A Growth Stage CEO’s Wild Ride: Leveraging Your People Strategy for Success
I’ve had a number of opportunities to advise incredible founders who have scaled tech companies, and with recent mentorship from Patrick Pichette, this is the core of how we as Inovia Capital see the evolving and important role of the growth stage CEO. The range of topics presented below will be subject to deeper dives in the future.
Imagine this potential scenario — you’ve just reached 100 employees and recently closed your Series B funding round with participation from some notable investors. Your Board is keen to hear the plans for accelerating your growth, which includes doubling your team size to over 200 people over the next 24 months, opening four new offices, introducing two major upgrades to your product and moving your infrastructure to a new cloud platform.
If the above sounds like where you are or might be soon, congratulations — you’ve hit the growth phase in the life of your company. Some key questions to ask yourself are if you’re well prepared to manage this process? Do you have the right team members for the next phase of growth? How will you maintain culture as you scale? How will you test your processes and systems to ensure you’re hiring at the same level of quality and twice the speed?
While this can be a pivotal moment for you and the team, as CEO, you’re in a position to steer a number of areas in the company. It can feel overwhelming — and while it may seem wise to focus solely on customer acquisition or your product roadmap, there a number of other areas that also require your attention to ensure long term success. Among them:
The changing role of the CEO (and your exec team) — Do you trust your leadership team enough that you can shift your role to focus on growth? If you do an honest assessment, are all the players that were critical for the last phase of your company’s success still the right ones for the coming 24–36 months?
On building your organization around three obsessions — How can you maintain your hiring bar as you scale? How do you ensure that all new hires have the right fit? How differentiated is your compensation strategy?
Systems and tools — Can your processes and systems really deliver two or three times the velocity of hiring, with equal or better quality?
Culture — Do each of your employees know and stand by the company’s mission and values?
Performance and development — Does your performance management process allow you to regularly evaluate everyone’s progress and take relevant actions (promotions, manage out) at the right pace? Are your superstars identified and managed on a different path?
I. Changes in Your Role as the CEO and Leadership Team
During the early days of operating a startup, it’s likely that as CEO, you were focused on product development, customer acquisition and experience, and culture management, all while striving to scale the business.
In order to facilitate an effective transition to growth mode, your role (and mindset) would need to shift from being hands-on to exercising greater leadership by entrusting and enabling the executive team to drive operations and deliver on business objectives. This would involve a mix of continued direct leadership in key areas of focus, but also a new set of tasks such as operating more as a coach and mentor to the executive team, and carefully assessing current capabilities to determine additional talent needs to scale the business.
When building your initial leadership team, you may have hired for the immediate short term, which is quite common for a startup. However, as corporate objectives change or during growth mode, a key consideration is whether these same individuals are going to continue to execute and deliver in the next phase, or if you may need to hire above or replace them.
If you determine that you have an all-star leadership team who are well equipped for the next stage, ensure you’re mentoring, developing and promoting them with tact and speed. In addition, you should also be complementing your team with additional new capabilities for this next phase of growth. Examples of this includes individuals who can scale the sales organization, or build the necessary long term infrastructure. If there is a need to replace anyone, it’s important to recognize individual accomplishments and efforts that were critical during the early stage, and then extend relevant support to find alternate opportunities should there be a need to transition them out of the company.
II. Building Your Organization Around Three Obsessions
Obsession About Only Hiring Top Talent.
You may be proud of the team you’ve built to date, but in order to double or triple headcount at an accelerated pace, managers will have to continue playing an integral role in hiring future talent. While in scale mode, the need for hiring talent quickly often leads to poor decision making and increase the risk of hiring toxic employees. This HBR study outlines the cost of hiring a toxic employee, often outweighing the benefits of hiring two superstars (defined as the top 1% of the workforce). One of the key success factors in strong acquisition process is to ensure that all key hires are made through multiple decision makers, but most organizations still don’t take the time to obtain multiple points of reference on every candidate. An example of a gold standard approach is the strong process Google has established involving data, structure and collaboration, which can be leveraged to make sound hiring decisions.
Obsession on Fit — the Right Type of Fit.
Hiring for “culture fit” has been subjective and introduced bias into the interview process, while also contributing to the lack of diversity in tech.
Beyond determining a candidate’s suitability based on core capabilities, turn your focus on assessing other attributes that align with the company mission and values (i.e., a “values fit”) as part of the interview process. Companies, such as Shopify, welcome individuals who contribute / add to the company culture by applying this methodology during the recruiting process.
Obsession on Competitive Compensation — Where is the Mojo?
Everyone can pay. Everyone will pay. And offer benefits. So there. Now what?
Start with making sure you are very well attuned to the market dynamics. Tools such as Option Impact, a private company compensation database, can provide you with relevant benchmarks for evaluating your compensation philosophy, whether it’d be to pay at or above market. This may also be a good time to revisit or build on your equity strategy. Refer to some key considerations and recommendations from a previous blog here.
In addition to the standard benefits you offer, perks can also positively contribute to employee morale and company culture. But the real trick here is to offer perks that are unique or difficult to replicate. These can range from providing onsite childcare services, offering better access to similar services, flexible work hours, half day summer Fridays etc. Rather then taking a paternalistic approach on perks, take the time to listen to and connect with your employees on a regular basis to obtain their preferences and feedback on perks to determine ROI. However, don’t be afraid to innovate either!
III. Biting the Bullet on HR Resources, Tools and Systems
In the early stages (and in some cases even slightly later) of your startup, it’s quite common to keep your HR team and systems lean. However as you scale, now would be a good time to evaluate your current and future needs and determine what additional resources (if any) would be required for your People team. Depending on your needs, there comes a tipping point when it’s critical to make those hires to increase your company’s velocity. This may involve hiring a senior HR leader along with recruiters and/or generalists to help build out and manage your growing employee base.
It’s also likely that you’ll need to transition from DIY systems (i.e., Google and Excel spreadsheets) and invest in tools and platforms to enhance or simplify your processes. This is a perfect moment to evaluate your needs, build your infrastructure and leverage it as you scale during the years ahead. This can include implementing HR information systems (HRIS) like BambooHR or an Applicant Tracking System (ATS) such as Workable. Other tools can also be explored in the areas of payroll or performance management, employee engagement, and one-on-ones, to name a few.
IV. Critical Time for Cementing Culture
1. Transparency and Communication
What once seemed as an effortless process of keeping employees engaged and informed on key business updates, may now tend to be more challenging as you scale. Ensuring that your mission and values are understood and followed across geographies and distributed employee base gets to the heart of the Culture challenge of a growth organization. Hence the importance of ingraining it as part of regular structured and ad hoc processes.
In order to ensure the same level of engagement, strive to foster trust with employees, have regular and open communication, and be transparent with them by sharing key business objectives, performance updates and company direction. The trick here is to make transparency a top priority while also scheduling regular all-hands meetings, team-offsites and Q&A sessions with the team (across all offices if applicable). Easier said than done, with everyone working so hard, and without much disposable time.
Yes, please do put your mission and values on office walls, but remember that every “moment of truth” — moments when you can identify and celebrate, actions that reinforce your values and/or steps towards achieving the mission — those moments are critical in nurturing the culture of your company. Despite the fact that the CEO spearheads culture, employee engagement is also often the best barometer of cultural health.
Explore ways to practice and communicate these values to employees regularly, thereby establishing a sound foundation and enabling consistent reinforcement.
2. Employee Engagement
There are several measures which can be taken to strengthen employee engagement within your company, some of which are outlined below.
Include moments of truth on mission, OKRs and values in all regular communications
Ensure your values go beyond the company’s specific mission, and also support employees social, physical and mental wellbeing
- Facilitate activities to enable cross-functional and level employees to get to know each other and encourage idea sharing.
- Explore Google’s course “Search inside Yourself” which is popular for mindfulness and resilience.
- Get all employees involved in organizing events related to social, educational, charitable and related activities that reflect your corporate values.
Foster feedback
- A culture of open and regular feedback is essential to making improvements within the workplace, both while you’re still early stage but also critical as you grow, as it contributes to employee retention. Tools such as Culture Amp provide the ability to conduct more comprehensive employee satisfaction surveys, or frequent pulse checks which can also be done by a Slack tool such as Polly.
Follow up on feedback by:
- Incorporating employee suggestions for possible solutions.
- Establishing clear recommendations.
- Communicating your action plan and progress on recommendations to the team.
3. Diversity & Inclusion
No conversation about culture can avoid the elephant in the room — diversity and inclusion. The good news is that when you are small, you can set yourself up for success. Companies of even a few hundred people who have not made it a priority from the get go, will likely struggle from a structural point of view — it’s tough to catch up once you hit some small critical mass. Because of this, it’s imperative to implement policies and programs as early as possible to help shape the trend for a long term healthy environment.
If you’re looking to further enhance your diversity and inclusion efforts in the workplace, check out some of the resources below which can be leveraged within your People/HR function. Good news is that a panoply of great tools now exist to tackle this challenge:
- Explore Emily Chang’s new book, Brotopia, where she discusses gender imbalance in the tech community.
- Check out Project Include, which offers a toolkit of solutions for enhancing diversity and inclusion in the workplace.
- Platforms such as Textio can help your team create an inclusive job posting and increase gender diversity within your company.
- The Expecting Playbook, provides best practices and tools to develop a parental leave program in Canada.
By the way, it’s never too late to make changes, especially as it relates to the composition of your team and fostering an inclusive workplace environment. Here’s how Mike Litt, CEO at Vidyard (a portfolio company) is redesigning his team and workplace to make it a more diverse and inclusive environment.
V. Performance and Development — the Killer (But Quiet) Growth Accelerator
Here is a conundrum: most CEOs want a high performing culture, but neglect putting a priority on regular and disciplined performance management processes. Performance management is too often the poor child of management processes. Why? It takes time, reflection, discipline, and conversations on tough and touchy subjects. And, equally important, most people are often not trained properly to receive and provide feedback; yet performance management is a killer tool in the CEO arsenal to develop a high performance organization.
The truth is that performance management does not need to be a heavy and cumbersome tax on an organization. There are many ways to be agile, productive, and effective. In fact the best performance reviews are the ones where there are no surprises, where it is a continued conversation rather than an “ah ha!” moment. Performance reviews are not intended to replace regular and ongoing conversations but rather complement them. Having regular documented one-on-ones throughout the year provides a more holistic assessment on individual performance and supports effective conversations.
Beyond the process of tracking and assessing performance and career development for each of your team members — the strugglers, performers and superstars — most companies don’t act fast enough with decisive actions at both ends of the curve.
- High potential talent should be recognized, leveraged, and stretched (which they are looking for anyways) in short order. Not only will they stay excited, but the organization will benefit from their velocity.
- In the case of poor performers, action also needs to be swift. This however doesn’t always lead to an exit, as they could be great contributors in a different role. Leadership should also act quickly to effectively realign the org.
Looking Ahead
Coming back to the scenario at the beginning of the post, it’s understandable that reflecting on ambitious growth targets set for the next 24–36 months raises many questions to a CEO in hyper growth mode. Although it may feel daunting, a well-designed People roadmap fused with a committed and capable People leadership team can enhance your performance, and reinforce the culture you worked so hard at building and that you are so proud of…
The above five step framework intends to provide relevant insights, priorities and some hints of the type of resources to turn your people processes as your key secret leverage point and turbocharge your growth strategy. Are you candidly asking yourself these questions?
