Friends,

Tomorrow, I’m back to work after a blissful week of rest and relaxation.

There’s nothing like time away to help you reflect and recenter on the things that are important.

The one reflection I’m returning with is how deeply I want to turn this newsletter into something that becomes a go-to resource for People professionals. Something that helps you to build the best people and pay practices for your company.

I’m going to start thinking about how to bring that to life over the coming weeks and months, but one thing is clear, it needs to be in service to you, dear reader.

More on that to come soon, but in the meantime, enjoy this week’s edition ✌️

Matt

PS. I finally got to see Odyssey at the cinema. I’d rate it 7/10. It was massively hyped, but still a solid film.

In case you’re new here (or just missed it) here’s the past three editions of the FNDN Series:

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This weeks edition is based on one of the 30+ sessions that took place at the recent Startup People Summit. If you’re looking for the playbook on building the modern people function, you can access every session with a post-event pass.

Anyone who has worked in a People function in the technology industry has run into the unfortunate narrative that follows it around.

That HR is a handbrake.

Paul Stovell, Founder and CEO of Octopus Deploy, started his company holding a similar view.

Every HR team he'd worked with before Octopus, in his words, "existed to protect the business from the people".

That was the opposite of what he wanted, so he didn't build a People function.

But at 100 people, that narrative was forced to change.

This is how he and Orli Remez, his Chief People Officer, built the function he'd avoided, and why the relationship between the two of them underpinned all of it.

Paul had two reasons for going without HR.

The first he’d already seen up close.

The second was the company itself. Octopus was engineering-led, and nobody could see what the role would add that the engineers weren't already doing.

But then the cracks appeared.

At 100 employees, the larger departments ran recruiting and performance reviews well, and the smaller ones made it up as they went. Candidates and employees got a different experience depending on which team they landed in.

That fell well short of the world class employee experience Paul believed in for his company.

So his response was to build the function, and to build it differently.

His reasoning was a commercial one that any company can sympathise with. People are 80 to 90 percent of a software company's costs, and its biggest asset.

The People function should exist to give them a great experience, and get the best out of them.

He also knew what he wanted from the person running it. A business partner who happens to understand people, there to get the best outcome for the company and its people, rather than a function whose job is to say no.

But he couldn’t build that himself. Paul is an engineer who knows where his blind spots are, and while he can give the person in the seat feedback, he can’t coach them, because he's never done the job.

So the expert had to be the one in the chair, and Paul had to rely on them. That’s why the relationship matters more than the function itself.

Orli's view is that a people function only works when it's embedded in how the business runs, and that starts with the CEO and the CPO before it trickles down to anyone else.

The first real test was an acquisition.

Octopus bought Codefresh, and with it a workforce that had been through two rounds of layoffs and a long stretch of flat salaries.

The external advice was to use “golden handcuffs”: promise everyone money in two years and hope they stay.

He and Orli set one objective instead: the team should fall in love with Octopus.

Then they fixed the flat salaries immediately, because that's what they'd do for anyone else who worked there.

Two years on, attrition from that group is low, and Orli, who’d planned to leave after the integration, fell in love with Octopus herself and stayed on.

Paul’s list for how he sees the success of this partnership is short and blunt.

1. Cover the blind spots.

A hundred things are going well at any moment and a handful are broken, and a CEO's attention only goes to the broken ones. Everything else gets left alone.

Paul needs someone to say "I know you're focused on that, but look over here".

Sometimes that’s a brewing problem, and sometimes it’s a team that has been working hard and would value a message from him.

2. Be a business partner who happens to understand people.

If Paul understood the law deeply he'd run the business better, so his head of legal exists to give him that knowledge when he needs it.

The same applies to people.

Paul meets CEOs who tell him, for example, that marketing isn’t performing and they want to make big changes. When he asks why they haven’t, the answer is a People team that worries about the redundancy process, so the CEO feels handcuffed.

The version Paul wanted engages from the other direction: we’re here to get the best outcome for the company and its people, and we’ll use what we know about people to help you get there.

That’s the point at which it becomes a partnership.

3. Treat people decisions as risk versus risk.

A broken function is a risk to the business. A people change that goes badly is also a risk.

There's no risk-free option, so the people team's job is to help the CEO pick well.

Take the person hired 12 months ago who isn’t working out. The manager has had the conversations for six months. Everyone knows the role isn’t the right fit.

The standard response is “we might get sued”. So the People team starts a six-month documentation process, so that if it ever reaches a tribunal the company can defend itself.

Paul’s view is that dragging someone through that is the surest way to get sued, because it demoralises them.

What they agreed instead is no surprises:

Ending up at a tribunal wouldn’t keep Paul awake. Finding out they’d treated someone unfairly would.

4. Be selective with the CEO's time.

Orli sits in Paul's seat before bringing anything to him and asks “what matters right now”.

Her framing is that the function is there for the business, and the best outcomes are the ones where the people call and the business call turn out to be the same one.

5. Be in the room before the big decisions.

Six months into Orli's tenure, Paul announced two promotions at an executive offsite, one to C-level and one to VP.

Orli found out while sitting in the audience alongside her peers.

She’d likely have backed both. The problem was that a decision which changes reporting lines, pay and titles (not to mention the interpersonal impacts across the team) had been made by one person, with no one pressure-testing the timing or what it might set off.

Paul had made calls like that alone for over a decade because there'd never been anyone to make them with. Orli didn't fly home until they'd talked about it.

The test they’ve built since then is this: if he's sitting on a big decision and the two of them aren't discussing it, something is wrong.

A year later, when a function wasn't working and he flew overseas to spend days with the executive involved, Orli was on the phone the whole way through.

None of this holds without routine. Octopus runs four to keep the relationship working.

1. The CPO sits on the ELT and in the business rhythms.

Paul rates this as the one that matters most.

The dysfunctional CEO and people-lead relationships he’s seen all share the same gap: the people lead meets the CEO one-to-one, but is never in the room while the business is being run, so they can’t see the friction between two departments as it happens.

Orli piloted it, and once the leaders saw what it added, the question went away.

2. A standing meeting the CEO can't skip.

There’s always an agenda to anchor to, and always room left for the unstructured part: brainstorming, testing an idea, or venting, because the top of a company is a lonely place to sit.

3. Written narratives before strategic conversations.

Octopus is a writing company, and time is the scarcest thing either of them has. Anything strategic goes out as a document in advance, so the meeting opens on the thinking and the proposal, with the backstory already read.

4. Confidentiality as the default.

Orli will Slack Paul with “don’t do anything about this, just listen. Park it. I want you to know.”

Nothing said between them moves unless they decide it should.

If your founder says they don’t care about HR, Paul’s advice is to take them at their word on the admin and bother them with the thing they do care about.

Ask to sit in their meetings and bring observations. If the seat never comes, it's the wrong partnership.

A strong CEO-CPO relationship is critical to an effective People function, but it shouldn’t be left to chance.

Reframe what the department is for and agree what the CEO needs from it, then build the rhythm that holds it. That’s how a People function shifts from the handbrake to the accelerator.

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A roundup of the most interesting stuff from the week:

When you’re ready, here’s three ways I can help you:

1. Tools & resources
Resources and tools that give you what you need to build your own startup compensation practices.

2. Comp consulting
Building startup compensation practices that are clear, fair and competitive.

3. Startup People Summit
A 1-day annual event for People professionals in scaling companies. Creating the playbook for startup people practices. Grab recordings from past events, or subscribe to join the next summit.