Why Neighbor Rejected an Unlimited Vacation Policy (And What We Did Instead)

Let’s talk vacation time.

For most startups, “Unlimited PTO” is the default. I put that in quotes because we all know it isn’t ACTUALLY unlimited. You’d be fired if you worked one week and took off the other 51.  

As an HR leader at some of the top Silicon Valley companies, I’ve found that managers AND employees struggle with the ambiguity of an unlimited policy. In an effort to clarify, additional rules and guidelines are created. This increases frustration (wait, you said it was unlimited?) and employee resentment.  

Moreover, hourly employees usually don’t fit in the unlimited policy so there’s a separate one created for them. Not cool.  

Additionally, I found that employees who have an unlimited policy end up taking FEWER vacation days. There’s no baseline on what’s appropriate so they err on the side of not taking too many.  

For these and other reasons, we do NOT have an unlimited policy at Neighbor. What do we do instead?

Every employee, regardless of seniority, gets 20 PTO (paid time off) days per year. On January 1, everyone at Neighbor is given 20 days and it’s up to YOU to use them how you wish. Go on vacation, stay home to take care of yourself or a loved one, take a personal day. Use them how you wish! There’s no second guessing on what’s appropriate. No concerns around abusing the policy.

Here’s your PTO. Take it. Recharge. Enjoy.

Build-A-Bear and the Secret to Employee Engagement

I recently took my five year old to a Build-A-Bear Workshop near our home. It was her friend’s birthday party, and I sat off to the side while the young girls rummaged through clothes and accessories for their new teddy bears.

As the girls enjoyed themselves, I couldn’t help but notice two employees helping with the party. One was visibly tired and disinterested. It was clear he didn’t want to be there. Maybe it was just a bad day, but from all appearances he looked like a punch-the-clock, I’m-just-here-for-the-paycheck employee. The epitome of disengagement.

The second employee, Ryan, stood in stark contrast. He brought energy and enthusiasm to his job. He was passionate about his work. He was fully engaged. Ryan understood his job wasn’t to build teddy bears or sell accessories. His job was to provide each customer with a magical, memorable experience. Ryan excelled at that.

Finding and retaining employees like Ryan is a challenge all employers face. A recent Gallup study shows that only 30% of US employees are engaged. Globally that number is only 13%. To combat this problem, companies are heavily investing time and resources to increase employee engagement.

But creating an engaged workforce starts well before an employee walks through the door. The secret to employee engagement isn’t a reactive program, it’s having a robust hiring process that selects candidates who are the right fit for your company and the job their being hired for. Or as Jim Collins teaches in Good to Great, it’s about getting the right person on the bus, and into the right seat on that bus.

In Work Rules!, Google’s former Head of People Operations, Laszlo Bock, argues that companies aren’t spending enough resources to get the right people on the bus. In Bock’s words:

“The presence of a huge training budget is not evidence that you’re investing in your people… It’s evidence that you failed to hire the right people to begin with. At Google, we front-load our people investment. We spend more than twice as much on recruiting, as a percentage of our people budget, as an average company. If we are better able to select people up front, that means we have less work to do with them once they are hired.”

When managers make a poor hiring decision, no amount of training or investment can overcome that error. So, how do companies make sure they hire employees who engage? Here are two suggestions:

1. Companies need to be candid about the job.

Share the good, the bad, and the ugly. Employees are eventually going to find out what the job is really like. Why not be upfront? My favorite example of extreme candor comes from the job ad for Ernest Shackleton’s 1914 South Pole Expedition:

Men wanted for hazardous journey. Low wages, bitter cold, long hours of complete darkness. Safe return doubtful. Honour and recognition in event of success.

Candidates know that no organization is perfect, and being transparent will help people understand what they’re getting into.

2. Companies need to have a clearly-defined culture.

What is the purpose, vision, and mission of your company? When I was a first-year MBA student, I attended over a dozen information sessions for companies that interviewed on campus. I was struck by how clear LinkedIn was about its culture. For many of my classmates, LinkedIn was not the right fit. But for me, I knew it was where I wanted to be. I love working at LinkedIn because the company vision of creating economic opportunity deeply resonates with me.

The clearer companies are in defining their culture and what they are looking for in a new hire, the easier it is for job seekers to identify companies where they’re a good fit. Increased transparency leads to better decision making for the employer and the employee. Everyone wins.

Before my daughter and I left Build-A-Bear that day, I approached Ryan to tell him thanks for creating such a memorable experience. When asked how he was able to do it, Ryan responded, “I’m just a big kid myself. I know how to talk to the little ones.”

Build-A-Bear nailed the decision to hire Ryan. They found someone who is both passionate about the company and the job. In short, they have an engaged employee.

We would be wise to follow suit. By investing in talent acquisition and making sure the right people are selected up front, companies will spend far less time and energy dealing with disengaged employees, and more time helping their good employees become great.

This article was originally published on LinkedIn.

What’s the Most Important Trait to Hire For?

When I was an MBA student, I had the privilege of mentoring several first-year students as they searched for an internship.

One of these students, Jacob, dreamed of interning at LinkedIn. Even before the MBA program started, Jacob was proactive in networking with professionals and learning about LinkedIn.

We both thought he’d get an interview, and he was well-prepared for it. But when the recruiting team selected the eight individuals for a first round interview, Jacob did not make the cut. He was severely disappointed.

Despite this setback, he wasn’t ready to throw in the towel. Jacob politely reached out to the recruiting lead to tell her that LinkedIn was his number one company, and that if an interview slot should open, he would love to be considered.

The day before the interview, Jacob got a phone call. One of the candidates had backed out. They wanted to meet with him. He impressed the interview panel and was invited to a final round interview. He did all he could to prepare, but, to his great disappointment, Jacob was not given an offer. He still wasn’t ready to give up.

Once again, Jacob explained that LinkedIn was his dream company and that if anything changed, he would love to be reconsidered.

He stayed in touch with the HR team, and a few months later, Jacob received a phone call from a LinkedIn recruiter. An internship spot had opened and she thought he’d be a great fit. Jacob went through several more interviews and his persistence finally paid off. He got the offer.

What is Grit?

Many words can be used to describe Jacob’s approach to the internship recruiting process. But the one I find most fitting is a four-letter word we don’t hear often enough: grit.

Psychologist Angela Duckworth defines grit as “passion and perseverance for very long-term goals. Grit is having stamina. Grit is sticking with your future, day in, day out… Grit is living life like it’s a marathon, not a sprint.” Individuals with grit can look at a tough situation, ignore the obstacles they are unable to change and instead focus their energy on what they can control.

Why You Should Hire for Grit

Companies look for many traits when hiring employees. Leadership, confidence, flexibility, teamwork, and raw smarts frequently make the list. But in my experience, grit trumps them all.

According to Duckworth, grit is a better predictor of success than anything else. Grit wins over IQ, EQ, raw talent, good looks, physical health, and education. Gritty people view unmet goals not as a setback but as an opportunity to learn and grow. They are more likely to endure through a difficult project and hang in there when difficulties arise.

Talent is not enough for success, and Duckworth’s research shows that there are many talented individuals who simply do not follow through on their commitments. In fact, grit is usually unrelated or even inversely related to measures of talent.

As crazy as it may sound, more than half of voluntary turnover happens within a year of new hires’ start dates. The direct and indirect costs of hiring, onboarding, and training new employees are significant. Do you want someone who will quit when his new job isn’t all he expected or when things start getting tough? No? Then hire for grit.

How to Identify Grit

A quick scan of a candidate’s resume or LinkedIn profile won’t reveal her level of grit. Since grit is the blend of passion and perseverance, let’s look at how we can identify both of these attributes in job candidates.

To gauge a candidate’s ability to persevere, consider asking questions such as:

  • Can you tell me about some of the obstacles you overcame to reach your present position?
  • Can you tell me about a time when you came close to failing but you pushed through?
  • How do you maintain a positive outlook when the challenges seem insurmountable?
  • What is something difficult that you mastered and how did you go about it?

Identifying a candidate’s passion is the other side of the coin. And it’s not just passion for life, but passion for your company and the kind of work they will be hired to perform. A question such as, “Why do you want to work for our company?” may reveal some insight, but a better gauge of passion may come from nonverbal cues witnessed throughout the recruiting process.

What can you learn from the candidate’s body language? What has she done to learn about your company and the position? Has she reached out to connect with any of your colleagues? A candidate’s behavior may tell you more about her level of passion than her response to a scripted interview question.

Additionally, the clearer you are in your culture and how it differentiates from other companies, the clearer you can identify passion in job candidates. It’s not just a matter of hiring employees with grit, but hiring employees who will be “gritty” for your company.

In today’s workplace, almost all companies struggle to hire the right candidates and to retain them once they’re hired. Too many hiring managers only seek out candidates who worked at premier companies or graduated from top-tier universities.

You’re better off hiring employees who are passionate about your company and who will persist when times get tough.

You’re better off hiring for grit.

Acronyms: are they helping or hurting communication?

This article was originally published on LinkedIn.

One of the best books I read last year was the Elon Musk biography from Ashlee Vance. Musk’s entrepreneurial accomplishments are legendary, and there’s much to learn from this well-written, well-researched book.

But the most important lesson I learned has nothing to do with Musk’s innovations in space travel, clean energy, or electric cars.

In May 2010, Musk sent a company-wide email to all employees at SpaceX. Something was bothering him and he wanted everyone’s attention. The subject line of his email? Acronyms Seriously Suck. Here’s an excerpt.

“There is a creeping tendency to use made up acronyms at SpaceX. Excessive use of made up acronyms is a significant impediment to communication and keeping communication good as we grow is incredibly important.

Individually, a few acronyms here and there may not seem so bad, but if a thousand people are making these up, over time the result will be a huge glossary that we have to issue to new employees. No one can actually remember all these acronyms and people don’t want to seem dumb in a meeting, so they just sit there in ignorance. This is particularly tough on new employees.”

At first glance, Musk’s tone seems a little strong. Surely a CEO has more important things to worry about, right? Maybe. But have you ever joined a new organization or team and felt completely lost by the flurry of acronyms? Have you ever sat quietly in a meeting as others used acronyms you didn’t understand? I know I have.

Acronyms are not bad per se, but in today’s workplace we use them all too frequently. One of my friends recently joined a company that maintains an internal list of over 700 acronyms. 700! Can you imagine trying to learn that many acronyms at a new company? It’s absurd.

Musk points out that acronyms are especially hard on new employees. We all know that making the decision to leave a job to start a new one is difficult. The growing pains faced when making these kinds of changes are real, and getting up to speed in a new role does not come overnight.

In fact, it takes the average new hire 8 to 12 months to gain proficiency at a level comparable to their tenured co-workers. Additionally, 40% of employees who leave their job voluntarily do so within six months of starting in the position.

Can eliminating unnecessary acronyms reduce turnover and time to proficiency of new hires? It’s certainly a cost-effective place to start. Here’s a quick exercise that can help:

  1. Make a list of the acronyms you frequently use at work.
  2. For each one, ask yourself whether using the acronym helps or hurts communication.
  3. If it helps communication, make sure all employees you interact with know what the acronyms stand for.
  4. If using the acronym hurts communication, stop using it and encourage your colleagues to follow suit.

If you’re still not sure, consider taking a few minutes to discuss acronyms at your next team meeting. Review the acronyms your team regularly uses, and ask for their honest feedback.

Eliminating unnecessary acronyms, and clearly defining the necessary ones, will help your organization communicate more clearly and effectively. It’s not rocket science. (See what I did there?)

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How to Make the Most of Performance Reviews?

This article was originally published on LinkedIn. 

Performance reviews. Love them? Hate them? If you’re like most, you fall in the latter camp. Many view formal performance reviews as a dreaded experience and a waste of time. They can cause anxiety for both the direct report and manager. But are they a necessary evil?

In one of my MBA courses, we recently read “Get Rid of the Performance Review!” by Samuel Culbert. Culbert argues that performance reviews are “negative to corporate performance, an obstacle to straight-talk relationships, and a prime cause of low morale at work.”

One technology company estimated spending $21 million per year to execute the performance review process. After surveying employees, this company found that 54% of direct reports thought the performance rating they received was accurate. Even worse, 53% of leaders believed that their direct report’s final rating actually reflected their performance.

So, direct reports are more confident in their review than the managers actually delivering the review?

Something is obviously wrong, but what should be done? A recent trend, at least for technology companies, is to eliminate performance reviews altogether. Our class had a guest speaker from Dell who shared how they came to this conclusion.

A few members of the HR team conducted an external and internal study to analyze the effectiveness of performance reviews. The team came back with several bold questions. Are performance reviews necessary, and if not, should we get rid of them? The data showed that performance reviews were causing more harm than good.

In time, the results were shared with CEO Michael Dell. He loved the idea and immediately reached out to employees: “We’re thinking about getting rid of performance reviews. What do you think?” Hundreds of people responded and almost unanimously said, “Yes! Please eliminate them!” Dell no longer does formal performance reviews. Instead, managers are required to have quarterly discussions with their direct reports. These discussions focus on performance and career development.

Dell isn’t alone. Adobe eliminated performance reviews a few years ago. In 2013, Microsoft ended its infamous stack ranking process. Several of my classmates shared that PwC recently ended performance reviews. More companies will likely follow.

While traditional performance management has its flaws, I’m not sure that all companies should end the review process. Employees need to receive feedback, especially feedback that is immediate, frequent, direct and specific. These discussions should be taking place regardless of how the company conducts performance reviews.

The onus of providing feedback falls on the managers, but direct reports are wise to initiate performance discussions. I once had a manager who asked for feedback in almost every one-on-one meeting with his manager. This may sound excessive, but it showed he was committed to improvement. When we approach our managers with an attitude of humility and a desire to grow, we’ll likely receive the guidance we need.

While these are a few steps to maximize performance discussions, I don’t have a sweeping cure-all for the performance review. I’m not convinced (yet) that eliminating formal reviews solves the problem, but we can certainly improve the process within most organizations.

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Three Steps to Successfully Manage a Career Transition

This article was originally published on LinkedIn. 

Last summer I interned with LinkedIn in HR, a not-so-natural move for someone who previously worked as an investment banker and financial advisor. While I was excited for the change, I showed up to the internship with virtually no experience in human resources. Sure, I had helped prior companies recruit and train new employees, but those tasks were in an informal capacity.

I felt good about the path I was pursuing, but didn’t know for sure whether HR would be the right place. Needless to say, LinkedIn took a risk when they hired me.

As I shared in a prior post, I had a great summer at LinkedIn, and I’ve since accepted a full-time offer. My career transformation was a year in the making, and I took three steps that helped me successfully manage my career transition.

Talk to everyone in that field

When I was considering transitioning to HR, I reached out to everyone I knew who had HR experience. I spoke to recent MBA grads, seasoned professionals, and even cold emailed a few Chief HR Officers. I was impressed with the amount of time people were willing to spend answering questions and sharing insights.

I wanted to know the good, the bad and the ugly, so I reached out to some who had left the field and others who had a less than stellar opinion of HR. In total I spoke with over 40 professionals, and with each conversation I felt more confident that I was heading in the right direction.

Jump in feet first

Once I felt good about my new path, I jumped in feet first. As professionals, it’s easy to get distracted by the many career options we can pursue. We often hesitate to commit to a certain path because we’re concerned we might later change our mind. It’s a valid concern, but it often prevents us from taking action.

When we fully commit to a plan of action, it’s amazing how opportunities become available. When we tell others our plan, they can ensure we’re connecting with the right people and they’ll do what they can help us reach our goals. If at some point we change our mind and decide that the path isn’t a good fit, we can always pivot. Until then, jump in feet first.

Find a role model

When I joined LinkedIn it was critical to find someone that I could look at and think, “That’s the professional I want to be.” I was fortunate to find several role models during the summer, including my manager. With role models, it’s especially helpful if you can observe how they carry themselves and how they interact with people. A lot can be learned from watching successful professionals.

LinkedIn strives to create a culture of transformation, and the company certainly enhanced my personal transformation. In addition to having a great manager, I was fortunate to have numerous lunches with HR leaders. These interactions gave me the opportunity to ask questions and receive career guidance.

By the end of the summer I felt confident that I was on the right path and I’m grateful that LinkedIn helped me transform my career.

Career transitions can be tough to navigate, but we can take proactive steps to ensure we’re heading down the right path. When considering your transition, talk to everyone you can in your prospective field, jump in feet first, and find a good role model.

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