OpenComp has been conducting a series of interviews to explore how companies are responding intelligently to the economic downturn, from where to get comp data to how to approach headcount planning.
What follows is an interview with Emily Downs, the Head of HR at Hummingbird, a startup in the fintech and financial security industry. Emily started her career in HR at Ticketfly, and has since worked at Plaid before becoming involved with Hummingbird.
The following has been lightly edited.
How have you observed Hummingbird respond to economic downturn, especially in terms of conserving cash and accelerating revenue?
Our response to the economic downturn is probably similar to many companies: we focus on our financials and our runway. We plan for the worst case scenario, middle of the ground scenarios, and best case scenarios by taking time after every quarterly board meeting to do a deep dive into the health of the business.
We're taking an especially careful look at headcount planning this quarter. We've broken out the H2 headcount plan into ‘must hires’ and ‘nice to haves,’ and projected where those would take the business. Essentially, that’s how we're managing spend from a headcount perspective.
On the market share side, we’ve put a lot of energy into our growth machine. Because of this, our hiring plan has pivoted towards growth hires. That means sales and marketing; folks who can ensure that our pipeline stays up and running and that we're able to continue moving on the revenue side.
On the product side, we're doing research to identify the features, apps, and additions that we should be building now to keep opportunities most open for us in the future.
“We’ve put a lot of energy into our growth machine. Because of this, our hiring plan has pivoted towards growth hires.”
How are you acquiring compensation data and running analysis to support your headcount and compensation planning? (note: Hummingbird is not an OpenComp customer at the time of this interview)
Unfortunately, compensation data is difficult to work with because it's volatile. It’s all nuanced, especially as you think about industry and specialization of roles. To make the compensation data work for us, we’re taking industry standards and our own internal compensation data, and then checking against capacity planning and growth strategies.
Compensation for a particular role is generally influenced by compensation data and what you hear from candidates, but you also need to weigh the value of that role internally. What essential roles are you willing to pay a premium for, compared to other roles based on short, medium, and long-term business goals?
That can be a challenging conversation to have because we want to pay people equitably and fairly.
“Compensation for a particular role is generally influenced by salary data and what you hear from candidates, but you also need to weigh the value of that role internally.”
What attention have you paid to pay ranges and are you thinking about them differently given the current market?
Currently, we use a point pay program and give candidates the option between a cash-heavy offer and an equity-heavy offer. It's worked well, and candidates appreciate it. This strategy becomes interesting to navigate down the line when rewarding, recognizing, and retaining talent, but we’ve found it to be a solid foundation.
We’re also keeping a close eye on market competitive offers. So, when candidates cite other companies' offers, we jot that down as a salary data point and reconvene on the non-comp offerings we can leverage to position ourselves competitively. Because, changing compensation every time there’s a counter-offer will become extremely chaotic.
How do you communicate the value of compensation to candidates and employees to bolster acceptance and retention rates?
It’s important for employees to understand that compensation is not just about salary: it includes the value of the equity and the cost of health insurance benefits. Sometimes this requires a bit of education.
For instance, employees care about their paychecks, but they also care about good health insurance coverage and the other perks and benefits that let them live their lives outside of work. And those things don’t come for free. Over the past few years, average health insurance renewals have hiked up, meaning employers are likely increasing what they pay on employees’ behalf.
From an operational perspective, it’s important to note that if you react too quickly to counter-offers, you could end up overpaying people initially and then lose your ability to afford them over time, depending on your company's financials. Either way, it can create a huge pay disparity issue, which I think we all want to avoid.
“It’s important for employees to understand that compensation is not just about salary… Sometimes this requires a bit of education.”
Is pay transparency legislation on your radar, and if so, how are you responding to it?
Being a fully remote company, we've had less direct exposure to these laws than some other employers, but we’re definitely paying attention to them. Pay transparency puts a lot of healthy pressure on companies to get confident and grounded in their compensation philosophy, and any ambiguity can stir up real challenges for employers.
We're still in the early phases of using a program anchored in equity and transparency. Next year, we’ll be doing a big revamp and will have to see what will work best for us at that point, including considering a pay range structure.
“Pay transparency puts a lot of healthy pressure on companies to get confident and grounded in their compensation philosophy.”
What are you doing now to increase retention, especially among high performers?
In the immediate term, we've been focused on incrementally improving our benefits and taking advantage of low-cost, high-engagement activities to ensure our employees feel they’re being taken care of.
Increasing retention - especially for high performers - is not a short-term game. We're focused on making sure our team members feel recognized for and challenged by the work they do, and that there are plenty of opportunities to be recognized for that work. We run quarterly check-ins to ensure our team members are getting that frequent and intentional feedback and recognition.
What about when it comes to compensation?
We emphasize the importance of a high level of engagement and understanding when talking about compensation. Be direct with employees and treat them like adults, because otherwise they're going to know that you’re not being transparent.
People come to work for their paycheck, but they stay at work because they like their colleagues and they like what they do. If you notice people are jumping ship for higher pay, check where your benchmark is. Then ask yourself, what’s the secondary reason? Figure out your culture and what brings people to work, and shore up any weak spots.
“People come to work for their paycheck, but they stay at work because they like their colleagues and they like what they do.”
In an ideal world, what would compensation look like at Hummingbird?
I personally believe in a pay-for-performance kind of program. Performers who have an outsized impact should receive outsized compensation. In addition to being drivers of ROI, they also tend to be huge culture carriers. Losing high-performing employees who are so embedded in the business can have real fiscal and cultural consequences.
In the real world, you need a balance of equitability and structure. I would implement a very clear, tiered program where employees can move as quickly or as slowly as their own personal growth allows, essentially blending a pay for performance and a structured approach.
“In the real world, you need a balance of equitability and structure.”