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The last 10 years of Joel Grossman’s life started with a seemingly casual introduction through a business school friend to Location Labs CEO Tasso Roumeliotis. “I was getting my MBA and looking for a Bay Area tech internship, but I wanted to work for a company with a business model I really believed in,” he says. After a phone screen and a quick interview — and offering to work for free that summer — Grossman landed the role. “I showed up and found an empty desk, and that was the beginning.”

The beginning, that is, of a now decade-long relationship that has taken him from intern to COO. He’s been with the company since it was venture-backed and deep in the red through to its victorious 2014 acquisition by online security firm AVG. During years both lean and fat, he’s been a part of something pretty remarkable:

When people join Location Labs, they stay. The company boasts a 95% employee retention rate, and has never laid off an employee.

So what’s the secret? In many ways, Grossman’s own story is emblematic of the company’s management ethos: Hire promising people — who are in it for the right reasons, not the biggest compensation package — then toss them into the deep end. “I made plenty of mistakes along the way, but it’s a place that understands that and appreciates that,” he says.

In this exclusive interview, Grossman describes what a high-retention culture looks like, and how to build one from scratch. He shares the tactics founders can use even before they start interviewing to boost their retention — and he explains why taking the time to figure out your company’s personality, and communicate it candidly at every turn, is the single best investment you can make in your future.

Understand What Healthy Retention Looks Like

First things first: what are the signs that a company has healthy retention? Sure, there’s the obvious one — people aren’t leaving. But if you wait to see whether or not you’re losing employees, you’re already behind.

Rather than focusing on attrition, start paying attention to how your employees are interacting with management and with each other while they’re there.

One major factor that Grossman has found predictive of retention is how people come to you in the first place. “Our referral rate is really high. If you walk through the offices here, about 60% of our employees have referred another person who is also here. Over 40% of our new hires are referrals, including some referred by people who no longer work here.”

Referral rate is a great leading indicator of retention.

Conflict resolution is another, softer indicator. How are disagreements handled and resolved at your organization? “A healthy environment has disagreements, but they’re vigorous and healthy,” says Grossman. “Communication is open and ideas are debated.” Innovation is the lifeblood of any growing company — and a crucial element to keeping your team happy and engaged — but it can’t happen when people are hesitant to share and vent.

Location Labs is serious about its “disagree and commit” culture when it comes to decision-making. Leaders actively solicit disagreement. But once a direction is chosen, everyone is expected to rally behind that mission. “This is similar in spirit to rigorous testing before you commit code,” says Grossman. “You want to rigorously test out ideas before you jointly commit to decisions that will inevitably affect everyone.”

Then there are passion and teamwork, those essential but hard-to-define touchstones of the startup success story. When you’re moving at a breakneck pace, it’s hard to stop and take stock of these nebulous indicators. Instead, look for their common manifestations, Grossman suggests: “Are people here at sunrise to hit a deadline? Do I like spending time with these people even when I’m not being paid to do it?”

Working well together is so important, in fact, that Location Labs created an award to celebrate it when they see it. They call it the “Spartan Shield” award.

“I’m not a military expert, but from what I understand a Spartan shield is literally a large shield, which isn’t designed to protect you so much as the person next to you. They would align themselves as a single phalanx — not individuals, but a single team much stronger than the sum of individuals. Each is dependent on the shield of the person next to him. You’re keeping the person next to you safe.” The aptly named award is handed out to anyone at the company who goes to great lengths to help out others. The winner typically spends extra time helping out another team on a project that is not their direct responsibility.

It’s not about individual glory. It's about what you can accomplish together. The people we end up retaining stay because this trust and loyalty is tangible.

Finally, high-retention environments are productive environments. “For me, retention is not a specific area you focus on. It’s sort of an offshoot of productivity. Folks who are happy stay and do the most effective work.” In his experience, the key ingredient of happiness is not compensation or prestige, it’s having the opportunity to achieve a lot of work that has an impact. “In knowledge work, it’s really important that people feel empowered and productive.”

You Must Recruit Well to Retain Well

Now you know what a high-retention environment looks like. But how can you build one? For starters, from the moment you consider filling a role, take these key steps to maximize the odds of hiring someone who’ll be with you for the long haul:

1. Manage your online presence carefully. “At the outset in the interview process, make sure your website conveys what you are, conveys your values,” says Grossman. Curating your company’s digital image also means looking beyond your own website, to review sites and other public resources.

“We’re on Glassdoor, and sometimes the reviews are negative. We try to respond to each of those. People have interviewed with us because they saw our responses to critical reviews, and they were impressed that we cared enough to write them. They appreciated our perspective.” Own your brand and messaging, wherever they pop up. Ultimately, knowing who you are as a company — and communicating it clearly, internally and externally — is the single most important driver of retention.

Nearly all of Location Labs’ job postings include an “About You” section that makes it clear they are looking for people to take initiative. “We know who we are and who we aren’t. We would never say, ‘We have a great training program for anyone eager to learn,’ because we don’t, and we’re not looking for people who are looking for that,” says Grossman. “Recruiting posts and pages are often aspirational — to the extent of being dishonest — which does you a disservice in the long run because you get people who are then disappointed when the reality doesn’t match the advertisement.”

Know your strengths. Know your weaknesses. Know your true culture. And then make sure you communicate it all upfront.

2. Pen job descriptions with personality that’s unique to your company alone. They’re a candidate’s first impression of your organization — and you never get a second chance to make one of those. Be clear about what people can expect from your culture, and what they won’t find. Location Labs even enlists the marketing and communications teams’ help to hit the right tone: “We shoot for personality and ownership,” says Grossman. “But we’re also pretty upfront. If you’re looking for concrete structure, this might not be the place for you. This is where you’ll get thrown in the deep end.”

3. Look for diamonds in the rough. Imagine a graph, where the x-axis is time and the y-axis is skill. Some candidates may be higher on the y-axis — that is, more skilled coming in the door — but ultimately yield a fairly flat line. “We would much rather hire someone who looks like a strong curve, gaining more skill over time. Their skill level today might be lower, but their potential is a rocket ship.”

To better identify diamonds in the rough, Location Labs interviewers focus on personal challenges and reactions. They care less about how much someone has achieved as an absolute measurement than the amount they grew from where they started.

As an example, one of their directors of engineering taught himself how to code. Prior to joining the team, he had been a financial advisor, and when he interviewed his coding skills weren’t especially strong. He started in QA, but his trajectory was immediately obvious to Grossman. A couple years later, he moved into engineering and now he’s leading a huge team. “He’s one of the most impressive technical minds at the company, but we initially brought him in because of how fast he was growing on his own initiative.”

A large percentage of Location Labs employees are first or second-generation immigrants. “In many cases, they had to work harder than most to get where they are. They’re self driven. It’s a familiar story for us now. When we first meet them, they may not be the best or most experienced or even most qualified. But when we start asking about what they were interested in learning and how they were learning, we could see their exceptional growth rate.”

The company gives more weight to diversity of experience. When screening resumes, they don’t look for specific technologies or skills. They look for results. What was this person’s legacy in past roles? Over 30% of their hires in 2015 started their careers in completely different role or field. “We’ve found that candidates with this type of background have the underdog grit that allows them to be successful here,” says Grossman. “We’re not overly impressed with pedigree. We let demonstrated growth be our primary filter.”

4. Interview for values. Equally important is assessing whether each candidate understands and can internalize your company’s priorities. “I give a lot of credit to our new head of recruiting, who put our company values into our scorecard. Now they are part of every interviewer’s assessment of candidates.” Successfully interviewing for values, though, is a two-way street, and interviewers also need to be equipped to convey what your company cares about to candidates.

You need to be transparent with interviewees so they can self-select. Be brutally honest about who you are.

When you roll out a values-focused interview process, be rigorous. Don’t skimp when it comes to getting your team on the same page. For Location Labs, that meant holding training sessions to define what core values look like in an interview. “We have one called ‘underdog grit,’ for example,” says Grossman. “What does that look like in a 30-minute conversation? How do you interview for it? It’s a lot of work to make sure everyone understands that.”

Investing in your interviewing process is not a one-and-done undertaking. Location Labs still conducts formal training sessions, held twice a year for an hour to an hour and a half over lunch. Once trained, new interviewers shadow experienced ones. And People Operations shadows interviewers periodically, too, with a focus on calibration. “We’re metrics driven. Our people ops team will go through scorecard metrics to flag people who seem too soft or too harsh, or whose feedback is not concrete. If necessary, they will flag people who need more one-on-one training.”

Even today, as crazy as it seems, CEO Tasso Roumeliotis still interviews nearly every person the company hires. “I have a ton of respect for him for doing that, and it’s because he’s in the best position to ensure cultural match, and it allows him to continue to calibrate the type of talent we should be going after and bringing on board,” he says.

5. Stop negotiating. Grossman, for one, never does it. “We used to negotiate compensation with candidates, and some would be very very focused on ‘the number.’ When that happens — not always, but often — those people’s hearts aren’t really aligned with your mission. When we have an aggressive deadline or someone’s stumbled, they’re never really part of your phalanx.” That’s not to say you should ever lowball new hires; remember, feeling appreciated and empowered is a key ingredient of strong retention. But when someone is selecting a new “job family,” as Grossman likes to call it, consider whether you want compensation to be a deciding factor.

Your Office Has to Feel Like a Community

Most people in technology spend more time at work than with their families — we’re all familiar with that particular truism. And yet it all too rarely shapes the way companies do business.

Grossman and the team at Location Labs, on the other hand, emphasized community-building from the company’s earliest days. “Create a culture where people feel rewarded and valued,” he says. “That means making sure people have interesting challenges and feel appreciated by their peers and management. It’s making sure people feel ownership over what they are working on.”

Team building isn’t just about after-work beers (although those can certainly be part of fostering a warm community). It’s about uniting people around their work, and the knowledge that their contributions matter. For example, in a recent reorg, product teams that had been organized according to technologies were shifted to be aligned around goals, or as they're called internally, missions. “We had five individual mission leaders pitch their mission to the larger product team, and individual employees decided which mission they wanted to work on.”

At most companies, employees are told what to do. Grossman and his fellow executives believe that the company will do better if everyone aligns around goals. “Software is an inherently creative endeavor, and we felt that this approach might yield better results, if we could get people more personally invested in the problems they were trying to solve,” he says. “This starts with them choosing the problems they want to solve. That will always lead to deeper personal commitment to a challenge.”

Employees want to know that their voices are being heard, and access to management — right up to the CEO — is essential. That’s true for longtime individual contributors as well as management-track employees. “A lot of folks have no desire to be in management. They should continue to get meaty projects — training new people, for example, or running an internal colloquium — and multi-topic trainings or sessions with other industry experts. Everyone should have the opportunity to explore new things for the company. Their voices should be heard and respected, even if they are weighing in on things they don’t work on directly.”

Let Teams Define Their Own Metrics

Early on, you have the visibility and bandwidth to manage your whole team — after all, you’re probably all sitting in the same room. As your company scales, though, you’ll need to let go of much of that day-to-day management. And delegation is actually a key opportunity to foster deeper employee engagement.

“Ten years ago at 20 people, we could easily decide who worked on what and what was most important. Today we have a dozen deployments and 180 people, and it’s impossible,” says Grossman. “We created leadership teams for each product, and they define what that product needs to accomplish over the next quarter. We hold mini board-style meetings where they present their achievements, challenges, and goals to the management team and we advise.”

Eventually, Location Labs saw a trickle-down effect from this strategy. As leadership teams increasingly shaped company process, they fostered a culture of agency and responsibility across the organization. Smaller project teams, too, began taking greater ownership for their work. “Three-person engineering team would say, ‘In the next month we’re going to attack the sign-up funnels for this product. The current metrics are X, but we think we can get to Y. This is how we plan to get there.’ Not just ‘I’m going to write some code’ but ‘This is what I’m trying to do with this code.’”

Communicate Through Multiple Channels Constantly

That kind of engagement goes both ways, though, and with it comes an even greater obligation to keep your entire team in the loop. People really want to understand why decisions are made, or why the company is moving in the direction that it’s moving. When we’ve struggled as managers, it’s when we’ve failed to be sufficiently transparent,” says Grossman. And while many management strategies get easier with time and practice, communication often becomes a bigger challenge at scale. “It’s very hard when you’re 200 people. It’s something we’re still learning to be great at.”

Still, there are tactics you can implement to make communication a regular, integrated part of your operations:

Grossman is also the first to admit that he and the rest of the company’s leadership often find themselves in roles they’ve never held before — a reality that will probably sound familiar to most startup leaders. “We do make mistakes of inexperience now and again and try to combat that by openly discussing the challenges in front of us. We’re avid readers of management books, and we really encourage each other to read the best new books.” Unsurprisingly, any employee at the company can expense any work-related book at any time. It’s an entire category for expense reports.

If you can achieve this kind of candor, there are huge benefits to be reaped. For one, Grossman notes, “We don’t come with any biases about ‘how it’s always been done.’ We collaborate a lot on product, marketing, and sales, so whenever we go to a customer meeting we’ll come back and write up summaries to the rest of the management team about what went well, what didn’t go well, and what we learned.”

Perhaps most importantly, this kind of honest, direct communication is the cornerstone of a culture where people feel that their achievements are truly seen. It’s not a bad thing to demonstrate that management, too, is growing and learning with the organization.

Specifically, the management team regularly acknowledges failings and opportunities for improvement to set an example. Recently, the leadership has been more vocal about falling short on goals around internal communication and leadership training, for example.

If you’re going to claim to be a meritocracy, where people can succeed if they achieve and work hard, then you have to be able to show that again and again.

Reward Employees Before They Ask

Building a meritocracy also means acknowledging that hard work when you see it. Just as Grossman steers clear of compensation negotiation, Location Labs aims to give raises and promotions before they’re asked for, too. “You don’t want people to ever worry or question if they are part of the team and celebrated and appreciated. When you recognize people when they don’t expect it, it earns you a ton of points, way more than the dollars a raise costs you. You make a huge impression.”

Many startups have gone the opposite direction, implementing precisely calibrated promotion cycles. And Grossman acknowledges that those systems are likely easier when it comes to planning and budgeting. “But historically we haven’t done that. We think it’s more important to treat individuals as individuals. To tell them sincerely, ‘You’re doing a great job and you’ve impressed us. We’re adjusting your comp now to reflect the level of work you’ve been doing. We’re not just looking at you once a year during some designated time.’”

Extract Maximum Feedback When People Do Leave

Of course, even an organization with sky-high retention rates will see employees leave; it’s the nature of business. But don’t let anyone walk out the door without one last structured opportunity to share feedback. “Everyone who leaves, whether they’re great or not, has an exit interview,” says Grossman. “That information is collected and fed back, and sometimes we make changes based on it.”

More often than not, the things you hear in an exit interview won’t be a surprise. In Grossman’s experience, they are often a reflection of things you’re already hearing internally — or would be, if you were listening carefully. “When you’re trying to run as fast as you possibly can and someone raises a concern, you might say, ‘Okay, we got it, but we gotta keep going.’ When someone leaves, it’s a smack in the face to wake up and prioritize that feedback.” Use every exit interview as a reminder to redouble your efforts to hear, and process, internal feedback.

The People Ops team runs exit interviews, and that’s a conscious decision. An exit interview is not the time to try to win back an employee or get defensive. In most cases, People Ops was not involved in the person’s decision to leave. If anyone, it was probably a peer or their manager. “We want to get the real feedback people have to offer, so we want to give them the chance to speak to a neutral party who will really listen, collect details objectively, and really understand how the world looks to that person who is leaving,” Grossman says.

In the early days, there were core processes that were broken and negatively affecting people. They prompted several employees to leave, and exit interviews were able to capture these frustrations. “I think we get a lot of honesty in these interviews now because the people who have been here long enough see how we’ve taken past exit feedback seriously to build a better product and a better company. You want to build up a track record with this.”

When It Comes to Growth Opportunities, Be Clear

This is another one that will become more relevant — and crucial — as your company scales. Younger, smaller startups may not think much about providing employees with clear professional-development paths. And it may not be necessary; when everyone from the CEO to the interns work side-by-side, the ingredients for success are conveyed organically. Moreover, employees who join a scrappy early-stage endeavor may simply not care about promotions and chains of command.

“The people who join something at 20 people want to build a great product. Everyone is pulling their own weight, but there’s not a lot of desire to be leveled. Also, you don’t have enough data points to show what a career path should look like,” says Grossman.

He uses the term “career path” very intentionally here, because employee trajectory shouldn’t just be about advancing linearly. “We don’t want people to think of their time here as climbing up and over. It should be an individual journey through the company across cross-functional pillars that combine hard and soft skills. We want people to grow here, whether that means within their role or team, or completely outside of what they’ve always done.”

That doesn’t mean that definition and clarity aren’t important when it comes to helping people stake out their future at the company. “As we got larger and larger, fewer folks had daily interactions with management. And as more people were new managers in roles they’d never been in before, conversations about ‘How do I grow here?’ became muddled, with no structure and too much shoulder shrugging.”

Career Paths were introduced as more formal blueprints for advancement in each functional area. “There’s a lot more clarity now about how to become a great employee and a more valuable member of the team,” says Grossman. These will become an important manifestation of your company’s values and character, so don’t dash them off. And don’t hesitate to sneak a peek at other companies’, if you can. “The Silicon Valley software community is really great about sharing best practices. There’s a lot of great knowledge out there. Just make sure anything you borrow fits your organization.”

As you begin working with more structured tools, look out for unexpected results — and respond to them. Location Labs, for example, rolled out a career ladder for the QA team and learned that they really needed to roll out two. “We learned that some QA engineers don’t want to stay in QA but want to bump over to engineering and write core code. Those conversations were instrumental in creating an additional career path for QA.”

Be prepared, too, for pushback. “When you roll out career ladders, you’re guaranteed to encounter people who don’t agree with the level you put them in,” says Grossman. When that happens —assuming you’ve done your homework and thought very carefully about those placement decisions — proceed with candor. “Be honest about the reasons that person isn’t at X level: ‘Remember the four times this happened?’ From there, focus on the opportunity. “Tell the employee ‘It’s a goal of ours to get you get there, and we’re going to help you. We’re invested in your success.’ You need to define a positive, specific growth path.”

Boiling their success with retention down to key tenets, Grossman says Location Labs has simply taken the time to think carefully about what they value and prioritized that, openly and honestly, with every move they make. “If a company has a hard time retaining people, they either don’t know who they are or they aren’t communicating it well. The good news: both of these problems can be fixed.”

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