BRIAN KENNY: The saying, “Find a job you love and you’ll never work a day in your life,” was probably coined by somebody who was really happy at work. According to Pew Research, the number of people who feel that way has steadily declined since the pandemic. We know that happiness at work has all kinds of benefits for both workers and employers. Happy workers are healthier and more productive. They’re better at solving problems, and they’re willing to go the extra mile. All of which leads to lower absenteeism, higher retention, more satisfied customers, and not surprisingly, stronger financial performance. Everyone wins when employees are happy. So why isn’t every employer making happiness the top priority on their job?
Today on Cold Call, we welcome Professor Susanna Gallani to discuss the case, “Lanco Medical Group: Fostering Happiness For Growth.” I’m your host Brian Kenny and you’re listening to Cold Call on the HBR Podcast Network.
Susanna Gallani studies performance management systems and explores the interplay between monetary and non-monetary incentives. She is a second-time, maybe third-time repeat customer on Cold Call. It’s great to have you back, Susanna.
SUSANNA GALLANI: Thank you, Brian. It’s great to be back.
BRIAN KENNY: I think this’ll be great. Let’s just dive right in. I’m going to ask you to tell us what inspired you to write the case? What is the central theme and your cold call to start the discussion in the classroom?
SUSANNA GALLANI: This is the quintessential HBS story. I was pitching a session in the executive education courses I participate in. I was talking about my work, and the interplay between monetary and non-monetary incentives. Recently, I’ve been focusing on how that interplay plays differently for different people, and how the preferences of people in any organization vary with respect to what motivates them. I was giving my little spiel in class and talking about my current work. After class, one of the participants came down the steps with her smartphone, showing me that that’s exactly what they were doing, or trying to do, in their organization. That was Lissete Hermida, which is the protagonist of our case and the co-founder of the organization.
BRIAN KENNY: Okay. How do you start the discussion now, when you’re doing this case in class?
SUSANNA GALLANI: Well, the first question we ask our students is what is the goal? What is the problem that Lissete is trying to solve? And what is the ultimate goal of the organization? Because this is not just about making a workplace a happy place to be. She has a very, very specific and very precise business goal, which is growing fast in a market that has a ton of potential, but also a ton of risk and a ton of uncertainty.
BRIAN KENNY: Yeah. Let’s talk a little bit about the company, what they do and the market that they’re in. Can you describe Lanco’s business?
SUSANNA GALLANI: Yeah. Well, they are a pharmaceutical intermediary, if you will, in the Central and Latin America regions. Well, if you ask them what they do, they will tell you, “We deliver health.” That is their mission and their north star. In order to deliver health, of course you have to go through pharmaceuticals and medical devices. They predominantly started working with what they call their institutional channel, which is working with governments. In Latin America, a lot of the medications are provided through government contracts. That was their start. But lately, they’ve been growing into, first of all, multiple countries, which is one dimension of growth for them. In addition, also into multiple segments. So much so that they’ve started working with private distributors, pharmacy chains, and so on. In addition, they’re actually now developing some of their own branded generic medications in order to provide the actual medication, not just the contract, through the supply chain.
BRIAN KENNY: How large is Lanco? What’s the size and scale of their operation?
SUSANNA GALLANI: They’re relatively small, but they’re growing so fast. At this time, they are about 55 people in total. But they’re planning to double their size in the next year.
BRIAN KENNY: Okay.
SUSANNA GALLANI: They’re really on a trajectory that’s very steep.
BRIAN KENNY: Being able to scale the culture and things is going to be really important. The case does start to dive into that. Why did they choose to prioritize happiness as one of the things that they were focused on?
SUSANNA GALLANI: Yeah, that is actually the second question that we discuss in the case. Because the idea is what’s the importance of the human capital? In this company that is growing fast, that is dealing with multiple different constituents. How do you balance the need to attract and retain qualified and skilled talent, but also somebody that will follow your journey and drive the change with you when you are so decentralized? Because these people are literally in different countries. Lissete cannot be, other than on a Zoom call, present in every single location. She has to leverage their local teams to drive this change and drive the growth.
BRIAN KENNY: Yeah.
SUSANNA GALLANI: This is a very specific type of business where you need people that understand not only the science behind pharmaceuticals, but also how to deal with their respective channels. When they deal with the institutional channels, they need to understand what are the bureaucratic processes? What are the forms? What are the agencies through which you work in order to get the approvals to operate in a certain country? Or the license to procure pharmaceuticals for the healthcare system, and so forth. It’s a very, very bureaucratically intense business. In addition to dealing with private customers, pharmacy chains, which are regular companies. So very different set of skills in that particular interaction. Again, growing fast, and developing a set of skills and relationships. The relationship with this counterpart, it is very central to them. Lissete and her team really, really want to keep the right people around in the organization for the long run.
BRIAN KENNY: What was the method that they used to gauge happiness with the employees?
SUSANNA GALLANI: Well, they leverage a third-party provider. It’s a company called Mide La Felicidad. My Spanish is not great. This company had developed a survey instrument to gauge not only the regular engagement satisfaction at work, which there are so many well-established tools in the market. But they had this additional element, which was gauging the level of happiness of the employees not only at work, but in life. That was really important for this company when they developed the instrument, but also it was important for Lissete because she realized how much the life at work and outside of work is intertwined. She realized how much she could leverage opportunities to contribute to her workers’ happiness outside of work, and how that would eventually reflect in their performance, and in their loyalty to the company, and in their drive to move the company forward.
BRIAN KENNY: The case actually follows them going through multiple iterations of this survey. Maybe we should start at the beginning. I’m curious, what did they learn at the beginning? What were some of the gaps that they discovered that were surprising to them?
SUSANNA GALLANI: Lissete would always tell you, “Don’t ask a question you’re not prepared to hear the answer for.” In fact, the first time around, they were very, very surprised. If you met Lissete and her husband, who is the COO of the company, they are very what we would call people people. They really care about people in general. They have a high EQ. They thought that they were already doing many great things for their workers. For example, differently than other companies in the region, they would offer them free healthcare plans for them and for their families, which is not a normal thing to do in that region. They would provide fresh fruit in the morning at the office because many of their workers didn’t have an opportunity to eat nutritious food. They organized a company trip every year in some nice location. Then they realized that these were not only not appreciated as perks, but they were also interpreted as entitlements. They were doing this to make their workers happy and hoping that they would be grateful in return. She actually recalled during our interviews how she felt they were even cruel towards her in saying this was not at all what they wanted.
BRIAN KENNY: Yeah.
SUSANNA GALLANI: A rude awakening in some ways. But it led her and her team to think deeply about, “Okay, what is it that we need to do differently because we’re missing the mark?” Then they reacted to some of those things. They did again, and they found that some things had improved, but some things didn’t move. In fact, they went through three consecutive iterations. Some of these needs that the workers are reporting as not being met remain unmet.
BRIAN KENNY: Yeah.
SUSANNA GALLANI: The final question for Lissete in the case is what are you going to do about that? Are you going to continue to invest? For example, one of these items is the need for better financial education.
BRIAN KENNY: Yeah. I paused on that one for a minute because it seemed strange to me that that’s one of the things that they would be offering as a perk to their employees.
SUSANNA GALLANI: Yes. In fact, one of the questions I had for Lissete is, “Is this your responsibility—”
BRIAN KENNY: Yeah.
SUSANNA GALLANI: “—as a company leader, to provide financial education for your workers?” She felt that, to some extent, it was because this was something that was stressing her workforce. These are people that may not, in many cases, have had a formal education in finance and other related topics. They earned their salaries, but they don’t know how to, for example, invest them in something that will give them a living wage when they retire. These are causes of stress, which can get in the way of the work that they are supposed to do for the organization. She provided channels through which they could strengthen the financial education of the workers. Unfortunately, this doesn’t seem to have worked yet. That is still a need that comes out, even in the third iteration of the case, as an unmet need.
BRIAN KENNY: Yeah. You’d described them earlier as having a high EQ and really caring about their employees. I would imagine that it’s almost a little hurtful if you are responsible for a lot of these people and you think you’re doing right by them, and then you find out that you’re missing the mark in a number of ways. Did Lissete talk about how they dealt with that as the providers?
SUSANNA GALLANI: Yes. They decided that feeling hurt and taking offense was not really leading to anywhere good.
BRIAN KENNY: Yeah.
SUSANNA GALLANI: What they did, they started talking a lot more in detail with their workers about what is it that they need, what ways they would want these needs to be met. What vehicles should the company use to help close that gap? They have engaged in a very honest and open conversation. Which, if you think about it, it takes courage on both sides. Because in many organizations, I’m sure that if we poll five random organizations, pick them out of a lineup, and we ask the workers if they are receiving things that they value in exchange for their work, we would be surprised by the responses. The question though is would these people feel comfortable telling their leadership that they are not getting what they want? That they would rather have something else. Let’s take a company trip, for example. How many people would feel that they have to go, and not that they really would like to go-
BRIAN KENNY: Yeah, yeah.
SUSANNA GALLANI: … to the company trip. These are those dynamics in an organization can be a little bit difficult to navigate when you don’t have a base of trust and comfort to talk about these things openly.
BRIAN KENNY: Yeah. I’m sure a lot of our listeners can relate to this. I’m just thinking about even with my team, as we try to think about what our outing is going to be each year. We do an outing. We want to take everybody out of the workplace and let them have fun. It’s so hard to find an outing that everybody wants to do. In fact, I don’t think we’ve ever successfully done it. We’re not a large group, we’re smaller than Lanco, so I can imagine. Also, does this get more complicated as you try to determine what makes people happy in one country versus another? Because we’ve got cultural differences at play now, in terms of what people’s expectations are.
SUSANNA GALLANI: Absolutely. Not only cultural differences, which exactly right, they are there for sure. But there’s also regulatory differences.
BRIAN KENNY: Ah, yeah.
SUSANNA GALLANI: There are things that, in certain countries, you just cannot give your workers. Or certain things that, in certain countries, you must give your workers. That is no longer a perk, it is actually an entitlement. She has to navigate that complexity, too.
BRIAN KENNY: Yeah. Is there a certain point at which they thought to themselves, “There are some things where we just have to be disengaged? We just can’t make everybody happy on every front.”
SUSANNA GALLANI: Yes. In fact, that, in line with the work that I’m doing more in my own research, reinforces the idea that offering these perks, or rewards, or personalizing the incentive systems is also a sorting mechanism. There are certain people that will not be happy with the set of things that the organization is willing or in the position to offer. That is a lost battle. Those people will likely leave the organization regardless, because there is nothing that Lanco can do or is willing to do that will meet their needs.
BRIAN KENNY: Yeah.
SUSANNA GALLANI: This is also a way to understand who is a good match for the organization and who isn’t.
BRIAN KENNY: Yeah. How important is it in these situations, and not just at Lanco but at any organization, to have a really strong set of core values that guide you in those decisions that everybody understands?
SUSANNA GALLANI: Oh, it’s very important. It makes things easier as well, because it’s easier to align people around the same set of ideals and values, and especially knowledge-based work. We put a lot of attention on the mission, and the core values, and why are we here. It is a rallying cry and an alignment mechanism throughout the organization. But what you get in exchange for your work may or may not be related to the values. There is a little bit more of a daylight there sometimes. You might be very motivated by compensation or financial rewards, and somebody else sitting next to you might be motivated by recognition, and they might share the same core values.
BRIAN KENNY: Yeah. As an employer, or even as a manager, how do you think about that? How do you sort through that? Is there a methodology that would help you determine what’s going to motivate this person versus that one?
SUSANNA GALLANI: Yeah. This is a much longer program, if you will.
BRIAN KENNY: Well, we have plenty of time, Susanna.
SUSANNA GALLANI: But it is something that I’ve been thinking about for quite some time now. I’ve been discussing these ideas with our Executive Education participants, to just gauge their reactions. The first thing is ask them. We haven’t been asked. In our culture at work, we rarely are asked what is it that motivates us. So much so, that many of us have never thought about it. Not to the degree that you would need to have thought about it to be able to make an educated choice. I always use provocatively the term deprogramming, because we have been ingrained in a way of thinking that the way that we are going to get appreciated by our organizations is through a very small set of options. There’s also a fear of losing the fairness, because I might get something that is very valuable to me, but it doesn’t compare in market terms to what my colleague is getting. We have to really rethink how we think about rewards and how we think about motivation within an organization. This takes a longer time, but the starting point is to start having that conversation. And being willing to be dynamic about the response to that conversation. Maybe the first time that somebody asks me what motivates me, I will respond based on a mental image I have of myself. But then, when I experience those rewards in exchange for my work, I might realize that maybe that’s not what motivates me. Maybe I need to rethink that. I think there needs to be a journey within the organization toward creating an environment in which people really understand what motivates themselves to begin with.
BRIAN KENNY: I can imagine that would change over time for individuals. What motivated me a couple of years ago might not motivate me in the same way today. That’s a conversation that has to continue. You can’t have it once.
SUSANNA GALLANI: Absolutely. It does, it does. I have actually evidence from other organizations in the healthcare industry I’ve been speaking with. Young physicians that come out of medical school with a ton of student debt and wanting to start a family have a different priority set of preferences, compared to a more senior physician who has now grandchildren that they don’t get to see because they don’t have time. So they would rather have flexibility in their schedule, as opposed to maybe the additional call shift to get paid a little bit more. Certainly, these preferences change because we as people evolve in our lives and things happen to our lives. There’s a contextual factor that
