Markkula Center of Applied Ethics

Work-Life Balance

An Interview with Warren Anderson

Start-ups are famous for requiring a lot from employees—especially long hours. The results can include significant personal accomplishments and instant wealth. But they can also include stress, family problems and even physical illness. When Warren Anderson started Anderson Soft-Teach, he had a different idea about work-life balance and how to create esprit de corps:

One of my personal objectives was to create a business where my employees and I could be successful, and everyone’s personal lives could be successful simultaneously. I was driven by a desire not to run into the problem of burnout, either for my employees or myself. I wanted to protect my physical and mental health and everyone else’s. That was one of the things that created a "do your best but don’t kill yourself in the process" framework for Anderson Soft-Teach.

Of course, we did work weekends when it was required, but we didn’t have an ethic where people had to come in on the weekend or stay late as the standard practice. I set the example. If I had a speech to give at a trade show or a new product was being completed, for example, I stayed plenty of extra time, but I wanted that to be the exception rather than the norm.

As a result, we did at times sacrifice some growth in revenues because we didn’t work people 60, 70, 80 hours a week. We weren’t a wild, blow-it-out, Silicon Valley story that hit Newsweek. But you can measure a business as successful many ways. We started the company in 1983 with no venture funding, and it grew steadily and profitably for 14 years. When we were acquired, we had $6.5 million in sales and 42 employees. I think we did create a group of people who worked hard when they needed to and also knew how to have fun.

Whenever we had company events, we included significant others, spouses and families because I thought it was important to recognize the contribution the family was making to the company, and I wanted to include them in the excitement of what was happening.

The emphasis on team spirit was appreciated and adopted by employees, as Anderson discovered during a sales downturn.

At the time, our sales manager was the most heavily leveraged employee: If things were going well, he got a significant bonus; if sales were down, he would make significantly less. During this period, I approached him and said, "You’re probably working harder now than you ever have, yet your compensation is lower than ever." I offered to change his compensation formula so he wouldn’t be hurt so badly by the downturn in sales, and he said he’d think about it. The next day, he came back to me and said, "My salespeople are hurting because commissions are lower. I don’t feel comfortable not feeling the same pain, so thanks but I’d rather not change my compensation."

In general, I think companies need to attend to salary ranges. Today, you have CEOs making incredible compensation even before their stock options kick in. I tried to keep the salary ranges at a low multiple (about 5 to 6 times between the lowest- and highest-paid employee). Putting a reasonable cap on higher-level compensation I thought was an important statement. We were all working hard to succeed, and we were all working together. The big payoff would come if the company became successful and was acquired, not in day-to-day salary.

Also, everyone in the company (except people in sales, who worked on commission) was given a bonus based on growth in total company revenue from year to year, paid each quarter. Each person was assigned a unique factor that was multiplied by the increase in company sales for the quarter compared to the same quarter in the previous year. This meant everyone was looking at how the company was doing, not only their personal job performance. It focused people on doing what was right for the whole team.

One manager told me later that she used to resent calls from customers with technical questions because they interrupted her work. After we started the quarterly revenue bonuses, she began to view those same calls as great opportunities to build positive relationships and increase future sales.

Warren Anderson is founder, ex-CEO and chairman of Anderson Soft-Teach, a multimedia publishing company specializing in training products for PC software. Anderson directed the company 14 years until it was acquired in 1997. Widely regarded as a pioneer in the training industry, Anderson Soft-Teach made INC's 1989 list of 500 fastest growing privately held corporations in the United States. Anderson is currently an Executive Fellow at the Center for Innovation and Entrepreneurship at Santa Clara University.