Navigating Choppy Waters: The Talent Perspective

Speaker 1: So I'll go ahead and start with a introduction of Bolster, then people will get a chance to join and most people probably already know a little bit about us. We've been around for two and a half years. Bolster is at Talent Marketplace for executive level talent. We help our clients find on- demand fractional interim board roles and full- time roles as well. We started running this series called Navigating Choppy Waters a couple of months ago when we started seeing some challenges with the economy. We thought we have a lot of experts out here that we're connected to, and it would be great for our clients and our members if we can bring some of those together and just have some conversations about some of the challenges that people are facing and think about the ways that maybe people have faced these challenges in the past and learn from some experts. Today, we have Lori Knowlton, former multi- time chief people officer, and she's a current advisor. And then Mark Frein, who's also a multi- time chief people officer, and currently chief workforce officer at Net Oyster. So we're running the show today with a kind of rapid fire round robin. I'll just ask a couple of questions of both Lori and Mark and then we'll open it up to have some conversation with the audience as well. So meanwhile, just go ahead and start with Lori. Will you just introduce yourself, give us a quick introduction of who you are, how you got here, and what made you interested in talent and people?

Lori Knowlton: Absolutely. Good afternoon everybody. My name is Lori Knowlton and I have had a long career in HR. It started in 1994 in Cambridge, Massachusetts, working for a strategy firm called Monitor Company. And Monitor Company I think has been acquired by Deloitte or somebody like that. But they were in the McKinsey, Bain sort of echelon strategy consultants with people like Michael Porter and Chris Argyris on their board of directors. And so that made it a Petri dish for top talent and for top talent initiative. Notably, there was no HR team at Monitor. It was recruiting and professional development. And then benefits and comp were run by finance. It was all about the business leaders making the decisions and running the talent show. So the war for talent was hot in the nineties in Cambridge, and then I went to the dot- com bubble and as my career progressed, I went through the dot- com bubble in Cambridge and had a really exciting time. And then I grounded myself in HR after the burst of the bubble and came to Austin in 2005 to be Chief People Officer at HomeAway, which was a acquisition based vacation rental company and then went to Silicon Labs after that, which is a semiconductor company with a focus on internet of things. So all of the companies have had an intense focus on talent and maintaining talent and building great cultures. I'm happy to be here to talk with you about it today.

Mark Frein: I am Mark Frein. I am really pleased to be here today. I'm the Chief Workplace Officer for a company called Oyster HR. Oyster HR is in the business of helping other companies employ people globally, especially for the talent demands for venture- backed distributed work companies. I have been working in people related industries since around the same time as Lori, I guess. So I've seen through every up and down in the overall markets in the tech sector since 1997, I guess. For a while I led a consulting company out of Vancouver, Canada that all of our customers were technology companies and my direct customers were the heads of people at those companies. And then I made my way into executive roles at venture- backed startups where I've been for about the last 12 years.

Speaker 1: I just want to ask you both, and Lori, maybe you start with this, but what's a talent challenge that you see kind of VC backed companies facing right now? And then we can talk a little bit about what both you and Mark are advising people when you see those or how they remind you of what you've seen in the past?

Lori Knowlton: I think that we're seeing a lot of noise in the system and we're seeing CEOs operating on either end of the spectrum. Either they're getting so much information about the macro environment that they're being reactive and sort of jumping to conclusions about their own products and their own companies like layoffs or so forth. And they might need layoffs, I'm not saying that they don't, or they're sort of in paralyzed mode of unable to move forward and unable to make the hiring plan that they want to make in order to achieve their objectives. So that sort of reactivity or reaction to the macro marketplace is a problem because they're not necessarily able to make the decisions that are necessary for their unique business to be successful. So I have one CEO that's in EBITDA pressure and the board is pressuring him to make cuts and he knows that he needs to, and I have another CEO who's about 30 people behind on his hiring plan and doesn't want to make any job offers. So between the two of them we've got a whole range of executives.

Speaker 1: Yeah, that's super interesting. Have you had similar experiences in the past and what were the solutions you had for that?

Lori Knowlton: Yeah, I mean I think it's always important to scan the market and to understand what's coming up and CEOs are great at synthesizing and integrating all of that data, but at some point there's a point where the day comes and you're living in the moment and you need to make that decision. So at Interliant, which is a company where we did 26 acquisitions in 18 months and went public, we then had to downsize after the dot- com burst so that the choppiest part of my career was like 2000, 2001 right around 9/ 11. And we were really focused on what we needed to do every quarter in order to survive for the next two quarters. So there's an element of being just really pragmatic and tactical about it at that point, which would be informative for any CEO to look at and say, okay, I've got sort of a long- term strategy that I'm playing on. What do I need to get done in the next 90 days? What do I need to get done in the next 60 days? What do I need to get done in the next 30 days? And to be true to their business and true to their investors. And perhaps they operate more cautiously than they would in the past or they would've three or five years ago, but they don't stop action'cause that makes them just as vulnerable as taking the wrong action.

Speaker 1: Yeah, I like that. Mark, have you seen something similar to that?

Mark Frein: I mean obviously right now across at least the venture- backed segments, there is a lot of anxiety and that anxiety moves from different parts of the marketplace downward in terms of the venture capital firms where the companies are funded downward to operators. I think that, I mean Lori's absolutely right. The pressures that we're seeing that are externalities are there, they're real. In some cases they're difficult. But I do think it's very important operationally to avoid mixing the externalities with the internalities. Meaning the externalities are how you run your business and how you make your business work is going to be a question that needed to be true before the current environment, will need to be true after the current environment, and needs to be true throughout the current environment. So responsiveness to the challenges is a question of figuring out where your business is heading independent to some degree of the externalities. And talent, all the things that seem to be true right now is that it's not, even though there are some degree of shifting in terms of employer leverage from a situation where employees in the tech sector had a tremendous amount of leverage. It's not obviously clear right now that it's any easier to get great people in the technology sector than it was a year, two years ago. So it is still hard to find good people to work in technology companies and I anticipate that continuing.

Speaker 1: Yeah. Lori, you mentioned something when we were talking earlier about the impact to employees on the lack of moving forward or the lack of decision- making.

Lori Knowlton: The impact of the inaudible is in either direction on the employee base, so it's hard to find people to work for you, it's also hard to keep people working for you. So the trust of moving forward is important and it takes a long time to build a culture of trust. It's built every day based on solid decisions and clear communication and transparency with your employees. But you can lose it overnight if you react in a way that's damaging to your employment brand or that seems to be taking the employer employee contract too lightly. The war for talent came out early in my career, so I've lived with it as a manifesto of my career and understanding the importance of talent is something that most of the CEOs understand, but they don't really always understand their role in preserving the trust and their role in part of that intrinsic employee employer contract. And a lot of it has shifted even more in favor of employees with the talent being so sparse. I try to find an Android developer, it's impossible these days and there are hundreds of them, but they're all very well employed and able to accept jobs from anybody. Sorry, I lost my train of thought. So making sure that your employees can trust you and stick with you through these hard times is important so that you're maintaining your organizational knowledge and momentum.

Speaker 1: And Mark, I think you already touched a little bit on this, but what are the challenges, the biggest challenges you're seeing for talent right now?

Mark Frein: So the one question is where and there is increasing... What happened partly in COVID and even before to some extent, was the talent- based particular in the sectors that we're talking about became much more mobile and became much more interested in having the flexibility to work where they chose to live as opposed to move or be held down by a physical place. I've been working in fully distributed companies basically for the last decade and it comes with strengths, it also comes with weaknesses, but at the heart of it, I think that is a new factor that is playing into the current situation where if you want to find people to work for you and you want to find the best people to work for you, they may want to work where they want to live as opposed to they want to come to where you are. And that creates a pressure and there's good reasons to be physical, there's good reasons to not be physical, but that adds a different dimension to the quote unquote, " war circle for talent." Whereas we used to be able to focus our recruiting efforts on developing networks in a particular physical location and developing recruiting strategies to pull people from the networks of a particular location. Though finding developers or finding talent for tech companies has become a matter of looking at the world, which opens up a lot of possibilities, but also is really hard. A lot of the strategies that talent acquisition would use to go after a market like myself and Lori are in here in Austin, are very different when you decide, oh it's not just Austin developers we're looking for, its global developers that we're looking for and have to look for sometimes because of the fact that you can save some money on the wage system if you don't hunt just simply in one market. So those complexities, especially for smaller companies, are both a wonderful benefit and an asset because it opens up possibilities that you didn't have before. But they also make the business part of talent very complicated very quickly.

Lori Knowlton: It makes the culture part of your team building a challenge also. There's an extra effort and the GitLab team does a great job of talking about this, but there's a huge amount of extra effort that managers have to make in order to stay in touch with their employees because managers are still the core conduit of information between the company and the employees and the main reason that employees stay or leave a job. And so your managers have to be exceptional to work in a remote environment and to stay connected to employees all over the world or all over the country and to make sure their interests are served well.

Speaker 1: Yeah, I think that's right. Maybe even more investment in leadership development than we might've done in the past'cause the leadership job is a little bit harder in that environment. A couple questions that came in from audience, so let's go to those. So for you Mark, can you share your observations from the past... I think it says 2. 5 years, I mean 25 years, 2. 5 years in terms of the start and stop hiring from your clients. Things like things turn on and off in the blink of an eye.

Mark Frein: The one thing I would say, especially for not 25, somebody just... I'm like, I'm going to have to really work here to go back 25. No, the one thing that I do say to other business leaders who aren't in the talent are human side of the business, everybody's in the human side of the business, but let's say the formal people side, is there's always a delay when it comes to decision about what you're doing with talent and it creates a ripple of a system effect. So meaning if I decide that, OMG, we just got this kind of funding and we believe we just have this kind of demand, we're going to put the pedal down really hard to staff up, that curve of acceleration of talent inbound happens over a time. It doesn't start the next day. And of course, I've been a founder operator myself of a company and you never want to think about what I want to do right now, means I want that to happen tomorrow. But the natural way that say recruiting and staffing up happens is there's always a little bit of a delay as things play through a system, as you get jobs together, as you figure out where you're going to go and hunt and you can build up the engine, I often talk about it with my recruiting teams like we're building an engine and that engine is going to rev at a certain RPMs. Getting it up to a certain RPM level takes a lot of work and then getting it down takes a lot of work, meaning you also don't shut it off all of a sudden. So you can of course decide that tomorrow we are not going to hire anybody else. But that can really, really do harm for your employer brand because you have a whole bunch of candidates in a funnel and if someone literally was expecting an offer the next day and you've shut it off without thinking about where you shut it off from the funnel, it can do a lot of damage to your brand. So if I have one piece of advice from all of the starts and stops, earlier this year, I've been part of a couple of venture- backed companies that have hired very, very rapidly. Q1 this year I was overseeing a talent function that hired more people in the quarter than I'd ever done before, which was about 215. We hired in a quarter, which was the same size of the company the prior year. We basically doubled the size of a company in a single quarter. That engine work takes time, builds a pet of steam, and you don't want to suddenly derail the talent engine because you will have a hard time restarting it again if you're not very careful.

Lori Knowlton: I absolutely agree. I also use the recruiting machine metaphor and there's also a point in the company's size where attrition is a inaudible and the people that are leaving voluntarily are your best people, not your worst people. And that's something that CEOs feel the pain on a regular basis. So at a certain size you should have a constant recruiting engine that is constantly sourcing and recruiting your top talent and looking for those people that you want to hire in the next six months. Because just like real estate, the right talent is not on the market all the time when you want to buy it. So say you're looking for a really strategic important key skill sets for your company, you need to always be sourcing for them and then hire them when you find them in the same way that you would if you're collecting some special asset that's rarely available on the market. You have to constantly be looking for it.

Speaker 1: Yeah, I agree with that. Yeah, we've definitely seen some of the stop and starts where people look for someone and then they decide that maybe now's not the right time, like you said before, Lori, you may need to wait a few months for it. All right, so one more question on that. What experience and advice would you offer founders and CEOs? And this is from Brian, and correctly resourcing the talent searching and recruiting strategy. For example, internal versus external services.

Lori Knowlton: I think that having an internal recruiting function is important in order to really represent your culture and have well- trained managers and have a nice process. But I think that baseline of recruiting capability would be at your core burn rate. So if you have attrition of say 10% or something like that, you want to staff your recruiting function in order to manage your day- to- day recruiting. And then you can amplify it with agencies or sourcing calendar or contractors when you have some additional demand. But it's good to have a blended approach so that you can have your recruiting brand and your recruiting story and great processes without having to be completely decentralized and fragmented in ad source services.

Mark Frein: Without any internal recruiting, you lose the ability to shape the employee experience and the culture in a way that helps the company grow. But you also have to be pragmatic in various times as the company run. And you also want to be really careful because recruiting, as we all know, is one of the places where when things get dicey, I mean if I go from hiring a bunch to not hiring at all and I have a team of 25 recruiters who are all internal staff, it's going to be dicey for them. So what I try to do is figure out that wedge that Lori just talked about, which is the wedge that I need under almost all possible circumstances just given natural attrition and then planned headcount growth. And then you amplify that or add to that in various places in various ways. That just helps you keep things more secure over the long haul.

Lori Knowlton: And during your slow times or when you have a dip, that internal recruiting team could be working on things like university recruiting because that has a very different calendar cycle than industry recruiting. Or they could be working on employment brand projects or they could be working on recruiting systems and processes. So they don't all have to have a full workload all the time. They can be adding value to your process. But obviously if you're under a trans constraint, you need to decide where that line is. And I've always been very clear that the CEO is the top recruiter in the company and that his or her involvement in the talent conversation is critical, not something that HR can do without their full buy- in.

Mark Frein: I talk about it like the hiring manager, or in this case CEO, chef with sous chef being the recruiting team, meaning the hiring manager hires, the recruiting team, helps make that process as best as it can. My opinion is that it gets a little wrongheaded if it's I'm a manager and I'm going to have recruiting hire somebody for me, because that person isn't reporting to recruiting, that person is reporting to you. So the ultimate ownership of the person coming in is going to be up to the hiring manager. But a great recruiting team can help a company make great decisions about the talent on the inbound.

Lori Knowlton: Your entire team has great perspective on those hires. If the recruiter has a hard time getting in touch with the candidate or is getting weird experiences in the process, then that has to be taken into account.'Cause that's likely part of the candidates' ammo, even if they're not showing that side of themselves to the hiring manager.

Speaker 1: Well let's get to the next question. What are your strategies for retaining good talent in the current environment?

Lori Knowlton: I would say listen to them carefully and make sure what they want.'Cause people's needs, they're changing and they changed tremendously during COVID. They changed from being an in- office culture with a steady place for childcare to being a place where children are sitting on laps and parents are unable to run their lives the way they used to. So I think that there is an important need for every company to think about what their population is actually needs beyond the purpose of the company. So being purpose- driven is number one, so that everybody can be aligned around purpose and envision and mission. But then the other sort of existential needs that people have from making sure that their family is taken care of, with their benefit premiums or their sort of childcare situation. Those are important things to balance in to make life easier for people so they can focus on the mission and purpose of the company.

Mark Frein: I think of agency, feeling of ownership, a feeling of participation, and a feeling of understanding. So my experiences, especially when things get a little rough in the macro environment or the economic environment, is that at least in the sector that we're talking about, or that Lori and I have been part of, the great talent will stay if they feel like they're part of the ride. And that means being part of having agency and having the ability to contribute to the solutions for how to weather storms and get out the other side. One of the natural impulses sometimes, especially I think for founders is when things look a little grim, I'm going to stop talking about things because I don't want people to leave because we only have X amount of months of runway. I believe it's the opposite, at least for the talent that I've had the most success keeping during the tough times is they want to know what's going on with as much realism as possible and then be involved in helping figure out ways too to get through it. So it's almost, you have to resist a natural impulse of let's not talk about how much runway, let's not talk about the challenges. It's like, let's talk about runway, let's talk about challenges. I did an all team meeting with my function today and I gave them a startups 101 about the current situation that effectively we are in economically, at least in the venture- backed industry because some of them just don't come from startups by virtue of the fact that where we've hired around the world for our own team and some of them have experiences and some don't. And I painted it very realistically. I wanted them to understand this. There's amazing opportunities to be in this kind of segment and if anybody went in thinking it was a low risk economics segment, it's a bad place to start, but it's a great place to be regardless of what's going on. But I used the image of a rollercoaster, it's going to feel like this at times because I wanted them to be as much... Have as much information about everything that's going on as possible so that they can contribute in the most consequential ways, not just because I want their ideas, but because I want them to feel agency.

Speaker 1: And a wrap up question unless anyone has anything burning that they need to. But one of the lasts one that came in was about transparency and how do you balance transparency with not wanting to scare people. For Lori, that's why you were about to jump in there to.

Lori Knowlton: Exactly where I was headed. And I think that if you can be transparent with people and share your logic and your logic is solid that they'll understand. So say you have a product line that isn't performing or a product line that you've decided to stop investing in, then it's important for you to tell people why you've made that decision and what the logic is behind it and what you're going to do with the product line that's staying. So maybe you have a new initiative that you're going to stop working on and reallocate talent or let that talent move on. Those types of business decisions are things that people expect to have and that people are basically talking about on their own anyway. I mean, your employees know where the performance is taking place and where the performance is struggling, even if you're not telling them. So rather than have them invent the facts, then share the facts with them and make it something that you can all solve for. And the worst thing that I've seen people do is to say, " Well, I'm just going to cut 10% across the board and see if you can make it through," And meaning 10% of the heads. A salary cut or something like that is something that's, we're all in this together, but a random, eeny, meeny, miny, moe sort of layoff strategy is something that nobody understands. So if you can take your transparency and say what will my employees say when I share this information with them, if they can give me a completely unfiltered response, then that's the best way to check yourself for how scary your message is.

Mark Frein: If they don't know the story, it's more likely they're inventing one that's worse than the reality.

Lori Knowlton: Exactly.

Speaker 1: And then probably spreading it by talking to each other.

Lori Knowlton: Exactly. Your best people are the first to leave. So keeping them close and keeping them informed is important.

Speaker 1: Maybe I'll just end with that as like, one piece of advice you'd give to a CEO in this environment, what would it be?

Lori Knowlton: Stay authentic and stay humble because that will allow you to value all of the input from the people around you and be thoughtful and that's why you're here.

Mark Frein: It's a little bit about realism with positivity. They've done research on people in difficult situations and the over optimistic folk don't do very well. The over pessimistic folk don't really do very well, but the people who have a sense of realism and share it with a kernel of hope that tomorrow can be better than today, tend to do the best. And so it's a little bit like... What I say to my team, and I actually gave this advice to my CEO yesterday, just it's one foot in front of the other, making progress, knowing what progress we're making, sharing that progress and tomorrow can be a better day than today or yesterday. That incrementalism, I think really helps in tough times.

Speaker 1: Thank you both so much for your time today and your expertise.