A new case study from MIT Sloan examines growth strategies for Managed by Q, an on-demand office cleaning and management company where pay above industry standard is a core part of the business model.
Founded in 2014, Managed by Q provides office cleaning, maintenance, and supply services. Headquartered in New York City, Q also operates in Chicago, San Francisco, and Los Angeles.
Unlike other on-demand companies like Uber or food delivery service DoorDash, Managed by Q hires employees instead of relying on contractors. Those working 30 hours or more a week receive free health insurance, workers compensation, paid vacation time, and a 401(k).
As of summer 2015, cleaners were starting at $12.50 an hour, with a 25 cent raise every six months. Even without benefits, that put income well above the janitorial industry’s average annual wage of $15,000.
The approach has made Managed by Q stand out in the on-demand industry, where classifying workers as contractors—freeing companies from the need to provide benefits and a minimum wage—is the norm.
Managed by Q’s commitment to workers and operational excellence highlights several elements of “ The Good Jobs Strategy,” a book by MIT Sloan Adjunct Associate Professor Zeynep Ton. In the book, Ton argues that when a company deploys its workforce in smart ways, its workers can be a driver of profit rather than a driver of cost. Costco, grocery chains Trader Joe’s and Mercadona, and convenience store chain QuikTrip are all detailed as examples.
“The original thesis is, if our people are so amazing and our technology is so amazing, eventually office managers will turn to us for everything,” Managed by Q co-founder and CEO Dan Teran says in the introduction to the case study. “So we’ll effectively aggregate the demand for all of the goods, services, and technology that’s required to run the office. And that’s the bet we’re making.”
The case study, which is available free online, was written by Ton and Cate Reavis, MIT Sloan’s associate director of curriculum development. It examines Managed by Q’s position in July 2015 and offers three paths to growth: acquire more customers and offer more services in the four current markets; expand into new markets; or build its technology platform to offer more services, including some by approved vendors such as information technology firms.
On May 9, Teran visited Ton’s class at MIT Sloan to discuss the case study. Teran told students that Managed by Q was pursuing each of the options, while paying attention to strengthening its technology platform.
Managed by Q has raised more than $40 million in funding, including a $25 million series B round earlier this year. In the class, students said taking on funding may force Managed by Q to make decisions that compromise its commitment to good jobs in exchange for faster growth and greater returns.
“It is true … there are some investors that are too short-term focused, but there are also other investors that are thinking more long term,” Teran said. “But the only way you can satisfy those investors is with operational excellence.”