And let’s be clear: The term “culture and employee engagement” doesn’t mean “Happy Hours” and “Pizza Parties:” Navigating Market Downturns and Other Startup Advice with Melanie Naranjo, Head of People at SaaS Startup Ethena

“You both have context for this introduction, so I’ll let you two take it from here! I know you’ll really enjoy chatting.” That was the email one of Ethena’s founders sent to me and Melanie Naranjo on 8/21/21, a bit over two years ago. At the time Melania was in discussions with Ethena about joining the startup as VP People, happily employed at a larger company but knowing she wanted new challenges. I’d been an investor in Ethena since its first funding so had enough history on where they’d been – and where they were going – to help give Melanie more context. I’m glad she agreed it was the right role – both her responsibilities and the company (a leader in the compliance training space) have grown quickly in the time since. So here are Five Questions with Melanie Naranjo.

Hunter Walk: One of my favorite things to do for founders is speaking with people who are considering joining their startup. And I was fortunate enough to have this opportunity with you, in August 2021, as you were evaluating the opportunity at Ethena. What were the final things on your mind before joining, and how soon after you started did you feel like the decision was validated as being a good one?

Melanie Naranjo: For me, two of the most important things I need to feel excited about a job are: 1. Knowing that I’m working at a place where everyone is equally passionate about doing great work and helping the company succeed, and 2. Knowing that I don’t have to waste time trying to convince anyone about the value of the People function. 

I remember when Ethena first reached out to me because I was immediately excited about the fact that they were in the HR tech space. The idea of working at a company whose entire business model revolves around catering to buyers in the HR space felt like such a breath of fresh air. Because the sad reality is: At most companies, the People function is still seen as a nice-to-have at best, and a nuisance at worst. 

But at a company like Ethena, whose company mission statement is literally to build more inclusive and ethical workplaces, I felt hopeful that my role and the People function as a whole would be seen for the strategic superpower they actually are. And as I was making my final decision about whether or not to join Ethena, my greatest priority was making sure I would be joining a company with a shared perspective on the value of the People function: I wanted to join a company where I’d be set up and empowered for success, where my voice would be valued, and where the leadership team cared just as much about the company’s People strategy as I did.

And I can say in all honesty that this became pretty darn evident almost immediately. The leadership team had dedicated the time to put together a list of People initiatives they wanted my support on, they took the time to answer my questions and solicit my advice, and even more impressively: The leadership team had already been so bought into the power of investing in effective People strategies that they had already set up the kind of infrastructure most People leaders have to fight tooth and nail for before I even joined: executive group coaching, recurring company-wide learning sessions, Feedback Fridays (which every company should really be doing), and so much more.

Honestly, I can’t say enough about how thoroughly Ethena knocked my socks off when I joined the team (and how incredibly grateful I am that I made the decision to join). 

HW: Your role as VP, People combined a number of different responsibilities – some of them more market-facing than the traditional person in your seat. For a second though I want to focus on the internal aspect of the job. Some people claim ‘culture and employee engagement’ are luxuries you can focus on in good times but during market downturns they should be subjugated to business KPIs. I’m going to assume you disagree with this but how do you manage through a changing environment and try to keep a team steady during a business cycle like the one we’ve experienced over the last year?

MN: I think where most people go wrong during times of difficulty is to try and shield their employees from the truth — especially when it can feel scary. There’s often a fear that employees won’t be able to handle difficult news or will immediately jump to false conclusions, jump ship, panic, etc.

In my opinion, though, most employers don’t give their employees enough credit. Employees are smart, and if you treat them like adults and communicate with clarity, context, and straightforward honesty, chances are pretty high that they’ll get it. 

A perfect example of this is the topic of pay transparency. So many employers thought a world with pay transparency was impossible. They worried no candidate would ever accept a compensation package that wasn’t top of band.

Now that pay transparency has been enforced in several states, we’ve seen that — surprise, surprise — that just hasn’t been the case. All candidates and employees ever really wanted was enough information to feel confident in the fact that they’re being fairly compensated for their role. 

Tying it back to your original question: The same applies during difficult times. 

The more you try to shield your employees (i.e. employing toxic positivity, downplaying potential risks, never talking about the elephant in the room, etc), the less your employees will trust you when you speak. Employees aren’t dumb. They can see what’s going on in the company, and they can see what’s going on in the world. If you never address the reality, they’ll be forced to fill in the blanks with their own (oftentimes exacerbated) assumptions.

The flipside, of course, is that the more transparent and direct you are with your employees, the more they’ll trust you to tell them the truth (even when it’s tough), the more reassured they’ll feel that you are actively monitoring the situation, and the more empowered they’ll be to partner with you on the solution. 

And let’s be clear: The term “culture and employee engagement” doesn’t mean “Happy Hours” and “Pizza Parties.” Sure, Happy Hours and pizza parties can be an element of your company culture. But what employee engagement actually means is an environment in which your employees are excited about helping the company succeed. That’s it. Engaged employees want to be a part of the company’s success. Disengaged employees couldn’t care less. 

So if you want to make sure you’re prioritizing a culture of engagement during difficult times — and you really should — start by making sure you’re empowering your employees with the information they need to be a part of the solution.

HW: I’m always surprised when someone considering ‘joining a startup’ has put a lot of thought into industry/vertical but not into stage of company. For example, in many ways seed stage companies across different industries are more similar than two companies within the same vertical but one new and one more mature. When you’re hiring at Ethena, how do you assess whether a candidate is stage-appropriate?

MN: This is such a great question, and an area that I don’t think gets enough attention. In particular because the company you are today — especially if you’re a fast growing startup — is not the company you’re going to be one year from now.

Which means you shouldn’t just hire for the person you need today, but rather, for the person you’re going to need 6 months, 12 months, and 18 months from now.

At Ethena, we do this by evaluating for the skills and qualities it would take to stretch and grow not just within the role, but alongside the company’s own growth. We look for employees who are adaptable, who are eager to take on new and unexpected challenges, and who are — to use an admittedly overused term — happy to roll up their sleeves right alongside everyone else: low ego, high humility.

The other thing we make sure to incorporate is a whole lot of transparency around the current team structure and the reality of what a day-in-the-life of the job would look like, including the not-so-fun stuff.

Most companies spend too much time trying to woo candidates on the shiny aspects of the role and not enough time being upfront about the challenges that will come with the role. They optimize for winning over the shiniest looking candidate vs weeding out potential mismatches.

In my opinion, this is a hugely risky move. The most impressive candidate on paper isn’t always the best candidate for the job. To your point, if you’re an early stage startup and you hire someone who’s used to working at a larger, more corporate company, someone who’s used to having a whole team of do-ers under them, it doesn’t matter how experienced they are or how shiny their resume looks: You’re going to run into a heck of a lot of issues as soon as you realize they haven’t had to “do” in a long time and aren’t able to function as a team of one.  

HW: Ethena delivers modern compliance training, delivered via software which allows for all sorts of improvements on the ‘guy with a slide deck’ model from 10 years ago. The first product was around Harassment Prevention. Isn’t this a really dynamic topic – how do you stay on top of changing norms, new situations? Like in a remote/hybrid workplace I assume there are a host of different questions raised? How are you finding Ethena customers evolving with, and adapting to, changing work environments?

MN: This question makes me especially excited because we have incredibly engaged — and I mean, impressively so — customers. 

The reality is, when you think about Harassment Prevention training, you don’t typically think: engaged learners. You think about a bunch of heavy sighs and eye rolling while employees are forced to take a training that looks like it was recorded in the 90s and doesn’t actually serve any other purpose except to “check the box” saying that employees have taken their state-required training. 

With Ethena’s training, though, employees are actually engaged. Not only do they take the time to rate our training (holding steady at an impressive 93% positivity rating from nearly 1 million learners), they also take the time to give us feedback. They share which modules resonated with them most, and what they think could make the training even better. And because the employees are actually paying attention to and learning from the content, they’re passing that information along to their People teams, too, who then share even more feedback with our Customer Success team at Ethena. 

This is critical to our continued success because we’re hearing directly from the people interacting with and leveraging our product. We’re hearing firsthand from our customers about the impact and relevance of our training in their day-to-day work. 

Combined with our team of expert advisors across the compliance space and quarterly reviews of our training content, we’ve been incredibly successful at keeping our content relevant by adapting to the ever-evolving shifts in: employment law, workplace norms, and cultural landscape. 
We’ve even branched into new areas of the compliance space — such as Anonymous Reporting and Case Management — as a direct result of customer feedback as they look to consolidate all their compliance needs under one provider.

HW: Any pieces of advice you got from mentors in the past that you want to share and pay forward here?

MN: Optimize for experimentation, not perfection. Try new things. Take bold (but calculated) risks. You’ll learn so much faster and grow so much further, and most importantly: Every day at work will feel like a fun, new adventure.

Thanks Melanie for sharing some advice with me/us. Follow her here for updates on free online trainings and discussions she runs on leadership, people and culture, etc.