Empower and Challenge your People

Institutionalize transparency and dissent

Transparency is about building trust. The more your people trust each other and the organization, the more engaged and secure they feel – even in bad times. It simply leads to better work. Erring on the side of transparency is a good general approach.

That said, you can take transparency too far. Having an open book approach to the company’s finances can help build trust, but at some level it can also lead to unnecessary stress. It’s common for early stage companies to have one or several near-death moments as cash gets tight. Briefing your team on the intimate details of your lack of cash and limited runway can leave team members wondering if they are going to have a job soon. Productivity is likely to drop just when you need it to peak. In these situations, the CEO needs to bear some of the burden of uncertainty. Let the team stay focused, not feeling like they are bumping up against existential threats on a regular basis.

Instead, be transparent about your goals and where you stand relative to them. Be transparent about what each team in the company is working on so that other teams can coordinate and help drive the overall impact. Create an expectation of transparency in all directions: what’s going well, what’s not going well, what have you learned?

Making transparency stick:

  • All-hands meeting: if not already in place at pre-seed, implement it at seed stage. Use this time to update the full team on progress to goals, answer questions (prepared or in real time) and reiterate the culture code via anecdotes and individual acknowledgements.
  • Internal Wiki: “If there’s something you need to know or want others to know, it goes on your [wiki]… allowing anyone in the company equal opportunity to participate, ask questions, and use their voice towards building a company our employees’ grandkids can be proud of.” - Katie Burke, Chief People Officer at Hubspot regarding their use of Atlassian’s Confluence product for their wiki. You don’t need a sophisticated software to start, just a simple online hub.
  • Price of admission to exec staff meeting: “you have to fess up to at least one thing that is ‘on fire’” – Ben Horowitz, What You Do Is Who You Are
  • CEO memo: regular updates from the CEO to the organization (and maybe external friends of the business) work wonders for instilling a sense of transparency. Lay out the good, the bad and any other important information. Pick a standard format and stick to it. You’ll also find this exercise serves to re-center your priorities and provide much needed clarity on a regular basis. Always tie it back to your mission and values.
  • Contrarian meetups: this may not be for every organization, but many use it quite effectively. The general concept is to provide a set time (e.g. 1 hour per week) for a team gather and ask of its leadership and each other: ‘why do we do X, Y or Z this way’? These questions should be coupled with alternative approaches and ideas. These typically work best when questions and topics are collected and prioritized beforehand. The questions may or may not be anonymized.

When it comes to conflict, there is a sweet spot. The goal is to set the conditions just right to hit that sweet spot. Once again, it starts with institutional transparency and interpersonal trust. Patrick Lencioni describes a highly functional team in The Four Obsessions of an Extraordinary Executive:

“These people argue like brothers and sisters, but then they seem to forget about the arguments ten minutes later, just like my cousins. One of them would have a bloody nose, and the next thing you know they’re laughing.”

This is one rendition of the conflict sweet spot, albeit a more forceful one. Just remember: all valued team members need to feel comfortable bringing a contrarian idea forward. This can be particularly daunting for certain personalities. Their ideas may be rock solid, so you want them to surface. Create channels for these people to ‘speak up’ (e.g. anonymized contrarian meetups described above).

Perhaps most importantly, leaders should develop an internal “thermometer” as decisions are being made and – as appropriate – nudge the discourse left or right on the spectrum below. “Hurtful words” are a simple way of knowing you’ve crossed the line into destructive. The best team formats reside at the intersection of direct but caring exchanges (also see the simple grid from Radical Candor in the Foster Leadership Cohesion section).

Source: The Advantage, Patrick Lencioni

Support L&D

The best talent is eager to develop and improve. The best companies support and benefit from this development. There are many ways, big and small, to support learning and development. The important thing is to make it a priority and recognize learning is an ongoing process, not an event.

A few tips to make L&D stick:

  • Start from the top: leaders must set the expectation and constantly reinforce. Employees need to hear and see their leaders’ encouragement. Consider some flavor of self-development as a core value.
  • Give support, not just permission: managers should encourage their reports to pursue L&D opportunities and, as necessary, make space in their workloads for activities that benefit the larger org. Per Linda Tong, GM of AppDynamics: “people need time to learn which can be done through courses, coaching, conferences, etc. Whether that is via a “no meeting day” or through hack weeks, it’s important to give teams the space to grow.”
  • Provide tools and feedback: be clear about the resources available and encourage creative new approaches. Make it part of regular employee reviews and onboarding. Recognize individuals for their efforts and ask how they are applying their new skills.
  • Connect it to the big picture: l recognize specific examples of learning that benefited the broader organization. Celebrate the application of new knowledge and skills most.

A few approachable programs to consider:

  • Mentor program: this can be simple but effective. A lot has been written on the topic so we won’t reinvent the wheel (see a few resources below).
  • Online micro-learning content: there are a number of high-quality, open resources for individuals to learn business, technology and creative skills (e.g. Ted Talks or Lynda via LinkedIn). Consider putting together a short list of sources your company endorses and/or pays for and share it with your entire org. This is an underrated avenue for professional development which will help everyone from a customer success person who wants to upgrade their data analytics proficiency to a rising engineer who wants to polish their managerial skills.
  • Professional development stipend even if just a couple hundred dollars per employee per year, this can be a cost-effective way to remove barriers and encourage individual exploration and ownership.
  • Business book clubs: a great way to facilitate organic “cross-training”
  • Guest speakers / panels: tap into your personal network or spotlight an employee with casual Q&A over group lunch
  • Trade/professional groups: promote and/or subsidize membership to well managed and active associations dedicated to building the network and knowhow of their members (a few examples: [insert examples].
  • Open office hours: consider holding regular time for people to swing by your office and ask career related questions. Just be clear that this is not the time to ask about an upcoming promotion or air grievances.
  • Learning on the job: lest we forget! This would be first on the list if it were in order of importance. With regular feedback and coaching from managers, this is the original development tool and the best of all.

Lastly, avoid the typical pitfalls of L&D programs. These programs often start with great intentions but go nowhere or worse, suck energy and breed cynicism. Remember that learning is personal and avoid one-size-fits-all approaches. By providing multiple avenues such as the ones above and removing barriers such as cost and time capacity, you allow people to choose the path that suits them best. And please, please don’t present dry Powerpoint monologues over lunch.

Further reading on mentor programs:

Design, refine your accountability structure

Some novel organizational structures have emerged in recent years, especially among forward thinking tech companies. A few of the more well-known concepts include Holacracy, Sociacracy 3.0, and various other approaches that involve task forces or ‘squads’ that constantly spin up and disband. In our view, these are all interesting but unproven.

It’s worthwhile to read up on these org experiments and maybe even cherry pick a few transferrable practices. Otherwise, we suggest sticking with a more conventional, level-based framework: in most structures, priorities flow downward and accountability flows up from individual contributor to manager to executive leadership to CEO to board to shareholders. The reporting lines change as needed, but not too often.

Once your company exceeds ~50 people, you will necessarily start building out the middle layers. Certain functions need it sooner than others – this is often an “a-ha” moment for one or two leaders when re-evaluating organizational needs. When you add mid-management, beware of stifling cross-department collaboration or organizational agility.

Tips for avoiding the pitfalls of additional management layers:

  • Allow/encourage dotted lines:in a cohesive organization, it’s natural for individuals to report to different people for different things, often across department lines. This facilitates the cross-pollination of ideas and offers career development opportunities. Just ensure everyone knows exactly to whom they report for each project/task and limit everyone to just one solid reporting line at any given time. The manager at the receiving end of this solid line should have the best pulse on the overall workload, development, and wellbeing of their direct report.
  • Avoid managing by committee each employee should have a single direct manager who trumps all other dotted line managers of that employee (see commentary above). Management by committee (i.e. multiple managers taking partial accountability for an employee) generally does not work because it leads to accountability cracks and confusion at all levels.
  • Connect individual objectives to company-wide objectives: this will discourage silo mentality and spur people to work across groups.
  • Adopt select practices from more avante-garde systems as mentioned above, we don’t advise full adoption of these systems, but there is something to be said for the spirit of individual empowerment and organizational agility behind them. Leaders will do well to selectively implement a few specific practices that can successfully transfer to their own company culture, just as long as they remain grounded in reality vs. aspirations.

The other key structural consideration as your company scales is whether to remain a functional or divisional organization. Functional organizations are organized by functions which work across all product lines. Divisional organizations are organized by product lines, each running semi-autonomously with their own P&L and dedicated functional support.

Source: Ben Thompson, Stratechery

Nearly all startups begin as functional organizations by definition because they have a single product line. As companies launch new and distinct product lines, divisional separation starts make sense. This is the typical evolution. Of course, there are notable exceptions such as Apple. (sidenote: there is an interesting history behind this, starting with Dupont Chemicals nearly a century ago. You can read that story as well as some excellent, albeit dated commentary on Apple and Microsoft’s org structures here and here).

There are many factors to consider when deciding which structure is right for your org, some of which are listed below. As you can see, functional structures are much harder to pull off at scale. Regardless of the decision you make, making it deliberately and at the appropriate crossroads will put you ahead of the pack. Most rapidly scaling companies ultimately stumble into some hybrid by accident.

Divisional Structure
Pros Cons
Built-in accountability and direct incentives (separate P&L) trategy tax: decision makers for division A forced to factor benefit/harm to divisions B and C
Clear career advancement opportunities for generalists More challenging to coordinate products and deliver seamless customer experience
Functional Structure
Pros Cons
Superior product coordination and more seamless customer experience (when done right) Difficult to execute at scale (requires truly collaborative culture)
Cannot effectively manage too many products
Requires exceptional visionary overseeing everything (e.g. Jobs / Ives; these don’t grow on trees)

We recommend sticking to a functional org structure until it hurts. For most businesses, the line is somewhere around a few hundred people (Apple is the extreme anomaly). Whichever structure you ultimately establish, ensure that accountability pervades throughout. Everyone should have someone else holding him/her accountable to their best work.

We recommend sticking to a functional org structure until it hurts. For most businesses, the line is somewhere around a few hundred people

Further reading:

Surround your people with A players: recruiting, screening and onboarding

There are many deep resources on this topic, so we will just highlight a few tips and further reading. Assembling a strong mix of backgrounds, skillsets and inclinations is critical to positive org health momentum. In other words, ‘empowering your people’ means surrounding them with other A players.

Here are a few tips from our experience

  • Recruiting – great candidates are often already gainfully employed. You have to go find them. Recruiters can sometimes help, but building your own internal chops at sourcing passive candidates is even better. Here are a few talent sourcing hacks:
    • Reference farming sessions: hiring managers should regularly meet with their individual team members and walk through their direct network to drum up potential candidates. Contact promising prospects on the spot. The act of meeting will force action that otherwise won’t happen.
    • VCs and advisors: this is what they are there for! Share the job description with them and have a concrete ‘ask’. If they have significant hiring experience, get them involved with interviews and reference checking at least at the senior team level.
    • LinkedIn: good old-fashioned profile stalking – this is the OG network and it’s still shockingly effective.
    • Referral program: start with informal perks and build up to a formalized program as your organization matures. A relatively small cash reward (e.g. $500) can go a long way to motivate people. Turn all of your employees into talent spotters, and then consider expanding to the broader stakeholder group including former employees, friends, business associates, etc.
    • Internal Recruiting Team: if you growing rapidly and have a large number of open roles on a consistent basis, consider building your own internal recruiting team. Make sure to compensate them like a top outside firm so that you can attract the best recruiters.
    • Targeted job/discussion boards: try posting on AngelList (the world’s largest startup community) and/or apply guerilla tactics to relevant forums on Reddit, Quora, Facebook Groups, etc.
    • Be Kind: remember you are leaving a brand impression in the ecosystem, just like a sales process. It may not seem a priority to you to acknowledge job applications, keep people up to date with where you are in your decisions, and send polite and friendly rejection notes, but it is important to candidates.
  • Screening tips:
    • Test for mission, vision, values fit: ideal candidates will have some level of personal connection to the products and change your company is making. When people care about your mission, they work a little harder and care more about the details. This is the #1 way to solve the recruiting challenge: give a prospect a higher reason for joining beyond title or compensation. If you neglect this, expect low acceptance rates, low success rates with new hires, and to generally overpay for talent because that’s your only offer.
      This is the #1 way to solve the recruiting challenge: give a prospect a higher reason for joining
    • Test for hard skills upfront: filtering early in the process can save everyone time. This naturally applies to technical contributor roles such as software engineering and accounting. There are varying opinions on whether to use general aptitude tests in the hiring process. In our experience, they do help predict performance in certain roles when used correctly. Just beware of assuming a false sense of precision: if you do use a general aptitude test, consider setting a bar vs. stratifying of performance into levels. Importantly, these tests should be considered as just one input factor among many when considering a candidate.
    • Pick an evaluation methodology: there are a number of good ones out there. We like The A Method for its simplicity. A well-crafted scorecard is critical. If your short on time, see a useful summary here.
    • Filter out cultural clashes: ensure that your evaluation process deliberately tests for cultural fit. Dig into past behavior that aligns or clashes with the company’s core values. The latter tends to be less subjective (i.e. filter out vs. filter in). One important nuance from the A Method summary linked above: “While the A Players you bring in need to be attuned to your culture, the culture needs enough elasticity to embrace the A Players who can challenge you in areas where you need to be challenged. Seeing it all come together is truly a beautiful thing.” Culture fit tests don’t have to be elaborate. Discord, a unicorn that started in the social gaming space, observes how candidates treat the waitstaff and engage with the general public when they take them out to lunch or dinner. They want to see how a candidate interacts with people that aren’t important in the hiring process, as this aligns with the team culture they’ve built.
    • Take Reference Checking Seriously:don’t outsource this step to a recruiter. References can provide critical insights, but you have to know how to get past the typical niceties. We outline some of the specific tips and questions to ask during reference checks here.
    • Seal the deal: once an offer is made, pull out all the stops. It’s not easy to get a candidate to this point! The A method has some good tips here as well.
  • Onboarding – the 3 pillars:
    • Culture see MVV onboarding section of this guidebook
    • Admin: as a starting point, check out this new hire checklist by Betterteam
    • Job training: this will vary by situation. Ask your managers to creating simple training kits for the individual contributor roles – these will save time and ensure consistency
  • Further reading:

Hire a Head of People Operations

A head of People Operations is like a traditional head of Human Resources with several important distinctions. They are responsible for some combination of finding, growing, supporting, motivating, and retaining your team. They are a champion for your company culture and a resource for your management team. They are far more than an administrative function.

What a Head of People Ops can ‘own’
  • Recruitment, screening and onboarding: codify and document the processes, including applying a specific evaluation methodology (see ‘’Surround Your People with A Players’ section above). If the person is particularly seasoned, they can help with organizational planning for senior positions, though this capability is rare and make sure you know the difference.
  • Employee Value Prop (EVP) and culture: hone the EVP based on real feedback and continually reinforce mission, vision and values. Be the eyes and ears on the ground for the CEO, signaling potential issues early.
  • Engagement & accountability: spearhead learning & development initiatives (see ‘Supporting L&D’ section above) and orchestrate accountability framework (e.g. can lead implementation of OKRs at mid and lower levels)
  • Compensation & rewards: design compensation “banding” for mid and lower levels. Advise on senior hires. Regularly conduct market benchmarking analysis. Interface with the Board’s compensation committee. Incorporate non-monetary perks and employee recognition.
  • Standard admin functions:benefits, payroll, PTO, employee issues, etc.
  • Human capital KPIs:what are the measurable results you want this person to achieve? Examples include time-to-fill-position, offer-to-joining ratio, cost-per-hire, employee retention, Glassdoor rating, and EVP agreement rate. Talk with your People Ops candidates / new hire about basic software tools you can adopt to help you track these metrics. Lastly, keep it simple. Start with just a few that matter most.

People ops is an emerging role that is still being defined. Start by looking at your particular needs. Perhaps you need an internal recruiter who is 80% focused on recruiting and 20% on the other items above. This can be a logical economic calculation during heavy hiring phases. In general, though, we’ve found CEOs tend to under-index on the softer side of this role.

One important note: while a head of People Ops can be tremendously helpful in executing the items above, remember it starts from the top and it all breaks down if the CEO is not visibly out front leading the charge.

When to hire a head of People Ops

When should you hire a head of People Ops? Ideally, as early as possible. Head of People Ops is one of the most widely underappreciated positions among startups. Many companies wait too long and do irreversible damage to their organizational health. Natural startup law dictates that after ~50+ people (or roughly year 3-5) you face more significant morale dips, turnover spikes, disjointedness and so on.

Natural startup law dictates that after ~50+ people (or roughly year 3-5) you face more significant morale dips, turnover spikes, disjointedness and so on.

Of course, these people don’t come free. For economic reasons, early-stage companies can typically wait to hire a full-time head of People Ops until one of two things happens:

  • You are about to hire a lot of people. Maybe you just secured a funding round and are about to bring on 20+ new team members this year. This might be a good time to bring on a head of People Ops.
  • You surpass ~50 people. At this point, the cost-benefit equation becomes compelling and you should consider hiring a head of People Ops.

Key call-out: hiring a Head of People Ops is not a cure-all. All too often, CEOs make a people ops hire to “fix” organizational disfunction. This is a formula for failure. Once again, it starts from the top. This position must have strong and visible support of the CEO. The prioritization of people matters must be clear.

Key call-out: hiring a Head of People Ops is not a cure-all. All too often, CEOs make a people ops hire to “fix” organizational disfunction. This is a formula for failure. Once again, it starts from the top. This position must have strong and visible support of the CEO. The prioritization of people matters must be clear.

Next: Closing Advice

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