Focusing on Fundamentals
2022 is turning out to be a rollercoaster year with the tech-focused NASDAQ down 30%, and the reduction of $79B dollars in funding across the global startup ecosystem. We are witnessing some portfolio company growth slowing, tightening of cash, layoffs, and restructuring. Companies are re-prioritizing and focusing on what’s critical and core to the business. We expect that in 2023, companies will be even more diligent about spend and put greater emphasis on outcomes and performance.
The theme of our 2022 report is: Focusing on Fundamentals. The annual Kleiner Perkins People Report leverages the collective power of the tech community, including leaders within and outside of our portfolio. This year we expanded participation in our surveys to Founders, CFOs, COOs, and People Leaders at VC-backed startups, not limited to our portfolio. Our approach to this report is to curate valuable perspectives and best practices to help you navigate this environment.
Our takeaways can be summarized into three recommendations:
1. Leaders Need to Offer Clarity of Direction and Thoughtful Transparency
Employees are feeling uncertain in this economic environment, especially those who have lived through recent layoffs. It is critical for CEOs and their leadership team to practice thoughtful transparency by:
Providing clarity in the company direction, and setting clearly defined goals/OKRs. Enabling employees to understand how their work contributes to these goals and the success of the business. Ensuring the right people have the right info at the right times so they are aligned with the business and can be involved in making the right decisions for the highest impact.
Companies that practice clarity of direction and thoughtful transparency will have higher employee engagement, which in turn will lead to stronger performance and happier employees.
2. Workplace Culture Matters
Workplace/Office culture matters. Culture is not just a buzzword. It is an intentionally designed program that ties together all elements of individual, team, and company performance. Employees want to feel that they are a part of a connected team, especially when times are hard. Leaders need to be intentional about:
The company culture they design and implement. Clear articulation of purpose, values, standards of behavior and performance metrics. Recognize that when it comes to any of the workplace models (remote/hybrid/in-office), there will be some level of compromise.
3. Laying the Talent Foundation for Growth
In 2021 and Q1 ‘22, most companies were on a hiring trajectory that assumed sustained growth and didn’t factor in the current economic conditions. Upon reflection, most companies realize that they over-hired in 2021 and Q1 ‘22. As we see a macro theme of growth slowing down, CEOs and executives are faced with a dilemma: “Can the employee grow into the expectations of the role fast enough, or will they need to be layered or transitioned out?” Companies need to be able to define the basics of their company culture (see #2 above) and compensation strategy. Pillars include:
Defining a pay philosophy. Establishing performance standards associated with roles and responsibilities.
If these fundamentals are not established, companies can not move to more advanced topics such as pay equity, equity refreshers, promotions, and top talent retention.
A huge thank you to the founders and leaders in our network for being champions of change in the workplace. We're thrilled to be able to support our portfolio companies and share insights and best practices with the wider community.
— Jackie on behalf of the KP Talent team
The topics in this report include:
KP Talent Team