Lexi Reese, Gusto COO uses her 20+ years of experience to provide advice on building high performing teams using authenticity, empathy and logic. Lexi explains the importance of team trust, driver and passenger mindsets, and much more.
Want to see more content like this? Join us at SaaStr Annual 2020.Lexi Reese | COO @ GustoFULL TRANSCRIPT BELOW
So a playbook on scaling high performance organizations in 30 bit minutes. No big deal. Seems important to share where my experiences that I’ll be talking to come from. So I spent five years in nonprofits and public service and 15 years at American Express and Google and the last four years have been at Gusto.
And over that time, let’s say Amex was 150 years, Google was 9 years when I started, and Gusto was about 4 years old when I started. So sort of going from older to more
more startup land. Also have had the pleasure of having a partner and an amazing husband, Corby and having a family with him of two kids and a dog. I promise my girls I would wear their bracelet and mentioned our dog. So there you go.
But joking aside, I think families and company building and organizations, it’s all tribes. It’s all different kinds of tribes and the ones that thrive have a lot in common. But it’s really the two Gs, Gusto and Google that probably are most relevant. So the time that I was at Google was 2007, so pre the 2008 recession.
We had 5,000 employees and $14 billion in revenue. That felt startup to me relative to Amex, but I know we can joke about that. Over the time I was there, we had 64 billion in revenue and about as many employees. So big, big scale. Gusto is… how many people have heard about Gusto before? Keep your hands up if you use Gusto. Amazing. I worship you.
For those who don’t, shameless plug. We are the best people platform for businesses that care about their people, including Humphry Slocombe. Gusto now serves 100,000 small businesses. We have 1,000 employees across three locations, San Francisco, Denver, and New York, and everything in the past four years has grown by more than 10 X. Our customers, our employees, our revenue.
And with that growth, there is something that I think is really deeply reflective of what creates high performing teams, and it may not be the thing that you’re thinking of. I think the foundation of high performance teams is that they share five things. They have impact. Everyone knows what they’re there to create and they’re excited by that.
There is personal meaning. People create a personal connection with that impact. There is structure and clarity. People know how work gets done. Clean orgs, I know what I need to do and I know how to do it. Dependability, I can depend on everyone equally to navigate their part of organization building, and the piece that most of today will be about is around the foundation, which is psychological safety and trust.
Now this work came out of some really good people analytics from Google that was performed over two years where a group that is referred to as Project Oxygen looked at teams, all functions across many organizations. Looked at quantitative impact, what was their impact on key results and also employee engagement. Who was the highest engaged teams?
They cross referenced a bunch to come up with the teams that performed the highest, were not the smartest people in the room. They were not the best positional players in their particular spot on the field. They were a team that had engendered this sense of trust. And for today I’m going to use the two words, psychological safety and trust interchangeably, but there’s actually an important component that people miss when they use them as synonyms, and that’s it.
Psychological safety is where people feel safe, welcome and valued in equal measure. All people feel safe, welcome and valued to express their opinion without fear of negative repercussion and to take risks and challenge the status quo.
Psychological safety is where people feel safe, welcome and valued in equal measure. All people feel safe, welcome and valued to express their opinion without fear of negative repercussion and to take risks and challenge the status quo. So I want to hold that in our head as we go through.
Keep in your head while we’re talking today. One team could be your existing team, could be another team that had all five elements in spades. You would know this team because you were doing the best work of your life and so was everyone else. You felt in flow. People loved coming to work. You were creating products, you were driving results, you were creating profits, real sustained value for the people that matter most, your customers, your employees and your shareholders, and then think about another team.
Maybe it’s the team, the same team, just at a different point in its life cycle where that was not the case, it was just a bad vibe. And I’d submit that, that team was lacking in trust and everything fell apart on top of that, in attention to results, no clarity, I’m not going to be able to depend on you.
And now think about just in the past 12 months in your company and in the next 12, how many teams will you be on? You’ll be on your company team, your functional team, an agile cross functional working group. And presumably a lot of people are coming, maybe people are going. Every time someone comes or goes, your team is in a new state of formation, it’s a new team.
So you’re trying to form and get to know each other. And then there’s definitely always a storming period where you’re working through each other’s differences and it’s kind of rough. And then you’d normalize and then you can possibly get to high performance.
So if we know that trust is the necessary foundation for high performance, and if we’re constantly in this state of flux, how do we actually cultivate that, practically? One, something to think about is, is trust earned or is it given?
On day one when someone comes to work with you, obviously a trust has been both earned and given. They believed in you, you believed in them, and people want to work for leaders that trust them and that they can trust. But that’s only day one. And then the real work begins, and what happens? Trust gets shaken.
It gets shaken because of something we’re going to talk about. But trust gets shaken and it needs to be earned again and again. And in technology we worship at this alter of speed and moving fast and breaking things, and for crying out loud, people refer to us as mythical creatures and unicorns.
And the deities and the myths and all of the storytelling is actually the very thing that can erode trust. Because if you don’t tend to this carefully with attention and deliberately, it goes away and we just saw what happens. And importantly, this work is not fast. It can go faster sometimes, but it’s actually slow and it may slow you down on a nominal level against whatever scorecard you’re tracking, but it is the biggest lever to high performance.
So if we go, if we think about now, what are the elements of trust? Hopefully all of this can somehow feel intuitive, especially as you’re thinking of your own example. Well, there’s three key parts that need to line up in every interaction across your organization to create this foundational level.
One is logic. So your team needs to believe that there is a plan, a debated, rigorous good plan that they can follow to create the impact they have. There’s no coaching on necessarily if the logic is off, but we’ll presume you have a good plan. In addition to being good, it has to be well communicated to everybody in the organization and we’ll come back to that.
The second is empathy. People need to feel like you are in it for them, not for yourself. And finally, is authenticity. The real you needs to show up. It needs to show up always, not just in what you say, but what you do, the latter being far more important. And when that wobbles and Frances Frei who had led strategy and leadership at an interesting time in Uber’s history, after Travis, the founder got ousted and before Dara and the new CEO came into play, she did this Ted talk on trust, which I encourage everybody to see based on her observations of what you saw at Uber at the time, and she described wobbles.
Wobbles against all of these things and these wobbles are gaps between how one party projects and believes they’re perceived and how another party is actually perceiving. So those wobbles across three dimensions, let’s talk about each one. So logic, all of these are examples that I have lived or am living right now.
So this is not meant to be preachy or pedantic and we’ll get to the playbook element after we established a couple of these foundations. So logic. So we debate rigorously plans for a three year strike at Gusto. We do a three year, who are we selling to, what are we selling, how are we going to get and find them and how will we know if we win?
So you come out with this plan at the end and let’s say you’re feeling really good about it. That’s great strategy. You’re feeling good, but then you come to find that the service organization, the people that are on the phone with your customers every day, don’t find the plan inspirational and are not connecting to it at all. That is a huge logic wobble that needs to be corrected.
On empathy, so let’s say you are going to correct this. You’re a person who says you welcome challenges and feedback from all sides. So you create a team meeting with everybody that has been there for a long time in the service organization, and you come and you sit down and you say, give me feedback on the plan. And people start to engage. They start to really engage and tell you why the plan sucks.
And you’re saying, “Mhh, yeah. Okay, tell me more.” But you’re kind of on your phone, or maybe you open your computer to take a slack. You check the box, you showed up, you pretended you had empathy, but that’s not what people were thinking. They’re thinking what you really wanted me to do was get on board, so that is an empathy wobble.
And then the last one is authenticity. And this one I think it’s misperceived. I’m going to give an example that hopefully resonates. You are a leader and you say you’re passionate about diversity, putting it in quotes purposely. You’re passionate about diversity and you hire an all white male leadership team.
And when you’re interacting with the organization, talking about your passion and talking about it a lot outside the organization, the thought bubble that someone may not tell you who’s a person of color or women from any backgrounds is, it’s not only not credible, it’s actually really obnoxious to say that you have passion for diversity when the most visible and important move you could make as to how you surround yourself and whose voices are helping you, are not diverse at all.
And this isn’t just a theoretical potential wobble. There is a ton of research and from experience, maybe you all relate to this, that when you surround yourself with sameness, it’s pernicious because you’re not getting new and novel ideas. People often with rare exception will default to what is the best way to fit in with the majority in the way they speak and the way they talk, which is a common information effect, and common information does not allow you to seek out the next innovative product or service idea.
And it’s incredible the time that we’re living in. I think over 25 years of working and leading teams and being on some that are high-performing and some that outright failed. If we look globally outside all of our organizations, the stakes have never been higher. This is from a trust study by Edelman Trust Barometer done globally.
In this year alone, there has been a precipitous decline in people’s trust for their governments, for the private sector at large, for NGO and for media. But the one raise that we saw was people’s trust in their employer, in all of you, in all of us to help navigate an anxious and ambiguous world and do the right thing. So this I think is an incredible insight, is incredible insight and it’s an incredible responsibility.
So sort of finishing the background on if trust is the most important element and if it’s changing our organization and our teams are changing all the time, how do you actually architect for this? Well, you set the expectation and you create the conditions for everyone in the organization to exhibit a driver mindset, to communicate for impact, and to make and live by impeccable commitments. We’ll talk about each.
So driver mentality, and we’ll use some examples that bring this to life. Again, all real examples. Let’s say there is a risk that you’ve just had a database breach. You don’t know actually if you did, you just might have. You don’t know specifically what the root cause was and you certainly don’t know how to respond.
And so you got to bring it together, a tight team to help investigate and figure out what to do. And immediately becomes apparent that you have passengers and you have drivers. Passengers prototypically take the posture that life happens to me and other people are to blame. And there’s three classic moves.
First is to blame. “Oh my God, I can’t believe that team F’d it up again.” And then to dwell, they always do that. That team is always screwing it up. And that another telltale sign, big hyperbolic statements, other people always stink. It’s never them. And then, wait, you know what? I’ve got a class tonight. I work all the time. I’m going to let these guys figure it out. They made their mess. They’ll call me. I’d probably have to fix it.
And the other side, you recognize drivers. People who prototypically say, “I’m not in control of everything that happens, but I’m 100% in control of how I respond. And I always respond with respect and with curiosity.” The driver sort of reflects, “How did this happen? What was my part in it?” And then they look for a way forward, “How could we potentially? How do we use the collective wisdom of everybody in the room to get better at this?
And then they learn, “You know what, that’s so, I’d learned so much, I’m going to create a macro, I’ll send it to the organization so next time this happens, we all know how to respond.” And interestingly you kind of, I see a lot of head nods of you can think of passengers and drivers, but we’re all both. We all at any one time are both.
And in organization building and imagine that the pace you’re going, that we’re going, it is really a marathon. It’s a long, long way to creating sustained and durable performance. And so the trick is not to try to always or not to, it’s not even possible to always be in the driver’s seat, but you can equip people to recognize when they’re being pulled into a passenger mindset and then get them back to a driver mindset.
And what is that tool? The tool will be recognizable to some of you. It is truly a mindfulness practice. So you’re in a situation, it’s heated, you’ll recognize in yourself, you’re about to respond to a way that if your mom was in the room she wouldn’t be proud. So it’s good to have the mom or the dad or somebody that you bet loves you, always on your shoulder.
You’ve got to in those moments, stop. And I’m not saying just you, you equip the organization to have the same practice, stop, label the feeling. In the case of the database breach, am I embarrassed because I might’ve played a role in it and am I frustrated because this is kind of endemic of poor performance? Am I scared? What is the feeling? And then take a minute to say, what was the trigger?
Let’s say I now reflect and I think, “Oh my gosh, the security engineer tried to tell me that we were at risk and that he needed resources to fix this and I kind of blew him off because something else was more important.” So in that moment, you observe what your part was in that and then you think, what could I do in response?
So I could say, because I’ve now noticed I’m kind of ashamed and I’m also really tired. That was the trigger. You can share that with the folks in the room and say, “Look, I own a lot of this and I’m super tired. I don’t think I’m going to contribute tonight.” Or you could stay or you could go, but the point is to then proceed and act consciously.
As we’re acting, growing organizations are all about communication, communicating in one-on-one, communicating broadcast and there is a good framing from Kim Scott who wrote a book called Radical Candor and had worked at Google, and she frames feedback along two dimensions. How do you challenge directly X-axis? And challenge directly can also be interchanged with communicate crisply.
And Y-axis is, while expressing deep care. And if we take an example we can all relate to your fly is down and we look at the three ways to not give feedback. I’ll sort of place some of these in your head. One is, the person who challenges directly but is super uncaring and that guy is like calling up from you while you’re on the stage like, hey dude, your fly is down, obnoxious aggressor.
Then you have somebody who does not care deeply nor does she or he challenge directly. This is called manipulative insincerity. This person wants to be liked, has a fear of fitting in. They’re definitely not telling you your fly is down. They might and quite often we’ll tell lots of other people that your fly was down. And then you have the ruinous empathy and this one is super tricky and a trap that I see lots of startups falling into.
This is the person that cares a lot, but is not super psyched about constructive conflict. Why does this happen a lot in startups? Because we often are working side by side and then somebody becomes the boss of somebody else. So you were peers five seconds ago and now someone has more positional authority.
Or you’re a founder and you’ve got to hire your first CMO or a CFO or a C anything and you bring in somebody with a lot of experience playing that position and you have a sense in both cases that may be your former peer or this new C level position is not performing, but you kind of think, well, they’re trying hard and I know they know more than me and I’m just going to be silent.
All three of these are so deleterious to the foundation of trust, because if we’re growing so quickly, if we’re changing, my job as title of COO of Gusto has in title only remain the same. Every six months, it’s an entirely different job. The expectations are higher because we have more customers, the complexity gets bigger, our product set has expanded.
So if people are not regularly giving feedback, positive and negative, then I’m not getting better and the organization that I’m empowering is not getting better. So this is really, really important. And so the way that we aspire and the quadrant we all want to be in, and by the way, this works in marriage too, is how do you care deeply but really be crisp and challenge directly?
And in this case, using the analogy, this is the person that would just quietly whisper, hey, your fly is down at a moment you could address it. So hopefully just seeing this, you can recognize when you yourself have delivered feedback in one of these quadrants or when you’ve been on the receiving end.
In either case again, it’s easy to label, but how do you practically go back to your organizations and make it a reality? Equipping people with a common way to give feedback and making it part of your organization is a good way to do it. This is one that works for us. Some have probably heard of it. Situation, behavior, impact and future.
What do you want to see in the future? And I’ll give you two examples to illustrate this. Again, both real. So you’re in a meeting with a colleague and they interrupt you and you feel slighted by that. One way to give feedback is dwell on it for a while. And then finally when you get the courage to say something, say, at one of our meetings a month or so ago, you interrupted me and others and I got to tell you, you do this a lot and it’s why people are leaving.
Super scary to be on the receiving end of that feedback because, “Which meeting? Oh my God, I did. I’m so sorry. And I do it to others and that’s why people are leaving.” Suddenly I don’t have trust that I’ve kind of lost trust in myself, let alone the person giving me the feedback.
And now let’s look at same example that actually does it really well. So in our executive leadership meeting two days ago, recency matters, specificity matters. When I was giving summary thoughts at the end of the discussion, you cut me off using a hand gesture like this. That’s really specific. I can bring that person back to the memory of that specific hand gesture.
The impact was I felt disrespected, but more importantly you set an example for everybody looking at us that it’s okay to interrupt people in that way. And so in the future can you let me finish my thoughts and then tell me afterwards if the content was off or I was going on too long because I value your feedback.
This is, you feel like somebody is in it for you because they’re not denying that they may have had a good point, like maybe I was going on really long, but they’re just saying that’s not the way that I want to receive it, and they’re lodging it in with such care and saying it this way. Again, we’re building trust. We’ve just built empathy and built that foundation further. So that’s great.
We can architect a driver mentality. We can have this awesome radically candid culture, but organization building is a lot about coordination. Coordination of hundreds and thousands of decisions and plans and rigorous discipline of coordination is what helps organizations go faster.
And so this requires impeccable commitments. And impeccable commitments, often you focus on what the person receiving the request does. But it actually starts with really good requests. So I’m very guilty of musing. I’ll give you an example from yesterday. I’m in a one on one with a woman named Flavia and she runs her health insurance advisory business and I say, “You know what Flavia, I wonder if we can get new advisors who’ve just come to Gusto to be up and running fully ramped faster than we are doing today, because that would really help the business. So I’d love for you to bring me thoughts back on that.”
And because we have this language in Gusto of impeccable commitments, she said, “I don’t know what I’m saying yes to, Lexi. What exactly are you asking?” And so I had to reframe and think, “What was I asking? Well, I think one of our biggest levers for end of year where everyone is buying and needing payroll on health insurance is making sure our advisors and advocates are fully trained and ready for the most complicated requests. So could we get the ramp time down by 50% in order to be ready to serve our customers while staying 100% compliant?”
She said, “Okay, that much more clear. I know what you’re asking. I know when you need it by, I know why I should prioritize it.” And if you’ve made the request a non compounded question, then there really are only five acceptable answers, and I will challenge you to write these down and see how crisp people commit versus how vaguely they commit.
So five answers.
Yes, I commit. I’ll do it by the day. I’ll do it exactly what you’re asking. No I don’t. I commit to respond but I need to actually do some research on what has to come off my list. So I’ll get back to you by a certain time. Or finally, I actually need some clarification on what you’re asking. The last one being, I counter offer. I actually can’t do that, but I think I understand the spirit of what you’re asking, and so therefore how about this.
Five ways, the unacceptable ways that happen all the time, yeah, totally. I will do the best I can or my favorite, let’s take it offline. I’m going to take it offline and I’m going to get back to you. First of all, what is offline in these days? Like we’re always on the fucking line.
And then finally, let me see what I can do. So truly, honestly, challenge yourself, see, give yourself a grade. Every time you ask a question to somebody in their organization, was it clear? And then give people the ability to commit this way, but don’t leave the meeting until it’s tracked and always follow up.
You as a leader and everybody is a leader in some way in the organization, are equally accountable for delivery on these expectations. So a great way to wobble is if you commit to something and you deliver it two weeks late. No. If you commit, you also deliver. And if you don’t, you apologize. You apologize publicly and you don’t give a long backstory about why you could have done.
You say, I’m sorry, I committed, I didn’t get it done and that’s unacceptable because we hold ourselves to higher standards than that. And without that, this pernicious thing of delay and mistrust and anxiety creeps in to organizations. So hopefully now you get sort of the framing of great teams built on trust, teams that have trust are exhibiting this amazing alignment that you know it when you see it between authenticity, empathy and logic, and that you can not be haphazard about that.
You can architect driver mentality, impeccable commitments and great candid feedback into your organization by making it part of the expectations, and also equipping people to meet those expectations. So that alone is a playbook for high-performance, but I still would imagine like, great, I get it, but it’s still sort of vague. So how specifically yes, I buy it, how do I do it? What do I do tomorrow?
One is clarify what your expectations are for everybody in the organization and if you’re in an organization, wouldn’t necessarily be the one to write it down. Ask your leader what are the expectations? These are Gusto’s. I’m not going to go through all of them, but every engineer, every salesperson, every service person, everyone in the organization drives the business, builds diverse and inclusive teams, model self-awareness and Gusto values and communicates for impact.
And right up there at the top is cultivating a trust base environment where everyone feels safe, welcome and valued. You’ve got the expectations and they’re important for the next two steps because you hire for them. So really, really bad kryptonite is urgency to hire a role related specialist. I need the best engineer, I need the best salesperson, I need the best finance person.
So I’m going to screen only for their capabilities against that role related need. No. Equally if not more important has to be their experience, their motivation for creating a trust based environment. So how do you do that? Once you clarify your expectations, you really set up a good tight interview process with questions that you can calibrate equitably on and some of the questions around trust are simply, is trust given or earned?
When have you been on teams where you felt there was a lot of representative voices and trust was working well? What was going on with them? What about the opposite? When have you been the reason that trust faltered? If these are stumpers, if these just are like I don’t know, then no, it’s a hard no. People have to be curious at least innately curious.
Depending on their experience level, maybe they don’t have a ton of examples, but curiosity and an interest in these questions matters a lot. And then once you get this team, it’s about calibrating equitably. And calibrating both what they do, X-axis, representative of how we do it again at Gusto and sort of built on the other experiences that I told you about at the front.
But key results that are measurable, quantifiable, everybody there is no team that is removed from having actual key results, but also how they’re doing against the attributes and expectations that you set up front. And so the the difficult, but it’s actually not that difficult. The one that hooks people up or wraps them around the axle is that amazing producer who is really destroying trust.
They’re not committing well. They’re not making people feel safe and valued. They give really catastrophic feedback. They’re often in the passenger seat, but there are an amazing salesperson. Or this guy is the best technical designer we could ever get. That person deserves to be coached. You brought them in, so you should be able to write down a coaching plan, explain what your expectations are and give a very short time period in which you are checking in to make sure that person is getting better.
But at the end of that time period, if it is not gotten remarkably better, the person needs to go, and you need to be willing to take the hit to revenue or product delivery or whatever it is the person was so amazing at, but I guarantee you the short term hit is so worth it relative to the long term malaise that develops in an organization where people who are doing all the right things see that this person is still allowed to be here.
And may we all be blessed with Beyonce, my patron saint, who is both amazing at what she or he delivers and is doing all the right things as it relates to the expectations of the organization. For that person, praise them in public, reward them well, and make sure that they get exposure to others so folks know what good looks like in this regard.
I love this topic. It’s from probably jumping on my seat a little bit. I do think we could have had a talk on how to create great strategy or any element of the five elements of trust, but ultimately, given the backdrop we’re living in, how important it is for us to create organizations that people can rely on to feel safe, welcome, and valued, I think that creates not only great performance for all of us, but does a great service to the rest of the world. So thank you so much for coming. Great to be here.
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