EP 256 – The Social Contract: Rethinking the Balance Between Owners and Employees Michael Walsh | Freedom by Design – Part 5

Michael Walsh - Paper Napkin Wisdom - You don’t build a business. You build people—and people build the business

In the fifth installment of the Freedom by Design series, Michael Walsh distills a transformative idea on a literal paper napkin: The Social Contract. It’s a powerful reframing of the unspoken expectations that define the relationship between companies and their employees. More than a list of responsibilities, it’s a shared agreement—designed not just for performance, but for mutual growth.

Michael, founder of Walsh Business Growth, has long championed the notion that businesses should be engines of human flourishing—not just economic engines. In this episode, he puts that belief into structure, separating the contributions of the owner/company and the individual employee, and then aligning them toward a greater shared purpose. 

“You don’t build a business. You build people—and people build the business.” —Michael Walsh, Ep. 256 

The left side of the napkin reflects the company’s obligations: generate individual and collective results, build a strong culture, and move meaningfully toward a larger purpose. The right side lists what employees receive: compensation, growth, meaningful work, and meaningful relationships. It’s not a transaction—it’s a relationship. 

This Social Contract offers a practical and ethical lens through which leaders can assess whether they are holding up their end of the bargain. Are they truly building a culture that supports progress, or just expecting loyalty in exchange for pay? Are they offering meaningful work—or just tasks? 

“We don’t just hire hands. We hire hearts and minds. And we better create space for them to grow, or we’re breaking the contract.” —Michael Walsh 

Michael also notes that this framework becomes especially vital during periods of business change—like scaling up, restructuring, or navigating economic uncertainty. Without clarity and alignment, the social contract breaks down—and with it, the culture and performance. 

Let’s dive into the 5 key takeaways from this thought-provoking episode. 

5 Key Takeaways from Michael Walsh – Ep. 256 

1. The Social Contract Should Be Made Explicit 

Too often, company-employee expectations are implied, vague, or even contradictory. Michael argues that this napkin makes the implicit explicit. It lays the groundwork for transparency and accountability on both sides. 

Take Action: Create your own “Social Contract” with your team. Are you aligned on what’s expected and what’s offered? 

2. Business Results Are Both Individual and Collective 

Owners expect individuals to perform, but they must also foster collaboration to produce collective results. Performance isn't just about personal metrics—it’s about how the team wins together. 

Take Action: Leaders: Measure and reward team-based outcomes, not just individual ones. 

3. Culture Is a Leadership Responsibility 

Michael reminds us: culture doesn’t happen by accident. Leaders are responsible for shaping an environment where purpose, values, and behaviors are aligned. 

Take Action: Audit your culture. Is it intentional? Is it being reinforced daily? If not, it’s time to build it on purpose. 

4. Purpose Isn’t a Poster—It’s a Progress Metric 

The last item on the owner/company side is about “making progress toward the company’s larger purpose.” Michael emphasizes that this isn’t fluff—it’s a metric. If employees can’t see progress toward purpose, they disconnect. 

Take Action: Regularly connect work outcomes to the company’s stated mission and purpose. Make it visible. 

5. Employees Want More Than a Paycheck 

On the employee side, the contract highlights the hunger for growth, meaning, and connection. Compensation alone won’t create loyalty or engagement. 

Take Action: Build systems that enable professional development, connect people to meaningful projects, and foster real human connection at work. 

Michael’s “Freedom by Design” series has taken us on a journey through leadership, impact, and organizational integrity. In this final chapter, he invites us to consider the human operating system of our business—and whether it’s built on a sustainable, reciprocal foundation. 

Want to Connect with Michael Walsh? 

🌐 walshbusinessgrowth.com 🔗 Michael’s LinkedIn