The power of freedom

Chapter 12. About Employees and Company Development

Let me say that again: a company becomes strong when every employee has the opportunity to develop their potential. I didn't realize how important it is for a company to help its employees grow. It's a simple principle, but it's incredibly significant. Companies that can provide growth opportunities for their employees are much more likely to succeed; otherwise, they will become ineffective over time.

Sometimes, employees are seen as insignificant parts of a large system or, even worse, as people who cannot be changed. When someone works for someone else rather than for themselves, they often view their job not as a means of self-realization but as a temporary occupation. From the very beginning, I speak openly with my employees. I explain that sometimes they can earn even more than I do. There is an advantage to being an employee – there's no risk of the company going bankrupt. Many businesses fail, and working for someone else can be more advantageous because it offers stable income with less risk. Often, entrepreneurs don’t make a profit in the first five years after starting a business and aren’t sure if their venture will succeed. Many employees don’t understand what it’s like to be an entrepreneur until they find themselves in that position. Frequently, they conclude that it might be better to be a strong manager rather than an entrepreneur.

Every year I would present our company’s development strategy to the employees and consider it essential. From 2004 to 2012, I did this twice a year, and then I got back to annual presentations.

Every leader should tell their employees what they plan to do, what their goals are, and the tools they intend to use to achieve them. It’s important to clarify what you expect from each individual.

A leader must share all necessary information with their team and encourage the system to grow. It’s the employees’ responsibility to ensure the growth of their department based on that information. It’s impossible for a leader to do everything alone. If people in the field don’t understand the extent of their responsibility and don’t adopt an entrepreneurial mindset, their departments will not thrive.

In Russia, the term "capitalization" is often misunderstood. Only a few companies go public; most of them even struggle to be sold. In reality, entrepreneurs are often unaware that they’re no longer independent. The main difference between owning a business and merely participating in one is its proper structure and the ability to sell it profitably. Otherwise, you might find yourself running a business that eventually disappears or goes bankrupt, leaving you with nothing. All your efforts would have been in vain.

The main goal of a businessman is to create an environment where each employee:

• wants to grow;

• is talented and fits their role;

• understands that their work is fairly compensated;

• is genuinely interested in the tasks at hand;

• sincerely believes that they are realizing their potential through their work.

If all five of these conditions apply to a particular employee, they will be able to achieve outstanding results. This isn't easy, as the process is complex. Let's take a closer look at each of these points for a better understanding.

I'll start with the last point: employees must know that their work is meaningful and offers personal value. This directly relates to our focus on achieving long-term outcomes. Although we frequently seek instant satisfaction in our daily lives, each of us has an inherent desire for something greater. Fundamental values like family and life deeply influence a person's internal culture and their drive for long-term perspectives.

It's crucial to set up a system that supports the development process.

So, what conditions are necessary for someone to want to engage in long-term efforts?

Transparency. Employees want to know what they will be allowed to do and what they can expect to gain in the long run. Let me provide a specific example. At one point, I began to notice that transparency in rules was important to my employees. They wanted to understand what they can expect if they committed to long-term work: what financial rewards they would receive and how this would impact their personal development. Initially, I thought their primary concern was financial compensation, but I later realized they were seeking something more meaningful.

Me with the company's diamond partners from Tyumen, at the Diamond Stars Awards. November 2023.

I have yet to meet anyone who would say, "Just give me the money, and whatever happens, happens." Even the most mercenary individuals eventually start seeking something more from their work than just meeting financial needs. This is tied to our instincts. We have basic animal instincts, but we also possess more complex responses related to social interaction and the functions of the neocortex – the part of the brain responsible for higher-order thinking processes like information analysis, planning, and social behavior.

In interviews, I can sense how people react when the conversation shifts to money and growth opportunities within the company. When the topic of finances comes up, the atmosphere often feels a bit awkward. However, when we start discussing potential and what a person hopes to achieve, it encourages them to open up. Conversations about finances usually last just a minute, while discussions about desires and goals can go on for an hour. That's how this energy works.

The next point I want to address is that employees are interested in the work they do. This is primarily ensured by having engaging tasks. Interest brings immediate satisfaction and triggers a quick dopamine rush. It’s crucial for people to feel joy in their work; without it, life can seem dull and gray. Therefore, it's important to create an inspiring atmosphere at work.

I reflected on this and introduced a flexible attendance schedule: if someone prefers to come in later, they can arrive at, say, 10 am. There was a time when I almost fired a mortgage broker because I couldn’t find her at her desk several times. I used to be a strict disciplinarian and would dock 10% of someone's salary for being five minutes late. If someone was late a second time, the penalty was even steeper. This broker even tried to manipulate the data to make it look like she was present. But eventually, we changed our approach. Do you know what we started doing? If someone was late for a meeting and arrived after 9:05 am, they were simply not allowed in – just like they close the door at school. Let me explain why we did this. At that time, I felt that people were too relaxed, and that was a real issue. Because of this, I’m not a big fan of remote work. Now that the initial wave of remote work has passed, it’s clear that people crave face-to-face interactions. For instance, it’s currently difficult to get into theaters; everyone is looking for personal consultants and coaches – society is returning to in-person communication.

Then I realized how important it is to create a comfortable environment that enhances interest in work. Having an interest in work doesn’t mean you can just show up and do nothing. It’s essential to set ambitious goals. If you enjoy communicating, engage in that. If you don’t like writing reports, create a team of assistants or seek help. For those who like to influence others, it’s crucial to find the right roles for them. Recognizing and understanding these subtle aspects is key to fostering a workplace atmosphere filled with joy and harmony – a goal that requires dedication and effort to achieve.

It’s crucial to understand that a successful company isn’t built solely for one person – it must serve the interests of all employees while upholding core principles. In 2016–2017, I initiated a major transformation of our organization with a clear goal: to create an environment where every team member could find their work engaging and fulfilling. One of my leadership approaches is to regularly put myself in my employees’ shoes. I ask myself: what aspects of work might frustrate or demotivate them? Take monotony, for example. Imagine being forced to perform the same tasks all day long – it could quickly become overwhelming. While I acknowledge that during particularly busy periods, some people might actually prefer a month of monotonous work because it offers a sense of calm and predictability – you can focus on the task at hand without constant disruptions.

Dealing with work that arrives in waves can be incredibly draining. Over time, you’ll notice a pattern of peaks and valleys. It’s crucial to stay attuned to your organization’s natural rhythm, as no business can operate at full capacity non-stop. When I recognize that we’ve been pushing too hard or maintaining an unsustainable pace, I make a conscious effort to adjust expectations and reduce demands on my team. However, it’s essential that employees are aware of and understand these shifts in intensity.

Ultimately, I concluded that my goal is to create a system that allows employees not only to understand the long-term objectives of their work but also to enjoy it in the present moment. They should start feeling that they are not just working for someone else, but are realizing their potential and fully expressing themselves – and that’s truly awesome.

The next point I want to elaborate on is that employees need to feel that their labor is fairly compensated. I didn’t arrive at this realization immediately. Back in 2003, my approach was simple: “We pay you money – you work. Leave me alone.”

Then I started thinking about freedom. It always annoyed me when people were told what to do. Ideally, individuals should act independently. Many employees are very smart and talented people who – no offense to managers – are often smarter than many entrepreneurs. For such employees, it’s essential to create the right conditions. Some aren’t ready to take risks, some fear losing stability, or don’t have enough financial resources. But what if we create conditions where everyone feels like they own a mini-business? I always tell my employees: “Don’t think of what you do in our company as just a job; think of it as your own business. Let’s discuss what you want to gain from your work. Do you want to earn more? Let’s talk about the value you can bring to society because an entrepreneur earns when they create value for people.” I’ve seen many cases where people started with 50,000 rubles and were earning 300,000 within a year.

I don't have these kinds of conversations with everyone. When I see that a talented employee might leave, we need to support them urgently. This brings us to the next point – recognizing an employee's talent and their willingness to grow. I can quickly identify talented individuals; this is part of my management skill. If someone stands out in a meeting, I can notice it right away and promote them as soon as the second day of their employment. There have been cases where someone joined us as an assistant at 22 and, within three years, was already in a third or fourth position in the company.

For me, age doesn't matter. I can appoint a 24-year-old as CEO because I believe they will quickly acquire the necessary skills. There are entrepreneurs who are 23 and already multimillionaires. Doesn’t that prove that anyone can achieve great things? The only limitations are in our minds. Every employee is a potential superstar who needs swift support. Sometimes during these conversations, an employee will tell me that, to be honest, they were planning to quit and look for another job because they don’t want to work for 30,000.

My favorite saying is, “The only thing better than financial motivation is a strong leader.” That’s why I always value strong individuals: they attract others like bees to honey, creating their own success and drawing more people in. It’s crucial to create the right environment for employees where their desire to grow can flourish – another important principle I mentioned earlier. My goal is to provide such working conditions for as many people as possible. Honestly, I’m not fond of banking approaches. We’ve had many people come from banks, and almost none have returned. If someone leaves our company, it’s usually for personal reasons or for significantly higher pay that we can’t offer at this stage. Sometimes people come back after realizing that we truly have a good and healthy entrepreneurial culture with opportunities for growth. We welcome back former employees; there’s no taboo against re-hiring them.

Chapter 13. About Business Processes

Let’s discuss business processes and see how they are managed. We’ll break down each point in detail.

Every employee should have an individual development plan for the next five years. This plan outlines their expected salary at each stage of their career. With some candidates, I negotiate a five-year salary agreement on the condition that they will develop according to the plan. What does this achieve? We train the employee right from the start, discussing how they will grow, what responsibilities they will have, and how they can realize their potential. We talk about the skills and competencies they will acquire, how much they will be worth in the market, and which companies might compete for them. We have excellent universities, and I always tell my employees that I understand their aspirations and hold no grudges. If someone tells me they don’t see a future for themselves in our company or feel underpaid, I shake their hand and part ways without hard feelings. I believe I do everything possible for my employees, and if they find better opportunities elsewhere, then it’s the right choice for them.

I don’t hold employees against their will, and even with friends, I have no agreements about not poaching staff. If my friends are "hunting" for my employees, I’m happy for them because it means the people I work with are truly smart and talented.

In about 95% of cases, I let people go. Once, I offered one of my employees improved working conditions twice, but he said he was satisfied with what he had. A year later, he came to me saying he had been offered another job and didn’t know what to do. We talked it over, and he ended up staying with us at “Etagi,” becoming one of our best managers. At that moment, I didn’t know what to think: I felt he was underpaid and had offered him a raise, but he, being modest, declined. This was a lesson for me: if you feel an employee deserves more than you’re currently offering, you should provide them with those better conditions, even if they refuse. Over time, I realized that those who are naturally modest often turn down better offers, and you might comfort yourself with the thought that they don’t need it. But if you believe improvements are warranted, you should make them.

I never get upset when employees leave; I believe I’ve done everything possible for them, and they thank me for that. Sometimes they leave and struggle to succeed elsewhere. In those cases, I feel sad because I sense that I didn’t prepare them adequately for change. It seems they were only valuable within our system, and I made a mistake by giving them too much without choosing those who could truly handle it. There’s a joke that if a wife leaves for someone richer, it’s not so bad. What hurts is if she leaves for someone less fortunate.

At our company, we regularly conduct anonymous surveys among employees to gauge their interest in their work. This anonymity allows everyone to share honestly what they like or dislike about their jobs. We collect and analyze the data we receive. Initially, we encountered complaints of a more basic nature, and we responded promptly by making necessary repairs and improvements. Once these fundamental issues were addressed, new requests emerged: in some departments, we had hired too many underperforming employees. After resolving those concerns, new challenges arose: employees began expressing that the company needed to grow faster, synchronize IT systems with sales, and operate with greater speed. The higher the level of issues that arise, the healthier the organization is. If a company struggles with basic tasks, it’s a bad sign.

Employee engagement can be measured by turnover rates at a given salary level. There’s a so-called “golden triangle” consisting of employee talent, their salary, and turnover rates. How do we measure engagement? I always say it’s evident in people’s eyes. The eyes are the window to the soul, the only organ that reflects everything. Animals may not have speech, but they can understand each other through their gaze. I find it difficult to connect with people over video calls and prefer face-to-face meetings. That’s why I frequently visit our branches; I need to look people in the eye to understand them better.

In the past, the world’s population was much smaller. While living organisms have existed for 500 million years, the evolution of speech has occurred only over the last 100,000 years, whereas the evolution of creatures with eyes has spanned hundreds of millions of years. Therefore, eyes convey more truth than words. Engagement through eye contact reveals more than anything else; it’s important to recognize this. However, for many, this might just sound poetic.

There are two types of engagement: external and internal. External engagement is visible at a glance – an employee actively works, participates in meetings, and shows initiative. Internal engagement, however, is far more important and interesting for the organization. When people are truly connected to their responsibilities and view their work as meaningful, they begin to operate with greater dedication. We often perceive the world through emotions, and the realm of feelings is still not fully understood. Engagement serves as a sort of indicator of internal emotional states, which is why it will be the subject of further research. Currently, many employers are losing ground in this area because overall employee engagement is declining. However, one of the most crucial tasks is to change the internal culture; improving it could turn the situation around.

Through learning, people acquire new skills and discover the world. This is my philosophy. To me, a good leader is someone who can inspire people to work. If an employee doesn't rush to the office in the morning or feels reluctant to go, then something is wrong. If you don’t enjoy your job, it’s better to hand in your resignation and leave. The role of a leader is a complex mechanism that involves relationships, behaviors, emotions, and social, financial, and even personal aspects. It’s a complicated dynamic that fosters a desire to work. Yes, at the core of it all lies desire. When people say that management is about business processes, I disagree: management is a much more intricate matter. I've seen many examples where an employee, lacking formal management tools but possessing life wisdom, proved to be more effective than the most educated manager. This is reality, and I acknowledge it.

Teaching someone practical skills is much easier than helping them find their inner strength, build self-confidence, and overcome communication issues. These are far more challenging to teach. We need to seek out talent in management and understand how the system works, which requires deep analysis.

For me, the question of an employee's experience has long been settled. I never consider experience the main criterion for professionalism. In fact, I often see it as a disadvantage. What matters to me is the person themselves, their essence. I analyze what they are capable of and what skills they possess. Acquiring necessary skills is relatively easy, so work experience doesn’t interest me much. The only thing that truly matters is the real results that a person has achieved. The process of analyzing not just results but competencies and the likelihood of achieving future results is a comprehensive methodology.

This is a separate system that I will discuss in detail in one of the upcoming chapters. But believe me, the secret to success lies in entrepreneurial culture and motivation. Since childhood, I have believed in practical reasoning and have always thought that one of the reasons for the collapse of the USSR was incorrect motivation. People had nothing to fight for, and this became a fatal mistake for the state's leaders when creating ideology.

Proper motivation can work wonders. Let me give you an example. In our company, HR is motivated by revenue volume and the salary of the employee they hire. This makes them invested in the outcome. If an HR manager finds a candidate willing to work for a lower salary but who delivers excellent results, they receive a significant bonus. This scheme is simple but very effective. It encourages employees to perform better. Focusing solely on workload without linking it to results, or having an incomplete understanding of the entire process, often leads to problems. In such situations, it’s essential to closely examine how an employee impacts the final result from start to finish. This usually presents the greatest challenges and leads to frequent excuses: the employee lacks necessary authority, responsibility is blurred, and results are hardly dependent on their efforts. But you know, there’s no need to fear this – you have to try. An employee is like a stream that seeks to merge with a river and then with the sea; they will always find their way. Therefore, it’s crucial not to be afraid and not to impose internal limitations on oneself. Obstacles are often only in our heads. When you create a system, employees will discover amazing solutions on their own. However, if a company has ingrained the paradigm of “this is my area of responsibility, and I won’t go beyond it,” that’s already a signal of a serious problem for the business. Instead, businesses should encourage initiative: “Okay, give it a try, take action. Here’s your goal; I expect results from you.” This approach opens up new opportunities.