much structure and too much oversight and no freedom is a certain kind of dystopia.

18:51But you know what? So is a workplace with too much freedom, no rules and no direction. Yeah. And I was just handing people that blank sheet of paper and hoping we'd have a functional company. And we did it. And it was stressful for people. I think I didn't realize that I had craved my own freedom at work. And so I was giving people what I wish I had. But the thing that was right for me as an entrepreneur was often not the thing that would have been right for my team. They wanted to show up and know what the heck was expected of them each day. I think it is a spectrum and like finding that midpoint is really the magic and either extreme is just as unpleasant.

19:28This is my favorite framework for understanding dissatisfaction. I want to throw it at you and just see what you make of it. So there is a psychological concept that was popularized in the 1980s called self-determination theory. And it revolutionized the way we understand motivation. It says this. It says that every human being needs the same three things. They have the same three basic needs that when they have them, you have the foundation for happiness and motivation. When you don't have them, you don't. And those three things are what I remember as ARC, autonomy, relatedness, competency. They need to feel some control over the decisions that they make.

20:14They need to feel connected to the people around them and they need to feel good at what they do. And when you have those things, you can thrive. And the reason I love that is because the first time that I heard it, I started to apply it to all the times in which I was unhappy at work and it just lined up. I would think, oh, there was that time when I worked at that magazine and I hated it and I didn't want to work there. And now I think back to it. And I didn't have autonomy. I had these bosses who were telling me what to do. And my own ideas were never getting through. I didn't have relatedness as I was annoyed at working there.

20:50And therefore, I wasn't connected to my colleagues and competency. I didn't feel good at what I was doing because my stuff kept getting killed because I didn't want to understand what the expectations were. And then on the flip side, places where I am happiest is where I do find that arc. It sounds like in some way or another what you were doing, whether or not you were thinking of it this way, is you were trying to create an environment where people can have those things. I don't know that you've ever heard of self-determination theory, but I am curious what you make of it as I tell it to you and what maybe you had learned about building a work environment where people can have those.

21:28Oh, yeah. I think that that concept feels so resonant to me. It's funny because I got asked to do like a lot of speaking on like creating positive workplace culture. And particularly within the hospitality industry, I feel like I always related to Maslow's hierarchy of beads. Like some of these conversations are like stuck in the Stone Ages. It's like, how do we like pay people better? How do we get better benefits? And that matters. But that's like the bottom of the pyramid. Like that's like the most basic. Like how do people just get paid fairly much for time? I think the things that really make life worth living are like the things higher up on that pyramid.

22:04It's do I have meaning at work? Do I have purpose? Am I connected to other human beings? And yes, I totally agree. It's interesting. I could obviously in the book, I have so many examples of like different systems that we implemented to get at that. But one way, one thing that we would do is our framework for decision making actually was this concept we called collective success, which is basically just a stakeholder analysis. But whenever we were making decisions, we would look at it through the lens of how to maximize the benefit to the employees, to the customer and to the company. And we had to weigh each one and like actually like measure what we think it would be and then keep working on a solution until we got to like truly the absolute best for all of those things.

22:51Can you bring that to life with an example? Yeah, sure. For instance, it sounds too silly, But one big question we'd always run into is which holidays should we be open or closed for? And when you work in hospitality, you are other people's entertainment. So it's pretty common to be open on holidays. But surely some, it's perhaps not a great idea. We were talking about how to, if should we be open for 4th of July, we'd flip-flop every year, depending on whose voice in the room was loudest. And I was like, this is dysfunctional. This is not a good way to run a company. And so we started doing this and broke the team up into three different groups.

23:24And each one had to represent the employee experience, the guest experience and the company's interests and make the most compelling argument from that. Would we be open or closed? What kind of modifications might we make? And most companies would look at that and just be like, are we going to make money that day or not? That's it. That's where the question begins and ends. But when you come at it from that angle, it was mixed. Like half our employees want us to be open, half wants us to be closed. The customer would probably want us to be open. They might even want us to do something extra special.

23:56What is the company's interest? It's like long-term, like sustainable profitability. Like what's the trade-off between morale and profitability for that day? So we'd make all sorts of modifications. We would decide, okay, we can take volunteers to work it. We can institute holiday pay. We could keep maybe just our takeout location open and the restaurant closed. What can we do to maximize the benefit to the guests? Oh my God, we could do specials. We could do this. Like what kind of special holiday stuff? And between all of these, like what would be most sustainably profitable for the business?

24:26And when you think in that way, it's more interesting. It's more fun. But it's also more meaningful. You see the whole ecosystem in which you operate. And it's not just, oh, I don't feel like working that day. I'm annoyed that we're going to be open. Because you're part of, again, something bigger than yourself and something that you care about sustaining in the long term. What'd you end up doing? Yeah, we do stay open. We take volunteers. and somewhat reduced hours. We do a special thing for guests and it's a very busy, profitable day for us. And for us, we decided that the values-based decision is to be closed for really important family or religious holidays.

25:04Because if we were to be closed for all sort of fun holidays, we'd be closed all the time. And part of our business is to be other people's fun. That didn't seem aligned with the purpose of the company. Yeah, yeah. This has been really fantastic. Let me ask you one final question, which is if someone's listening to this right now and thinking, this is a mindset I want to bring to the environment that I'm building and creating, where, aside from getting your book, is a good place to start? Oh gosh. And I don't mean resources, I just mean thinking. I just mean, where should they begin to break down what they want to build or what they want to build in contrast to?

25:45Maybe just take it back to your own experience and what a good foundational starting point is for somebody. Yeah, I think it depends on where someone is in their journey. But I always believe that if you want to go somewhere and maybe it's somewhere you haven't been before or you don't totally know how to get there, that the first place I always start is with a vision of success. So I'll take a time period, maybe it's five years, like a horizon, and I plant myself in a moment in time. And then I write as though I'm in the present. what does success look like? And I think that really helps guide you because I think the beauty of asking yourself that question and that being the starting place is you will paint a picture, maybe one you haven't looked at before, but the thing that's deepest in your heart and that you're trying to get to and it'll have a visceral and tangible quality.