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Note: This Wednesday Wisdom mini-series is the article version of a talk I gave at Google Zürich in November 2024. If you are inside Google, you should be able to find the video. It is a bit of a lengthy exposé, so for easy digestion it has been cut in three parts. Last week, I discussed how companies that grow eventually run into boundaries in society, prompting different attitudes toward the companies, to which they must react by changing some of their ways. This week: Part two on how companies change because, as they grow, they start hiring more people which inevitably means hiring different people.
Wait, what now, is this a three-parter now? Last week you promised us two parts! Yes, yes, I did. But as I was writing this week’s episode, I found I had much more to say than I expected to, so I made an executive decision and told the Wednesday Wisdom production team (which consists of our cat Zoë and myself) that we are doing a three-parter and please deal with it. Zoë is pouting under the bed right now but she’ll come around soon enough because I got some cat treats here and she is a sucker for them.
As companies grow, they employ more people; stands to reason. But, they also employ different people. These two things conspire to make companies more corporate.
Let’s start with a simple observation: People are the company. The basement does not house some mythical spirit that influences everything that is going on: Every organization is the sum total of the behaviors of the people in it. As I wrote before: Culture is what you do (and not what you say you are). That is why hiring is such a critical function in growing companies: Everyone you hire will change the company in some minuscule way and the aggregate of these small changes will become quite substantial over time.
By and large, people are an interesting lot, and the more of them you have together, the more interesting their behaviors become. Let’s start with group size: The simple fact that you have more people means that you have to organize things differently; even if these people are all the same (spoiler: they are not); even if they are all in the same location. Larger groups of people have dynamics that smaller groups don’t have (science) and levels of trust in larger groups are lower than in smaller groups (more science).
In larger groups, the number of bilateral connections grows polynomially, which is not as bad as exponentially, but still quite hard to keep up with. This means that you cannot know everyone anymore and it is often impossible to build trust relationships with everyone you directly or indirectly work with. This leads to defensive behaviors and organizational mechanisms that seek to replace trust by processes. In this stage we get design reviews, mandatory code reviews, and segregation of who can “touch production” and who cannot.
The anonymity that comes with a growing company leads to the formation of smaller groups that can internally maintain personal connections and establish trust. That’s not bad in itself, but it eventually leads to in-group/out-group behavior. This was brilliantly described by the German and British sociologist Norbert Elias in his book “The Established and the Outsiders”. For instance, in my first job, I was working in a team of systems programmers who traditionally had bad relationships with the security team (who were located in a different building, which also didn’t help). After figuring that out, I walked over there and introduced myself as a new systems programmer, looking forward to working with them on improving system security. They were flabbergasted and this was a good start in mending the bridges between our teams.
In my experience, the original reasons for inherited animosity between teams are usually long forgotten and the people who were originally involved are often no longer there. Much like European history.
Worse than establishing in- and out-groups though is the sad fact that anonymity breeds cruelty, as it is not necessary for group cohesion to be nice to everyone. Lots of science there, and I suppose most of you will have heard of the Milgram experiments that show we are quite willing to hurt someone we don’t personally know.
If you have never heard about the Milgram experiments, you must watch this video. It will change your perception of humanity.
Confronted with more anonymity and less trust, people start behaving differently. There is more apprehension before committing to something, there is more “arse covering”, and there is a lot more double checking of everything. All of this leads to more bureaucracy and it also doesn’t do wonders for velocity. Please note that in the story so far, I am still assuming that the larger company consists of exactly the same kinds of people as before, just more of them. The behavioral changes I mentioned are behaviors that are inside everyone all the time, but in smaller groups it is not necessary to deploy them, whereas in larger groups it is, all in the name of organizational self-preservation.
Obviously, the hypothetical that the growing company contains the same kinds of people never holds. Companies try to make that happen, and for a short period of time they might succeed, but inevitably, as they grow, their employee base becomes more diverse. That diversity in itself leads to changes in behavior because people will have different cultural backgrounds, different values, and different expectations, which makes communication more problematic. You might think that you are still only hiring people from Ivy league universities (and maybe you are), but believe me, the moment you let the first Dutch person in, things are going to shift.
On top of the laws of probability that say that a larger company is a more diverse company, companies that are growing are usually consciously hiring different kinds of people. Lots of reasons for that, but let me name a few obvious ones.
First of all, as you grow, you typically (consciously) widen the field that you are hiring from. For instance you might open up remote offices and hire from their local population. Now you have people in different states and different countries, which leads to more diversity and to more bureaucracy as you now need to deal with things like mandatory time tracking or a mandatory 13th month of salary. Also, you need to grow, so maybe you start considering candidates from more diverse educational backgrounds, maybe even ones that you never heard of, like the HIO Den Haag. You start hiring for different roles, as you never needed project managers and scrum bags before, but now you do! These people typically have a different profile than your existing employee base. To top it off, most companies eventually start putting more effort in hiring people from traditionally underrepresented backgrounds (either voluntary or under pressure), diversifying the employee base even more.
I know it is not popular right now, but I still believe DEI to be a good thing, when done right. If you disagree with me, first read this book and then this post and then come back for a discussion on the topics of DEI and “merit”.
Another change is that, as you grow, your appetite for risk changes. When faced with a candidate who did well on some interviews but not so great on others, there is more of an appetite to hire them regardless. Small companies often (and correctly) think that they are terrible at coaching and developing people, but larger companies think (mostly incorrectly) that they are better at it. “Sure”, they think: “We can hire this somewhat riskier candidate; there is no need to hit the ground running, we have an education department now, we’ll put an onboarding buddy on them to show them the ropes, we’ll send them to an English language course to improve their communication.” This appetite for risk is often caused by a very human desire to be nice to people but also by a perceived urgent “need to hire”. In a growing company, managers have hiring targets and this often works out so that they would rather hire a muppet than nobody. Here starts the slide into mediocrity, because some of these risky candidates don’t work out and most companies are still better at hiring than at firing.
An often neglected reason for why your larger company has different kinds of people in it, is that when you grow and become more successful, different types of people are interested in joining. When you are smaller and not yet a “sure bet”, your company will attract people who are risk-takers, who have an appetite for high velocity, and who can deal with the chaos. When I joined Google in 2006 it was by no means a household name yet and many people wondered why I left the comfortable and lucrative position I was in to join a company that was trying to make a name delivering free Internet services.
For a while, when operating the advanced espresso machines we had in the office, I joked that if this whole Internet thing didn’t pan out, I at least had acquired enough skills to become a barista 🙂.
When you are bigger, more organized, and more of an established company, people who are not as fond of chaotic fast-paced startups might consider joining. I saw this first-hand in the engineering leadership programs that I co-facilitated. One of these programs included labeling people with a “color” based on a pop-sciency personality typing scheme. We maintained stats of how many “contestants” of each type we had seen in every instance of the program and, over time, that mix changed significantly, away from the go-getting impulsive chaotics like me (orange) and towards personality types that showed more appetite for organization (gold) and for personal connections (blue).
Another shift in joining is that once you are big and successful, the “career tigers” want to join you.
“Career tiger” is a direct translation of the Dutch word “carrièretijger”, meaning someone who is overly focused on having a successful career.
As you become more successful, the company becomes a “must have” stepping stone on the career trajectory of very ambitious people. Compared to the first batches of employees, they join for completely different reasons, namely to pad their resume with a stint at your successful company. They also typically stay for only a few years and then move on. Consequently, they are fundamentally different from the people who joined when the company was not a big name yet. Successful new companies are the kinds of company where managers leave to become directors somewhere else, directors leave to become VPs somewhere else, and VPs leave to become C-suite somewhere else. For a career tiger, joining such a company is a great proposition. Another thing that often happens is that these “career tigers” bring people with them from their former employers, thereby injecting “old” attitudes and programs into the (still) young company, leading to more change in the direction of general corporate awfulness.
An example: I worked at a big tech company that, during its phase of explosive growth, hired a high-level HR person from a large soft-drinks company. The first thing they did was implement a “high potential” program to spot talent that they could fast-track into executive roles. That is the kind of stuff that I have seen in banks and rarely do I have anything good to say about it. Suffice it to say that this kind of program was anathema to the company I worked for, but there you go: Corporate gravity at work!
The newer generation of senior executives usually have different motivations and are different people than the old guard. For one thing, having missed out on the IPO, the stock price is very important for their total compensation and so they start focusing on that, which is often a change from the founding days. Take Google as an example: In their IPO letter, Larry and Sergey promised that they would: “optimize for the long term rather than trying to produce smooth earnings for each quarter.” I think it is safe to say that the current senior executives think differently about that.
For some more information on this train of thought, also check my article on losers, clueless people, and sociopaths.
With all of this happening, the company is typically rumbling forth and not seldom becoming financially more successful, leading to more growth. Now the company has a large diverse workforce and offices in lots of places, usually spanning multiple time zones. The company has to change to deal with all of this, becoming more bureaucratic as policies start appearing to deal with every eventuality.
Not all of that bureaucracy is bad. I was at a small remote office for a big tech company when our first colleague retired and when our first colleague became pregnant. Being small and far away, we had zero policies in place for these eventualities and HR people were asking themselves: “How do we deal with this?” You probably agree with me that it is not bad to have standard policies for these seminal life events.
But, we have all also seen our fair share of really dumb policies. And the problem with dumb policies is that they rarely go away. Many of these policies are a response to a single event that should probably be dealt with using common sense and an individual approach, but among the growing employee base there will be people who are fond of rules and regulations and so now we have a policy prescribing a mandatory email footer or something like that. As the company grows, the HR manual refines. At Google during it period of explosive growth, whenever a new policy was announced, I used to say: “This week, we copied page 165 from the IBM Human Remains manual.”
Even good policies rarely survive intact as budgets tighten and people find loopholes. At Google, we used to have an amazing travel policy that sought to balance flexibility, travel necessities, and cost effectiveness. Such policies are in essence games, and so the game players (of which we had a lot) figured out how to work it so they could maximize their time in first class on long-haul routes. Eventually, some VP found out that an L4 engineer was flying to San Francisco in first class whereas they were only sitting in business class and when that happens that typically is the end of that.
All of these changes are more or less inevitable in large and growing companies, as they are the result of interpersonal dynamics and raw human psychology. It is impossible to grow from 1,000 to 100,000 people and not fall prey to this.
That is it for this week. Next week, the conclusion (really): Changes because of the hiring bar dropping and because of level inflation!
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