Mario Kaphan, co-founder of Vagas, the largest online recruitment company in Brazil, was interviewed by Fabio Betti , from Corall Consultancy, in the organization’s office in São Paulo.
Despite an average growth rate of 30% per year, Kaphan clarifies that Vagas’ objective is not the financial return but to realize a purpose: “We want to make a difference, contribute to a better world in which people can choose the best companies to work for and who to work with. This moves us!”
During the conversation, the entrepreneur also explained in detail how the horizontal management model is cultivated in the company, his day –to- day challenges, besides revealing, in the end, a curious characteristic that deeply impacts his professional life. He also took the opportunity to give a message to anyone who knocks on his door looking for a job: “For those who believe that professional development is equivalent to climbing in the hierarchy ladder, this is not the right place. Now, for those who believe that professional development is equivalent to growing professionally, this is the ideal place”.
Why was the horizontal management model chosen?
M.K. It is a model in permanent construction. The trodden path starts in practice and then becomes theory. Only recently have we really understood why we are horizontal: we have adopted this model because it offers the most favorable environment to experience shared values and this experience is our competitive advantage.
This is the best way for a community like ours to accomplish its purpose because it is only through our experience that we learn that living our values makes the difference. There is a clear correlation between values and horizontal management, something that we did not realize at the beginning of the model’s implementation.
Intuition led us to this type of management. In the beginning, we sought the experience of shared values and what we learned throughout our journey is that it is during decision-making that our values come to life.
Is it also not possible to experience shared values in a company that adopts a more vertical decision- making process?
M.K. I believe it is more difficult in this type of model because the more complex the decision is, the more it will be forwarded to the highest levels and senior management becomes responsible for decisions which are based on their values. Of course, this does not mean that people do not share experiences and values, but they do not have the opportunity to make those values, in fact, come to life.
What is interesting about Vagas is that we do not have a list of values nailed to the wall like other companies.
As the company does not have a clear guide, how do you consider the diversity of values that exist in each employee?
M.K. When speaking about experiencing values, we talk about ethics and how each value is experienced. For instance, when talking about a value such as honesty, it manifests itself in several decisions and eventually is passed on as information that interests the client, the community and so on.
It is at this time that values in fact take shape and that we build the ethics of our community. Therefore, what matters is not the establishment of a collection of core values, but rather what is important is the experience of what happens on a daily basis. Since there is not a selection of problems to be solved we are faced with new problems every day and that is when values are manifested.
What major advantages has this model brought to Vagas.com?
M.K. The company is not obsessed with growth or profit. These results are seen as consequence of a well-done job. This has everything to do with the model which is focused on experience.
Vagas.com has grown by an average of 30% annually in its 17- year history and never less than 10% — which we achieve in 2015 and was highly celebrated due to the crisis.
The company does not deal with a series of inefficiencies that are present in other corporate environments, such as competition or withholding information.
Another interesting aspect is that during our selection processes we follow the principle of only hiring people who have something to teach us.
In fact, this principle may not occur as much in a vertical environment, because people may resist attracting such a good candidate that could threaten their future career development…
M.K. Exactly. I always reinforce that Vagas is an imperfect company and that, as elsewhere, certain things do not happen in the ideal way. However, in our environment, a virtuous cycle is created because people have more freedom, autonomy, respect and that makes the company work better.
I emphasize that the basis of horizontal management, and its most complex feature, is the consensus building process. When it happens, it is absurdly efficient and pleasurable, and it brings a lot of innovation.
“The basis of horizontal management, and its most complex feature, is the consensus building process. When it happens, it is absurdly efficient and pleasurable, and it brings a lot of innovation.”
What are the major disadvantages and what does not work in the model? How to improve these aspects?
M.K. We simply believe more and more in this model and bet on it because we understand that it provides the basis for a stronger company.
Of course, during the building process many difficulties arose.
Attracting people who want to live this experience is not a simple and hiring the wrong people is problematic.
For example, during a selection processes it is very frustrating not to attract great talent, because they do not identify with us and do not want to work horizontally. It is equally disappointing when the person does not adapt because every dismissal process causes suffering.
Since there is not a specific boss, how do dismissals happen?
M.K. The dismissal process must be kept confidential, considering both the person’s interests and the fact they are being dismissed or not.
At first a person or a group takes the initiative to start the dismissal and sends it to HR that examines the situation.
If we observe that it does not make sense to keep the employee in the team, the group meets and this information is shared. This experience is always absurdly painful because sometimes they are friends dismissing friends.
The synthesis of our model is to bring people together who work doing what they want, but also need to be aligned. Everyone has everything to do with what happens. People do what they want because we assume that their purpose is aligned with the company’s purpose.
I would like to understand a little more about consensus. Sometimes it takes a long time to reach consensus or it simply does not happen. Does the company end up missing opportunities because of that?
M.K. I am going to tell an interesting story in which I use Frederic Laloux as a reference. Vagas was illustrated as a case and won a prize at the MIX Mashup Congress in the United States. On the event’s website, someone commented on my article detailing the company’s model saying that I should get to know Laloux book, “Reinventing organizations”.
In fact, there was an article by Laloux in which he analyses several cases of horizontal companies and, according to him; this type of organization must rely on advisors, tie-breakers when consensus do not happen. Laloux believes that in consensus-based companies, a person’s ego can break the entire company.
Do you have this advisor role in the company?
M.K. No, because even if we did, our model would be broken, as we would be delegating decisions and, consequently, the experience of living our values. Vagas is horizontal, based on consensus and we may even have informal organic advisors, but there is no one with that role.
The decision-making process is as follows. It is not that 160 people — total number of employees — are consulted in each small decision, but in some way they are. For example, let’s say that a team of six people responsible for their own management discusses among themselves and makes the decision of hiring five more employees. They discussed, defended their ideas and came to that decision. By the way, I highlight that teams can make decisions involving budgets, so this scenario is possible.
So, this group decided, reached consensus and, then gave visibility to this consensus, which is the key to the model. After this, the other employees will learn that this decision has been made and, because the motto of the company is that everyone has to do with everything, you can be sure that there will be someone waiting at this team’s door to initiate a controversy (laughs). In fact, when someone sees any possibility of improvement in the company, it is possible to open what we call controversy, which must be then brought to consensus.
This happens, because hiring five people is a lot and a controversy like this must be brought to consensus. That is, the consensus of the group of six people was assumed because it did not involve the 160 people that participate in the company. Any of these 160 people can question and, then, a new consensus will have to happen. This will get to HR, be analyzed, then it will pass through Finance, and so on.
At that point, the group of six would learn that, for such a decision it is necessary to bring others into the process, such as a HR leader. Do we have leaders? Yes! What we do not have is a delegation of leadership. In that case, the leader would be the person that the group of six believes has the most potential to help them making that decision. It would also be possible to ask HR or Finance which leaders should be involved in that decision-making process.
With that, imagine that this process would have eight people and, after a lot of discussion, these eight people reach the same decision. Probably, after this, there will be no controversy. That is why decisions are made by “suitable” groups of people. This “suitable” is, obviously, self-regulated.
Another example is someone who comes into the company and starts consulting many people for every small decision.
Someone will end up saying: “Stop it! Decide by yourself”. That is, there is even one person consensus. The logic is the same. Here at Vagas, in our second version of the intranet the consensuses will be published on our homepage daily. People will be able to keep track of what happens in each area and, thus, it will be possible to open the controversies even more easily if necessary.
Anyway, closing the story with Laloux, when ending the lecture I gave at Mix about Vagas, I was approached by him with his book when I was leaving the stage and he said that we were talking about the same things.
In fact, we recognize a big similarity between his book and our model, with the difference that at Vagas there is no the delegation of this role, which happens naturally.
A very selfish person, with a destructive profile, working in a consensus based organization, ends up being rejected?
M.K. Yes. Imagine someone who repeatedly presents this profile in meetings. I point out that, on these occasions, it is normal for the discussions to be heated and it is great that they are. But there comes a point that you will feel the real pleasure of losing a good discussion. However, when the ego imposes itself, the meeting can be ruined.
When the ego is not part of the equation, it is very pleasurable. It is possible to advance in the game of ideas, since everyone involved has the clarity that they are constructing a solution and suddenly, it does not matter whose idea it was, who proposed that in the first place.
In the past, for example, we went through difficult moments, even lost some people. However, we had the opportunity to find others who are extremely aligned. I have just left a long meeting, and it was these people who made it happen as it happened. It was very strategic, with discussions about the future of the company and I did not say anything at all.
You described the importance of using controversies to open conversations and explore new possibilities. Now, where does the shy person stand in a company in which controversy is such a strategic tool?
M.K. They bloom and it is beautiful to see it happening!
So shy people adapt their personalities or end up teaming up? How do they function in this model?
M.K. First of all, we have a huge respect for people. What cannot happen is misalignment with the model; you cannot believe or say “ I do what I want and nobody has anything to do with this”.
We have people who eventually transform themselves during meetings. Employees who are really shy, but suddenly speak out and turn out to have very structured opinions. And they are really heard. On the other hand, there are also extrovert people that do not participate actively in meetings.
As long the person really knows the model and embraces this form of management, it does not matter if the person is shy or not. You only need to know that the other people have to do with what you do, that whoever sits next to you may question directly and this is part of the game. And that however shy they are, they can and must do this kind of questioning to build consensus.
“ We are not obsessed by the financial return and our focus is not to distribute dividends. We want to make the difference, contribute to a better world in which people can choose the best companies to work for and the companies, the best people to work for them”
In the more conservative corporate models, employees are usually recognized with positions and promotions. Since you are unable to offer a career plan, what can you offer employees? How does professional recognition happen in this model?
M.K. For those who believe that professional development is equivalent to climb in the hierarchy ladder, here is not the right place. Now for those who believe that professional development is equivalent to growing professionally, this is the ideal place!
From the compensation point of view, I highlight that we are aligned with the market. For example, if someone has a director profile they will be paid as a director would be. Compensation follows contribution and should be internally fair. However, at Vagas they will not take on such a position, although they often have this leadership role. It is important to emphasize that this role may even look like a management role, except for the fact that this person is not in charge.
What is your role as the company founder, inspirer and advocate of the model since you are not the one who hires or dismisses people?
M.K. I do not do that, but I take part in the controversy processes that generate hiring and dismissals. Anyway, what I do on a daily basis is simply exercising my role of having everything to do with everything. I have a leading role in various subjects and this is part of the model. However, I have no voice of command.
My role is not to order anything, but I have the obligation to open the controversies I consider relevant and I do this with all my conviction. Now, what is interesting is that I am not the only one doing this.
The critical mass of people who do this expands more and more. As we hire a lot better than in the past because we were learning from our mistakes, it is remarkable how our new employees exercise this right from the start.
For example, the two people who conducted today’s meeting: one has been working here for a year and the other eight months.
It is very exciting to see the organization maturing and the exponential growth of our experience living the model.
In its 17 years of history, Vagas.com has reached the respectable position of the largest e-recruitment company in Brazil. What were the major decisions and successes that led you to this position?
M.K. We have several interesting aspects. One of them comes from the fact that the company was born to create solutions and therefore you need to know how to listen, try to understand a problem and translate it into a product. In addition to this capability, you must have competence to develop such a product. In the beginning, we were very small and did not invest in marketing. We have grown by word of mouth and gaining trust. This trust has everything to do with the recognition of experiencing values, which demonstrates the relevance of our model.
So, it all happened partly due to intuition.
Basically, Vagas.com was born as a space where we did things that made sense to us. Over time, we have become the largest employment website in Brazil with a market leading software. The virtuous cycle has happened! As the company was very small, it would only work with the real engagement of people. For a very long time, we used to joke that in the organization people “wore” various hats, such as the developer, commercial, and so on.
Like what happens in startups?
M.K. Exactly, except for the fact that as soon as a startup is born, a CEO is already defined and, with it, a chain of power.
In addition to the CEO, startups are often born with other hierarchical levels already designed…
M.K. Yes. In that case, what is often in the way is the investor himself. He is interested in the return and that depends on pre-established goals. Suddenly, instead of realizing the organization’s purpose they focus on the return on the investment.
I remember when we talked about conscious capitalism with Vicente Gomes, my partner at Corall, and you said that you did no see yourself as a capitalist. Can you talk a little about it?
M.K. Of course I am a capitalist because I make a profit, but not in the sense of the purest conception of capitalism.
I am a great advocate of free initiative and I think it is what really makes the difference in the world.
Vagas’ objective is not profiting, but to realize a purpose. We are not obsessed by the financial return and our focus is not to distribute dividends.
We want to make the difference, contribute to a better world in which people can choose the best companies to work for and the companies, the best people to work for them. This moves us!
You studied electronic engineering at Polytechnic School at USP. If you met yourself just after you graduated,what would be your main advice?
M.K. I would say go faster (laughs). When I graduated we were living in a full dictatorship. Despite having had the privilege of taking part in the construction of the computer Industry in Brazil, I was not fully living it because of the period in our history. Who knows I could have had more clarity, participated in more revolutions…
In spite of this, I love the path I took, and I believe I have always been a very coherent person. Since the beginning I have had a lot of freedom to invent, which is directly related to a problem I have. I am a person without memory; even though many people do not believe me.
Do you feel comfortable talking about this characteristic?
M.K. I do not have any problems talking about this. My case is extreme. For example, if tomorrow someone asks me what we talked about during this interview, I will not know how to answer that.
I attend a meeting and the next day I do not remember the decisions that were made.
The interesting thing is that this puts you in the present all the time…
M.K. Absolutely. That is why I am the kind of person who does not hold a grudge. What a good thing! (Laughs) This allows me to put myself in this creative posture almost all the time and this adds a lot. And here I am in an environment that knows and respects this.
But no one takes advantage of this; by saying something like “Do not you remember that yesterday you gave me a raise”? (Laughs)
M.K. Of course they do (Laughs). Actually, the most common phrase is “I told you so”. And the least common is “You told me that” (laughs). Sometimes they are right, but that is part of life… I have experienced this since I was little.
What is interesting is that despite having brought a certain “limitation”, this characteristic has put you more in the freshness of the present.