How do we end "bro-culture" in tech? Zenefits has a plan

When Beth Steinberg first heard from Zenefits about taking over the HR department, she knew what she was getting into. But she took the meeting anyway.

A veteran HR professional with over 20 years of experience working in tech, Steinberg read the expansive coverage of the startup’s “bro culture.” She also followed the investigation into Zenefits both skirting and violating regulatory laws across several states closely. In November of 2014, she even met with co-founder and former CEO Parker Conrad to put in place some people management systems and formal processes. At the time, Conrad was not supportive of the initiative. He was forced to resign 14 months later amid the investigation.

Yet Steinberg didn't see a crisis-riddled startup that was plastered all over the headlines or the irony of an HR startup with massive HR problems. She saw an opportunity.

“Every problem is solvable,” Steinberg said in a recent interview at Zenefits new headquarters in downtown San Francisco. “This is a great challenge that I am uniquely positioned to help with. At the end of the day, my motivator is to make an impact, not only to the culture but to the trajectory of the business.”

Steinberg is Zenefits' first Chief People Officer, a role that she assumed in August. While total headcount at the HR startup is down to 500 from its peak of 1,400, Zenefits is hiring again. Engineering job openings at the startup shot up by 220% in the past year, while openings, on average, at peers like Namely, Gusto and Justworks declined by 15%, according to LinkedIn data. Sales jobs, year over year, are up some 250% as well.

Zenefits’ mismanagement of its employees and its fraternity-like culture came before it became a theme across technology companies like Uber and venture capital firms in Silicon Valley. Now, Steinberg believes that we will only see change across the industry if leaders are willing to completely rethink how they onboard, manage and train their employees.

That starts with getting rid of the term “human resources” entirely. 

“Human resources sounds very old school and, in some ways, like you are devaluing people by calling them resources,” she said. “The reality is in every tech company, all you have is your intellectual capital.”

Today on LinkedIn, roughly 600 professionals working in technology hold the title Chief People Officer like Steinberg at companies like eBay, GoDaddy and MetroMile. Just this week, enterprise storage startup Box announced the appointment of its second chief people officer, a position that was formerly referred to as “Head of People Operations.” While the number of CPOs is growing, nearly 16,000 tech workers currently hold the title of Chief Human Resources Officer or Human Resources Director. The semantics of the job aside, Steinberg and I discussed how her first six months at Zenefits is going.

Edited excerpts:   

Caroline Fairchild: What about Zenefits initially peaked your interest?

Beth Steinberg: My last company, Brightroll, [where I led people and talent] was bought by Yahoo, and after that, I took a little time off and then started my own consulting firm called Mensch Ventures. As I was looking around I wanted two things. I wanted a seasoned CEO. I have worked with a lot of first time CEOs and founders which has been an amazing experience, but I had not worked with a seasoned CEO for a while. And then I wanted a big challenge that perhaps I haven’t had at this magnitude before. I think Zenefits is a great story and we can turn it around.

CF: How did you determine for yourself what was really going on within the company?

BS: I tried to ask real questions about where [CEO Jay Fulcher] and other leaders see the culture. Where do they want it to go? What are they doing in addressing some of the difficult issues that Zenefits has faced? Obviously, we can learn from that as a company, but I feel like the lessons of Zenefits can be shared throughout the tech world to really think about things like growing too fast. What are the costs, real costs, in terms of not only to the business but to the people of not building a foundation of things before you start to grow? I also came here and hung out to see what the vibe was and people seemed engaged. To be honest with you, [people were engaged] more so than I thought they would be given the trials and tribulations.

CF: What were your main concerns?

BS: The main concern for me was like the “bro culture.” I just don’t do that anymore in my career. The days of rallying people around beer and parties with alcohol are just not the way that you run a functional company. I did ask a lot of questions about that and well, obviously some of that is very true. But, I have to say, I don’t think it is any different from a lot of tech companies where I have worked. I think that is just not the way it is anymore here and I think it is changing a lot in Silicon Valley as well.

CF: What was your first priority when you took the job?

BS: I wanted to really make sure I had data on the culture and what was really happening here. So, one of my first goals that we are in the process of right now is to run a survey and really get some great data. I brought in a cross-section of employees throughout the company to give me thoughts on the questions. I wanted to figure out what are people skeptical of given the history of the company. Leaders are [now] committed to putting together action plans and in fact, we are financially holding people accountable. It is part of a leader’s bonus to have an action plan, not to necessarily change the scores because I think that is a little bit of a manipulative thing to do but to have a clear action plan and make continual progress on the things we need to change.

CF: Do you think a lack of employee diversity contributed to Zenefits past problems?

BS: I don’t know the answer to that. I do think the premise of bringing in a lot of people who have no experience being an insurance broker and trying to teach them is an interesting dynamic because that’s a really hard job. I do think in terms of diversity, we are not where we need to be. As I dissect what happened, I hear a lot of things. I think that growth was too encouraged without necessarily building a foundation. I feel like if the scandal wouldn’t have happened, something would have fallen apart at some point soon anyway. They were growing at such a dramatic pace, but a lot of the systems, process, tools and methodologies that I like to see in a scaling startup were never done here. And so many of us on the leadership team, the new leaders that Jay [Fulcher] has brought in, we are having to go back and build some of those things.

CF: As you scale up hiring again, what are the questions you get most from potential employees?

BS: We do still get questions about the integrity of the company and what we have done around that. It saddens me that sometimes the scandal is still the first thing that comes up about Zenefits because I don’t experience the company in that way at all, but the reality is we are going to have to just continue to do more good things in order for that to go away… Zenefits has been held up to a standard that other companies have not been held up to. I think it is a little unfair.

CF: What excites you moving into this year?

BS: Actually being able to help leaders learn and grow… We, meaning the greater tech world, have treated leadership and management like a nice to have. But leadership and management is a skill, it is a craft, it has to be taught and it has to be fostered and we often have the false expectation that if you are given the title, you are going to know how to do the job. It is sad and stunning to me that we know that and many people don’t change their behavior. I really approach it around trying to get people to be very self-aware around what they know and what they don’t know and helping them build skills from there.

Clarification: This story has been updated to clarify that Zenefits' total job openings in engineering, not total headcount, is up 230% year over year.

Update: A spokesperson for Gusto reached out to share that the startup's engineering team doubled in size in 2017. A spokesperson for Namely reached out to share that the startup's engineering team is up 23% in 2017.