Is Your Company a Pool or a Stream?

When I founded LogiStyle in 2006, I had adopted a philosophy that I would hire freshly minted college graduates, give them some great opportunities to meet and work with CEOs and require that in about three years they move on to their next opportunity. About three years ago, when my business partner David Baker and I merged our two companies to form Think Shift, we wondered if my three-year timeframe – or even the requirement that each employee move on – made sense anymore. We discussed this in great detail. This article is the result of our discussions, and much of it represents collaborative work with David Baker.

You can think of your company in two very distinct ways. At the core of that question is whether your company is a pool or a stream. Both models are valid, practical and sustainable. Each has its benefits and its challenges. I am not advocating for one over the other, however, I do posit that you must choose. You cannot be both. I advocate that you choose intentionally.

THE POOL MODEL

On one hand, you can view your company as a pool of water. You keep the pool clean; you keep the water warm. You invite people to join you: “Come live in this pool. You will thrive here. We will do great things together.”  You commit to adding nutrients to the pool to keep it healthy. You are proud of the pool. You are proud of the people in the pool. Most of all, you are proud of what the people in the pool have done. All of you take pride in what you have accomplished.

The pool feels like a family. There is comradery and friendship that goes beyond the workplace. There is true respect and regard for each other and a commitment to take care of one another. You celebrate the excitements and accommodate the challenges of your colleagues: not just at work, but in life in general. You commit to seeing them grow.

THE STREAM MODEL

On the other hand, you can think of your company as a stream. The water comes from uphill and flows downhill, and your company occupies a small portion of the stream. Since it is running water, it stays clean largely on its own. You don’t have to add nutrients, since they come from upstream. You invite people swimming down the stream to stop and spend time with you in your portion of the stream. “Live with us for a while,” you say. “Do great work. Teach us what you know. Learn what we can teach you. When we can’t grow you or you can’t grow us, move downstream. There are many more opportunities there.

 “Go and prosper. Stay in touch,” you say as you bid farewell. In this model, you expect your employees to move downstream. You acknowledge that you have to replace that individual, and it will take time to hire and train their replacement. As daunting as that task might seem, you are excited about the new “nutrients” that a new person would bring to your organization. People joining you from upstream and your employees moving on downstream is part of your company’s life. You accept that.

 Which should you choose: a pool or a stream? Is one model better than the other? Is one more applicable to the size of your company? To your industry? Is there a right answer?

To answer these questions, we must first understand a fundamental obligation that an employer undertakes when they hire an employee – the concept of stewardship. One year ago, in our Food for Thought article “This Tango Takes Three,” we elaborated on the stewardship responsibility to enrich every employee: every individual in your company should be richer at the end of the year than they were at the beginning of the year. We suggest that you use that test to determine whether you can discharge your stewardship responsibility better with the pool model or the stream model.

If you think of your company as a pool you have three major responsibilities. Let’s examine how you might discharge each of those responsibilities.

A pool of water gathers moss and debris. Your company will be filled with old ideas, with habits and practices that once made sense but no longer do. There are few new people to question the status quo. So it becomes the leader’s responsibility to be an incessant disrupter. Keeping the pool clean includes periodic removal of dead or dying fish. You have to be proactive in managing performance.

A pool of water consumes its nutrients and has few ways of producing its own. The leader has to be proactive in bringing in new ideas, new technology and new ways of doing things. It’s important to institutionalize this process and ensure that the new ideas are not only being introduced by the leader, but by other thought leaders in the community and the industry.

 How do you ensure that your employees grow every year? In a small company there is limited growth opportunity – surely, limited upward mobility, but even limited lateral mobility. If you think of your company as a pool where you have invited your employees to live, then you are obligated to take a broader view of employee growth and well-being, beyond just at work. In that broader context, you can encourage and ensure that your employees are growing as individuals.

IS THE STREAM MODEL EASIER?

Certainly not. Yes, you don’t have to spend as much time cleaning the stream and adding more nutrients. But, you must maintain a continuous dialogue with your employees about moving downstream: not just when they have stopped growing, but even before their first day at work. Starting with the interview, you should discuss with the employee their plan for their next position. If this conversation does not start from the beginning of their employment, it would appear to the employee that the conversation is motivated by concern about the employee’s performance, and the initiation of the conversation would seem merely self-serving. But when such a conversation starts from the beginning of employment and becomes part of their monthly one-on-ones, it gets elevated to a stewardship conversation.

HOW DO YOU KNOW IF YOU ARE HAVING SUCH HEALTHY CONVERSATIONS?

How do you know if you are having such healthy conversations? Ask yourself if you were surprised at the departure of a well-performing employee. If you were, you are not having the conversation. If you do this right, your employee will come running down the corridor to ask for your advice because they just got a call from a recruiter about another opportunity. The elapsed time between when the employee started looking at an outside opportunity and when you found out about it is a measure of how poorly you are tending to your stream.

As the caretaker of the stream you monitor all the people that are swimming from upstream, down the stream. You must routinely stop people and explore opportunities in your company even when you do not have open positions. After all, you might soon have an open position.

All of this sounds like hard work – in fact, self-imposed work! Why would I want a well-performing employee to leave? Why wouldn’t I want a pool for the well-performing ones, and a stream for the rest?

CAN YOU HAVE A POOL AND A STREAM?

Can you have your cake and eat it too? The concept of a stream, with a small pool tucked to the side, seems very appealing. The trouble is that since it is so easy to let the stream stay healthy on its own, the pool’s required upkeep is likely to be ignored. The result: you have a cesspool on the side. Furthermore, would you be candid with your employees as to who is in the pool and who is in the stream? Would you move people from the pool to the stream? When you consider these questions, you realize that any incarnation of this is really just a stream.

Does everybody have to swim down the stream? Do you, the leader, have to swim down the stream as well? You can defend the need for a few people to stay as the caretakers of the stream. Their job, as the stewards of the stream, is to keep it healthy, broaden the stream, release jammed up debris, etc. But you cannot have too many people doing this job. Typically, they are the owners of the company.

ARE SOME INTUSTRIES MORE SUITED TO ONE CONCEPT OVER ANOTHER?

For example, if you have a business with a lot of institutional knowledge and very skilled labour, should you opt for a pool to ensure that you hold on to those skilled employees? It is tempting to argue in favour of this. However, experience from certain industries shows otherwise. One could consider high-tech and investment banking as industries with very skilled employees that are highly educated, yet the concept of a stream is most popular in those industries, and they thrive from that turnover.

Is a stream more appropriate for larger companies? Are smaller companies better suited to the pool model? It is tempting to argue so. But I would argue the contrary. At least in a larger company, you have the capacity for considerable internal movement of people to keep the pool clean and nourished. In a small company, you don’t have that luxury. I believe the attraction of the pool in small companies really stems from the delusion that you are taking care of your employees, and the aversion to the daunting work of constantly recruiting and training. Succumbing to the Law of Inertia – people tend to endure the pain of the present rather than risk enacting change – means that leaders tend to hold on to employees that are neither growing themselves nor growing the company, at the cost of the new ideas that a new employee would bring.

What I would concede is that certain leaders tend to prefer one model over another. And to the extent your leadership style is more suited to one model, embrace it wholeheartedly. Discharge your obligations diligently. I am not advocating for either of the two models. Both have their advantages and their challenges. As always, I prefer not to be prescriptive except to ask that you make your choice intentionally.

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