VC Ben Horowitz explains why startups need to train their employees

The team uses the breakout space at Slack’s San Francisco office for trainings and show-and-tell sessions. / Photo credit: Slack

The following is an edited excerpt from The Hard Thing about Hard Things by Ben Horowitz. The excerpt was provided by HarperBusiness Publishing. You can buy a copy of the book here.

I learned about why startups should train their people when I worked at Netscape. People at McDonald’s get trained for their positions, but people with far more complicated jobs don’t. It makes no sense. Would you want to stand on the line of the untrained person at McDonald’s? Would you want to use the software you should do the same in your company.

Almost everyone who builds a technology company knows that people are the most important asset. Properly run startups place a great deal of emphasis on recruiting and the interview process in order to build their talent base. Too often the investment in people stops there. There are four core reasons why it shouldn’t:

1. Productivity

I often see startups keep careful statistics of how many candidates they’ve screened, how many have made it to the full interview process, and how many people they’ve hired. All of these statistics are interesting, but the most important statistic is missing: How many fully productive employees have they added? By failing to measure progress toward the actual goal, they lose sight of the value of training. If they measured productivity, they might be horrified to find that all those investments in recruiting, hiring, and integration were going to waste.

Even if they were made aware of low productivity among new employees, most CEOs think that they don’t have time to invest in training. Andy Grove does the math and shows that the opposite is true: Training is, quite simply, one of the highest-leverage activities a manager can perform. Consider for a moment the possibility of your putting on a series of four lectures for members of your department. Let’s count on three hours preparation for each hour of course time – 12 hours of work in total. Say that you have 10 students in your class. Next year, they will work a total of about 20,000 hours for your organization. If your training efforts result in a 1 percent improvement in your subordinates’ performance, your company will gain the equivalent of 200 hours of work as the result of the expenditure of your 12 hours.

2. Performance management

When people interview managers, they often like to ask, Have you fired anyone? Or how many people have you fired? Or how would you go about firing someone? These are all fine questions, but often the right question is the one that isn’t asked: When you fired the person, how did you know with certainty that the employee both understood the expectations of the job and was still missing them?

The best answer is that the manager clearly set expectations when she trained the employee for the job. If you don’t train your people, you establish no basis for performance management. As a result, performance management in your company will be sloppy and inconsistent.

3. Product quality

Often founders start companies with visions of elegant, beautiful product architectures that will solve so many of the nasty issues that they were forced to deal with in their previous jobs. Then, as their company becomes successful, they find that their beautiful product architecture has turned into a Frankenstein. How does this happen? As success drives the need to hire new engineers at a rapid rate, companies neglect to train the new engineers properly. As the engineers are assigned tasks, they figure out how to complete them as best they can. Often this means replicating existing facilities in the architecture, which leads to inconsistencies in the user experience, performance problems, and a general mess. And you thought training was expensive.

4. Employee retention

During a time of particularly high attrition at Netscape, I decided to read all of the exit interviews for the entire company to better understand why people quit high-tech companies. After putting economics aside, I found that there were two primary reasons why people quit: They hated their manager; generally the employees were appalled by the lack of guidance, career development, and feedback they were receiving. They weren’t learning anything: The company wasn’t investing resources in helping employees develop new skills. An outstanding training program can address both issues head-on.