Posts from management

Getting Human Resources Right

The news out of Uber last weekend was horrifying. A woman engineer was unable to get human resources to deal quickly and appropriately with a sexual harassment claim. I don’t know anything more than what I learned in her blog post. Uber is investigating and the full story will likely emerge in due course. I am not interested in piling on Uber right now. Plenty of people doing that.

But it does raise a great question which is how to get human resources right in a fast growing tech company. Growing from 50 to 500 to 5,000 to tens of thousands of employees is hard. Operating systems and processes that work in a 500 person company don’t work in a 5,000 company. The same is true of every growth spurt. Systems break down and stuff gets messed up.

A well designed and implemented human resources organization can help. A messed up human resources organization will hurt. As Uber has found out.

So what have I seen work and what do I recommend?

Here are some things you can do to increase the chances that your human resources organization will be a force for good in your company:

  1. Hire a human resources (HR) leader EARLY in the development of your company and “level up” your HR leader as needed as your company grows. The right HR leader in a company of 50 is not likely the right HR in a company of 5,000. Of course there are exceptions to this rule, but in general you will need more experience in the HR leadership function as your company grows.
  2. Have your HR leader report directly to the CEO. Do not tuck the HR leader underneath your COO, VP Ops, CFO, GC, or VP Admin. The CEO has a hard enough time figuring out what is going on in her company as it is. Putting someone between them and their cultural leader/thermostat is a bad idea. Plus the optics are terrible. Your management hierarchy says a lot about what you value and what you do not. Actions speak louder than words, always.
  3. Do not make your HR function a recruiting function. Of course HR needs to help the company hire. And it certainly needs to help transition out people who have to leave the organization. But HR orgs that function mostly as an I/O pipe are bad HR orgs.
  4. Do make your HR organization about culture and leadership first and foremost. I have heard many HR leaders called “our culture carrier.” That’s good. And HR orgs should be making sure everyone is getting feedback on their performance and development goals, including the CEO. Organizations that share feedback top to bottom with dignity and professionalism are great places to work and perform better.
  5. Always have a company handbook that lays out the rules of behavior in the workforce. You can’t do this too early. You set the tone early and it propagates. It is great if you can start with your values, clearly laid out for everyone, and then lay out the rules and what happens if they are not followed.
  6. Build a great employee onboarding process. I believe that the companies that take the time to properly onboard new employees are better places to work and perform better. Onboarding should be more than “here’s your laptop, here’s your desk, here’s your boss.” It should be at least a few weeks of getting ingrained in the values, culture, systems, processes, and rules. It should be learning about every part of the organization, the current operating plan, strategic priorities, management team, and more. Doing it right is hard but it pays off bigtime.
  7. One CEO that I have worked with for more than fifteen years once told me his HR leader was his most important senior executive. He said she was his “business partner.” That’s a great place to get to if you can get there. What is more important than your team, after all?

I hope those suggestions are helpful. They are based on what I’ve seen work and not work over the years.

In the Uber situation we also saw a failure in the “whistleblower process.” This is a particularly hard process to get right. First of all most teams, whatever kind of team, don’t really want “snitches.” It is human nature to try to come together and support each other. And blowing the whistle is the exact opposite of that. So here are some things you can do to get this right:

  • Train your organization about the situations that are particularly tricky; sexual harassment, drug and alcohol issues, fraud, etc. Teach everyone how to recognize them and what to do about them. Make it clear that they are EXPECTED to report these issues to management and that failure to do so is complicit behavior.
  • Have some sort of whistleblower hotline. Often times the company General Counsel will manage this hotline. Make sure everyone knows about it.
  • Enable anonymous feedback throughout the organization and explain when it is appropriate and when it is not. Obviously anonymous feedback has great potential for abuse. But it is often the only way you are going to get the most important feedback that nobody will share otherwise.
  • Talk about this stuff in your all hands, regularly. I am sure this is a big topic this week but it should not get talked about only when something bad happens somewhere. This is something that should be discussed at least a couple times a year. Companies that scale rapidly can double in size in less than a year. So you have to talk about this stuff frequently to make sure everyone understands it. And make sure to clearly cover it in the onboarding process.

If you don’t have this stuff worked out in your company, now is a great time to do that. Your employees are watching you.

What We Don’t Do

Strategy is hard and becomes increasingly important as companies grow and scale.

One thing I advise teams to focus on when they go through a strategy exercise is to identify the things they won’t do.

One way to do this is to make a list of all the things people inside (and outside) the company are encouraging the company to work on.

Then break that list into two lists – the things you will do and the things you won’t do. This should be a group exercise, iterative, and ideally done on a whiteboard or some other similar tool.

The timeline for this list of projects doesn’t matter a lot. It could be for the next year or it could be for the next three to five years.

This exercise identifies the things that are most important versus the things you would like to do but can’t get to right now.

And this process helps solidify the strategy.

I think a company, at least a company that is smaller than 1000 people, should not try to do more than three big things a year. These big things can include a number of smaller things in them. So you might have a list of ten things you want to do this year. If you can organize those ten things into three big focus areas, then that works. If there are literally ten big things you want to do this year, I think that is way too many.

The most successful companies I work with have a clear sense of Mission/Vision>Strategy>Priorities that guides the company quarter to quarter, year to year, and aligns everyone on the team around where the focus is and why.

Saying no to things that are off mission, off strategy, or are not a priority right now is critical to getting this right.

I say this as an investor who has seen his ideas end up on the no list way more often than the yes list. I understand why that is and accept it. I would rather work with a company that knows where it is going and why than one that blindly listens to its investors.

From The Archives: Retaining Your Team

I picked up a bad head cold in SF this week. It’s rainy and cold there and that got the best of me. So I’m running a post from the archives and medicating myself instead of writing today.

Retaining Your Employees

I hate to see employees leave our portfolio companies for many reasons, among them the loss of continuity and camaraderie and the knowledge of how hard everyone will have to work to replace them. Many people see churn of employees in and out of companies as a given and build a recruiting machine to deal with this reality. While building a recruiting machine is necessary in any case, I prefer to see our portfolio companies focus on building retention into their mission and culture and reducing churn as much as humanly possible.

There isn’t one secret method to retain employees but there are a few things that make a big difference.

1) Communication – the single greatest contributor to low morale is lack of communication. Employees need to know where the company is headed, what they can do to help get there, and why. You cannot overcommunicate with your team. Best practices include frequent one on ones between the managers and their team members, regular (weekly?) all hands meetings, quick standup meetings on a regular basis for the teams to communicate with each other, and a CEO who is out and about and available and not stuck in his/her office.

2) Getting the hiring process right – a lot of churn results from bad hiring. The employee is asked to leave because they are not up to the job. Or the employee leaves on their own because they don’t enjoy the job. Either way, this was a screwup on the company’s part. They got the hiring process wrong. The last MBA Mondays post(two weeks ago) was about best hiring practices. Focus on getting those right and you will make less hiring mistakes and experience less churn.

3) Culture and Fit – Employees leave because they don’t feel like they fit in. Maybe they don’t. Or maybe they just don’t know that they do fit in. Another post in this series on People was about Culture and Fit. You must spend time working on culture, hiring for it, and creating an environment that people are happy working in. This is important stuff.

4) Promote from within. Create a career path for your most talented people. The best people are driven. They want to do more, develop, and earn more. If you are always hiring management from outside of the company, people will get the message that they need to leave to move up. Don’t make that mistake. Hire from within whenever possible. Take that chance on the talented person who you think is great but maybe not yet ready. Work with them to get them ready and then give them the opportunity and then help them succeed in the position. Go outside only when you truly cannot fill the position from within.

5) Assess yourself, your team, and your company. We have discussed various feedback approaches here before. There is a lot of discomfort with annual 360 feedback processes out there. There is a growing movement toward continuous feedback systems. Whatever the process you use, you must give your team the ability to deliver feedback in a safe way and get feedback that they can internalize and act upon. You must tie feedback to development goals. Feedback alone will not be enough. Build a culture where people are allowed to make mistakes, get feedback, and grow from them. I have seen this approach work many times. It helps build companies where churn rates are extremely low.

6) Pay your team well. The startup world is full of companies where the cash compensation levels are lower than market. This results from the view that the big equity grants people get when they join more than makes up for it. There are a few problems with this point of view. First, the big option grants are usually limited to the first five or ten employees and the big management positions. And second, people can’t use options to pay their rent/mortgage, send their kids to school, and go on a summer vacation with the family. Figure out what “market salaries” are for all the positions in your company and always be sure you are paying “market” or ideally above market for your employees. And review your team’s compensation regularly and give out raises regularly. This stuff matters a lot. Most everyone is financially motivated at some level and if you don’t show an interest in your team’s compensation, they won’t share an interest in yours (which is tied to the success of your company).

I believe these six things (communicate, hire well, culture matters, career paths, assessment, and compensation) are the key to retention. You must focus on all of them. Just doing one of them well will not help. Measure your employee churn and see if you can improve it over time. A healthy company doesn’t churn more than five or ten percent of their employees every year. And you need to be healthy to succeed over the long run.

From The Archives: The Board Chair

One of the things I am spending a lot of time on these days is Board leadership. That usually means Board Chair, but can also mean “Lead Director.” If you have a Board of five or more and are struggling with managing your Board, get a Board Chair or a Lead Director asap. Here’s a post from the archives about this.


Continuing our series on The Board Of Directors, this week I’ll talk about the role of the Board Chair.

The Board Chair runs the Board Of Directors. He or she is a Board member with the same roles and responsibilities as the other Board members. But in addition, the Board Chair is responsible for making sure the Board is doing its job. The Board Chair should make sure the Board is meeting on a regular basis, the Board Chair should make sure the CEO is getting what he or she needs out of the Board, and the Board Chair should make sure that all Board members are contributing and participating. When there are debates and disagreements, the Board Chair should make sure all opposing points of view are heard and then the Board Chair should push for some resolution.

The Board Chair should be on the nominating committee and should probably run that committee. I do not believe the Board Chair needs to be on the audit and compensation committees, but if they have specific experience that would add value to those committees, it is fine to have them on them. Either way, the Board Chair needs to be on top of the issues that are being dealt with in the committtees and making sure they are operating well.

Small boards (three or less) don’t really need Board Chairs. In many cases the founding CEO will also carry the Chairman title, but in a small Board, it is meaningless. Once the Board size reaches five, the Board Chair role starts to take on some value. At seven and beyond, I believe it is critical to have a Board Chair.

It is common for the founder/CEO to also be the Board Chair. I am not a fan of this. I think the Chair should be an independent director who takes on the role of helping the CEO manage the Board. The CEO runs the business, but it is not ideal for the CEO to also have to run the Board. A Chair who can work closely with the CEO and help them stay in sync with the Board and get value out of a Board is really valuable and CEOs should be eager to have a strong person in that role.

When a founder/CEO decides to transition out of the day to day management but wants to stay closely involved in the business, the Board Chair is an ideal role for them, assuming that they were responsible for recruiting or grooming the new CEO. If the founder is hostile to the new CEO, then this is a horrible idea.

When Boards get really large, like non-profit boards, the Board Chair is even more important. I’ve been on a few non-profit Boards over the years. I don’t really enjoy working in the non-profit world, but I do it from time to time. I have had the opportunity to watch a couple amazing Board Chairs at work and I’ve learned a ton from them. The partnership between Charles Best and Board Chair Peter Bloom at Donors Choose is a thing of beauty. Same with the partnership between John Sexton and Board Chair Marty Lipton at NYU. For profit CEOs and Board Chairs could learn a lot from watching these masters at work.

When it works, the Board Chair role is hugely impactful. It allows the CEO to spend their time and attention running the business and not worrying about the Board. The Chair will manage the Board and when the CEO has issues with the Board, the Chair will be clear, crisp, and quick with that feedback and will help the CEO address those issues.

Many CEOs find working with a large group of people who have oversight over their work and performance challenging. It makes sense. Who has ever worked for six or more people at the same time. How do you know where you stand with all of them? How do you know what they want you to do? How do you know what is on their minds? The Board Chair’s job is to give the CEO a single person to focus on in dealing with these issues.

The Board Chair job is hard, particularly when the company is in crisis, but it is also extremely gratifying. It is an ideal job for entrepreneurs and CEOs to take on when they are done starting and running companies and want to move into something a little less demanding. I’m always on the lookout for people who can take on this role in our portfolio companies. The good ones are few and far between and worth their weight in gold.

Urgency

One of the things I often press for in my role as a board member and investor is a greater “sense of urgency” in our portfolio companies. The founders and CEOs, it turns out, are hungry for that even more than I am. It is a collective frustration.

So when I hear a suggestion on driving urgency, I take notice. I got this one from a CEO who I’ve worked closely with for years.

I find many business books to be fairly useless or at best irrelevant to my situation but I read John Kotter’s book “A Sense of Urgency” over the weekend and it was excellent. I highly recommend it. 

The best thing about the book is that it creates a common definition of what “urgency” and “complacency” mean and even cautions against creating “false urgency,” which is a lot of anxious frenetic activity without no forward motion. False urgency is just as bad as complacency.
I plan to read this book and if you are hungry for more urgency in your organization, I suggest you do as well.

Keep It Simple

I like this advice from John Lilly, a serial CEO and now a partner at Greylock:

I didn’t understand the role of simplicity and messaging early on. One of the things that happened at one of my start-ups was that I would get bored saying the same thing every day. So I decided to change it up a little bit. But then everybody had a different idea of what I thought because I was mixing it up.

So my big lesson was the importance of a simple message, and saying it the same way over and over. If you’re going to change it, change it in a big way, and make sure everyone knows it’s a change. Otherwise keep it static.

The number one cause of employee unhappiness and unwanted departures is “I don’t understand where we are going.” That is a failure of leadership on the CEO’s part. I agree with John, keep it simple and repeat often and don’t mix up your messages. It is critical, particularly as the organization grows in size.

Distraction and Mission

Many of the leaders of our portfolio companies struggled to get their teams focused last week. We heard from many of them asking questions like “If either of you have thoughts on leading a team through exogenous events, happy to take your guidance”

It may sound insensitive or crass to be asking how you get people focused on work when they are upset, dismayed, and devastated. I understand that people need time to come to terms with something that is so emotional for them and that employers have to be sensitive to that. I am all for that. Much of last week was spent  on that.

But I also believe that getting the team off of Facebook and Twitter and back into the code and shipping product is actually a healthy thing for everyone.

Many of USV’s portfolio companies are mission driven. That’s not our investment strategy per se, but it seems to be an output of our investment strategy. We have portfolio companies trying to democratize access to healthcare, education and financial services. We have portfolio companies trying to make it easier to be an artist, an entrepreneur, a freelancer, or an author. We have portfolio companies trying to make it safer to use the Internet without being spied on. I could go on and on.

And so, working in these companies and working to help these companies and the people they support succeed is important. And if you are upset with the world, then one of the most therapeutic things you can do is try to change the world to be a better place. If you work in a company that is mission driven and you connect with that mission, then I would encourage you to throw yourself at that work this coming week. I can assure you that it will help.

And if you don’t work in a company that is mission driven, or if you don’t connect with your company’s mission, then I would encourage you to quit and join a company that you are inspired to work for and then throw yourself at that work. Here is a list of those kinds of opportunities.

Enjoying The Struggle

The NY Times has a great longish piece on David Letterman today.

This quote got my attention:

Maybe life is the hard way, I don’t know. When the show was great, it was never as enjoyable as the misery of the show being bad. Is that human nature?

Building companies includes a lot of “misery of the show being bad” as David Letterman puts it.

And I really love the idea that you can enjoy that struggle.

Obviously you want the “show” to be great, but his point is that greatness is fleeting and you have to go through a lot of bad shows to get to some good ones and you’d better figure out how to enjoy that struggle, as he and his team did.

Good advice for all of us who hang out in startup land.

Relaunching At Age Fourteen

Our portfolio company Meetup was launched in June of 2002. We invested five years later, in 2007, when the company was already profitable and was approaching double digit revenues. Nine years later they are 3x the size when we invested in revenues, meetups, and more. But the founder and leaders of Meetup feel like they are just beginning to scratch the surface of their mission which is to get people out of the house and into the real world doing things they enjoy with other like minded people.

This video, which they created as part of their re-launch this week, shows the range of things people use Meetup to do with others:

Many people associate Meetup with night time events where people with name tags on them walk around and introduce themselves to others. Those sorts of things happen on Meetup for sure. But the more common uses are runners using Meetup to schedule group runs, moms using Meetup to hang out with other moms, and, apparently, jugglers using Meetup to juggle together.

So Meetup is relaunching the Company this week, fourteen and a quarter years after its initial launch. This means a new logo (the name badge is gone), new mobile apps that use deep learning to understand what you want to do and encourage you to do more of it, a new team (with women leaders in both product and engineering) with lots of new engineers and data scientists, and a sharper focus on marketing.

If you want to see what the new Meetup is all about, download the new app (iOS and Android) and check it out. Maybe you will find yourself juggling in the park this weekend. I sure hope so.