At the start of a new year, many people are thinking about how they might grow in their careers in 2023. Employers need to stay ahead of those aspirations, even with the prospect of a more significant economic downturn. Employers must also adapt to employees’ changing expectations about career growth, resulting from the shift to remote work, social justice movements, and the talent shortage.
I’m reflecting back on frameworks that used to be the gold standard for managing career growth:
Annual promotion cycles
The path to promotion requiring individual contributors to become managers
Forced ranking of employees
None of these make sense anymore…and maybe they never did! So where does that leave us?
In this conversation, Barbra Gago, Founder & CEO at Pando, shared with me her new paradigm for career growth: “just-in-time” career progression. We covered topics such as:
Why is continuous management of career growth important?
Why does a downturn make it more important to invest in employees’ career growth?
Is it unreasonable for founders to expect employees to be intrinsically motivated, as opposed to driven by extrinsic factors like compensation or seniority?
You can listen to our conversation or read the lightly edited transcript below. Let’s dive in!
Leadership Roles
Here are a few leadership roles at companies that I’m excited about.
Arketa: Head of Demand Gen
Aviator: Growth Marketing Manager
Clutch: Head of Enterprise Sales
Explo: Head of Marketing
Jasper: Lots of roles across engineering and product!
Motive (formerly KeepTruckin): VP of Customer Success - contact john.gleeson@gomotive.com
Pocus: Founding AE and other roles in Customer Success, Biz Ops, Demand Gen here
Transcript
Allison: Barbra, I am so excited to have you talk about career progression and career growth, which I know are subjects that you have thought about long and hard for a long time.
Barbra: I'm super pumped to talk about my favorite topic.
A: To kick this off, what's wrong with how companies think about career progression today?
B: There are many problems. The first, when we say, “career progression,” we're really talking about employees, how they move through the reorganization, and what steps they take — how they level up. The way that companies think about it is through performance management. When we say, "You can come here, you can grow, we'll develop you,” usually the way we deliver that is through performance management, which is an annual process.
We need to shift this paradigm of performance management to career progression. Career progression is what employees are really looking for. We should be emphasizing that more than performance management, and decoupling them a little bit.
If we want to get into what's wrong with performance management, it’s that employees don't feel that they have it as much as they should. Mostly through that performance management process, we’re evaluating people in cycles. People only really feel like they progress at that cycle. I hear a lot of HR leaders who are saying that employees expect to progress every six or 12 months. And my response is, well, you only have that cadence for career progression.
Employee progression is really a question of, How am I moving forward on a continuous basis? Wherever I level up, I need to be able to see that. The performance review cycle is really the only way that it happens right now.
Most people don't like performance management. We've been trying to fix it for a long time.
Over the last six years maybe, there's been the idea that we need to go to continuous feedback — as if feedback's the important thing. But feedback is not necessarily helpful if it's not also anchored in performance. They're kind of disconnected. And then people who are getting feedback don't necessarily know how that relates to knowing where they are at in their current level, or what they need to do to move forward to the next step. We're really lacking in helping employees visualize and understand how they're progressing in real time.
The other big problem is how we measure performance. Look at the data we've collected. We've collected it in a subjective, biased, and often opaque way. We’re saying, "Okay, employee, we've collected data about you. The manager has done some stuff. Here's what we think” and hand it to them. And on top of it, oftentimes companies force managers to force rank people on a bell curve or put them in a nine-box, which is pretty arbitrary and subjective as well. So, I think the way we look at measuring is also broken.
A: I'd love to talk about the forces that are driving us to this point where continuous career growth and continuous management of career progression is a really important corporate imperative. I don't want to date myself, and I actually am not that old, but probably before my time, I think there was a general understanding across industries that you might never get promoted. You might stay at the same level for most of your career.
Also, you might be at a traditional company where it's expected that you stay in a particular role for two or more years. Having a promotion conversation would be completely out of the question before the end of that period. For example, I started out my career in management consulting and then went into private equity investing. In both of those professions, you're basically entry level for two years. There was a standard salary that you got and a standard title. At the end of those two years, you become eligible for possible promotion, but you might not get it. The idea of continuous career growth for some people (particularly for some managers) might sound like a lot of pressure. Does this mean that people are constantly going to be asking for promotions? I think that's probably the devil's advocate take to this.
B: We have to change the paradigm of it being a promotion so much as leveling up. And that's where the language around progression is really important.
The workforce is getting younger. With digital tools and technology, we can track and measure everything in our sleep, in our waking life — everywhere. I come from go-to-market sales and marketing, so I’ve had a lot of data, a lot of tools, a lot of structure to understand the funnel and measurement and all these things. Employees have nothing to measure how they're performing.
There are a few big shifts. One traditional idea is that if you're an individual contributor, then at some point, you're going to become a manager. That's how you work your way up, make more money and be successful. But that's just wrong.
It's called the Peter Principle. When you put people who are really strong individual contributors into manager roles, you just promote them to their level of incompetence. Then you end up with a really bad situation of middle management sucking. We all know that a lot of middle management sucks. And it's because we tend to do that.
We haven't built systems to reinforce the value that if someone is an individual contributor or a subject-matter expert, they can stay in that role. Your title might not change, but you should still be able to progress. Maybe your title would change at some point. But the idea is to have parallel paths, splitting those out and having individual contributor tracks actually have more steps.
You mentioned staying in the same level your whole career. A lot of times, that happens because companies base their leveling frameworks off of compensation benchmarks. Then compensation benchmarks only have six levels. So, then we only have six levels. Now you have all of your engineers pretty much are in level three or four. But the problem with that is, if I'm an engineer at level four for three or four years, and then you up level a level three, I'm going to think, "What the heck? That person is definitely not as senior as me. Why are we at the same level?"
People are starting to realize that the manager path shouldn't be the only path. Many studies actually that say only 12% of employees want to be managers. So, we need to reevaluate how we're thinking about how people progress and move up in the organization. It's not fair and it's not equitable.
You end up with a lot of pay issues when you have these few levels with really wide bands. That’s the level four engineer who's been there for four years, who probably gets paid way more than the other one. How do you explain why they get paid more if they're at the same level? Everybody wants more transparency and structure around this.
We should be way more agile and nimble about how we're thinking about the biggest resource that we have as an organization, which is our people. Instead of holding everybody until a certain point in time by saying, “In January, we're going to review everybody and then we'll see what happens,” why don't we do this in a more agile way? Which is really where we get into this concept of continuous progression.
A: I think the Peter Principle, and the idea that not that many people actually want to be managers, will resonate with a lot of folks.
B: If you're a level seven IC and a level seven manager, to get to that level seven IC, you have a serious amount of domain expertise that is mission critical to the business and creates a lot of value. And just because you're a manager doesn't mean you're better or should be valued more.
Manager is a different role. It's a different set of skills that only 12% of people want to do. And I don't know how many are actually good at it.
It's really about aligning your resources with where they're the best, and how to get the most people performing the most. It's not about, "Oh, who are my top performers?" My goal is, “How do I make everybody perform the best or as many people as I can?” Forget about the bell curve.
A: What metrics matter when you're talking about this new type of career growth? It sounds like this is not just about the promotion. There’s career growth that happens in between promotions. Is the metric here productivity — basically a per-person productivity metric? Is it equity? Is it how fast people are getting promoted? How do you measure whether a company is handling career growth well?
B: This is a big part of the thinking that went into how we're thinking about Pando and what we're building. As I mentioned, I come from sales and marketing. If I have a lead source that is delivering high quality leads consistently, I'm going to double down on that lead source. I'm not going to wait until the end of the quarter. I'm not going to wait until the end of the year to decide this was the highest performing lead source and spend all my money there. I want to be able to iterate and move quickly on that.
From an employee perspective, it should be similar. When you have people who are really excelling and really killing it, we want to remove the roadblocks and enable them to continue to progress. I've talked to so many people who are top performers who think they are not getting promoted because they have to wait for performance reviews or whatever it is.
We really need to have systems in place that enable a structure that gives us data that lets us see what I call an employee growth score. What's the growth velocity of an employee?
You would expect that at the lower levels, it's going to be much higher, and at the higher levels it'll be slower. You need to understand what that growth looks like over time so that you can really optimize it.
When I was at Greenhouse, we came up with the concept of employee lifetime value, which is very similar to customer lifetime value. We really need to get better at thinking about how we optimize the return that we're getting from talent that we have. And how do we make that compounding? Your dollar base net retention needs to be 120 or 130. How do we actually optimize the employee experience?
This is what's tied to growth. The more continuous and fluid we can make employee progression and growth, the more we can optimize the outcomes that we get for the business. There's an idea that there has to be a business need to level somebody up. If somebody is consistently delivering and getting business results, then there is a need to level them up, which is keeping them and having them continue to deliver those metrics.
Our mindset is that people can't level up because we only have so few levels. The solution is very simple — have more levels and break down compensation bans more narrowly. This actually has a huge benefit. It’s more equitable because now that level four engineer is maybe a level six engineer. And that level three that just got leveled up to level four. The comp bands don't need to be wide. They can be narrow.
My belief is that we're moving towards this stuff being a little bit more transactional. We're seeing that in the legislation that's going out that you have to have compensation visible on job roles. This means we’ll also need to be able to say, what is the level? What does that level mean? And then it's all just come back to the idea that we have to have structure and transparency around this.
There's a great opportunity and it's definitely doable. It’s just a matter of shifting our mindset about how we've traditionally thought about it. It's really not that complicated. We just need to add more levels, have more bands, have systems that enable us to track employee development over time. This also empowers employees to see where they're at, so it's a win-win. They can see they have growth in between the times that they level up.
A: I'm thinking about the currencies that matter to people when they feel encouraged and they really want to stay at a company. One is obviously, what level are they and what their compensation is. I also remember when I was at Gainsight, a common thing that people coveted was recognition, which might not have had anything to do with the level or the compensation they had. For example, were they asked to speak at an all-hands? When a senior leader wrote an email to the company describing the highlights from the last week, did they mention a particular person who did an amazing job? Who got to speak at the annual company conference during the keynote or during other sessions?
There were a lot of different ways that people felt as though they were being appreciated and that they were building a career asset, in the sense that they were building their reputation, which didn't have so much to do with leveling and promotions. How do you think about recognition fitting into this broader career growth puzzle?
B: It's 100% linked. The way to create continuous progression, from our perspective, is creating levels and then competency-based rubrics. Oftentimes, the criteria for performing in those competencies at that level will be some of the things you just mentioned. It’s somewhat bidirectional. It shows recognition when you get invited to do those things, but it's also literally part of the behaviors that might be exhibited if you are doing a really good job at that level.
Recognition is also a way of getting feedback. People don't get enough feedback. And we haven't done a good job at structuring it in a way to really help people develop. If you have a really good manager, you're lucky. It's not usually the case. The recognition is obviously a big set of feedback. But it's also linked to signals both for yourself as well as peers that you’re leveling up. It would also be demonstrated as things that you should be doing or types of things that you would’ve liked to have done — speaking at a conference, speaking at the company conference, running a lunch and learn, or presenting at the all-hands.
Those actually do come up as examples in a lot of the competencies that we have, for example, in Pando.
A: So these are behaviors that are expected to progress from level to level. And each of these behaviors actually requires a certain type of skill that you've developed, like public speaking or managing a group conversation.
What would you say to someone who thinks that people should be intrinsically motivated to do a good job at work? That these external things like money or levels shouldn't really factor into whether people are engaged day-to-day. Obviously that’s a very naive opinion, but there are some people, particularly in older generations, who really believe that.
B: It definitely comes up. I don't know if it's a bias necessarily, but it's an assumption that isn't really fair because people work to support their families and it's a livelihood. We, as organizations and company builders, owe it to the people that we hire to show them what they need to be successful.
It’s the same with interviewing. People do interviewing sometimes to trick the interviewee. But, why not prepare them for the process? Let them know what the steps are. Get the best outcome possible from them to represent what potential you can get out of this person when you hire. As opposed to trying to trick them and see how they respond to it.
We need and we owe it to employees to show them what they need to do in order to progress and how they can level up. When it comes to intrinsic and extrinsic motivation, everybody’s different. The important thing in creating equitable career progression systems, is that everybody is different, everybody has different motivations. Some people still want to grow, but they don’t care about it as much. Or maybe they’re happy where they are and they’re delivering — that’s fine. Other people are going to be like light speed, getting to the top as quickly as they can.
A: It's a real mind shift that a lot of founders need to make. I think a lot of founders are intrinsically motivated. A lot of them are very creative people. They have these beautiful ideas that just need to be birthed, and they're often forgoing salaries for a significant period of time. Maybe there's some major payout later, but they're clearly motivated intrinsically by something that's not money in most cases. And in most cases where they're successful.
It can sometimes be hard for founders to hire a larger organization that is constituted of people who are mostly different from them in that respect. Employees’ families are often the most important thing in their lives. They want to support them. They want to have stability in their lives and feel like they're progressing day-to-day. So, particularly as a founder yourself, what tips would you have for founders that are trying to make that mental adjustment?
B: Let it go. Being intrinsically motivated or extrinsically motivated is a type of diversity. Not everyone you’ll hire will work as you do. You’re going to hire people who believe in what you're doing.
I think everybody at Pando, for example, is very much aligned with our mission. But everyone is not going to be motivated by the same things.
We don't do this at Pando, but one of my earlier ideas was to have a portfolio of the rewards that employees can choose from, as a reward for performing. It doesn't necessarily have to be money. It could be donations or more time off.
I don't think it's realistic to expect that everybody is intrinsically motivated. It's wonderful when people are, and I think we get a lot of benefit from that as founders. But especially as companies get bigger, you need to be more realistic about creating tools and systems that get the most out of everybody.
A: We are obviously in the middle of macroeconomic uncertainty, however you might define that. What do you think about investing in people at this moment in time? Why is it important? Why should founders not shortchange career growth as a priority?
B: It's a great question, and it's definitely timely. I've been thinking about it a lot. Some investors have this assumption that people will cut HR budgets. That's true that some budgets might get cut; people are cutting across the board. But if you have to lay people off, which many companies have, everybody who's left is really frazzled, uncertain, and scared. And it's really important that they feel that they still have a path at the company. If your company's going to be successful, you need to keep them engaged and growing. So it's actually the time to double down on that type of people program, in terms of thinking about what their career aspirations are, their goals and what other types of opportunities do you have in the organization that they could take over.
This concept of continuous progression that we're really excited about is also a great way to help you manage cash flow better. At Greenhouse, for example, we didn't do performance review cycles on an annual basis. Just as people leveled up, that was a conversation between them and their manager. They would put forward a promotion package proposal and that would get approved or it wouldn't. That means that you're iteratively progressing people throughout the year and leveling them up.
The cost impact then is much less than if you're doing it at the end of the year. Because regardless of whether or not you laid people off, you're still going to have to go through this process and evaluate compensation. The more agile you can be about it, the better it is in this kind of climate as well.
A: I love that. Great note to end on. Barbra, thank you so much for taking the time to chat.
B: Of course. It was fun. Thank you for having me.
