Building a Very Small, Very Loyal Team

August 11, 2011

Chapter 12 – Team Profile: 37signals

37signals employs 16 people including Jason Fried and David Heinemeier Hansson. During the nine years since it was founded only two people have left the company. Keeping a consistent team helps the company stay focused. David is adamant that keeping the team you have is “more efficient, easier, cheaper, better on all accounts.”

Everyone would agree that low employee turnover is a good thing, but making it happen is difficult. Jason and David put a lot of time and effort into figuring out how to make their working environment so good that people just won’t want to leave. Their basic principles are simple: be reasonable and flat.

Be Reasonable

Jason and David try to remove every piece of red tape from their company. One example is expense reports. Many companies have large and complicated processes for filing expense reports. In my career I have had to staple receipts in the proper format to an 8.5 X 11 sheet of paper, print out emails to prove that I paid for shareware, and complete an expense report training program and test before I could submit my expenses.

Jason and David solved this problem by eliminating expense reports. Every employee gets a credit card with no limits and the instructions, “spend it wisely.” This demonstrates how much trust 37signals puts in each member of the team.


“Tons of companies act in very irrational mistrusting ways when it comes to their employees. We take the opposite approach.”

Jason and David run their company on the idea that they should be reasonable. They are reasonable in their processes —they remove any impediments to productivity that they can— and they expect employees to be reasonable in return by not taking advantage of them. If one employee does cause a problem they change the policy for that one person and not the entire team.

Stay Flat

Jason and David strive to make the 37signals team very flat and open. The way they manage their office space is a good example. The team is based in Chicago, and five team members live nearby. However, everyone works from home. David explains why:


“You can’t have a preferred flock. If everybody in Chicago was meeting up every day in the office and talking about stuff and making decisions it would feel very ‘second rank’ not to be in Chicago. We don’t want that atmosphere at all.”

Jason and David have found the best way to maintain an open team and avoid interruptions during the workday is to work predominantly from home. They keep their office space for customer meetings and as a place for the team to meet together if they choose to. They are focus on “letting people work where they feel most comfortable.”

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