VC Chris Barbin Offers Tips on How Founders Can Retain their Best Employees

(This Q&A is part of a series of articles based on HR experts’ reactions to a report about employee retention that Founders Circle conducted along with them. For a different point of view, read “Let your employees go,” our conversation with Patty McCord, the former HR head at Netflix and author of  Powerful: Building A Culture of Freedom and Responsibility. Also, for additional advice, see “How to retain star performers: Tips from HR pros.”) 

Every founder knows that attracting and retaining good employees is critical to the success of their business; but the reasons for employee attrition remain a mystery to many.  There are sometimes obvious read flags like a toxic work culture or employees that feel under-compensated that can quickly lead to higher attrition, and then, there are more subtle clues that often go undetected.

While it may be tempting to sound the alarm when employees start leaving in droves, don’t panic if your company suffers a spike in attrition, says Chris Barbin, the venture capitalist and longtime technology entrepreneur. Unless the people leaving are top performers, the departures might even prove beneficial to the company. 

But if the best workers are part of the exodus, you may have a serious problem, he says.

Barbin co-founded IT consulting firm Appirio in 2006 and sold it a decade later to Wipro, where he served as global cultural officer, for $500 million. Now a venture partner at VC firm GGV Capital, Barbin shared these thoughts in reaction to a survey conducted by Founders Circle, which revealed that some of tech’s hottest startups suffer from sky-high attrition rates. 

In a wide-ranging conversation with Founders Circle, Barbin talked about what he’s learned in 25 years working with young companies about what prompts employees to exit. Most importantly, he offered valuable tips on how managers can retain their top employees. These are edited excerpts from that conversation.

Q: The survey shows that fast-growing startups struggle with retention. Why wouldn’t people want to stay at a hot company?

A: I think it’s a bit of a mixed bag. I think a huge driver is the geography. Where is the company founded and based? If you’re in a smoking-hot market, like San Francisco, New York, maybe in Bangalore, India, the number of smoking-hot companies is high and therefore there’s always some company that’s coming up that people can jump to. It’s very hard to compete in some of those markets.

Q: A year ago, you wrote in Forbes about your experiences managing Appirio. You personally interviewed the first 100 employees, believing that they would set the bar for the remaining hires. Are there ways startups can hire to reduce attrition?

A: We put a lot of thought into this and had a lot of hearty debates, even with our venture backers. I think this is common at an early stage. If you are hot, and you’re growing fast, especially if you take capital, you want to accelerate. Your goal in many cases is to hire faster. It’s one of these areas where folks need to be very thoughtful about their recruiting and hiring processes, and in many cases, slow down.

Q: Have any startups you’ve invested in or managed experienced a period of high attrition? If so, how did they respond?

A: There have been times where you see attrition spike to the 30-to-40% level. I think sometimes it’s in your control and sometimes not. There could be a new super hot competitor. You could be getting poached. It could be one of your partners that’s really good, and people are going to them. There’s other situations where I think you can isolate attrition to a manager, or a function. What’s important is doing a fishbowl analysis of why this is happening. Then you go attack that.

But in some cases, you can let the attrition play out. What I mean by that is, there are phases of a company as you go along: three years, five years, 10 years, where you can get a class of people that just want the old days. They’re not good for the later stages.

Q: What seems to matter most to workers at these high-growth firms is personal growth and advancement. Would you add anything to that list?

A: Well, you can draw a direct line between advancement and compensation. I think the way that people’s brains work is they say, ‘Hey, if I’m advancing and getting promoted, I’m getting more compensation.’ I agree that a primary driver for top performers is being alifelong learner. Everyone wants to learn. 

I think what I would add to the list is a level of management that cares, and is empathetic. I think there’s something really strong to be said about someone who cares about your career, your family, work-life balance. When you bring a personal touch to the experience with your staff—it can be by recognizing the birth of a child to the death of a loved one—it shows you care about more than just grinding productivity out of your employees. It’s about showing care, and it’s a really important leadership trait.

Q: You’ve also written leaders should recognize unsung heroes, the people who play important behind-the-scenes roles. How do leaders identify these people?

A: I don’t think it’s easy, but I do think there are things that management and leadership can do to try to identify them. These aren’t the people who will shout questions in the all-hands meeting, but I think you do it with outreach and round tables. What I found personally helpful is just making sure you have different vehicles for touching the entire employee population.

Q: Patty McCord, Netflix‘s original HR chief, told us she doesn’t believe companies should focus on retention for retention’s sake. Do you agree?

A: I don’t think retention should be a goal. It should be measured. It should be understood. I do think a level of attrition is healthy. We used to look at obviously, voluntary and involuntary attrition, but also regrettable attrition. There were certain people we would identify that we knew were really critical to us: It could be somebody who’s managing a big account, somebody who for five years in a row had been our No. 1 salesperson, or in engineering, someone who was a workhorse, a 10X developer. But not all attrition should be treated equally.

Q: How do you prevent regrettable attrition? What do you think of mentorship programs?

A: I love this question. When you said mentorship program, I chuckled because I think everybody tries this and organizations generally try to put a lot of structure behind it, and I think structure works against a mentorship program. A mentor isn’t really forced on somebody. I’ve had mentors over my career, but no one said, ‘Chris, this should be your mentor.’ I do think mentorship programs could work, but I would never call them a program.

As to regrettable attrition, no one is irreplaceable, but you do want to keep your best people. And to do so, you have to show you care. One thing that can help keep them engaged is variety. Your best people want to be lifelong learners.

Q: If you’re talking to a founder who is looking at high attrition rates, what would be your best piece of advice?

A: Try to really understand what’s happening. It might be a manager to manager thing. It could be a regional thing. Find out whether it’s voluntary, involuntary, regrettable. Break down the problem and see if there are hot spots that you can attack.

Get ahead of it and really over-hire a leader in your HR team early. That’s important. Get a strategic HR person, not somebody who’s just a great recruiter. At a growth stage company, you tend to want to hire a great recruiter because your burning need is more people. And sometimes you overlook the broader definition of an HR leader, which is someone who deals with operations, benefits and culture. You want a real thought leader on how to scale globally. 

We went through a handful of HR people that were good, some that weren’t. The job of HR is 50 percent comprised of everything from compensation to benefits to employee relations. The other 50% is running the company. You are as important as the CFO, the CMO. You are making strategic decisions. I don’t think a lot of early-stage executives, at least first-time executives, understand the 50/50 bucket.

I think some of the best HR people are not HR people by trade. They are really good business people who care about people who should get pulled into that role. You have to say, ‘Hey, this role is strategic, and you’re going to run the business alongside our CFO.’ But some classically trained HR people, they came up through recruiting or compensation and benefits. I think you have to think outside the box and go to other executives who want to build a business and who really care about people.

Q: We know from the survey that culture plays an important role in retention. How do you define it and nurture it?

A: I view culture as not one thing but a lot of little things. It is an intersection between mechanisms—the way work gets done—and human behavior, which is how people work together. In terms of mechanisms, you want to have world class applications, have a structure that makes it easy to get work done. At a lot of big organizations, people complain about bad systems and bureaucracy. You want to avoid that. On the human behavior front, it’s some of the things we talked about. You want to have rewards and recognition and shoutouts. You have to give people variety. It’s a combination of lots of little things. You have to pay attention to both.