“Code is easy. People are hard.”
Colleen McCreary picked up this phrase from a senior engineer in the early days of Zynga, and it’s stuck with her ever since. “I think universally founders and early startup leaders underestimate how hard people work is,” she says. “So many leaders end up playing catch-up in the people space later on because when they’re starting, building and selling the product is what seems hard — they think they can handle ‘all of this other stuff.’ In fact, on more than one occasion, I've had a CEO say to me, ‘I spend all of my time dealing with these people challenges, but I don't need to hire someone super senior to handle it,’ which is just such an ironic statement.”
In our experience supporting seed stage companies at First Round and interviewing hundreds of founders and startup leaders here on The Review, after getting to some level of product/market fit, CEOs tend to find themselves spending the bulk of their time and mindshare on people-related challenges. Whether it’s bringing the right people on the team and managing others off, developing a cadre of leaders, or crafting culture and compensation, it all quickly becomes more difficult — at a faster clip than they might expect.
And even if a founder does come into the startup game eyes wide-open, fully expecting their plate to be full with people challenges, there’s still plenty of other failure modes. “Many assume that what they've seen before with respect to people processes is the way it should be done. And so a lot of what you run into, especially when you're scaling, is people coming in who say, ‘When I worked at XYZ company, we did it this way and this is what we should do.’ And the practices just continue, without anyone ever assessing, ‘Well, what problem are we trying to solve? What culture are we trying to build? What do we want to put into place at our company?’” says McCreary.
She’s seen the inverse happen as well. “Sometimes it's just a rejection of everything someone saw at the last company. Like, ‘We don't need managers,’ or ‘We don't need job titles,’ without understanding that most people actually do like structure,” she says.
McCreary has an incredibly well-trained eye when it comes to spotting these sorts of patterns. As a repeat Chief People Officer, she has more than 20 years of experience in HR, operations, and recruiting, working at a fascinating set of companies through multiple IPOs and acquisitions — from Zynga’s journey from 130-person startup to 4000-person public company, to The Climate Corporation and Vevo, to her current role at Credit Karma.
These experiences have clarified McCreary’s understanding both of her own role and how to better approach essential elements of the people function. “As Chief People Officer, I'm not the CEO of culture. I’m really not the CEO of happiness,” she laughs. “I think that I am like the product manager of the systems and tools that run the company. My job is to build the systems and tools that support the work that our leadership team has decided needs to get done. And so like any great PM, I do think it is my job to consistently be looking at all of these tools and seeing if they’re working.”
This constant tinkering often leads to implementing new approaches, and occasionally, less-than-conventional ideas. Take this quick example: “We do promotions quarterly. It keeps us ahead of market and people don't have to wait so long to feel like they've proven things out. But it's a lot of work to facilitate a promotion cycle with calibrations and trying to do it equitably four times a year,” says McCreary. “But we think it's the right thing for our business and for our employees. It also means that four times a year, you're going through the cycle over and over. And so every time we’re focused on how we could do it better. How can we do it faster? How can we provide more clarity? What did we miss? What questions came up? Are there better tools we could use?”
In this exclusive interview, McCreary walks us through her approach to the systems and tools in her purview, including compensation, rewards and recognition, performance management, company communications and leadership development. In walking us through some of the most common missteps she sees, McCreary offers up advice for leaders looking to assess if their own tools are working in each of these buckets. She also shares strategies on approaching them in a fresh, new way — from eliminating bonuses and making peer performance feedback optional, to why career growth isn’t just about a promotion.
MISTAKE #1: NOT DIGGING INTO COMPENSATION (AND FORGETTING THE THREE C’s)
McCreary offers this up as a starting point: “I find that the processes, systems and tools are really just about providing clarity, context and consistency,” she says. “There is this craving for structure and hierarchy, and that even starts when people are young. And so you need to provide clarity to people on where decisions are being made and who's making them, and how they can get what they need from them. People inherently are self-motivated. So you want to set up a system where they know if you achieve XYZ, this is the outcome that will happen to you.”
People will react not just to what they hear, but what they're actually seeing in practice. And so you have to provide the clarity of what you're trying to do. And then the context as to how you got to that decision. And then you have to do it over and over again.
To illustrate the 3 C’s in action, she starts with what she terms “everyone’s favorite topic” — compensation.
“When I first got to Credit Karma, only 40-something percent of the employees said that they felt like their total compensation was fair in the employee engagement survey,” says McCreary. As she does with every new role, she set out on a listening tour to troubleshoot. “I do a very deep set of 1:1s, and at Credit Karma I spoke to 100 people in my first 30 days. I have a little formula: First, I obviously want to talk to everybody on the management team. Next, I talk to all the people who are considered ‘stars’ by the leaders, because it's kind of interesting to see who those people are. And then I want to talk to the people who've been there the longest — not always the same people as the stars,” she says.
While these conversations take their own course, McCreary does stick to a loose script:
How did you end up at the company? “This helps you find out a lot about motivation, what they were looking for, and to some extent, what they were sold in terms of the vision.”
Why did you stay? “This allows you to see if there's a mismatch between those two things, or if they're harboring anything around that.”
Where did you work before? “People are usually really excited to tell their story. This also gives me a sense of where their point of view might have been developed. “
What’s working really well at the company? What’s not working well? “In the tech industry, it’s generally harder for people to point out the former. Generally, people are really excited to tell you about the latter.”
What am I not seeing or hearing? “What do they think I should be listening for?”
Who else should I talk to?
“I get a lot of information at the end of all of that, and write up a sort of Amazon-style six-pager that lays out the big themes that I heard, the things I think the management team could go after, my own three priorities, and the timeframe I think I can accomplish them in,” she says.
Going back to Credit Karma’s particular compensation example, McCreary summarizes her findings: “No one understood how they were paid, how additional equity grants were made or how they were going to get promoted. This is the case at a lot of companies — compensation seems to be just this black box of ‘Well, somebody makes a decision and then this money shows up, and I'm supposed to decide whether or not I want to stay here.’”
In an effort to boost compensation transparency, McCreary and her team dug into each element. “When we redid all of our compensation, I got up on stage at an All Hands and walked through, ‘This is how you're paid. This is what Radford is. We pay at this percentile and this is why we do this. And here are the companies that are in this set. We do a market review twice a year. These are the dates. This is when you can expect to understand that or hear this,’” she says.
“I spent a lot of time just trying to explain how compensation works and the context as to how we were going to pay people, and we continue to reiterate that in meetings, in new hire orientation. We have a whole Slack channel that's just about compensation and equity so that people can continue to ask these questions. We have go-pages set up so people can understand it.”
Startups that fail to demystify comp will set themselves up for hardship, says McCreary. “It's a fundamental piece of the value proposition of why somebody is at a company. If people don't have the clarity and the context, and they don't know when things are going to happen or when things can change, you'll end up just instead of working on these things endlessly, instead of focusing on the product and your customers. You're going to end up spending all this time trying to appease people, or to give them the clarity around if they’re being treated equitably relative to the folks around them.”
If you don't consistently provide clarity and context, all you're going to end up doing is talking about compensation all of the time.
MISTAKE #2 : NOT TAILORING REWARDS & RECOGNITION TO YOUR SPECIFIC CULTURE
Another common pitfall is failing to custom-tailor your systems and processes so that they are in service of your culture and values. A copy-paste, stamp-it-out approach doesn’t work across unique company contexts.
McCreary often sees this pattern in the reward and recognition bucket. “Can you do peer recognition? How do people want to be recognized? And is that coffee with the CEO? Is that a party? You have to figure out what those different pieces are so people can understand it when they come together. Again, this goes back to why did we do this? What are the choices we made? And can you explain it? This is usually the biggest challenge for folks — can you explain why you do what you do?”
McCreary dives into two very different examples below — first, how Credit Karma retooled their bonus incentives, and second, the gaming mechanism that inspired rewards at Zynga.
Drive the right behaviors with your incentive system.
“Right now, I'm working at Credit Karma, which is very much an ‘all for one, one for all’ type of company. But when I got there, it was very traditional compensation — here are the pay ranges, once a year you could get a bonus from like zero to 15%, determined by your manager,” she says.
“But Credit Karma’s values are around helpfulness and empathy, and ownership and progress. And when you think about how you reward people, then you should reflect on whether this bonus program is really driving those behaviors that you say that you want, or the things that you care about. At the end we were like no, it actually doesn't really do much,” says McCreary. “So we made the decision to do away with most bonuses. With the exception of the most senior people, most don’t have much control over company performance — why should your pay be connected to what happened? And so we rolled it into base pay and just said, ‘Hey, we're going to pay you for the job that you do. And we pay everybody the exact same thing, we don't do merit increases or anything like that. And if the market moves, your pay moves.’ So it's a very extreme example, but it works because it matches our values and it rewards people in that way.’”
As an alternative reward that better aligned with their values, the Credit Karma team introduced the annual Exceptional Impact Program. “You can nominate yourself or somebody else, and we give an additional equity grant to people who've really shown some sort of exceptional impact. And it's selected by a senior leadership team, versus at the individual management level, so even if you moved teams a lot or had four managers or those kinds of things, you could still get considered,” she says.
Here are some of the nuts and bolts of how it works: “We basically keep a running Google Form and it's open all year, although we traditionally award it in December. We intentionally designed it to be around impact and not just performance, because I think there's a difference in terms of the work that you did that really has changed some sort of direction in the company and made potentially a lasting impact,” says McCreary.
That’s not to say 100% of the team will always be on board if you make unconventional moves in the spirit of your values. “I do have some critics, some who call it my socialist communist pay program or those kinds of things, which is kind of funny,” McCreary laughs. “But it works because it's the choice that we made. If you’re at a different company where the values and culture are about meritocracy and the individual, then you would design a process that delivered extra bonuses or huge stock grants just for those top performers.”
To provide another example, McCreary goes back to her Zynga days.
“Zynga was much more extreme. Back in our startup times, we created this massive awards program there. Our former CFO Dave Wehner is the CFO of Facebook now, and he always said that Zynga’s awards culture was just like nothing he’d ever seen. We did these quarterly awards and we intentionally designed them to drive after our values,” she says.
“For example, there was a founder/CEO award, where the CEO Mark gave his Tesla to people for a quarter, back when Teslas were still brand-new. We had this Atlas award, which was all about the people who were holding up the company, so you got $5,000 to take time off and go travel somewhere. We had a green beret award for people who ‘saved the day.’ And then we had the Zynga Spirit Award that was $100,000 in vested stock, and it went to those who had some sort of big win, both junior and very senior folks,” she says.
Of course, this wouldn’t necessarily map onto another company culture. “It doesn't really work with where I'm at now. And it also depends on where you're at in your company cycle, and what you can afford,” says McCreary. “But that awards culture and the idea of recognizing people a lot, I think it's great, people loved it.”
When it comes to rewards and recognition, you need to ask, “What are we trying to accomplish? What are our values? How do we live them out?” And that's why just taking whatever you did at your last company doesn't work.
MISTAKE #3: NOT TALKING ABOUT THE HARD STUFF
In terms of cultural problems that may seem innocuous but are actually quite pernicious, McCreary points to another common tendency: avoiding the thorny topics.
“Leaders need to normalize what's going on in the company. Not talking about the problems that are going on and just letting things fester is a huge issue,” she says. Attrition is an apt example. “That's the number one thing I find with startups, especially when most of the team has never seen rapid growth before. I make this comment all the time:
The pain that comes from adding chairs to the deck is way better than the pain that comes from taking the chairs off the deck.
“But they only can go off of the experience that they've had, or maybe that their friends have had. And so if all of a sudden, a bunch of people are quitting and no one's talking about it, they don't necessarily know what's going on or why that's happening,” says McCreary.
“It's normal when companies are scaling to potentially go through these valleys and mountains of attrition. What people signed up to do in the early days is not what they're going to be doing as the company grows and changes. You don’t get to own every decision anymore. All of a sudden it's all about being specialists and going very deep on certain things. Or someone could lead a team that was 10 people, but managing managers is a whole new level of complexity and they're not ready to do that,” she says.
“But instead of talking about it, what companies tend to do is just ignore it. They think that everybody sort of knows why people are leaving. Or that it's not that big of a deal. Or that attrition isn't necessarily bad — which I agree with, I think it's very healthy. But if you're not talking about it, people will assume the worst,” she says.
On a tactical level, McCreary suggests simply raising the topic yourself. “One of the things I just started to do in our All Hands meetings was saying, ‘Okay, no, one's asked about XYZ. I know you're thinking about it. We're going to talk about that right now.’”
I know it's painful. I know no one wants to talk about it. I know you really want to just focus on the mission, on your customers and on what's going well. But if you're not talking about the things that aren’t going well, you're really setting yourself up for pain for the long-run.
“When I ask a founder, ‘Hey, what's the biggest problem you're trying to solve?’ I often hear, ‘I'm trying to solve for a gap in leadership,’” says McCreary. “And when I'm talking about leadership, it's not about managing someone. It's people being comfortable voicing different opinions, pushing back, and carrying the water on messages that no one wants to hear. It’s just incredibly hard to find people at all levels with the courage to do that and bring people along on the journey with them,” she says.
“One of the hardest things as a CEO is having to let somebody go, or having to cut a line of business or tell people things aren't going well. How you do that and how you build trust is so important — there are just a lot of people who are not very delicate about that,” she says.
McCreary shares a leadership challenge from Credit Karma: “We announced that we were going to be acquired by Intuit in February 2020. And it wasn't even closed — we went through a very long Department of Justice antitrust review. But then COVID hits and the financial markets tighten. And in our world, we make revenue when our members use a product from one of our partners, so a personal loan, a credit card or a mortgage. Well, when the credit markets tighten, no one's lending. And so our revenue went to the floor,” she says.
“Thankfully, we were profitable. We had money in the bank, but we had to go through a process of like, ‘How do we financially survive this?’ And we took three weeks to figure it out, we didn't rush into doing anything. And we actually decided to do pay cuts instead of layoffs,” says McCreary. “And our CEO Ken Lin could have had me give out that news. I'm pretty broad shouldered and I'm usually the one who sort of lays things out in that way. But instead he was like, ‘No, it's my job. I'm the CEO. I'm going to lay this out.’ And he was super thoughtful about how he did it. So it was a leap of faith in the team and that we could make it, but then also owning the message and owning the follow-up message.”
I find so many people run from it, but the leaders who I've learned the most from never shied away from the hard stuff.
MISTAKE #4: NOT STAYING ON MESSAGE
McCreary’s full title at Credit Karma is actually Chief People, Places, & Publicity Officer — which means that she owns the company’s PR internally and externally.
This doesn’t always live inside the people function, but in her eyes, joining the two is critical. “I think a lot about how we are telling our story and our narrative inside of the company, but also equally important, how are we telling that narrative outside of the company? It's incredibly important that those two things match, because if they don't, you're going to run into issues on either side,” she says.
“If they don’t match, then internally people will get their information or define their experience based on what the outside world is telling them. Even if they're hearing how amazing and awesome the company is, and how you're worth so much money and all those kinds of things, that's not a healthy mindset in my opinion,” says McCreary.
You want people to build a narrative based on their experiences inside the company, how you operate, and the decisions you make — not based on what they read in the paper.
To counteract these tendencies, McCreary offers up some unusual counsel to startup CEOs: Act like a one-hit-wonder pop star.
“Early on, you have to focus on why you're here, what you're doing, why it matters. CEOs basically have to be like one hit wonder pop stars. You have to keep singing the same song over and over. Because people don't remember, and you have new people joining who haven't heard you sing that song,” she says.
“Founders, in particular, are always looking to move onto the next thing, but people don't come along the journey that quickly. So you have to slow down to be consistent, stay on message and tell employees how they're going to define success. Because if you don't focus on what really matters, people will hang their hat on an IPO or the stock price or something that you really do not control as being the determinant of success, and it's just hard to unwind. You're going to be in for a lot of pain later when things get rocky. And unfortunately I've learned that the hard way — I've lived that. So I'm exceptionally sensitive to it.”
MISTAKE #5: NOT REFRAMING CAREER GROWTH PROPERLY
“Career growth is one of those terms that people throw around and there's not really a definition. And so part of what you have to do for your employees at all levels is give them a framework for what career growth even means,” says McCreary.
“The idea that you can just keep promoting, promoting and promoting sort of times out at some point. So whenever I hear a comment like, ‘Well, I didn't get promoted, so I'm clearly not growing anymore,’ it seems as though it’s not being framed correctly. Meeting new people, working in a new environment with new products is growth and development, but you have to keep framing that for folks,” she says. “Especially for people who've been in the same type of job for long periods of time, I say that in a lot of ways, it's like being a teacher. You could potentially do that job for 30-40 years. And I don't know of any teacher who wouldn't say that they grow every time they have a new class, that they have to learn new skills and they get to do new things.”
As a leader, you have to help people reframe their expectations around growth and decide for themselves where they're at in their own careers and what they're aspiring to do.
In addition to encouraging omnidirectional career growth, McCreary points to another way startup leaders and managers can help reframe growth: emphasizing strengths over highlighting weaknesses.
“I grew up in the culture of giving corrective feedback and working on all the things that you're not good at. Then I read this book ‘Nine Lies About Work,’ which I loved, and I was very mad that I didn't write it myself. And one of the concepts they discuss is how we need to stop spending so much time on weaknesses and start focusing on strengths. Why do we spend all this time trying to convince or mold people into what they're not? Instead, we should encourage people to strive for being even better at what they're already naturally good at or what they enjoy,” she says. “It’s a very hard change for a lot of leaders — myself included — to move to that because of a natural tendency to pick out the things that aren’t necessarily going as well, or the other skills you think they need to advance.”
It’s all about choosing the right framing. “You can say things like, ‘Hey, let me give you some advice on this other set of skills that you may need to develop over time, but it's your choice.’ Or, ‘Hey, you're amazing at this. And maybe these are the opportunities for you, because when it comes to recruiting and bringing in talent and selling a vision and selling a message, you are phenomenal. But when it comes to your ability to play in the sandbox with others, or potentially make hard decisions, you're not as great at those things. But maybe you don't want to spend time going down those paths.’”
If you’re seeking to make a similar transition at your company to focus on strengths versus the corrective aspect of feedback, here’s what McCreary recommends: “In peer or upward feedback, you can switch your tools to focus on those kinds of prompting questions on how people show up and what their strengths are. There's a lot of work around this from the University of Michigan, where a lot of this positive work came out of in the mid-2000s,” says McCreary.
She brings up an example from her own career: “I remember I worked with a coach who had me do this reflected best self exercise. It was this idea of going back to your peers and some people who you've worked with and asking them for examples of when you've shown up as your best self. When they think of your best work, what are those competencies?” she says.
“And when you see that picture, the feeling that you have as an employee is so different than when you do a traditional stop-start-continue type of feedback exercise — it really does flip everything. In general, people are inherently defensive. And so the more that you sort of pick, pick, pick, the more they're going to almost dig in on certain things. It's almost like quicksand.”
Here’s how these exercises in reframing career growth have been translated into systems and processes at CreditKarma:
To encourage career growth in every direction:
“We've built out job architectures, which we call a job framework because we don't want it to be a ladder where people feel like they have to go directly up,” says McCreary. “Instead you want people to feel like they can maybe take a path somewhere else or do something else, and that would still be career growth.”
To encourage the right kind of feedback:
“In the absence of a performance review per se, which we don't do, or 360-feedback, we had to put other tools in place for folks. Three times a year, we go through this process we call peer perspectives,” says McCreary. “It's perspectives not feedback — because that’s such a scary, loaded term. So we tell folks to pick the people who you want to receive perspectives from and we tell those giving it to think of this as giving advice. We don't require it, although for the first one for this calendar year at Credit Karma we got 85% participation.”
These perspectives are paired with an hour-long manager-direct report session called the Karma Combo. “It's supposed to be this combination of foresight and insight — what are you seeing in yourself and your role, and then in the future, what would you like to see in yourself and your role, and what can we do to help facilitate that?” says McCreary.
“Most people have appreciated that these are sort of optional experiences. We intentionally design it to not at all penalize you for learning, growing and getting that perspective. And I’ve found that with this system, people are much more honest about what the opportunities are because they know there's no downside for someone when they’re giving feedback,” she says. “This isn’t connected to promotions or anything like that. As I mentioned, we don't really have bonuses and you can get promoted multiple times a year, so it's not locked into any certain timeframe.”
In case you’re looking to borrow from this approach, McCreary shares some of the specific questions they ask employees to consider before their session with their manager:
Reflection: What was the most meaningful observation that you've reflected on from your peer and or upward perspectives? This prompts you to consider what was the light bulb moment or new information that was surfaced. It’s intended to facilitate insight and awareness of the potential differences between how you perceive yourself at work and how others experience working with you.
Learning: When you get these perspectives again in four to six months, which characteristics do you want folks to recognize as improvements? Or what strengths do you want to continue to leverage? This helps you explore possibilities and opportunities to enhance success and growth in your role or aligning your values.
Action: What actions and support do you need and do you want between now and the next cycle to make this a reality? This helps you identify what actions you will own for your own growth, to be a champion of your development.
Enablement: As a manager, what can I start, stop or continue that will help you in your growth journey?
McCreary ends on this thought: When it comes to any of these tools or processes, it’s not one-size-fits-all. “There's this nuance that people are all individuals. So many companies are like, ‘Manager training is the solution to all of our problems,’” she says.
“And I laugh about it, because I think being a manager is like being a parent. As a parent, you can take as many classes as you want and read as many books as you want, but when that kid shows up, they don’t come with a manual directly for them. And not everything shows up exactly how you read it or how it happened in the class. So you just have to live it and experience it,” she says. “And you have to put a lot of time and effort into thinking about, ‘Oh, what did I just do? And why did I do that? And did that work or did that not work? And could it work again? And is it the person or the situation that's causing this?’ It actually requires another level of thought. You need to have the motivation to understand how people are motivated by different things and then figure out how to approach them differently.”
Cover image by Getty Images / Rawpixel.