What Employees Really Want Beyond Pay: The Social Contract with Michael Walsh

Jun 15, 2025

5 min read

Updated: Oct 29

Why do good people leave, or stay and go through the motions? Michael Walsh says owners of service businesses are working from an old deal. The boss says do your job or you won't get paid. That deal is gone, because the results now depend on the thinking of knowledge workers, and you cannot force someone to be creative. Michael's napkin replaces it with the social contract. The owner wants four things from each person. Each person wants four things back. Pay sits at the base, and professional training and growth matters just as much. Most owners only put a fraction of this in the offer letter. The rest still happens, unspoken. For an owner who feels their freedom shrinking as the team grows, Michael argues this contract is where it starts coming back.

Inspired by Paper Napkin Wisdom Episode 256 with Michael Walsh pt 6.

Why I'm the boss, do your job no longer works

Michael's work is aimed at established owners of service businesses, or businesses with a service component. The goal is freedom in the business, from the business and because of the business. As a company adds people, complexity rises, structures get outstripped, and the owner's freedom goes away.

He contrasts two ways of seeing a company. One treats it like a machine that exists for the owner, with people as cogs. The other treats it like an intelligent ecosystem. His premise for growing a business today is the second.

The reason is a shift in power. It used to sit with the boss. Now it sits with the intellect of the teams who actually generate the result. Michael's example is blunt. Under threat, he could be forced to lift a rock. Nobody can be forced to be creative that way, because the brain freezes. People need an environment where they are not worried about survival and can trust the people they work with. I summed it up. You cannot get freedom from your business while running command and control, because you end up running around protecting the organization from people who are just going through the motions.

What owners want from every employee

Michael lists four things the company wants, and they build on each other.

An individual result. This is the most basic expectation of any hire.
A collective client result. Can this person learn to work with others to produce results bigger than any one person could, for larger client situations? Many projects need more than one person, and a growing company gets more of them.
A stronger corporate culture. When people learn to work well together, culture is the spinoff, mostly from the second item.
Progress toward the company's larger purpose or mission.

I drew out the sequence. Individual results feed collective results, which build a strong culture, which moves the company toward its purpose. In that sense culture is not cupcake carts and coffee in the lobby. It is people producing results together.

What employees want in return

The other half of the contract also has four parts.

Compensation. Everybody wants to be paid, and if this is wrong, nothing else matters. If it stops there, though, the relationship is transactional, the old industrial model of work, get paid, go away. When pay is all someone gets, they push for as much of it as they can.
Professional training and growth. Michael says people want to grow their careers as much as they want the money. Growth leads to better jobs and more money later.
Access to meaningful work.
Access to meaningful relationships, with colleagues, clients and suppliers.

He treats these less as steps and more as layers that all have to be present. With pay and growth in place, meaningful work becomes much more real, and meaningful relationships develop over time as people work together. If either of the first two is missing, everyone is too worried about them to care about the rest.

Why the second item on each side matters most

Michael underlined number two on both lists. Individual results are already expected, and pay is table stakes, as I put it. The real growth sits in the second line.

On the owner's side, most people are not very skilled at working in teams, and owners need them to get better at it. On the employee's side, people want to grow their careers. Put the two together and something useful happens.

Meaningful work turns out to be easier to provide than owners fear. If the commitment is to grow the person, every assignment can be geared toward that, even the ones they are not thrilled about. Michael's example is an architecture firm where everyone wants the cool projects. If people are committed to professional growth, even the mundane projects become interesting when they build skills.

He also says the first two items on each side should be spelled out in an agreement. Items three and four are almost entirely qualitative. You can still tell whether they are present.

How to tell if your culture is team-based or self-based

I pressed for what this looks like in a small business. Michael's test is simple. When someone stumbles, does someone else naturally step in and help? When someone is out of line, does a colleague say we don't do that here? That is a team-based culture.

In a self-based culture, people protect themselves. That happens when survival feels at stake, and Michael includes emotional survival, such as feeling put down or not valued. You can see the difference anywhere, he says, even between two people working behind a coffee counter.

He points to military training and fire departments as places this is visible because lives depend on it. People go into harm's way because they trust the person beside them would do the same. Michael is clear this is not hold hands and sing Kumbaya. It comes with a responsibility to deliver results. I added that two military guests on earlier episodes of the show described love within their teams as the way they built high performance.

Michael also notes that not everybody should be on your team. The aim is the right fit, and hiring for it is the subject of the next conversation in the series.

How to apply the social contract in your business this week

Michael's point is that you are already betting your results on your people, whether you name the contract or not. Making it conscious is the difference.

Write both lists for one role. What do you expect, and what does this person expect back?
Check the offer letter or agreement. Are individual results, collective results, pay and professional growth actually spelled out?
Ask each person what growth would make their next mundane assignment worth doing.
Watch for one week. When someone struggles, who steps in, and who says that's your problem?
Add growth, meaningful work and relationships to the scorecard, as I suggest, so people can see the map.

One warning is worth keeping. If you are not speaking the contract, people fill in the blanks. And if they cannot find meaningful work with you, they start looking for it somewhere else.

Michael Walsh and I co-founded Growth & Impact Partners, which delivers the Complete Growth Program and the Freedom Framework developed by Walsh Business Growth Institute. To see where your own business is stuck, take the Growth Pattern Diagnostic.