Human resources technology software provider Zenefits nearly jeopardized its current status within the human resources world. The cloud-based software provider allowed employees to sell insurance without licenses and to drink at work. Media reports have said that inappropriate sexual conduct took place at the firm’s office.
According to CEO Jay Fulcher, the company’s third chief in a single year, speedy growth was partly the problem. He and previous leaders have since banned alcohol at work, fired problem employees, laid off nearly half of its staff at one point and repaired its compliance issues. The company motto transitioned from “Ready. Fire. Aim.” to “Operate With Integrity.” Leadership shuffled, began to focus on the future and hired the company’s first chief people officer, Beth Steinberg, in August 2017.
Although Zenefits ran into issues with its rapid growth, Steinberg said she’s experienced this at other firms as well.
Talent Economy spoke with Steinberg about the cultural changes at Zenefits, the importance of effectively scaling a startup and developing leaders. Edited excerpts follow.
Talent Economy: You’ve previously led human resources or advised at companies such as Nordstrom, reddit and Facebook. How has your past work informed your current role?
Beth Steinberg: My history has been in both Fortune 500 companies, as well as a number of advisory and permanent roles in scaling startups. My past experience has really been a benefit to Zenefits in terms of helping to understand how you actually gracefully scale a company. Things change as the company and the business ebbs and flows, and I’m able to weather that. Also, my experience in working with technical leaders, technical employees and working with leaders who may be new to leading is something that I’ve done for a very long time.
TE: Zenefits’ recent struggles have been well documented. How has the company turned that around? What are your plans to continue to get the culture on the right track moving forward?
Steinberg: I can’t speak too much to what happened before I was here, but it’s certainly been well-publicized that Zenefits had a lot of growing pains in the early days. The company grew both from a revenue perspective and from a people perspective in an extremely rapid way, and I think that rapid growth definitely caused some issues for the culture.
The second phase of Zenefits was really [former CEO] David Sacks coming in, trying to reset values, put some structure in place, tackle the compliance issues, which he really successfully did over much of 2016, and then Jay came in early 2017 and really did another reset in terms of setting up the company for success. A lot of the things that Jay has done, and I’ve tried to help with since I’ve been here, are things like putting in systems and process, getting real feedback about the culture and acting on it, making sure that leaders feel supported and investing in leaders being successful in their role.
I think sometimes, you have to go slow to go fast. The growth of the past has certainly informed the way that we want to set up the company going forward in terms of making sure that we’re not moving too quickly and we’re thinking about culture, structure, talent and management systems and processes when we make decisions.
I think also the culture turnaround is largely informed by employees here really wanting to see the company be successful, understanding what some of the mistakes of the past were and figuring out how we move forward in a more functional way. Jay has added several new leaders, a diverse leadership team, and we’re just slowly but surely getting back on track.
TE: I understand that CEO Jay Fulcher has blamed the problems facing the company on speed of growth, as you said as well. How should startups manage scaling up to ensure future success?
Steinberg: I think that’s a great question. Zenefits’ history has been so publicized, but actually some of the scaling issues have happened at every startup that I’ve ever been at. And I think focusing is crucial; not assuming that adding headcount solves every problem is I think something that really makes a very big difference; and really doing the analysis around where do you need to grow from a people perspective, where do you need to add systems and process, where do you need to better collaborate from a structural perspective and really doing that analysis as you grow. This has happened in nearly every company I’ve been at.
I also think that in general, that Forbes, VCs, kind of the whole tech sector, needs to stop equating success with things like doubling your headcount. I think there’s been such a false metric out there that companies that are super successful are growing from a headcount perspective like crazy, and that to me should never be an indicator of success because sometimes that doesn’t make sense for the company. So those are some of the things that I think can make a real difference.
TE: What are some of those other metrics that startups should focus on instead?
Steinberg: I think, obviously, making their goals, having a few very specific company goals and making sure that everybody knows what those goals are and that the company is holding themselves accountable for tracking to those goals.
I think overall, this is a little bit overused, but overall kind of engagement and satisfaction of employees: Do people feel like they’re learning and growing? Do they feel like they’re being led in a way that makes them productive? Those are some of the things that should be looked at instead of looking at headcount growth, which can be a false positive in many ways. Conservation of cash, driving to profitability, all of those business basics I think are critical to look at.
TE: How does people strategy play into Zenefits’ public image, as well as the images of companies more broadly?
Steinberg: I think because we are a company with a product focused on making work easier for companies by doing comprehensive onboarding, having a mobile app, making technology kind of front and center for companies, I do think we have to make sure that we are doing the same within our own companies. And I think through some of the programs that we are doing, such as our HR advisory group and payroll advisory group, we really try to take a leadership position in terms of sharing information about management and leadership and best practices. We want to help our customers to be successful in that area.
TE: What additional advice do you have for companies who are managing difficult cultures?
Steinberg: I really believe that you need to ask people their opinions on things through different mechanisms. We use Culture Amp as an engagement tool. We try ask the right questions of people. We brought in a cross section of employees to make sure that we’re doing that. And then I think you need to have very specific plans to act that involve everybody. I like having employee roundtables, where you’re actually talking through issues with people.
I think companies need to double down on developing leaders. For a very long time, I would get mad at leaders because they weren’t leading in a way that I thought made sense. And now I realize through my experience that most leaders aren’t taught to lead. The days of people working at GE, getting a lot of development, doing rotation programs, or being at P&G and doing that and then going out and launching companies is gone. There’s really not the opportunity for people to learn and grow like there used to be. So I feel very strongly that companies need to invest in developing leaders. I don’t think that leadership is an add-on or a nice-to-have; it’s a skill and it’s a craft that needs to be developed. That is one of the key areas that can really make a difference in a company’s ability to scale.
TE: What do you see for the future of talent strategy and the role that technology can play in talent management?
Steinberg: There’s a lot of interesting things that are going on. I think that there’s a whole area with AI and machine learning around taking bias out of the interview process. I really think that planning and trying to be more proactive around talent is something that is happening. Not waiting for people to leave, but really thinking about how you can develop people internally to take on different roles and moving from a reactive stance to a proactive stance.
I also think that, in general, people are not staying in companies for long periods of time anymore. Instead of fighting that as employers, we need to just understand that that’s the new norm and figure out ways to build alumni programs and broaden the community of what we think about as employees of people who are here and people who are no longer here and using them as a way to refer people and extend the employment brand. All of those things are changing a lot.
Technology plays into it in many ways. I remember in the early days of being in HR where everything was done by paper, and now, I don’t think I ever touch a piece of paper. I mean, everything is done electronically, and I think that makes things so much easier in terms of onboarding, employees kind of owning their own information, having information that will be portable for employees, so being able to take your performance feedback with you when you leave a company, being able to take your training skills with you and documentation of that with you. I think all of that are going to be new and exciting developments in how we use technology.
TE: Is there anything else you were hoping to share with Talent Economy readers?
Steinberg: The thing that I said about developing talent is the most important thing that many of us need to think about. I think there’s been so much focus in bringing people into a company, and I really think the focus needs to also be equally or on a higher sense of urgency around what do you do with people once they get in the door? How are you developing them? How are you making an environment that’s inclusive for people? And I think that is really going to start being a huge focus as we continue to grow our companies.
Lauren Dixon is Talent Economy’s senior editor To comment, email email@example.com.