This Polish Company Shows How To Destroy Command-And-Control
Last month we visited the beautiful city of Krakow in Poland. We went there to visit yet another highly progressive organization that has been on our Bucket List for just a while. The company is called u2i, a web technology consulting company founded in 2000 in NYC. We got to know about them at a conference in London earlier this year that we attended, and presented, as did they.
After learning the basics of how they were organized during that conference, we immediately added them to our Bucket List. We desperately wanted to research them in detail. A few months later, off to Poland we went..
u2i is a web technology consulting company that was founded in NYC in 2000. In 2005 they opened up a new office in Krakow, Poland. Nowadays, the engineers are all based in Krakow while most of their clients are still based in and around New York. Just like their founder and CEO, Tom Clarke.
u2i employs 53 people and focuses on "not only developing great code, but also long term strategies and close, lasting relationships with clients".
The illusion of control
In the first five years of its existence, u2i employed engineers in NYC. In 2005 however, they decided to move the operations part of their company to Poland. This move was mainly motivated by the fact that they believed they could hire better engineers for lower salaries in Poland. And they believed this would greatly improve their business.
During the first few years in Poland the company was organized just like any other traditionally organized company. There was the hierarchy, a clear set of rules, a traditional employer-employee relationship, et cetera. But the longer they worked in this way and the more they grew, the more they started to feel that this way of working was far from ideal.
Even though the entire hierarchical system was based on control, senior management felt that they couldn't control what was going on in the Polish office from the other side of the ocean. Because they didn’t want to continue fighting for this false sense of control, they decided to change. This kick-started their transformation in the year 2009.
Transformation by accident
One of u2i’s employees, Pawel Kozlowski, is known to the outside world as the company’s COO. Internally he doesn’t have a job title, but calls himself “the janitor of the organization”. Pawel explains: “We didn't have a detailed plan to make the change. We more or less made the transformation by accident, by making lots of mistakes.”
Before we deep dive into their current way of working, it's important to note that the transformation itself wasn’t easy. Pawel: “We discussed for 8 months what our new way of working should look like. During these 8 months, nothing really came out of it. Just discussing things over and over again didn’t bring us anything. Because we were all waiting for an outcome, the whole company came to a standstill. For example, nobody was promoted for 8 months because we weren’t sure what the new system was going to look like. To break out of this deadlock, we stopped discussing and started experimenting.”
This experimentation process allowed them to develop some very interesting practices. They developed some that set them apart from traditional organizations and also make them a front-runner among Polish businesses.
100% profit sharing
At first, in 2008, they implemented an early version of their profit sharing arrangement. From that moment on, not just the founders received a share of the company’s profit but the senior managers got a financial stake in the outcome as well.
After the initial improvements, the organization felt they could improve even further by expanding the profit sharing to more employees. So, they did. As of 2010, project managers were the next group included in the profit sharing program.
When the expansion of the program started to pay off as well, the gap between the engineers on one side and the project managers and senior employees on the other side, grew increasingly. In 2014, therefore, they implemented profit sharing for all.
Every employee now receives a part of the profit. In total, 100% (!) of the organization’s profit is shared among the employees. The amount each individual receives is proportionate to their salary level.
During the transformation, their outdated organizational structure was another big thing they wanted to tackle. They took action to get rid of the artificial hierarchy, most notably the role of project managers.
1. From project managers to sherpas
They got rid of internal job titles altogether. Instead of having managers in place, people can now be chosen to become a so-called Sherpa; a mentor-like role in their organization. Every employee picks his or her own Sherpa.
All employees can determine themselves who is going to mentor them to support them in developing their skills. They can choose a Sherpa based on who they prefer to have as their mentor.
Interesting fact: some of the Sherpas are very young. But because they are good at supporting the development of others, they are popular Sherpas. Kasia Ryniak for example, is 26 years old and is a Sherpa to 6 of her colleagues.
In most traditional organizations people would either be forced to mentor others (when being promoted into a management position) or they don’t get the chance to do so because they are too young and it’s not in their job description.
Therefore, the Sherpa approach of u2i is a powerful way to fully benefit from the talents and skills of all employees in the organization.
2. Promoting in a self-managing company
During the transformation, u2i got rid of all internal job titles and job descriptions. Pawel: “The only way to move up, was to push somebody down the stairs. We wanted to get rid of this toxic system.”
Because they removed fixed career paths, they put another system in place. They came up with 11 ranks that determine your level (with the accompanying salary level). And because there are no managers, it’s up to the Sherpas to promote the people they mentor.
So, would this not become an environment where people pick each other as Sherpa and continuously promote each other up the ranks? Pawel: “This simply doesn’t happen. Because everything is transparent and because everyone is jointly responsible for the end result, nobody has ever abused this freedom.”
3. Transparent salaries
As in the example above, transparency is a powerful mechanism for the organization. All salaries are open for everyone to see. Kasia: “Just like most people, I only checked everyone’s salary level once. After that I never checked it again. It doesn’t really interest me.”
While many organizations fear this transparency, at most of the Bucket List companies we’ve visited the responses of employees are the same. They check it once, and never look at it again.
4. Kudo cards
To facilitate alignment, u2i organizes monthly company wide stand-ups. They discuss the most important developments, projects, challenges and successes. Another powerful thing they do is giving out so-called kudo cards. Employees can give kudo cards to colleagues who they think have performed above and beyond. This practice helps u2i to promote a culture of appreciation.
Check this example of the kudo card:
5. Self-managed expenses
Another powerful practice that u2i has in place is the process of making decisions around conferences. Kasia: "We really wanted to have a conference budget at some point but it turned out we’re not huge fans of setting too many restrictions. What we do now is: we have a general rule that conference budget is unlimited but has to be reasonable (that means as a company set in Poland we’re most likely to pay for all expenses – flight, accommodation, ticket when the event happens in Europe but probably will cover only a ticket when the conference happens e.g. in the US).
We have a channel on Slack called #expenses so whenever someone thinks of attending an event, he/she is encouraged to create a post there with reasons behind attending conference and details (how much is the conference, what are other expenses, what that certain person can benefit from and what is the benefit for the company). Then, if anyone is against the idea, we have a space for discussion. But truth to be told, no one was ever blocked."
This simple process helps them to (1) think for themselves instead of just following rules, (2) involve the whole company into an advising process, and (3) be genuinely interested in where other people from the company are going and what can be learned from them afterwards.
6. Company wallet
When we went to lunch with some of the u2i employees, we experienced another beautiful practice. We left the office to go out for lunch and one of the employees grabbed the so-called company wallet. This company wallet can be taken by any employee if they want to go for lunch. The only thing that they ask when you take the wallet: spend the money as if it were your own.
A clear sign of high levels of trust. No rules, no control mechanisms, just use your best judgement when taking the company wallet.
During our visit we gave a presentation on what we have learned from the other 60 visits to Bucket List pioneers. The u2i employees were eager to learn what other progressive organizations around the world are doing. Also, we took some time to discuss the challenges they face at the moment. They struggle with a few things:
- The ideal situation within u2i is that everyone is allowed to spend 10% of their time on personal development. They can take 4 hours a week to do this, but they can also save the weekly hours and spend, for example, one complete week on personal development. In reality however, it is hard to safeguard this 10% time. It depends too much on the person or the project the people are working in.
- Because of the growing age gap (as employee retention rates are high), they feel there is a growing need for more focus on purpose & values to ensure a certain culture fit. They have defined a purpose, but it is not really being used consciously as much as they want to.
- Decision making is another problem. At the moment it is still too much based on consensus. This sometimes leads to slow decision making as they want to have everybody on board for important decisions. We have discussed ways to scale the advice process in the organization to a overcome this challenge.
Even though they face these (not uncommon) challenges, the way u2i is run has made a big impression on us. It's a remarkable organization that is challenging the status quo of how work in Poland (and in the world) is organized. They show once again that giving employees lots of freedom, trust, and responsibility can lead to amazing things.
Recently, one of u2i's employees, Kasia Ryniak, decided to leave the organization. To further understand the remarkable culture that the company has created, you should definitely read her blog post on why she quits the company. A beautifully honest and insightful story.