Today marks the one year anniversary of the LIFE business, and my, what a year it has been. One of the questions I’ve recently seen popping up quite a bit revolves around one of the core concepts of what makes LIFE so great: compensated communities. Essentially, people want to know what that really means.

Well, LIFE founder and top leadership guru Orrin Woodward wrote a great article on the topic, but to sum it here, compensated communities reward people on their ability to do what every business is desperate to develop– loyalty. Orrin uses four different principles to illustrate his point.

Four Principles of Compensated Communities

1. Social Capital. A term coined by practical reformer and visionary L. J. Hanifan during the Progreessive Era, social capital describes the phenomenon that occurs when people gather in groups. In Hanifan’s own words (emphasis added by me): “The individual is helpless socially, if left to himself…If he comes into contact with his neighbor, and they with other neighbors, there will be an accumulation of social capital, which may immediately satisfy his social needs and which may bear a social potentiality sufficient to the substantial improvement of living conditions in the whole community. The community as a whole will benefit by the cooperation of all its parts, while the individual will find in his associations the advantages of the help, the sympathy, and the fellowship of his neighbors. “
2. Tribes of Trust. One cannot garner loyalty without first earning trust. In terms of building a community, the speed of its growth can be directly tied to the speed of trust between its individuals. Orrin uses a quote from Robert Putnam’s Bowling Alone, stating, “A society characterized by generalized reciprocity is more efficient than a distrustful society, for the same reason that money is more efficient than barter. If we don’t have to balance every exchange instantly, we can get a lot more accomplished.”
3. Those Who Serve, Deserve. Organizations can flourish without servant leadership, but they cannot last. C.S. Lewis once wrote that no one looks up to a selfish man. The same is true within a community. Driven by compassion rather than compulsion, as Orrin puts it, “people respond in kind when they experience the time deposits from the leaders.”
4. Culture of Reciprocity. It’s the Golden Rule in action. When you create an environment of love and trust and promote the sharing and spreading of ideas, the community explodes. Revisiting Putnam, he explains, “Social capital turns out to have forceful, even quantifiable effects on many different aspects of our lives. What is at stake is not merely warm, cuddly feeling or frissons of community pride. We shall review hard evidence that our schools and neighborhoods don’t work so well when community bonds slacken, that our economy, our democracy, and even our health and happiness depend on adequate stocks of social capital.”

Have Fun, Make Money, Make a Difference

Though perhaps a difficult concept to grasp at first (or maybe not), the most important piece to understand about compensated communities is what a healthy, successful one looks like. And as Orrin explains, such communities have fun, make money, and make a difference. While having fun and making money tend to go hand in hand, it’s the “make a difference” part that makes this concept so powerful. But since Orrin took a mere concept and revolutionized it into a massively successful business model, I’ll let his words close out this post.

“Compensated communities isn’t just a way to make money, its a force for good in a world declining from lack of community..Typically, truths are discovered in communities through comparing a person’s life to the examples around him, not being hit upside the head by his leader. Community building, done properly, provides a fun-loving tribe of purpose-driven encouragers for people to experience acceptance and belonging. Over time, the new community’s models of servant leadership give a person permission and the courage to confront and change himself.”

God bless,
Catherine Crichlow