Welcome to the first segment in a new series: High Impact. A couple times per month I’ll be sitting down with a Chief People Officer or other talent leader to discuss an initiative they’ve completed and the positive impact it had on their business.
My motivation for this series was simple. No other leader outside the People leader has as much responsibility to create business-wide change. Yet too often People leaders don’t get credit where credit is due, and too often they need to justify the business impact of their work. My goals are to:
- Shine the light on an inspiring leader
- Connect a clean line between the people work and the business work
- Inspire future change agents with high-impact ideas they can use themselves
I’ll release each segment initially in a case study format, and later on as a compiled book. Lots to look forward to! Now, without further ado, my first guest is…
The Guest
My first guest is Kelli Dragovich, the Chief People Officer at product experience platform Pendo. Kelli has extensive HR and talent experience with executive HR roles at Intuit, Yahoo, Nook Media, GitHub (where she scaled the company from 180 to over 400 worldwide), Hired (where she built the People Ops function and Executive Team from the ground up and hired over 400 employees globally), and Google (where she led M&A integrations on their Cloud business unit). She’s a prolific angel investor and has consulted on People Ops and organization building with Twitch, Zwift, Patreon and many more. Let’s dive in.
The Situation
Kelli’s project was increasing efficiency at a startup used to a more growth-focused, capital-rich environment. Like most startups, Pendo had heavily focused on “growth at all costs” for years – all eyes were on the top line. Several years of operating with this goal (plus an abundance of venture capital money) had led to overhiring and a lack of scrutiny about costs.
Initial conversations for this project began about a year ago to prepare Pendo for an IPO, but when the VC and stock markets started to deteriorate over the summer of 2022 it took on new urgency. Kelli’s task was now highly important to the ongoing success of Pendo.
The Goal
Kelli and her team set a goal metric of increasing Annual Recurring Revenue (ARR) per employee to $200,000 in under 6 months, with a secondary goal of avoiding layoffs. At the start of the project, Pendo’s ARR per employee was $136,000.
To succeed, they knew they’d need to overcome a few distinct issues:
- This would be a significant mindset shift for the 900+ people working at Pendo, who were already nervous about the state of the economy and the future of the company.
- Transparency, honesty and communication would be vital to get employees invested in the project and actively participating.
- Needed to prevent employees from feeling like major changes were all being made in secret behind a closed door.
This was an ambitious goal, but the economic indicators all suggested that meeting it was vital for Pendo to continue being successful. If they didn’t keep up with the changing markets, the consequences could be dire.
The Process
- Open communication and build support across the company. First, Kelli and her team enlisted every hiring manager and department head Pendo and got them to focus on efficiency and cutting costs where possible. HR were the “stewards and rudders” of the project.
- Let the department heads make changes. Once department heads understood the shift to efficiency rather than just growth, they found many ways to improve it. They focused on headcount planning, being strategic about the roles that they backfilled, restricting where it made sense, and making full use of existing resources.
- Communication in both directions. Kelli, the CEO and the CFO reported on the project to other executives regularly to ensure no one was rowing in the wrong direction.
- Update the entire company regularly. Kelli’s team updated the rest of the company once per month in town hall meetings. They focused on the “Why” of the project. Pendo wanted to be prudent, proactive, successful and in control of its own destiny through macro-economic headwinds.
The Secret Weapon
The most important piece of this project was a Headcount Master Dashboard designed to be the single source of truth for the company. It showed current headcount, known upcoming attrition, roles that had been accepted but not started, performance management cases that might be on their way out, and all open recs. A cross-functional team of HR business partners, including Recruiting, Finance and Workday experts, met weekly to discuss the dashboard and made strategic decisions based on it. Once everyone had a clear view of headcount, they could be proactive about workforce planning.
Doing this with a cross-functional team also helped break down silos between the different groups. The recruiting team was better able to respond to cultural needs, and vice versa. Kelli emphasized the importance of getting the go-to-market recruiting lead and business lead in the same room. Many breakdowns can happen if these groups are not on the same page, and her team understood how important this was to their success.
The Business Impact
- Pendo’s ARR per employee increased to $202,000 from $136,000 after 6 months of work.
- Pendo’s Employee Net Promoter Score jumped from 42 to 65.
Kelli also pointed out that some of the most impactful work she’s done is not directly quantifiable. Getting board members and front line workers saying “You shifted this culture,” is incredibly meaningful and rewarding. This project also shows how people leaders can shape the business in very tangible ways and how important that role is when economic headwinds shift suddenly and companies are forced to adapt.
Lesson for the Future
Throughout our call, Kelli emphasized tying HR activities to business objectives. In her words, “HR can produce lots of really excellent metrics, but no one really cares unless it significantly helps or hinders the rest of the business.” Pendo does this in several ways – they also have dashboards that link eNPS to employee sentiment, motivation and attrition to emphasize why employee feedback is important. All of HR’s goals and metrics need to align with business success. For example, looking at costs saved by reducing headcount ignores how those employees contributed to the company. In Kelli’s words, “I could save millions of dollars, but if the business is losing it doesn’t matter.” She also emphasized that CPO’s must be an active participant in the growth and success of the business.
Final Advice
“Remember to keep some humor and honesty. CPO is a hard job and the people doing it can be really hard on themselves, but people know this role has been thrown into the hot seat. You don’t have to take it all on yourself.”
