While Facebook users pretend to toil away in Farmville, employees at Zynga, the high-flying company that produces the game and others like it, are doing their own toiling in less than ideal conditions—a situation that might come back to bite the company as its big public offering approaches.
The New York Times reports that tensions are running high as the firm’s 3,000 micromanaged employees work long hours to meet data-driven (and, some say, over-ambitious) goals and are given little slack from an intense management team unafraid to berate and eliminate low-ranking performers.
That corporate culture made the company profitable and teed up a widely anticipated plan to go public at a valuation of around $14 billion—which will make fortunes for Mark Pincus, the company’s founder and chief executive, and a who’s who of top venture capital firms that invested in the company early.
But the long-term consequences of the tough working environment might backfire: A hundred and fifty of the company’s employees recently received cookie baskets from a head-hunting firm. That company and others like it expect that talented employees will want to decamp for friendlier workspaces once they have the ability to sell their equity shares in Zynga, a prospect that has other major game developers salivating. Zynga has already seen the negative effects of its hard-charging reputation: A potential deal with mobile game company PopCap fell through due in part to executives’ concerns about Zynga’s corporate culture.
The age-old conundrum of management is how to demand the best from your employees—not always a comfortable process—while ensuring that they take some pride and satisfaction in their work. That’s especially true in industries that value independent thinking and creativity (like software development) and industries with a very competitive labor market (ditto). In fact, evidence suggests that happier employees are more productive, and that in turn means that it’s in a company’s financial interest to make sure workers don’t feel like they’re getting the short end of the stick.
Zynga executives are trying to change the company’s corporate culture by giving employees more time and tools to accomplish their work, easing off tight production schedules, and improving management training. They’ll need to if they want to keep their talent—and their profits—once the company goes public.
The Zynga case is also warning to other companies to take their cultures seriously. If a company that touts the slogan “our work is play” can create an unforgiving office environment, any firm is susceptible to a corrosive atmosphere.