Employeneurship: Employment Meets Entrepreneurship
Recently I was at a book launch on TMC's way of working. TMC is a pioneering consulting firm on our Bucket List. I realized we had never properly featured their unique way of working on our blog. That changes today.
First, some history
TMC was founded in The Netherlands in 2000 by Thijs Manders. It is an international high tech engineering consultancy which serves customers around the world. Their 1200 people, of 65+ nationalities, offer research, development and engineering in 20 fields of technology.
Their expertise ranges from nanotechnology to civil engineering, from data science to mechatronics, and much more. Their people join long-term projects at the 'technological core' of clients. The real deal, so to speak.
But more interesting to us is their unique approach to running the company. A recently published book, "The Racing Stable" offers an insight into their approach.
Its eye-catcher? Their Employeneurship model.
"Our people aren't employees, and they aren't entrepreneurs. They are employeneurs", says founder Thijs Manders. Our idea from the very start was "To offer my engineers a permanent contract and a share in my company's profits. To invest in their personal and professional development. To build a relationship with clients we send them to."
And he did. Their Employeneurship model revolves around five core elements.
1. Autonomous business cells
The 'Employeneurs' work in business cells. These are small, self-operating business units with full profit and loss responsibility. As 'The Racing Stable' author Marcel Metze writes: "TMC's business cell structure [...] could be described as a way to organize the company into product/market combinations that are recognizable to the client. But [...] there are more ways to look at it. The cells are also congregations of experts in a similar field, a social environment and a home base."
Business cells, ideally, consist of around 50-70 employeneurs. Plus, a cell director who leads the cell, a couple of business managers who find projects for the employeneurs, and one or more office managers who provide support.
This model is inspired by Eckart Wintzen's 'Cell Philosophy' which we witnessed elsewhere at progressive organizations like Finext, Rebel Group, Semco, VkusVill and Buurtzorg). The overarching idea is that as a team/business unit/company grows bigger than a specific number of employees it splits into two.
This principle has proven to be resilient, flexible and strong. And it's no different at TMC. The company has survived three significant crises (the dotcom bubble, the financial crisis and the pandemic).
To foster cohesion and a sense of community, TMC's cells organize a lot of social activities. For example, their pizza sessions are well liked.
"They usually start at 5pm, right after work. The company pays for the pizzas, the employeneurs organize the sessions [...]. They can be initiated by anyone, from cell director to employeneur. They can focus on anything." Recent topics have ranged from taekwondo to Industry 4.0, to presentation techniques and digital technology.
2. Individual profit sharing
The second pillar of Employeneurship is an individual profit-sharing program. It's liked because of its transparency and a feeling of fairness in the process. It’s satisfying to TMC members, and a big shift from the secrecy that poisons some traditional consulting firms.
Each month, employeneurs receive an Excel spreadsheet with a personal profit-sharing overview. It includes fees charged to the client, hours worked, fixed salary, personal costs (such as the use of a leased car) and the profit generated. The employeneurs get an agreed percentage of that profit.
This share differs depending on performance, seniority and the amount of entrepreneurial risk an employeneur wants to take. It increases over time. Where an employeneur might start at 10%, this share can rise as high as 50%. As you can see, this is where the 'entrepreneurship' in employeneur comes in.
3. A long-term relationship
The 'employee' part of the equation is based on the long-term relationships TMC forms with its people. For example, the company offers permanent employment contracts from the start. There are no temporary or project-limited contracts. And the employeneur enjoys a secure income through a market-rated salary.
They work with business managers to find assignments which use their expertise and offer development in areas they desire.
TMC prides itself on offering staff a 'personalized development journey'. It has set up the so-called YOUniversity. Each employeneur has their own "personal center of education, which they can fit up and organize in a way that suits them best".
Starting with an "Employeneur Analysis", new employeneurs and their coaches create individual plans for their growth. Then, a support system kicks in. It includes:
- Personal coaching on an ongoing basis (~every 7 weeks)
- Competence groups and pizza sessions
- A wide variety of internal and external training courses
- A personal development budget of €2,000 per year
- Mentoring by senior employeneurs
- Regular talks with business managers about ongoing and future projects
All in all, this is an elaborate personal development approach to ensure one of the main drivers of motivation, mastery, is tapped to the full.
5. Entrepreneurial lab
The fifth pillar of the Employeneurship model is the entrepreneurial lab. Director, Lotte Geertsen, explains what the lab aims to achieve:
“It is technology married to liberal arts, married to the humanities, that yields the result that makes our heart sing, said Steve Jobs, who was the embodiment of interdisciplinary thinking.”
“Combining careers to subsidize your skill development, make friends in different circles and discover real innovation by identifying where ideas interact should be possible for every professional, and for employeneurs at TMC.”
“I encourage every professional and employeneur to think about these questions: How do you treat your career? How do you combine a project at the client with being project leader in your tech startup in TMC's Entrepreneurial Lab?”
This lab provides not just a social environment, but also a physical space (full of tools and equipment), financial means (development budgets and awards) plus entrepreneurial coaching and guidance.
"Our people aren't employees, and they aren't entrepreneurs. They are employeneurs"
Challenging consultancy convention
The Employeneurship model gives people at TMC the opportunity to think and act like an entrepreneur, while enjoying security of employment. For many, it offers the best of both worlds.
And it works. People enjoy working for TMC. The employee churn rate (25%) is way below the industry average (34%). It's one of the reasons for their continued international growth. They have successfully developed the Employeneurship model and turned it into a distinctive feature in consulting circles.
The big question: Will traditional firms follow suit? Or does the radical transparency at TMC challenge the status quo too much? I'm afraid I know the disappointing answer to that question...
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The "profit sharing" component is always intriguing to me. It is certainly more progressive than any model based on hours worked versus impact made. How does the organization determine the criteria for the profit sharing? If it's "contribution" how is that defined? Does the team make that determination? Is it a company-wide definition that applies to all projects? Who evaluates the contribution made by each team member? I adore the combination of autonomy and real accountability that it can breed but the devil is in the details. Thanks Pim.
It would be interesting to know the average churn rate in the rest of the bucket list. Do you know it?
My experience is that junior/medior level consultants usually leave after a few years (here apparently 4 in average) to one of their client, traditional firms in their vast majority. So maybe the employeneur model has its limits too...
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