Imagine a colleague sitting across from you. She just got leveled over instead of being promoted into the role herself. She’s seething. For months, her manager wasn’t open with her about why she wasn’t considered for the role and what she needed to get promoted. Instead, he avoided having a difficult conversation and pushed it off, optimizing for his own comfort. And now his report has come to you, the head of people operations, seeking answers or a resolution. What do you say?
When you’re dealing with people’s livelihoods and their egos, tensions can run high, no doubt. But HR is also, in many ways, the beating heart of an organization; it’s the only department explicitly tasked with making every team member more successful. People ops leaders are in fact uniquely positioned to foster a culture of authenticity—a critical precursor to the agility successful startups demand.
That’s how Meg Makalou sees it. And as a human resources leader for startups big and small—from a four-year stint as Zynga’s Vice President of HR during a period of hypergrowth to her current role as chief people officer for The Climate Corporation—she’s navigated her fair share of gnarly performance conversations. Makalou also is the people ops expert in residence for First Round’s companies.
In this exclusive interview, Makalou looks at three of the toughest conversations an HR leader faces, and explains how to take them from adversarial to mutually beneficial. She shares tactics for catching the most challenging performance problems before they start. And she makes a plea for the patience and clarity that Silicon Valley too often lacks. Let’s dive in.
Managers, your lot is the easy and hard conversations. If you value your comfort over your team’s success, you are in the wrong job.
Delayed terminations. Companies outgrowing senior leaders. Compensation rumor mills. These challenging scenarios can perplex even veteran HR leaders. While it may sound basic, the key to all of them is to find the entrypoint to bolster relationships, because the harder the situation, the more challenging it is to find it. “I find that I get the best results if I come from a place of support and candor,” says Makalou. “I encourage anyone in an HR role—whether you’re the first people ops leader in a startup or a founder who’s pinch-hitting for now—to focus on building trust.”
What follows are three of the biggest challenges HR leaders face and the mindsets and tactics that will chip away at them:
THE CHALLENGE: You’ve known that things weren’t working out with a team member for over a quarter now, but avoided dealing with the problem. Now other people have noticed, too, and morale is taking a hit.
If you’re experiencing this one, take heart: “It’s very, very common,” says Makalou. Simply put, it’s hard to tell people they’re not doing well; most people dread that conversation. “Really seasoned executives need support to get it done, and get it done well. It’s even trickier for startup leaders, because no one really teaches a class on how to performance manage and potentially fire someone.”
Makalou recalls working with the CEO of a young organization who faced this archetypal startup challenge: Manager is hired on the basis of relevant experience, a strong resume and good interviews. Despite leadership’s high hopes, manager doesn’t get after it the way the role demands. CEO is slammed, so he puts the problem on the backburner. “The leadership team had a million things going on, as people in startups do, and so it didn’t become a priority to address this issue. It's also naturally something many avoid because it's a difficult conversation that could be confrontational.”
Two things happened next: One, because the underperformer was a manager, his reports grew disillusioned. Several had raised concerns and seen no changes. “You had people who were brave enough to say something about having a manager they were struggling with, which was followed with no action whatsoever. It was disenfranchising this whole other layer of the organization,” says Makalou.
Second, there was the impact on the employee’s peers. “They were left to think, ‘I'm working like crazy, giving everything I have to this startup, because that's what early-stage organizations need, and this person is clearly underperforming. Why are they still here?’”
Retaining an ineffective employee is never healthy for an organization, but it’s particularly dire for startups. Not only is there the risk of setting a dangerous standard at a time when you can’t afford slacking, every underperformer represents serious opportunity cost, too. “Founders are spread too thin. You’re dying for people to come and take over some of the millions of direct reports that you end up having. So when you get to the point that you’re hiring a layer to manage some of that stuff, it's really painful when one of those bets doesn't play out favorably.”
It’s a lot easier to avoid this scenario than to fix it. Makalou’s first piece of advice for navigating this conversation is to do everything you can to keep it from happening:
Crack what’s sugarcoated. Underperformance is often a matter of overstated—or misunderstood—experience. Mitigate that risk by defining expectations more explicitly than you think you need to from the moment you engage with a job candidate. Spending the time to write a well thought out job description helps - this is an area that many spend little to no time on. This is handy not just for honing in on the right candidate but it also forces you to really think about the full scope of the job and what skills and capabilities you need to find.
Once you’re getting serious about a candidate, it’s time to have an honest conversation about which expectations they’re comfortable with, and where they might need some extra support. And that’s a two-way street—don’t give into temptation to sugarcoat the role. If you know there’s a particularly difficult element of the job, you might even go so far as to spell it out.
“I'm in the business of trying to make people feel comfortable being upfront, because my job is harder if they're not,” says Makalou. “And I need to do the same myself. The worst thing that can happen is that we're not forthcoming with each other—I misstate expectations about this job, you leave, and we’ve wasted each other's time.”
Onboard your people into your industry — not just company. You probably know the basic elements of good onboarding: integrating new hires into their team, introducing them to people who will have helpful institutional knowledge, sharing your company’s values. But it’s also critical that you teach them the ins-and-outs of the space you serve. “Don’t miss the opportunity to develop, right out of the gate, each new hire’s business acumen about what exactly the company does. It helps put everything else into context.”
So often onboarding is about institutional — not industry — knowledge. Don’t make that mistake.
At The Climate Corporation, for example, that takes the form of an immersive two-day class on the basics of agriculture. The average software engineer knows little to nothing about growing crops. But once they’ve gone through the exercise of running an imaginary farm—from buying a tractor to dealing with uncooperative weather—they are much better positioned to develop the products their end users need.
In other spaces, your training might be even simpler. Makalou was previously an HR manager for Andale, which developed auction-management tools for eBay sellers. “Munjal Shah, the CEO at the time, knew that people needed to get what we were doing as a company right off the bat, so he required that everyone sell something on eBay. It could be things that we had in the office. You didn't have to go find items, but you had to experience being a seller on eBay and what that required.”
Be visible. But the HR leader’s work is not done when hiring and onboarding are complete (or, really, ever). To spot performance problems before they erode team morale, you need to stay engaged and observant. In smaller companies, that might be as simple as making it to happy hour from time to time or swinging by people’s desks for casual chats.
As companies get larger, pay attention to the energy of any team integrating a new manager. “One of the things I like to do is round up with the team and do new-leader assimilation,” says Makalou. “We get everyone together so they can ask questions of the new manager to get to know them. For me, facilitating something like that gives me a sense of the dynamics in the room.”
Ultimately, though, emotional intelligence is often your most powerful tool. You don't have to be an HR professional to know when you walk into a room and something's not right. It’s okay to weigh different people’s feedback differently, too. “It’s not that you want to read into everything people are saying. But if you’re doing a check-in and somebody who’s normally quite reticent discloses a little more than they normally would, listen to that.”
When you do catch wind of a problem, whether through your own observations or others’, sit down with the person in question right away. “Your first conversation doesn't have to be disciplinary, but it can be a really candid one where you say, ‘Look, I care about your success here, so I'm always going to be honest with you about what's going well and what's not. Part of that is to help you be successful, and part is to hear from you where you need support.’ I get the best results when I approach people from that standpoint,” says Makalou.
Realistically, though, it’s not always possible to avoid performance issues before they start. So what do you do when a more advanced problem lands in your lap?
Initially, Makalou recommends patience—which is hard to come by in a company’s early days. “I find that in Silicon Valley we're quick to give up on people. When you're in hypergrowth or you're in crazy startup mode, working more than you should, it can be really hard to take the long view on people. The default becomes: ‘I just don't have time for that.’”
Don’t forget: you hired this person for a reason. Patience, though, isn’t leaving a problem unchecked.
To diagnose the root of the issue—and look for paths to a solution—Makalou walks managers and CEOs through three questions:
1. What’s not working, specifically?
Start with this straightforward query for two reasons: One, to get managers thinking in an exacting way as early as possible about where the employee is falling short. And two, because people ops leaders often have information to share that would help explain the dissatisfying performance.
“Not all information gets to the founder or CEO, as you can imagine. I might be able to add context that changes their point of view on whether this person is the problem or a different set of forces is acting on the situation,” says Makalou.
2. Is there another role in which this person could be successful?
“Hiring people is time consuming and expensive. If you could recast them into an existing position—now that you know more about them and their skill set—that's worth considering.”
This advice doesn’t just hold true for new employees; existing team members who are outgrowing —or burning out in — their roles may also be good candidates for an internal move.
3. Do you think that there's something we could do for or with this person that would help?
When it comes to performance improvement plans, Makalou is of the mind that they should be used as sincere tools for improvement—not just as a formality when the writing is already on the wall. “Performance reviews and performance improvement plans (PIPs) are tools to mitigate risk. I don't necessarily think that you should put everybody through that, because not everybody is high risk,” she says. “Is there a path to success, or are you feeling like you have to go through this process in order to terminate them at the end? If that's where you are, fast-forward to the end and avoid putting everyone through that process.”
In some cases, the question is less about can a person change and more if they want to. So if you’re not sure, ask. Be direct. Candidly address where their performance falls short, and give the employee the choice to work on it or not. “I usually say, ‘Look, if you still have the energy and are excited about this opportunity, we'll head down this PIP path. This is not a construct that we put in place so that we can fire you at the end,” says Makalou. “It is genuine effort to help you, to get you on a path to success, and you have our commitment to do that with you. But if you don't feel like you have it in you or you don't feel like you could be successful, door number two is a conversation about how to gracefully transition you out of the company."
At the end of the day, termination can be inevitable. Whether a PIP doesn’t work out—or the employee declined or wasn’t offered one—some scenarios will end up at that difficult conversation. Here, too, there are a few critical steps you need to walk through.
First, assess your risk, legal and otherwise. “Is this someone you are afraid might do something violent or disruptive during the meeting? Nine times out of ten, the answer is no. But there are those people. There are those types of terminations. Think about it before it's happening to you,” says Makalou.
Choose the timing thoughtfully. Makalou recommends having the termination conversation either first thing or at the end of the day. “You should do it with dignity—and that’s not somebody needing to pack up their stuff in front of everyone. It's just not.”
Keep it brief. At this point, the time for feedback and give-and-take is over; now, the conversation is about notifying an employee that he or she is being terminated. “This is a decision that's been made. This is not the time to litigate whether it's happening or not. It is happening,” says Makalou.
That’s not to say that people won’t push back—and up to a point, let them. “Let them vent a little bit, then come back around to your message: ‘I understand that. I know that there have been challenges on both sides. I understand this is not an easy job, but it's just not working. You need to move on to a place where you can be more successful, and I want to help you make that transition. But this decision has been made.’”
Remember, everyone’s watching. The terminated employee will walk out the door, but the rest of your team will not. Be mindful of the messages your words and actions are sending them. “They’re going to take this as how the company treats people. That's true of layoffs and voluntary terminations.”
Finally, don’t forget that the manager doing the firing needs extra care, too. “In preparation for the termination, that leader gets a ton of support and check-in from me,” says Makalou. “I tell them, ‘Call my phone any time you want. We will rehearse this as many times as it takes to make you comfortable.’”
THE CHALLENGE: The company has grown beyond the leadership skills of one of its cofounders, and it’s time to bring in a seasoned executive. Trouble is, that cofounder is resistant to stepping aside.
Startup founders are often inexperienced—that’s part of the mythology, after all. But once an organization has developed and validated its big ideas, and it’s time to build the team that will help it scale, inexperience can be a liability.
“It’s a tough sell, convincing an experienced professional to come work for someone who’s navigating their first gig,” says Makalou. “That sell is made easier when the founder is self-aware about that, and when their heart is in the success of the company—not hanging onto a big title or a position of control. It's hard when the founder’s stuck on ‘No, I'm the Chief Fill-in-the-Blank Officer.’"
Here, too, addressing the problem before it even arises can make all the difference — and provides a reference to point to for future difficult conversations. “I would advise any founding team to have a discussion about how they’ll handle each other when it’s time to rethink their company’s leadership. It’s healthy — even imperative — to sit around the table and say:
Look, few of us have ever done this before. If we want this to scale according to our vision and fulfill what it can be to the world, we have to understand that we may not have these seats all the way through.
Still, relinquishing control is easier said than done. But while you can’t lean on hierarchy or PIPs in these cases, you do have another tool at your disposal: the founder’s legacy. “It’s remarkable to be the founder of a company that turns into something great. A legacy like that is much more important than being the VP from start to finish. Appeal to that,” says Makalou. “Say, ‘You will always be breathing rarefied air where this company is concerned, because you thought of it and you built it. Don’t compromise that by getting hung up on title.’”
Your goal as a people ops lead (or as a co-founder) is to help this leader see a critical fork in the road. Down one path there’s a role as adviser, thought leader, cultural icon. “Even if they can't manage a team, there's a role for those kinds of innovators as a company grows.” Moreover, bringing in more experienced leadership is an opportunity, and a relatively low-risk one. It’s a chance learn a new skill set from seasoned pros, and get set up to keep the reins the next time around. “You get to be a critical person in the company, but you don't have to be ultimately responsible for it.”
Down the other path is, well, nothing. “There's not a role for a founder that can't get out of their own way and is actually slowing the company down. Those people get fired.”
Here, too, there are key steps that the rest of the leadership team should take to facilitate the transition and mitigate its effects on the rest of the company:
Choreograph the conversation. When the time has come to ask an early leader to step down, don’t skip the thoughtful planning you would do for any employee; a founder deserves that same sensitivity. “I always assess the context and relationships. What is the scenario where this person will likely be most receptive and feel most supported, and most open?” The best person to deliver the message may be a cofounder. Other times, particularly if there’s been tension in the leadership team, the people ops lead may offer the best mix of authority and neutrality.
Communicate the change directly — and with sensitivity. Founders and early leaders are much more than managers. They are typically a startup’s heart and soul. They’ve established its mission and crafted its culture. In many cases, other employees joined the company to work with those specific people. Keep all of that in mind when you communicate leadership shifts to the team.
“There's going to be scar tissue. And there are considerations around the dignity of the person who's leaving and not saying too much, too. You don’t want to sit down with everybody and say, ‘Look, he just was really bad at his job in the end.’ In fact, that could actually be more harmful because the reaction could be, ‘That’s somebody I really love and care about and respect, and now you're kicking them while they're down.’"
Reconnect and rebuild. After the announcement, maybe a cursory Q&A session, many organizations try to go right back to business as usual. “People just throw their hands up like, ‘No one asked questions, and I don't really know how else to manage the situation. Maybe if we get back to work, the scars will heal over.’” In Makalou’s experience, though, the best and fastest path forward is to allow for a grieving process. “Give people the space to acknowledge that a core person is gone.”
Enlist and empower managers to provide the outlet their teams need. Maybe that’s one-on-ones with everyone, or simply giving people license to express sadness or disbelief. It might also be getting together for a fun offsite activity; in a smaller company, you might get the whole team together to bond over dinner or an outing. “But whatever you do, you've got to create some space to reconstitute. That usually starts with a bit of grieving and then a concerted effort to spend time as a group and knit the team back together.”
People will get over it, and the company will emerge stronger. It’s when you force the team to move on with unnatural speed—“Forget about last week!”—that damaging stress fractures form.
Fill the gap. The now-missing founder’s skill set may not have been quite right, but no doubt they still brought a lot to the table. As you move on from a leadership shakeup, you need to find a way to replace the vision or charisma you’ve lost.
THE CHALLENGE: One of your team members didn’t get an expected raise—or got wind of someone who did—and they’re frustrated and confused.
Once again, preventing this conversation should be your first line of defense. And when it comes to compensation frustration, Makalou’s advice boils down to one simple preventive measure: transparency. But it takes tactics to establish it.
“Whatever your strategy for considering promotions, comp changes, things like that, be open about the process you're about to go through,” says Makalou. “Don’t let it become a black box where people hear through the grapevine who got what.”
When people don’t know how the review process works, they’ll mostly fill in the blanks with something bad.
Compensation is too often shrouded in mystery. Setting and managing it is a skill set, to be sure, and not everyone can be an expert. Everyone can and does, though, have real emotion around how their time and work is valued.
“No, you're not asking everybody to be a comp professional, but they're not dumb. You could certainly explain how you benchmark jobs. How you think about skill sets. How you price roles when you review employees’ compensation. What are the things you look at?”
For an early-stage startup, that exercise often feels like a waste of precious time. The important thing is simply to compete in the talent market, right? On the contrary, it may be even more important to establish clear compensation parameters early, when the frenzy to get people in the door can lead to inconsistencies that fester later.
A basic comp philosophy can be a good half-step before setting the ‘official’ policy. Otherwise you’ll find yourself tangled in a string of one-off offers.
As a founder, you know you need to have a mission statement, a vision statement, goals and objectives. But a comp philosophy? In Makalou’s experience, a coherent strategy for how employees will be remunerated should be added to every startup’s list of crucial founding documents. As you draft yours, address questions like:
When it comes to salary, how competitive do we want to be?
Where is the type of talent we’re looking to attract currently working—and how are they being compensated?
What behaviors are you trying to drive and reward?
How do we want to handle equity? Will you offer options and RSUs, and who gets what?
How do we feel about shoring up a gap in salary with more equity?
Do we want to have a bonus program?
Realistically, startups will incur compensation inequities in the early days. That’s all part of the risk-reward structure of new ventures, and it would be a foolish proposition to smooth that out entirely. “If you were employee number 7, you probably have a lot more stock than employee number 100. You're not going to go take that away from employee number 7, and you're not going to give those big grants to employee number 100,” says Makalou. The goal is, as early as possible, to agree to a strategy moving forward that will avoid adding unnecessary lopsidedness.
Once the comp philosophy is in place, educate the rest of the company about it, starting with managers. They don’t just need to know it, they need to know how to explain it to anyone who’s asking—very possibly under duress. “Really spend time saying, ‘Okay, this is what we decided. This is how it works. This is the data we use. We use the First Round survey for our comp data, or we're going to buy Radford.’ Whatever you use, explain that to anyone who's going to own the decision and the managing of it.”
Create a cheat sheet. This process can be as simple as building a tool in a spreadsheet. Just give some thought to the resources a manager would need to execute this part of their job. “It's not humane to take a bunch of managers and say, ‘You're going to have to handle making and defending compensation decisions, but I’m not going to tell you anything about how it works.’" Establishing a clear compensation philosophy won’t eliminate questions; employees may still feel like they are due something more. But it will go a long way to defusing frustration.
Anchor to the market. “One of the conversations that we often have after a performance review is, ‘I've been here a year and I didn't get a raise. What's up? How do I get one?’" says Makalou. “In general, you can solve that with education. Say, ‘Look, here's what the market rate is for what you do. Here's the research we use. Here's the data we use. Here's what it says about what you do and what the market pays for what you do.’"
Zoom out from job to career. Armed with a defensible methodology, pivot the conversation from an emotional one to something more productive. It wasn’t a reflection on performance, or on the employee’s value. They simply didn’t meet the stated benchmarks for a promotion or raise. With that matter set aside, you can and should then engage in a dialogue about their interests and career path. “You can say, directly and authentically, ‘What do you want to do next? I want this to be a great career choice for you.’”
A manager on Makalou’s team once had this conversation with a full cycle recruiter. She was very smart and capable, but not as adept at interacting with candidates and digging in during negotiations. “He sat down not to talk about her performance, but her career. We could be more candid about the mismatch in her skills and current role, when we took a broader look at her career,” says Makalou. “As it turns out she was a superb sourcer. She excelled at finding candidates for hard-to-fill roles, so moving her into that role was a smart choice for her and more beneficial to the organization.”
Establishing a culture of honesty and transparency is often more demanding than not; it’s certainly more time consuming. But push through to the other side, and you’ll find your organization freed to more candidly pursue both individual and collective goals. “There's nothing gained by creating mystery or not sharing what your motivations are. No one benefits from employees feeling like management philosophies are locked away in a black box.”
Stony-faced execs across a conference room table, or a dejected employee toting a cardboard box full of personal effects. The popular conception of what an HR conversation looks like is grim, to say the least. But it doesn’t have to be that way when it comes to tough HR conversations. First, don’t postpone a potential termination. Get out in front of it with a more immersive onboarding to the industry — not just the company. Don’t forget that you hired the person for a reason and that the fit of the role may not be the same as fit for the company. When thinking about succession plans for unwilling senior leaders, appeal to their contributions thus far, the promise of the company and their legacy in it. Lastly, define and socialize a basic comp philosophy instead of waiting to put a formal rewards program in stone. Zoom out to the broader market and a team member’s career to handle any job discontent.
“People operations. Talent. Human Resources. No matter what you might call it, the function takes care of the engine of any organization: its people,” says Makalou. “I suppose that makes the HR leader the veteran mechanic. As such, she knows that any vehicle can stall and sputter, but with the right parts and frequent check-ups, it can handle obstacles on the road and each hairpin turn. For startups, growing a company brings with it the pleasures and perils of a long road trip — make sure your engine is ready to take you where you need to go.”
Photography by Bonnie Rae Mills.