Do yourself a favor and read this absolutely fascinating article. It’s not denying a free coke to employees that creates an exodus of employees (though offering the coke for 50 cents just makes you look cheap and petty); it’s the perceived lack of respect.

Difference between the cost of a free coke and a 50-cent coke: Very little.

Difference in perceived respect: Very large.

Sun Tzu advised treating personnel like your beloved sons. He also explicitly counseled against spoiling them, but that’s not the point here: the point is treating them with respect. Respect, let it be said, is always personal; perceived lack of respect is, therefore, always taken personally.

I mention this because some seem inclined to draw the lesson that start-ups need to become depersonalized (and therefore, impersonal) to succeed as large organizations. This is an unrealistic expectation. When an employee believes he or she is being disrespected, the type of organization or the history of that organization doesn’t matter; it will be taken personally.

What’s fascinating is that “the free soda issue” seems to be the defining signal of negative change in a small to mid-sized company over and over again. After all, it’s something immediately visible; it affects everyone; and it is universally regarded as petty.

Some may read this and object: but wait! It’s not petty. It’s costing the company money. It’s a perk. This, however, ignores a subtle point.

Why do employees drink cola in copious amounts? This is because they are working longer than 9-to-5 and require extra caffeine to function at a high level. Free cola is seen as a business expense for the men and women investing “sweat capital” into an organization. Charging for it is seen as a sign that management has no idea of what sweat capital is, what role it plays in a business, or why it’s important.

That’s why those seeking a high level of satisfaction in their work look first at the sign on the coke machine – and second, for the nearest exit.

(Late edit: I found the original blog post to be even better and funnier, titled “The Elves Leave Middle Earth – Sodas Are No Longer Free.”)