One of the biggest mistakes fast growing companies make is they underestimate the strategic role HR can play in scaling by design rather than headcount.
In a recent Harvard Business Review article, Marshall School of Business professor John Boudreau described the rampant use of HR within many startup and unicorn organizations solely as an arm to constantly be recruiting top talent.
An Employee Focus Benefits the Business
Businesses only move forward if their people do. A study from Bersin by Deloitte (pdf) found that high performing learning organizations are 92 percent more likely to innovate, 46 percent more likely to be first to market, 58 percent more prepared to meet future demand, and experience 37 percent greater employee productivity:
With breakneck technological changes occurring in every industry, there is always a new tool or skill being developed that will help you optimize your processes. A different Deloitte study found professional skills today only have a life of two and a half to five years.
But it's not just about teaching your workforce one new skill at a time. It's about creating a learning culture in which everyone has the tools they need to keep up with industry changes.
So what are the dangers of focusing solely on hiring? And how can you create a learning culture that scales your company’s success, without increasing headcount?
The Pitfalls of Using HR as a Hiring Machine
Higher costs
Creating a lean fast-growing company means cutting as many costs as possible. When you have an existing workforce that's ready and willing to learn new skills it doesn't make business sense to simply continue hiring new people for each new skill that's needed.
In the US, employers typically spend 52 days and about $4,000 to hire each new employee.
Engagement
Hiring costs are only the tip of the iceberg. Rather than simply an exchange of money for services, today's employees are looking to exchange their time and effort for opportunities for growth and learning. In a recent survey, Gallup found that 87 percent of millennials considered professional development or career growth opportunities to be very important in a job.
Especially in fast growing companies, what employees will normally see is that as the company grows with their efforts, executives begin to hire more experienced external candidates for senior level positions. This creates a demoralizing situation in which employees feel they have no room to move up in their career anymore, are being overlooked for team lead positions and managed by newbies.
Turnover
As soon as an employee sees they're not getting opportunities to build their skills they become disengaged. IBM found employees who felt they could not achieve their career goals at their current company are 12 times more likely to consider leaving. This number increases to 30 times for new hires.
Once disengagement occurs, there's a steady slope towards turnover which can cost a company anywhere from 30 percent to 400 percent of an employee’s annual salary depending on skill level, not to mention the effect turnover can have on the rest of the team.
3 Approaches to Creating a Learning Culture
Deloitte found the biggest barriers to learning are time and resources. Employees can typically only spend one percent of their time each week on learning. Meanwhile, 62 percent of IT professionals reported having had to pay for their own training programs.
Yet according to these three companies, designing a learning culture that connects, engages and motivates your people can be easier than you think.
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1. Peer Mentoring
Appboy wanted to connect people across the company from day one. To create this connection, the company started a peer mentoring program which teamed up newbies with mentors from different departments.
The initiative increases cross-departmental knowledge and collaboration, provides new hires with an outlet (other than their manager) for questions and gives current employees leadership opportunities.
Tyler Young, director of people operations explained, “Being a new hire means starting from the bottom when it comes to building internal (and long-term) relationships, as well as understanding team dynamics and company culture. The Appboy Mentor Program not only gives new hires a comfortable outlet to go to throughout their onboarding journey (and beyond), it also provides current employees (especially aspiring people managers) with leadership and mentorship opportunities to teach our new hires what #appboylife is all about.”
2. L&D Gamification
By gamifying the learning process, Eagle’s Flight found their people were more motivated to learn and retain the information learned in formal classes.
CEO Phil Geldart explained, "Gamification allows the learning and development (L&D) team to reinforce key concepts taught in class, usually presenting these concepts as questions. The questions are then inserted into a straightforward game where the correct answer generates points for the 'player.' This provides both motivation to succeed and compete, while at the same time making it fun to be reviewing content taught in class. With that review comes improved retention, and hence better application of the content, post class.”
Formal trainings aren't the only place gamification can be used. According to Geldart, “These concepts of getting points, and working to get high scores on a 'leaderboard' can also be applied to other forms of digital learning; for example, where the content itself is taught on line, and then participants win points not only for correct answers, but also for just working through the content or making correct decisions along the way.”
3. Integrating Learning Into Performance Management
From its inception, Klaviyo’s CEO, Andrew Bialecki, intended to create a learning-centered culture. A life time learner himself, one of the core values Bialecki emphasizes is "always be learning." Rather than focusing on an organizational-led process, his team’s goal has been to motivate a culture in which employees lead their own development. To facilitate this they provide their people with the time, resources and incentive to make learning a priority.
Part of the bi-annual review process, everyone from the CEO to the newest hire comes up with a learning goal. This can be anything from a professional to personal skill they want to develop. The company gives each person up to $3000 a year to spend on learning materials such as seminars, courses, etc.
As a result, they’ve seen a rapid increase in upskilling and internal mobility. For example, they’ve seen support engineers grow and transition into full blown software engineers in the space of 18 months. They’ve also had people move from support to account management bringing along their knowledge and technical abilities to offer clients a deeper customer experience. This process isn’t confined to individual development, Klaviyo has also set up a training room where people can share the knowledge they’ve learned.
Vice president of people operations, Tammi Pirri, explained, “It makes a big difference for people to see that there is career longevity and that even if you’re in a non technical role, through training and development you can transition. [Learning is] integrated, not only from a values and culture level, but also something that an employee can give back to others, opening the door for better communication and collaboration.”
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