Colleen McCreary

▶0:00HostWelcome to the Built by People podcast, where we share the stories and insights of the world's top HR leaders. Join us as we dive deep into the minds of HR executives, uncovering their strategies, challenges, and triumphs in shaping today's workforce. I'm excited to welcome Colleen to the Built by People podcast. Colleen, thank you so much for joining us today. And as a starting question, I always have to ask if you could share a little bit more about your career journey.

▶0:47GuestSure. Thanks for having me today. I like to now say I'm like an— I feel like an old lady in the tech industry. I've been in tech for 30 years, and I did get my start in recruiting, which I think a lot of HR people do. And I didn't study recruiting or HR or anything like that, but at Microsoft in the '90s, and was one of those people who loved meeting people, welcoming them into the world. I worked specifically in college recruiting, so giving people their first job was really an exciting thing for me and something actually I still love. It's an interesting, I think, note about me. Is that idea of helping somebody find that first job. I really think you have a huge impact on people in their life. But then, spent a number of years there, went on to EA to do college recruiting there, and that's where I took my first HR job. Actually didn't think I was a good fit for HR, didn't like rules or process or policies, but had a great CHRO there who saw something in me, and I ended up really liking it. And then, I got my first chief people officer job at the beginning of 2009, a little startup. That had 100 people called Zynga. We grew to 4,000 employees in 3 years and had actually the largest IPO since Google at the time. So it was a crazy story, big run for your first chief people officer job. And I have been doing a lot of chief people officer roles, either full-time or interim, ever since through a few IPOs and a few acquisitions. It's really just been all about helping companies build value, try and create a great experience for people while they're there.

▶2:18HostColleen, can you describe the circumstances and challenges you faced at Credit Karma during the significant revenue drop in 2020 and why was it critical to address this issue immediately?

▶2:29GuestYeah, my time at Credit Karma, I look back and think that's probably the job that I feel like was the place I made the most impact. And I'm really proud of my time there and this 2020 experience. Everybody had a really crazy 2020 in a different way. Credit Karma, where I was working on February 24th, 2020, we announced we were going to be acquired. It was also at the time the biggest drop in the stock market that had seen in about 10 years. So there was that. And then 2 weeks later, COVID has now really made its mark on the world. We were a 5-day-a-week in-office company. We send everybody home. And within just a couple of weeks, all of the credit markets, which is how Credit Karma really made business, which is in this— we loans and mortgages and we had a checking savings product, all these kinds of things. But once the credit markets start tightening, no one's lending, no one's giving out No one's giving out money necessarily. And so our revenue completely dried up. Literally almost overnight, our revenue started to drop more than 70%. And it wasn't just visible to the management team, it was visible to all at the time, about 1,200 employees at the company.

▶3:39HostAnd Colleen, what specific strategies and actions did you implement to manage that financial crisis, and what obstacles did you encounter along the way?

▶3:49GuestYeah, this is the part that I think is the most interesting story is like the what do you do do as a chief people officer when you're in this situation. We've announced that we're going to be acquired. That acquisition is actually on hold because the Department of Justice in the United States, the antitrust, decided it was an antitrust issue. We had no idea if that, that acquisition was ever going to happen. Here we are, we've got this ambiguity, we've got this COVID ambiguity. We thankfully were a profitable company as well, so we had that sort of going for us, which I think was unusual for a lot of startups at the time. But now we have our whole board who is, okay, what's the first thing you do when your revenue drops? What does a company normally say? They say you need to go lay everybody off, or you need to lay off half your company. You need to make as drastic cuts as possible. But we're in the middle of this health crisis that nobody knows what's gonna happen. This is now March, April of 2020. We really, we don't wanna do anything too drastic one way or the other. We have no idea, no road of clarity of what's going to happen next. And I think what's really important here is to think about, and I reflect back on this time of what our value set was as a company. And we do the really immediate things pretty quickly. Like you stop— people were sent home, so obviously there's no food in the office. And you— we were originally building out a new office and we were going to have two office spaces and we're like, no, we're going to close one of the offices. We pause hiring, we turn off all of our paid marketing, and then you get to the, okay, we've done all of the little tiny things that we could do. What comes next? And I think that is the question that a lot of people then would say, okay, what we have to do, we're gonna have to do something really drastic. And the mission of the company was to help people make financial progress. And so the idea of doing layoffs outside of my own distaste for layoffs was just horrendous, right? You're in the middle of this thing, why would you do that? And then I'm on a management team where none of those people had ever been in their seat before. So they're all first-time leaders in the United States, first-time CMO, first-time CTO. So they've never made the call on a layoff. So they don't actually know what it's like, what happens after, what would it be like? And I know the damage that first layoff can really do in a company. So I'm really trying to talk through that. And again, I think the pressure from the outside of like, you have to lay off. And now employees are getting restless. Our CEO and I talked, our CFO and I are talking, we're all working it out. And we come to this point where we say, we think we can get there with pay cuts. So we think there's a lot of other things that we can do. And now it's a matter of getting our board on board with this financial concept. I don't think gender always plays a role, but I definitely feel like the strong HR lady with all of these men, we have this all-male board and I'm the only one in the room and I am virtual room at this point and saying, I just don't think that this is who we are as a company. I don't think it's going to work for this acquisition. If I think we can do it, like we will make it work with pay cuts, like we can. And so we negotiate this timeframe of give us 5 months. And we'll come back to you. And if it doesn't work in 5 months, we have burned through all of our cash. And then at that point, we're stuck. We'll come back and we'll see how it is. And then that way, we can communicate that to employees and help them in their own mindset. And this is where we get to, and now we're at this point of saying, and we had told employees, hey, May 1st, we're going to tell you what's going to happen since everybody knows. And so we, so we do. So we go out to employees and we have this 3 steps of pay cuts. The management team takes a 50% pay cut, and then the second down, the next level of management takes a 35% pay cut, and then everybody else takes a 15% pay cut. And the, we do, we take everybody who's in recruiting and paid marketing, and that's about 100-ish people, about 10% of our workforce. And then we literally go through and we like, what skills have you have? What can you do? What else in the company can you do? And it's like the best internal mobility we've ever seen in somebody's career. Paid recruiters, who became product managers and BD people and worked in legal operations and got to work on all of these kinds of things versus just letting people go, which I think is the first step. So we were reframing all of that for people. The thing we did is now we're starting to see it in the economy at large, but we did an off— what we called the off the bus. You're on the bus, you're off the bus. And we just said, hey, if you're not in it with us, if you don't want to be here, the pay cut is too scary, you want to go work somewhere else, we will pay you to quit. So we will pay you to quit right now. I had never done that before. I had no idea whether or not it would work, and I can't say if that would work everywhere, but in our case, this buyout offer of, okay, I'm gonna give you a few months of pay, investing, and healthcare. But instead of just having people dropping off for the next few months, I just felt just leave now so we know what we're dealing with. And we had about 12 people out of 1,200 that decided to take that. And none of them were our superstars, which was everybody's management, oh my God, my best people are all going to quit. And they didn't. And I think the idea of, okay, we're all in this together, we're going to work through this. And that's a tough year, right? People are working from home for the first time. They're dealing with— we had in the United States, we had a lot of really hard racial conversations that were happening. There was a big election going on internationally. There was a lot going on for international employees as well. So really rocky road, but we were at least able to provide some certainty and for how long we thought this pay cut situation was going to last. Now, We didn't backfill anybody. We weren't hiring anybody. We did honor our commitment to our new college grads that were supposed to join, which actually were like the cavalry showing up when they did. So it's like this thing of this magic that sometimes teams aren't really ready for all these people to show up. But this summer, interns and new college grads were like gold coming down from the sky. But this was really our way of staying true to our mission, but also at the same time making it through one of the worst experiences that a company can go through. Basically, the floor falls out from your entire business.

▶9:37HostKhalid, how did the decisions you made during this period impact the company culture and employee morale, and what were the most significant outcomes?

▶9:46GuestYeah, I think there are a couple of things. One is initially, I think there was some big relief, right? We're not laying you off. We are living up to who we said we were. So that was, I think, really helpful. We built a lot of trust that ended up sticking with us for a long period of time. So I think the other piece that's interesting is the longer-term outcomes of that decision. By about September, so about 4 months later, we started to see our revenue coming back. And by October, we actually were able to bring pay back for everybody. So we honored that commitment that these pay cuts were really just about this environment instead of this being like a permanent move. We also had to divest one of our lines of business, and we took a lot of care as to what company we were selling that business and those employees that had to move there and made sure that they got a good home. So we were building trust with our employees through that. And then the deal, that acquisition ended up closing in December, so almost a year later, and we gave employees 2 extra paychecks during that timeframe. Every employee had equity, so they did really well. We really optimized for employees during that acquisition in terms of making sure that they were getting something and feeling part of that deal. And again, so it's this communication, telling them why we're doing things, what we're doing, and then this consistency of trust that we are doing the right thing by them. This paid off immensely for us because if you put yourself back into that timeframe, the next year is 2021. We are in the quote unquote great resignation. We have just been acquired. We've just been through like this super crazy time. We actually required people to come back to the office 3 days a week, which was not a very popular decision at the time. Now, thankfully, We never told people to move. We were very clear, like, you were going to have to come back. So I take a lot of faith again in being very clear and transparent with folks. During that time, we saw less than 10% attrition for the next 2 years, which is unbelievable. We didn't pay a Google or a Microsoft or an Amazon or anything like that. We paid at the 55th. It was not these massive pay packages. So we really had to rely on our mission and how we treated people and their career opportunities and those kinds of things. The other interesting thing on the business side is in that timeframe, we ended up having 8 quarters of record revenue and customer growth coming out of that. And I chalk up a lot of that to not laying people off. Like, we didn't have to go, like, hurry back and try and rehire all of those people that we would have let go of. We would have never been able to respond to the market in the way that we had. It was hand in hand of, like, the way we treated our people. They responded in kind to staying with us and being really speaking to that experience, but also the business results were right there, like having these quarter after quarter. Now, I can't really speak to how much after the 8 quarters because I ended up leaving after that time. I can say that even now, which is like 4 years later, the company that acquired them are still talking about they just had one of their best quarters ever, and that's due to my Credit Karma line of business. So they've really done a great job over the years of marrying those two things in that culture. But how we took care of people, during some of the worst time ever really paid off for us over the next couple years after.

▶12:45HostColleen, based on that experience, what key lessons did you learn and what strategies would you recommend or avoid in similar situations?

▶12:53GuestYeah, I think number one for me is like we had this values and mission set and people can be very trite to say those kinds of things, but when you are tested is when you are going to see whether or not those things matter and that they stick. And the fact that we were able to go back and use that as a guiding light and the principles that we were going to respond to, hey, we're— our mission is about helping people make financial progress. How could we do that to our employees? Like, how could we take that away from them in their time of need? That was a really big refrain during all of this time. We had values that were around empathy and progress. How do you help people make progress? Those kinds of things. So you had to think through those, but they actually— they work. So if you want to really know whether or not your values and your mission work, look at the hard times and see if you can— and make them appreciate. The other thing is just being very direct and very candid. I am that way personally. The CEO I worked with was not. That's not his normal bow. And we worked through that, the transparency around why we were making— the context of why we're making these decisions, what we're going to do, setting timelines for people so that they can make plans and have confidence and trust that we're going to get back to them by a certain date to reduce their anxiety. Was really important. And then I think the third piece around this was not to have a knee-jerk reaction and assume the thing that's always done is the right thing for your business. Now, maybe a layoff was going to have to be the, the case. I usually consider a layoff to be the diet drug that people take before they go on vacation, and they're trying to like do something really fast instead of diet and exercise throughout the year. I was able to bring that perspective to our team and really talk about it. But I also think that one of the things that we did was slow down, take a beat, and then bring everybody along on the journey with us versus just overreacting and responding right away. And that gave us the time and space to come up with a better alternative.

▶14:46HostColleen, what parting advice would you like to share with our community?

▶14:50GuestI think the number one thing I always like to say is when you are in the people seat and you're a people leader, you feel all this pressure to always have the right answer. And to always feel like you're the sole responsibility. Like, I always say that the chief people officer, we're not the CEO of happiness, we're not the CEO of culture, like, the whole leadership team owns that. Our job is to build the systems and tools that are going to help drive the culture that you want at the company. So, use your peers, use the other leaders, and come together as a team. Don't be afraid to share that burden, because if you try and take it on by yourself, you're going to explode. Like, you just can't make it. And I think my experiences thus far have taught me that you're not the only one. And if you try and live and operate that way, you're not going to be able to have a long career here. And the only key to success is really leveraging the team that you have around you.

▶15:41HostColleen, thanks so much for joining us today on the Built by People podcast.

▶15:44GuestThanks, Dave.