When Carol Mahoney met with Zoosk's founders Shayan Zadeh and Alex Mehr in late 2014, she believed it was to finalize a post-IPO talent strategy and make plans for the company's public future.
Zoosk, founded in 2007 by Zadeh and Mehr, is the number-one dating app in the world, with 33 million users via a subscription service and is consistently in the Top 30 most-downloaded apps in Apple's App Store. Zoosk uses Behavioral Matchmaking technology and real-time adaptive learning to deliver better matches for platform users. The company was set for an IPO in early 2015, says Mahoney.
As it turned out, Zadeh and Mehr had other plans. The online dating platform's founders handed over executive control to former CFO Kelly Steckelberg, and scuttled plans for the IPO. That left Mahoney in a bit of a pickle, she says in a presentation at TLNT and ERE Media's High Performance Workforce Summit, last week in Atlanta, Georgia.
Making big changes
"What happens at a founder-led company when the founders leave? Well, in this case, everything had been focused on this IPO. All of the product development, all the strategy had come from the top down. After seven years in business, there wasn't an established culture. We had to make some big changes," Mahoney says. And there wasn't much time to make it happen.
The management change was announced in the press in December 2014. By January 2015, the founders were gone, Steckelberg took over as CEO, and a new strategy had to be implemented to focus on Zoosk's customer base and on attracting and retaining new talent, says Mahoney.
"We looked at revenue and realized we needed to cut back; we were so focused on revenue growth in anticipation of this IPO that no one ever thought about the customers -- it was all about data. 'How are they interacting with the site? How long do they stay? What influences them to use certain features?' No one could answer these questions because the customer was missing from the equation," Mahoney says.
By January 8, Zoosk had reduced its workforce by approximately 15 percent to better align these costs with potential revenues. While it was Zoosk's only reduction in workforce, it still hit the company like an atom bomb. "By January 8, we'd done the workforce reduction. Morale wasn't great, people were nervous and anxious. As for creating a new strategy to move forward -- well, there wasn't a strategy. So, we had to develop a brand-new call-to-action," says Mahoney.
Call to action
Mahoney worked with a lean team of three other human resources professionals to focus on four areas. "We knew we needed four things: first, to serve customers better. But what does that mean? We didn't even know who our customers were and what they wanted. Second, we knew we needed to boost engagement of the employees we'd kept on. Third, we had to find our 'true north;' set out exactly what our vision and mission were. When we'd ask our employees why they worked for us, so many of them said, 'For the IPO.' Now, we needed to give them another reason. And finally, we had to achieve sustainable growth. Without the IPO, we had to start to look closely at how we balanced marketing dollars, our talent costs and everything else with the income from subscribers," says Mahoney.
Rebuilding the foundation
For Mahoney, the most important element of the strategy focuses on not just employee engagement, but on retention. In the San Francisco market, competition for talent has gone insane. "What do we do to keep people from leaving? There's only so much you can do when they have as many choices as our people do. So, engagement matters and it directly impacts retention," she says.
Retention is a short-term process with an emphasis on incentives, Mahoney says. Engagement is a long-term process that directly impacts retention by making sure employees are having fun, are trying their best, are doing meaningful work which will keep them coming back.
"When I first joined, we decided to do an engagement survey. We scored pretty well, but then immediately after the change in January we decided to do a talent review focused on retention, because how do you retain your top people if you don't know who they are? We did this for everyone -- not just the top 10 percent, and not just the management," she says.
One of the major issues brought up in the engagement survey was transparency, according to Mahoney. Employees wanted as much transparency from top-level management as possible, and with such a huge upheaval, it was understandable that employees would want to know what was happening.
"We realized we had to over-communicate about everything that was happening to make sure people knew we cared about their fears and their anxieties. Now, we talk about our profits, our subscription base, hiring, attrition -- everything. People need to trust that we're honest about the ups and downs of the business if they're going to stay. Another way we did that was through technology. We use Slack, which is an enterprise collaboration platform. We've created channels for every project and every initiative, and we've found it has improved communication and collaboration as well as engagement," Mahoney says.
Another area where employees demanded transparency was in compensation, says Mahoney. In her previous positions, salary transparency wasn't as openly embraced by management, but at Zoosk, now-CEO Kelly Steckelberg's background as CFO helped the company embrace that. But there are certain limits, and Mahoney says Zoosk is constantly walking the line between how much or how little to reveal in areas of compensation.
Though there were compensation packages put together for key individuals, Mahoney says it wasn't about buying talent, it was about identifying motivations and giving talent a reason to come back every day and work for Zoosk.
In a tight talent market like San Francisco, Zoosk had to focus on their differentiators, she says. To that end, the company allows dogs in their office and has a public 'Pet of the Month' feature. In addition, there are weekly happy hours with beer on tap, parties and an extensive emphasis on volunteering in the community. "We're in the Tenderloin district in San Francisco, which is generally an economically disadvantaged area. So, every three weeks employees are involved in community initiatives volunteering their time. They're very committed to their causes and to their involvement," Mahoney says.
Time for Innovation
Mahoney and Zoosk also promote the company's Hack Days, which are three-day hackathons to develop new ideas. Employees form their own teams, develop new product ideas or ideas for new features to the existing products, and pitch the ideas at the end of the event.
"At the last one we did, instead of rewarding the winners with prizes, we put their ideas up for a vote. Whichever team won, we committed to implementing their ideas into our products. As it turns out, there was a four-way tie, and we added all four. What a morale booster that was!" she says.
The company also supports 'Z Time,' in which employees choose a passion project, related to the company's work, that they focus on every other Thursday in addition to their regular workload. And the firm's innovation program involves an employee committee to review and screen new ideas and features.
While all of this change has resulted in a net positive outcome, Mahoney says there's still much work to be done. "We're not winning on all fronts, honestly. Attrition is up. There are still questions about our long-term direction. Transparency and constant collaboration is a blessing and a curse. Our talent pipeline isn't as sufficient as where we need it to be -- but that said, we've made huge strides and we're going to be stronger than ever because of the emphasis we've placed on retaining our talent," she says.
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