Goodwill Accounting on Teams

A while ago, I was working at a very early stage start-up with two friends.  It was just the three of us, but both of them were in San Francisco, while I was living in Seattle.   Every month or so, I’d travel down to stay in San Francisco for a few days so that we could catch up and spend some real-world time together.  It was during this time that I noticed the phenomenon I call “goodwill accounting”.

Naturally, starting a company is stressful for anyone, and we were no different.  The odd thing I noticed was that the longer it was since I was down in SF, the more irritated I’d get with my teammates over little things.  Then, when I would go down to SF, I’d feel a lot closer to my friends again, and it would be a lot easier to deal with the myriad little disagreements you naturally have to sort out when building a company.

What I noticed was that it was really the outside-of-work time which really made the improvement, and it started to occur to me that those times were filled with good feelings: often as a strong contrast to the stress of the work.  We’d go out to eat together, chat about things we share outside of work, laugh, joke around, get out an enjoy the city… all sorts of things.  And those events would fill up a kind of emotional reservoir of friendship and trust between us.  Or, to put it another way, we’d make a “deposit” in a “goodwill account”.

Then, when we got back to work, the natural rigors of the work would start to “withdraw” from that account.  Each disagreement, though perfectly natural and necessary for the business, would count as a “withdrawal”.  So long as we kept making “deposits”, things would generally be fine, and we could sustain the stress of building a business together.  It was only when we let the account drain off that our “checks” would start to “bounce”, and we’d start to have unpleasant disagreements and ill-feeling.

As things went along, I started actively thinking about my relationship with my two friend along these lines quite explicitly, and I’d start to deliberately arrange to make “deposits” in the accounts I had with each of them as much as possible.  Sadly, sometimes the rigors of founding a company would result in “bounced checks”, but it helped a lot to have this metaphor for understanding what was going on and a way to correct the situation.


The lesson here is to keep in mind your “goodwill account” with the people around you.  This is part of the one-on-one relationship you have with each person you spend time with (whether a colleague, spouse, child, or friend).  Any time you do fun things, share something special, or enjoy time spent together, you make “deposits”.  Any time you disagree, get on each other’s nerves, or cause one another bad feelings, you make a “withdrawal”.  For some relationships, it’s easy to keep the books balanced, but for other relationships (especially work relationships), you have to be more deliberate.  When you notice a relationship starting to go south, consider whether you’re “in the red” with that person, and what you can do to add something back into the account.

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