How to Reinvent Leadership By Empowering Employees

GAME-CHANGING LEADERSHIP

Homeroom restaurant aims to be the best part of people’s day — including for its employees. Co-founder and CEO Erin Wade explains her new leadership model.


In 2011, when Erin Wade and her business partner Allison Arevalo started Homeroom, a mac-and-cheese restaurant in Oakland, CA, they knew it had to be an inspiring and fun place to work. “It felt like our dream of creating that for ourselves would be shallow if we weren’t creating it for other people, too,” Wade explains. But neither Wade’s previous career as an attorney nor Arevalo’s as a corporate marketer had given them positive models for the type of workplace they wanted to create. So Wade began reading everything she could, interviewing business leaders, and taking classes, trying to figure out how to create a company culture that was truly people-driven.

They settled on a mission “to be the best part of people’s day” — not just for guests, but also employees. “Leaders make really different decisions when they have a view towards making both those stakeholders happy,” Wade says. The concept hit a nerve: Their first Craiglist post attracted hundreds of applicants to open interviews. Yet despite all that homework and enthusiasm, “Our first year was an absolute disaster,” Wade confesses. “We created a work environment that had almost no rules. It turns out that’s a crappy way to set up a company for success.”

In the years since, Wade and her team of nearly 100 employees have settled on an evolving, successful set of practices and attitudes she calls “people-driven leadership.” And Homeroom has become a highly profitable anchor in its community, with a staff turnover rate a third less than the industry standard and revenue per square foot more than four times the industry average for chain restaurants.

Here’s Wade’s best advice for other business leaders looking to redefine leadership and create a truly inclusive culture for their teams.

START WITH TRANSPARENCY

Homeroom operates as an open-book company. “You can’t involve everyone in making decisions about the company unless they know what the heck is happening,” Wade says. So every week, Homeroom holds a meeting that anyone on staff can choose to attend — paid. The team goes through a “report card” of their metrics, including everything from sales figures and labor costs to staff happiness and Yelp reputation, with different team members reporting on and taking ownership for different line items.

“What’s great about that meeting,” Wade says, “is that it involves every single person who’s there. Even if you’re not tracking a line, you can still contribute your ideas on why certain numbers were what they were or make predictions for the week to come.”

EMPOWER EMPLOYEES TO LIVE YOUR MISSION

Homeroom gives every employee from managers to bussers both autonomy and extensive training to make their own decisions about how to “be the best part of people’s day” in any given situation. That could mean, for example, bringing a free treat to a crying child — no permission needed. “The only thing we ask is that everything gets kept track of, so we know how much we’re giving away and why,” Wade says. “Once employees start thinking like that, it’s like watching a light go off, and they have so much fun with it.”

ASK FOR EVERYONE’S OPINION – OFTEN

Homeroom requires employees to fill out a survey at the end of every shift. Questions include what did and didn’t go well, if they had issues with guests and how they fixed them, and if they noticed any maintenance problems. Wade also asks how they would rate their personal satisfaction at work, and if there’s anything the company can do to make it better. “The daily survey gives a voice to people who either wouldn’t naturally speak up or aren’t usually asked their opinion in the first place,” she explains.

Wade credits Homeroom’s commitment to feedback and engagement for the company’s unusually high revenue per square foot, as employees spot maintenance issues before they become big problems and small suggestions for efficiency improvements add up over time. “We don’t just have a leadership team working on improvement,” she says. “We have an entire company working on it.”

EMPOWERING EMPLOYEES DOESN’T MEAN NO RULES

When Homeroom held its first all-hands staff meeting, Wade and Arevalo told people there was going to be no vacation policy or dress code. “We wanted to trust people’s own good judgment and we thought that’s what it would mean to empower them,” Wade says. They found that a lack of basic guidelines had the opposite effect. “Those aren’t the fun ways to express your individuality,” Wade explains. “You don’t want to have to ask yourself, ‘Are they going to hate me if I take two weeks around Christmastime? If I wear this shirt, am I going to offend them?’”

Instead, Wade and Arevalo found that the exciting questions were about how you encourage engagement in the process of creating guidelines, and how you continue to evolve your rules in a way that incorporates people’s opinions and thoughts.

DON’T EXPECT OVERNIGHT RESULTS

“You could decide to do a lot of the things I just talked about, but most new employees will not be familiar with a culture of personal autonomy, transparency, or top-to-bottom collaboration,” Wade cautions. If you decide you want those values in your company, expect to invest a lot of time and education to get your staff to understand what that really means.

When Homeroom first started running its weekly open-book meeting, attendance was very low. “Honestly, I couldn’t understand it,” Wade says. “Here we are, in an industry where we’re all on our feet all day, offering to pay people to sit, have snacks, and just hang out and give their opinions. I thought everyone in the company was going to want
to come, but very few people did.” Now, about a third of the company shows up on any given week, but Wade doesn’t expect turnout to ever get higher than that. “As excited as I am about all these principles,” she says, “not everyone is always excited about them. Because everything you try is so different, don’t lose hope if it’s not immediately embraced — even if it seems like it should be a slam dunk. Changing people’s paradigm surrounding how they think about work is a really slow, difficult process.”

COMMIT TO FINDING MENTORS

“There is no easy way to get spoon-fed a lot of these ideas,” Wade warns. “For some people, that’s an exciting challenge, but for some people, that’s just not how they’re going to want to spend their time.” Wade recommends the ZingTrain education program that Zingerman’s Community of Businesses runs in Ann Arbor, MI — even for companies not in the food business. “We bring a number of people with
 us every year to take a class there,” she says. “They talk to you about the theory of being an open-book company, and then they bring you into their businesses and show you how it’s operating in practice.” [Read our Issue 4 story about Zingerman’s at bit.ly/Issue4Zingerman.] She also recommends joining professional organizations focused on these types of issues, like the Tugboat Institute.

HIRE MORE WOMEN

As Wade researched the most people-driven businesses she could find, she noticed they were all either founded by women or had 
a very high proportion of female leaders. “Most companies are run to be very ‘winner takes all’: you have your leaders, you have your followers,” she says. “But if you’re looking to run a more people-driven company, that’s the competitive advantage that women bring to the table.”

She likens it to an experience she had surfing recently: “Usually, surfing is very male-dominated — much like business, where 5 percent or less of CEOs at Fortune 500 companies are female. A few months ago, I went out to a beach and found 95 percent women there. And without anyone ever saying a word, it was like the rules of surfing had been flipped on their head. Instead of the normal ‘one person per wave, whoever gets there first wins,’ the whole point was to try to get as many people safely on a wave as we could. It was one of the most fun, rewarding days on the ocean I’ve ever had.”

Wade compares the culture at Homeroom to what she saw on the water that day. “Not everyone’s going to want to run their company that way,” she says. “But if you do, it’s 
a great opportunity to bring in more women.”

GET COMFORTABLE WITH FAILURE

“If you’re doing something that’s not very mainstream, the odds of you hitting the nail on the head the first time you try are pretty slim,” Wade says. Take comfort in the fact that a lot of different roads lead to the same end point, and you’re probably going to pick some wrong ones along the way. “We continue to screw up all the time,” she says. “But I remind myself that even companies following much more well-worn playbooks make mistakes. And I think we’re having a lot more fun along the way.”

Homeroom co-founders: Allison Arevalo (left) and Erin Wade (right)

This article appeared in Issue 10 | Nov/Dec 2016

In Issue 10, we’re looking at the game changers – the people, ideas, and companies that have the ability to shift the entire paradigm of their industry or change the game for good. In an exclusive partnership with Gamechangers 500, we profiled the top 25 for-benefit companies in the world. We also have interviews with Next Jump Co-CEOs Meghan Messenger and Charlie Kim, who spoke to us about building a $2 billion company based on culture; Tom Chi – the co-founder of Google X – who spoke to us about rapid prototyping; the CEO of Next Energy Technology who detailed the company’s breakthrough energy technologies; and Jed Emerson, the Godfather of Impact Investing, who reflected on the future of conscious business. Plus: how to shift your workplace culture starting with you, a look at the new job skills needed in the current economy, and what it takes to have people-first leadership.

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