Dan Teran and Saman Rahmanian, two coworkers at venture development firm Prehype, were incredibly dissatisfied with maintenance services in the co-ops they resided in. From communicating to contracting maintenance services, the two found it difficult to truly get very good service. However, as two savvy entrepreneurs, Teran and Rahmanian saw a vision, one that made it incredibly easy to communicate maintenance services.
In the year 2014, Teran and Rahmanian launched Managed by Q, an incredibly unique service focused on provided high quality maintenance, wellness, and cleaning services to office spaces in New York. Teran, as CEO, and Rahmanian, as Chief Product Officer, developed a service somewhat akin to Uber for cleaning (Zeynep, “Managed by Q”). Initially emailing outside cleaning, maintenance, and even security companies to perform services for offices, Managed by Q has now changed to a distinct platform. Providing devices such as iPads to companies in need of services, Managed by Q created an incredibly user-friendly interface for clients to do different tasks from requesting services, leaving comments and suggestions for future services, and even instructions for tasks such as how to arrange pillows. Managed by Q’s dashboard presents an incredibly easy way how to request services, and is a simple way to input work orders as well as additional inquiries.
But what is most unique about Managed by Q is the strategy employed, entitled “The Good Jobs Strategy”. This strategy focuses on viewing employees as a sort of profit over a cost, in Q’s case, an essential link between Managed by Q and clientele (Trujillo, Managed by Q’s ‘Good Job’s’ Gamble). “The Good Jobs Strategy” serves as a way for Managed by Q to ensure not only customer happiness, but worker happiness.
Analysis
Strategy
While relying on contractors to provide the cleaners for Managed By Q’s on-demand service, Teran realized the company had no control over motivating contracted workers and hence found it impossible to enforce the consistent and high expectations associated with high-quality service. Teran and Rahmanian had a goal of customers giving personalized feedback to operators with a high attention to detail in tasks such as arranging every office supply at a right angle: they wanted things to be done “The Q Way”. However, because they used contractors, they were inherently not ‘Q’. Overall, they lacked control over compensation and culture. In addition, Managed by Q could not relay feedback they received to outside contractors but rather had to go through their managers. Personalized preferences were rarely applied due to contractors having different cleaners clean offices, and not one consistent cleaner (Gigged, 2018).
In order to be an operating system for offices and to keep a steady clientele, Managed by Q could not solely rely on a well-designed interface and iPads on every wall. Q needed to provide a superior service as well. In order to do that, they needed to develop and invest in their team, which included outside contractors. Teran realized that there would need to be a fundamental change in how the company operated, specifically company differentiation and what resources would give the company a competitive advantage.
Q had tried to differentiate itself with a seamless interface but had not focused on a key piece of the product. Co-founder Saman Rahmanian even remembers thinking, “…of course the cleaning just happens…” (Gigged, 2018). In order to keep clients, the management services must be priority. To Teran, the only way to do that was through direct access to the cleaners, maintenance, and wellness companies. So Q moved away from subcontractors, which are popular in the Uber for X economy and began permanently hiring cleaners.
When they made the decision to hire their cleaners, Teran and Rahmanian were fundamentally changing arenas where Q created value. Q would be an employer of cleaners and handymen, not just software engineers. Simultaneously they came to understand that the high-quality cleaners would be their real differentiators. Therefore, Q adapted the ‘good jobs strategy’ First discussed in Zeynep Ton’s book by the same name, the ’good jobs strategy’ encourages companies to invest in workers, while providing the operational structure for them to be successful on the job (The Good Jobs Strategy, 2014). At Q, this manifests in high wages, opportunity for advancement, constant training, consistent yet flexible scheduling, benefits, stock options and most importantly, a high degree of respect amongst operators. Every employee, whether they are a software engineer or a cleaner, is an operator.
The specifics of compensation and culture are discussed in further detail in later portions of this paper; however, the effects of this strategy are incredibly pertinent. The strategy increases operator’s ownership and pride in work, thereby leading to lower employee turnover and client churn. Better customer service leads to higher client retention and satisfaction which not only lowers the cost of attracting new customers, but also increases utilization of Managed by Q’s other on-demand services. That savings and revenue can be reinvested into employees. Zeynep Ton would call this part of the virtuous cycle of retail (Ton 63).
According to Ton, this virtuous cycle begins with higher labor budgets, leading to good quality and quantity of labor. This helps to avoid understaffing, allowing time for workers to productively and effectively complete tasks and leads to higher expectations for workers. The high quality and quantity of labor promotes quality products which in turn leads to higher profitability.
However, the high labor budget cannot just be spent on compensation. Employees need to be supported across the board and this high budget is reflected in higher degrees of training, good benefits, as well as opportunities for career development alongside good wages.
Motivation & Incentives
These higher labor costs work to satisfy the needs of their employees and to extrinsically and intrinsically motivate them. In order to minimize costs of hiring and training operators, it is important for Managed by Q as a start-up company to retain and motivate employees, as well as attract new ones. The system are mainly discussed by implementing course concepts of motivation from two perspectives, extrinsic and intrinsic motivation.
Compared to the New York State’s $9.00 minimum wage per hour, nationwide $7.00 per hour wage, and $10.00 per hour average wage for janitors who work for 40 hours per week, entry level cleaning operators at Managed by Q earn $12.50 per hour (Gigged 139). This extrinsic factor of higher wage can satisfy employees who have entry level, basic skills in terms of cleaning. If they perform to the standard requirements of Managed by Q, the employees have already earned more and gained comparative advantages compared to cleaning operators of other organizations. Besides the competitive starting salary, operators also receive a $0.25 per hour raise every six months, which means that if they stay in the company longer, even though they are not promoted, they still get higher salaries than before (Gigged 139).
Another extrinsic factor is the compensation for employees who work for a longer time per week. For employees who work 30 hours per week, they receive free health insurance, 40 hours of vacation, and can be involved in the retirement savings plan (Gigged 139). These benefits are designed to guarantee employees general health care. Meanwhile, it encourages people to work more, which creates more value to the company. By using theses factors, employees’ interests and goals are aligned well with the value and goals of the whole organization ([001][Motivation & Incentives]).
Additionally, Managed by Q has constructed a career path for operators which acts as to intrinsically motivate operators (Gigged 140). If a cleaning operator performs high quality work the Q way, one can be promoted to a mentor within several months, whose work is to clean and train other cleaning operators, being paid $14 per hour. Similarly, a good mentor can be promoted to be a supervisor who takes charge of the quality control, with a $15.50 per hour salary (Gigged 141). Unlike cleaners for other organizations, where workers can be stuck in the same position with no opportunity for advancement, cleaning operators at Q know their goals and how to achieve them.
Managed by Q also offers stock options to employees. In 2016, Dan Teran announced that Managed by Q would be allocating 5% of its equity as stock options for its operators (O’Brien, 2016). At the point of this announcement, Managed by Q was not profitable, and it was unclear if this would be more than a gesture; however, it was a signal to employees that Managed by Q was dedicated to its operators over the long term.
In these ways, Managed by Q is taking care of more than their operator’s basic needs. According to Maslow’s hierarchy of needs, employees most basic needs must be met before they are able to achieve higher orders. A livable wage could be considered tier one, and is above the average compared to average janitors. Job security can be considered tier two, followed by feeling accepted and recognized for hard work, which will be discussed in the culture section of this paper. Overall, because operator’s lower level needs are met, they are more likely to make decisions based off of their higher needs for challenge and advancement rather than compensation ([001], [Motivation and Incentives slide 5]). This strengthens the intrinsic motivation that operators feel towards their work.
When Managed by Q motivates their employees utilizing the extrinsic and intrinsic methods above, what it gains is not only the higher performance of employees, but also lower rate of annual customer churn, which is 10% and 50% for non-Q organizations, as well as lower rate of employee churn, which is 5% and 50% for non-Q organizations (Ton & Reavis, 2016). In other words, the virtuous cycle that began with benefits and career development functionally improved the quality of employees’ work and hence customer satisfaction. Q can focus less on recruiting employees and customers and therefore save money which can be reinvested in employees.
Culture
Managed by Q places large value on creating a strong and positive company culture. On their website, they clearly state their espoused values that are believed to be essential for the organization’s success. These values are transparency, integrity, optimism, community, and innovation. Part of their use of the ‘good jobs strategy’ relies heavily upon the company’s ability to enact the values that they have stated. Because of this, Managed by Q has gone lengths to make sure that their ideal culture and environment are realized. This dedication can be seen within the very existence of their comprehensive official guide to “Creating a Great Company Culture” which features sections on community building, employee recognition, and creating an inviting office space. The guide discusses topics such as the importance of creating a sense of belonging and advice on how to organize company wide events. Managed by Q has an entire People and Culture team that is specifically tasked with organizing community events and activities. These activities include but are not limited to hack days, health and wellness events, speaker series, and an annual company wide service day. Managed by Q even keeps a community blog called “Do Not Erase” where employees and interns can write their own op-eds; in one post in particular, an employee wrote about how a wellness event led her to check herself for breast cancer which, in turn, saved her life. In addition to these community building efforts,
Managed by Q has also utilized multiple tactics to strengthen the organization's culture by ensuring transparency between the business and its employees. This is achieved in a number of ways. Firstly, company-wide newsletters constantly update the workers on the happenings within the organization, as well as announcing employee birthdays, anniversaries, and new hires. To take this effort for transparency to the next level, Managed by Q also holds biweekly “All Hands” meetings. In these meetings, the entire work staff gathers together to discuss the current happenings in the company. During these meetings they hold “AQAs” which stands for “Ask Q Anything”; these question sections allow employees to ask the founder any questions about the company they would like. Every new hire, no matter their department, is also required to shadow the cleaners for a week so that everyone knows what's happening at the ground level. Managed by Q believes that if all involved in the business are fully informed, then everyone will continue to stay on the same page.
To foster innovation within the community, they created The Q Academy which is a program that allows people to share with the rest of the organization their areas of expertise. This is done in addition to the speaker series that invites professionals to speak to the employees about their knowledge and careers. While holding all these events to build a sense of belonging for the workers, Managed by Q also makes sure that the workplace is a diverse and safe environment for all. This starts with the hiring process which is why they have consulted organizations such as the Coalition for Queens, Galvanize and Project Include (which specifically works to raise diversity within tech companies) to ensure that their hiring process allows for the most healthily diverse environment as possible. In addition to that, there are many groups within the company for different minority groups to be a part of, such as Women of Q. Managed by Q makes sure that all of these spaces are effective in satisfying the workers by making employee feedback a priority; employees send in surveys about their experiences at the company every quarter to assure this. This focus on creating the ideal culture is not only important for upholding their good jobs strategy but it is also crucial to giving them legitimacy. Since a big part of Managed by Q business is assisting other companies with their own work environments and cultures, it is crucial that Managed by Q is able to lead by example.
Creativity and Innovation
Several factors lead to increased innovation at Managed By Q. Because they follow Ton’s Good Job Strategy of appropriately staffing, employees have time to innovate while they are working. To add on, Managed By Q’s strategy supports intrinsic motivation from workers; this increases creativity because operators are not just doing it to get paid, but rather because they have ownership in their work ([001],[Creativity and Innovation slide 28]). If operators enjoy what they do, they are more likely to seek to improve processes for the sake of improvements.
To add on, there are Field operators are emboldened to discuss with their supervisors how things are working at specific client’s offices and across the board. For instance, following an idea or innovation, an operator’s supervisor can pass that idea onto the correct process owner, who will follow up with the operator By having a process to back them up, Q has created a culture of innovation in the company.
Risks
Like any business, Managed by Q has faced certain challenges and may face potential crises in the future. Managed by Q faces three main pain points. First, there lies the risk of entry of potential competitors. However, it is safeguarded by two differentiators. Q’s unique culture ensures every employee equal benefits and treatment. The second is Q’s emphasis on the congruence model. In class, we saw how adapting the best practices of Toyota helped to drastically change the Nummi plant. However, the dissonance between the best practices and General Motors overall strategy was a big hurdle to successful implement these best practices company-wide. (“NUMMI 2015.”) Similarly, at Managed by Q, we can see how their vision, mission and outputs fit well. This gives them a strategic competitive edge over potential competitors.
Second, expanding into new markets may bring some challenges. In a newspaper article, a Q represented mentioned their struggle when entering the Chicago market. When Q started operations in Chicago, they observed that all the office spaces in commercial buildings used cleaning services provided through union contracts. Because of this, Q started providing consulting services to successful startups on how to maintain their closed-knit office spaces despite scaling-up. Looking at Q’s success in helping startups cultivates a positive, work environment compared to traditional offices started demanding similar services. (Holly, Robert “How Managed by Q Brings Startup Culture to Bigger Offices.”) Q was effective in shaping their strategy to fit Chicago’s market environment. Thus, circumventing a possible hurdle.
Third, in a case study, Teran acknowledged the challenges and risks associated with scaling up. They looked at two potential ways to grow. The first was to enter new markets through other cities. However, after a bad experience in Chicago, they were quick to understand that every market is drastically different. Hence, implementing Managed by Q’s business model and work culture in these varying markets without compromising its core values and beliefs meant a lot of work from ground up. The second way was to expand the number of services provided by Q in the existing locations and increasing market shares in the existing locations. Teran was quick to emphasise that “…he didn’t want to grow the business at the expense of the business model and culture curated at Q, which made it highly successful (Zeynep, “Managed by Q”)”.That is Teran is seeking to find a way to scale-up Q. However, he doesn’t want to compromise on their unique employment model.
How we can take these lessons to other companies and industries
Managed By Q has the advantage of being in the cleaning business—an industry that serves clients daily, ensuring that the company has enough clients and revenue to pay their cleaners high wages and provide numerous benefits. The following section will focus on TechMate, a tech support organization for small businesses and startups. Its co-founder, Colin Barceloux, was discussing ways to implement some of the Managed By Q ideas with Dan Teran, when TechMate was still known as ConvoyNow (Davidson). However, he quickly discovered some issues that might affect many who try to follow the aforementioned methods: there simply did not seem to be enough demand to support full-time wages or schedules for employees. Since I.T. work is not something one deals with everyday, TechMate originally followed a model similar to the car service Uber, sending individual contractors in different areas of the country to resolve issues as they were requested online (Davidson).
In his discussions with Barceloux, Teran saw some glaring problems that needed to be addressed if TechMate wanted to emulate Managed By Q. The most significant of these is if clients were matched with a different I.T. expert each time they accessed the service, and the experts did not provide equivalent quality of service, many of the customers would search for other I.T. companies. He suggested that the company scale back, to focus on fewer cities and establish great service in smaller areas (Davidson). After numerous consultations with Teran, Barceloux finally landed on a model that allowed his workers to receive great wages and benefits. Based in New York, TechMate services the tri-state area, choosing to gain popularity in a smaller area with a lot of business, before expanding. The company offers both one-time support and monthly or yearly memberships to ensure that they receive enough revenue to pay a select team of experts (FAQ). This system enables customers to choose specific experts or be matched with an appropriate one based on their current needs, giving each employee ratings on their services (FAQ). The methods helped TechMate increase customer retention and ensure that their employees receive the wages and benefits that they deserved. As it can be shown with the case of TechMate, it might take some maneuvering, but it is possible to apply the lessons learned from Managed By Q to various different companies.
Conclusion
Companies such as Managed by Q are expanding quickly, and with good reason. Defying the classic stereotype of underpaid workers, Managed by Q’s strategy focuses on the team as a whole. Utilization of intrinsic motivation and allowing for innovation, Managed by Q creates a culture that is the epitome of happy and healthy. By focusing their sites at one area at a time, Managed by Q ensures longevity, prosperity, and success by taking suggestions from customers and employees alike to better their company.