Author: Marla Gottschalk

Anything But Peaceful: The Millennial “Peace-Out” Resignation


By Chip Joyce

The companies we work with often complain of the Millennial generation’s cavalier attitude toward quitting jobs. I call it the “peace-out resignation”—and these resignations seem to come out of “left field.” The truth is these resignations are far from peaceful. The peace-out resignation is abrupt and untimely; and inevitably costly to an organization. Its roots often include a vital breach of workplace trust.

Overall surprise resignations are unsettling to a work group—often contributing to anxiety, confusion and low employee morale. For the resigning employee, the costs can be high and bridges can be permanently burned.

It is easy to assume this is yet another aspect of the negative stereotype of the Millennial. (A common response among managers.)  However, it’s dead wrong. If this is happening in your company, it’s time to actually stop and wonder why it’s happening.

Let me share a story of my own “peace-out” resignation nearly 20 years ago—when Millennials were in diapers or thereabouts.

I came in to the office on a Sunday, put my personal effects into a box, wrote a few instructions on where to find things, passwords, etc. and then wrote a screed—with probably 100 pages of supporting documentation—to explain why I was resigning, effective immediately. The reason? My manager was incredibly horrible. I had endured enough. My time with that organization was over.

I had worked for six months as a project lead. I needed guidance from my manager; questions answered. Was I doing things the right way? On the right track?

Yet for months, he wouldn’t give me the time of day.



My emails were left unanswered. I couldn’t get a spot on his schedule. I was living in a workplace “vacuum.”

When I did turn in the final project, it was no surprise to me that he relayed that it was “all wrong.” He shamed me in front of several other managers, my peers and blamed me entirely for the failure. (Frankly, I believe he didn’t know what he wanted and that is why he avoided me.)

Yet the more fundamental reason that I chose to “peaced-out” was that I quickly realized I’d wasted six months of my life working for him. I had nothing to show for it—and despite my hard work, despite my dedication—I had failed.

I hadn’t increased my market value.

I might as well have spent the past six months surfing that new innovation called “the Web.”

Perhaps I was a rare proto-Millennial. Or maybe Millennials aren’t really all that different from more established employees. (I tend to think it’s the latter.)

The peace-out resignation is a protest against feeling let down or betrayed. It’s that gut-reaction to that violated psychological contract which implies that I’m going to work very, very hard to achieve organizational goals and in turn you are going to coach me and help me to succeed. When all is said and done, I’m going to achieve something meaningful and be worth more in the marketplace.

I’m sorry, but what Millennials are demanding is fair. They want to know that work is a “give and take” relationship. The problem is that it’s the rare manager who knows how to make that psychological contract explicit, open, and transparent.

Managers need training to understand both the psychological contract and the obligation to define a mutually beneficial tour of duty for each employee.

Then—they need to honor it.

Chip Joyce is the Co-Founder and CEO of Allied Talent. He brings the Alliance Framework to organizations worldwide.

How Trust Is Often Undermined at Work — and What You Can Do About It


By Chip Joyce

Recently I’ve had a number of conversations about The Alliance (Reid Hoffman, Ben Casnocha, Chris Yeh, 2014) and the concept of psychological contract. Employer-employee relationships are damaged when these contracts are violated — and unfortunately, they are regularly breached. You might have had yours violated. If you are a manager, you may have unknowingly violated employee contracts.

If you’re running a company, you really need to stop and consider this —  because when psychological contracts are violated, morale can be low and productivity can suffer. Good people might leave as a result. That’s an incredible shame.

You’re probably asking what is a psychological contract? That’s a fantastic question. So, here’s the short version:

Marla (our Senior Consultant) sent me an academic paper, published in 1994, titled “Violating the Psychological Contract: Not the Exception But the Norm.” It defines the psychological contract as follows: An individual’s belief regarding the terms and conditions of a reciprocal exchange agreement between that focal person and another party.

A psychological contract develops when one party believes that a promise of future return has been made (e.g. pay for performance), a contribution has been given (e.g. some form of exchange) and thus, an obligation has been created to provide future benefits. It is comprised of the belief that some form of a promise has been made and that the terms and conditions of the contract have been accepted by both parties. (Note that these are beliefs or perceptions regarding promises and acceptance.)

Each party believes that both parties have made promises and that both parties have accepted the same contract terms. However, this does not necessarily mean that both parties share a common understanding of all contract terms. Each party only believes that they share the same interpretation of the contract…. parties are thus likely to possess somewhat different and possibly unique beliefs about what each owes each other. These beliefs can arise from over promises (e.g. bonus systems discussed in the recruitment process), interpretation of patterns of past exchange, vicarious learning (e.g. witnessing other employee’s experiences) as well as through various factors that each party make take for granted (e.g. good faith or fairness).

Let’s put this in simpler terms for a non-academic like myself: a psychological contract is a promise you think you’ve mutually made with someone, whereupon you both made commitments to each other. The problem is that the other party might not see it the same way, but you’re oblivious to that consideration because you are confident it’s what was agreed upon.

It may well have been — but that’s beside the point: to you, it is fact that the promise was made.

The consequences of a breach can be severe: When employees encounter a contract violation, their satisfaction with both the job and the organization itself can decline… [as the violation] undermines the very factors (e.g. trust) that led to the emergence of a relationship.

And as you might imagine, a violation can lead to “the dissolution of the relationship itself”. Sadly, this does occur.

In other words, if your boss violates your psychological contract, you may feel let down, and may look for a new job. In this particular study, 57% of newly hired MBAs reported being unhappy within the first two years of tenure.

Here are some examples of psychological contract violations:

  • Training and development (absence of training, or training experience was not as promised)
  • Compensation (discrepancies between promised and realize pay, benefits, bonuses)
  • Promotion (promotion or advancement schedule not as promised)
  • Nature of job (employer perceived as having misrepresented the nature of the department or the job)
  • Job security (promises regarding degree of job security one could expect were not met)
  • Feedback (feedback and reviews inadequate compared to what was promised)
  • Management of change (employees not asked for input or given notice of changes as they were promised)
  • Responsibility (employees given less responsibility and/or challenge than promised)
  • People (employer perceived as having misrepresented the type of people at the firm, in terms of things such as their expertise, work style or reputation)

Instead of relying on unstated psychological contracts, which are clearly troublesome — you should develop an explicit, agreed-upon, documented, mutual commitment. The Alliance describes the process for doing this between a manager and an employee: craft an agreement called a “Tour of duty”.

The tour of duty represents an ethical commitment by the employer and employee to a specific mission. Defining an attractive tour of duty lets [the manager] point to concrete ways that it will enhance the employee’s personal brand. If and when he works elsewhere— his or her career can be advanced by integrating a specific mission, picking up real skills,  and building new relationships.

As a manager, recognize that it’s natural to form these psychological contracts. Moreover, it seems likely that they will be violated (even if inadvertently), and negative outcomes result.

The great news? You can prevent many of these outcomes, by mastering Tours of Duty.

Chip Joyce is the Co-Founder and CEO of Allied Talent. He brings the Alliance Framework to organizations worldwide.

5 Operating Principles of the 21st Century Manager


By Marla Gottschalk

When we join an organization today, we rarely envision a long-term relationship. In fact, we anticipate that our career path will take us to many different workplaces, with varying missions and supervision. The days of The Organization Man are long over — and when Whyte penned this 1956 classic, no one could have envisioned the forces that would impact today’s workplaces. Gone are the promises that were once made when we entered organizational life.

More than a half century later — today’s managers have struggled to keep pace with the evolution of modern organizations.

The operating social contract between employee and employer has been forced to flex significantly. Whyte’s best seller depicted a qualitatively different contract within organizations, as compared to those developing today. In that previous world of work, organizations had the luxury of offering security and a predictable future. Employee commitment was derived from — and exchanged for — the promise of career-spanning employment. Today, these promises are not often made. As such, the operating social contract becomes dependent on other elements that might prove valuable. This includes the development of alliances which contiguously advance career development and help achieve organizational initiatives.

We have been relying on an outdated foundational view of management, yet forcing its application to modern times. With dismal employee engagement figures and a recovering economy prompting turnover, the time for change may be now. We need to select, develop and support today’s managers with all of this in mind.

Here are 5 key operating principles of a 21st century manager:

  • A firm belief in transparency. If we expect employees to be transparent about elements of their work lives, they deserve the same in return. Without this aspect, the trust we desire to build will never develop. This should begin early on at the recruitment phase and continue over their tenure. This also demands the perspective that the more we can share about the critical elements of our work lives, the better we will fare as an organization. (Breaches in transparency can result in devastating consequences.)
  • A deep respect for individual differences. This requires a non-judgmental perspective concerning both work style and individual career goals. We are not all alike — and our career paths will reflect this fact. Great managers will acknowledge differences, and align our strengths with the work.
  • A practice of encouraging “connection”. This is a foundational belief that if we forge lasting connections — our work will improve dramatically. This includes embracing diversity in both opinion and perspective, each and every day.
  • A commitment to career building. Taking the above elements further, managers must be skilled at the conversations that support career growth. This involves a cache of skills which can target skill building, not only valued by the organization, but by the employee, as well.
  • A love of the job. Last, but possibly most critical — is the desire to manage others. Without a committed connection to this role, it is inevitably difficult to motivate contributors and build trust. We push too many toward the role, who do not possess the required skills or interest.

Dr. Marla Gottschalk is an Industrial/Organizational Psychologist, consultant and coach. She is a Senior Consultant at Allied Talent and also serves as the Director of Thought Leadership at Kilberry Leadership Advisors.

Photo Credit: rkit; Pixaby

Employee Compensation and The Alliance


By Reid Hoffman, Ben Casnocha, and Chris Yeh.

Mutual benefit is the fundamental characteristic of an alliance in the workplace. Ideally, by working together, the employee transforms his career and the company transforms its business.

When an employee evaluates what he or she stands to gain in this alliance, the cash and equity compensation the company offers should be one of the benefits. But it should not be the dominant benefit.

Cash compensation and equity is part of the employee’s financial capital. In contrast, our book The Alliance focuses on how the company will help increase the employee’s human capital by making him more valuable and employable through acquiring important skills, experiences, and connections.

These “soft assets” (as we referred to them in The Start-up of You) accrue as the employee pursues and accomplishes his mission, and enable career growth in a way that simply making more money cannot. The smart long-term strategy for an employee is to optimize on building up human capital instead of optimizing for maximum short-term cash: unique skills, powerful experiences, or a deep professional network. These assets have a longer-term pay-off if leveraged well.

The company also wins when employees develop soft assets, of course. Employees who have up to date skills and networks do better work on the job.

One of the ways a company and employee organize the soft asset plan is by committing to a “tour of duty” that has a meaningful mission objective. An example mission objective could be a product launch or scaling some initiative to a certain level over a finite time period. There’s mutual benefit here, too. For the company, employees who commit to a tour of duty because of a meaningful mission will outperform those who are simply seeking cash-for-time. For the employees, they will be most happy and fulfilled if they’re involved in meaningful, high-impact work. Various research on employee engagement and employee happiness support these claims. In Silicon Valley, we call it having “missionary” rather than “mercenary” employees, and our innovation culture depends on it.

All this said, to ignore cash compensation in the context of the alliance is foolish. Regardless of how much they love their jobs or how meaningful the mission, most people would quit instantly if they were told that from now on, they wouldn’t be paid. Soft assets are critical for long-term value, but you can’t use them to pay the mortgage.

In a separate but related conversation to the tour of duty conversation, the manager and employee discuss the compensation package, which generally includes a salary or hourly rate, and might also include things like healthcare, 401k matching, and incentive compensation. The most common incentives include stock option or RSU grants, which vest over time, and bonus plans, which are calculated annually. Salespeople also often receive a commission based on how much they sell. In larger organizations, the broad structure of employee compensation tends to be set, for scalability reasons; personalization and negotiation between manager and employee happens within that structure.

All of these compensation systems serve the goal of alignment. Just as an alliance should align the interests of employee and company by providing the opportunity for soft asset growth and a meaningful mission, the compensation system should align the cash compensation with the value created by the employee accomplishing the mission. Ideally, monetary compensation gets adjusted up or down based on performance over the duration of a tour. Typically, monetary compensation (salary, bonus or long-term incentives like stock options or RSUs) is reviewed annually to allow for some adjustment and alignment. With more meaningful and honest 1:1 conversations between managers and employees, which we espouse in The Alliance, employees can better understand what they make and how they make it.

In the end, no compensation system is perfect. How many of you think that you are paid exactly the right amount? The alliance doesn’t change that fact. What it does do is to help a manager build a stronger relationship with your employees by contextualizing compensation details in an intelligent, more general career conversation.

Below are some additional frequent questions we’ve received about the Alliance and compensation.

Q: I’m an individual manager. I don’t fully control compensation for my employees. How should I deal with compensation when I lead a career conversation with one of my team members?

A: Individual managers can face constraints when negotiating compensation with employees. Oftentimes, HR sets and enforces a company-wide compensation policy or management enacts budget constraints that curtail compensation increases across the board. Still, managers have the ability to tout their employees’ accomplishments and almost always exercise some level of discretion. Furthermore, managers should focus on the elements of compensation that they do completely control. For example, you can still help your people grow their soft assets. As a manager you can define a mission that aligns well with the employee’s aspirations and values and which helps advance his career. On an ongoing basis, you can help the employee acquire useful knowledge and skills, build his personal network, and burnish his personal brand with speaking and thought leadership. This is true even if your organization doesn’t adopt the alliance framework!

Q: Should the company pay a “loss of optionality” bonus for the employee if he’s taking himself off the job market during his tour of duty?

A: The alliance framework does not imply there should be a special “loss of optionality” bonus for an employee who signs up for a tour of duty. But it does imply that there should be a vigorous, honest discussion between manager and star employee about the nature of their commitment to each other.

By signing up for a tour of duty, both company and employee gain short-term and medium-term predictability. This is what lets both sides invest in each other with confidence over the course of the tour. As such, even though this isn’t a legal agreement, breaking the tour of duty commitment represents an ethical violation.

Of course, talented employees will always be sought after by other companies, and sometimes employees will come upon a truly transformational career opportunity at a different company that would justify them ending their tour with you early.

As a manager, you should aspire to get to a place where your employee will talk to you first before seriously exploring alternative career offers in the middle of a tour. After all, if an employee is so unsatisfied or uninspired on his current tour that he feels compelled to be interviewing elsewhere, better for you to know about it as early as possible so you can potentially redefine the tour of duty, redefine the relationship into a short term, month-to-month transitional one until a new tour can be defined, or help the employee amicably transition out of the company altogether. You earn this “right of first conversation” by showing the employee that you’re truly committed to his career transformation and not simply motivated to keep him at your company as long as possible.

As a manager, be specific with your employee on how your alliance deals with certain tactical scenarios, such as interviewing elsewhere during a tour. For example, is it acceptable for the employee on a tour of duty to answer the phone when a headhunter calls? Is it acceptable to take a day off to interview at another company if the employee is already on a long-term commitment with his current employer? The manager and employee need to arrive at a mutually agreeable decision on this and other potentially sticky situations. While managers may be tempted to consider any contact with another company as a violation of the ethical pact, keep in mind that one way an employee can better understand his market value and the quality of his current career opportunity is by talking to other companies, so to explicitly bar that activity would not be in the spirit of the alliance. Different managers may have different standards, but all managers should be clear about expectations.

Q: If a tour of duty’s mission lasts multiple years, should compensation be set for multiple years? Why set compensation annually?

A: Today’s compensation systems, with stock option and RSU vesting, 401k match vesting, and so on already reward employees for staying over the long term. These kinds of systemic, standardized incentives are good because it does make sense to think about compensation in the context of long-term missions.

That being said, even if a tour of duty is expected to last more than a year, we suggest regular check-ins and tweaks as necessary. The goal of the tour of duty framework is to provide greater adaptability; locking in compensation could lead to a misalignment of compensation and responsibilities. In this sense, re-visiting compensation on an annual basis is not necessarily at-odds with a long-term tour of duty.

Q: In a classic compensation negotiation, there’s information asymmetry between employer and employee. The company has access to all the company’s compensation records in addition to market data from commercial providers. The employee meanwhile doesn’t even know what his co-workers make, let alone broader market trends. Doesn’t this information asymmetry erode the trust that’s necessary for the alliance framework?

A: Indeed, transparency and honesty are necessary for a true alliance.

Companies should be transparent about how they determine compensation (while preserving the confidentiality of other employees). Managers should share the data they’re relying on to determine compensation benchmarks. If candidates and employees expect companies to be open with them, then they should be ready to reciprocate by being open about their compensation history, competitive offers, and the information they’ve gathered through their networks and readily available reported data.

As we put it once in an interview, the ideal scenario is for both parties in a compensation negotiation to show all of their cards to each other, thus cooperatively determining the fair market rate as effectively as possible.

By framing this negotiation as a puzzle to be solved, rather than a battle to be won, both parties can work together, rather than at cross-purposes. Of course, at the end of the day, you do have to set a final number. The goal is simply to find a number that reflects the mutuality of a transformative alliance.

Q: How do I handle compensation when introducing the alliance to current employees who are already on an undocumented tour of duty?

A: For existing employees who are not on a defined tour, we recommend that you introduce the tour of duty process by defining the non-compensation benefits to the employee—the human capital gains around skills, experiences, and connections that can lead to career transformation—and leave the current monetary compensation system in place. This reduces uncertainty for both company and employee.

When it is time to define an employee’s next tour of duty, you’ll have the opportunity to work compensation into the discussion. In most cases, milestone- or achievement-based incentives will best align the interests of the employee and the company around accomplishing a specific mission. Transform the company, and be rewarded–that’s the kind of compensation that helps attract entrepreneurial employees.

This post was co-authored with Ben Casnocha, and Chris Yeh. To continue the discussion with us on this topic, please join our LinkedIn Group.

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