HR tools are having a moment. Last month, Lattice, an HR software platform for tasks like performance reviews and goal-setting, announced a $175 million series F funding round, putting its valuation at $3 billion.
Lattice’s success is somewhat a reflection of the VC world’s massive interest in the people-management space: Investors and companies are eager to find new tools to help people do their jobs better and manage their relationships at work. Those tasks are more important and daunting than ever before, as the way we work has been fundamentally altered.
I spoke to Jack Altman, the company’s co-founder and CEO, about what’s next for the company and the industry, as well as the future of HR tools in general.
Here are excerpts of our conversation, edited for clarity and brevity.
What do you think is behind the success of HR software startups right now?
The way that companies have to treat employees has really changed. And I think that has led to the birth of a lot of different processes that require new tools, new thinking and new best practices. You can see that in the way that performance reviews are conducted, the existence of things like surveys, the way that people think about compensation, the way people think about promotions and career development, the way companies need to invest in onboarding, development and growth. That backdrop has led to companies needing to retrofit their processes for a much more employee-centric world. And that has created opportunity for us.
Can you talk about some features on the product roadmap that you're excited about that you haven't launched yet?
Here are two we're really excited about. As the backdrop, we currently have three product areas: performance management, which is where we started; employee engagement, which is surveys; and Grow, which is career development, basically job architectures, levels and ladders for people to understand how their careers are progressing. We have two more [product areas] that are in the works. One is a dedicated goal and OKR platform to set, track, align and plan goals. We've always had a product for that, but now we're building that out into a much more fully fleshed-out product. And the other is compensation management, which will launch this summer, which we're passionate about.
What's an example of a big gap in what people want from their compensation management system and what's currently available?
Oh, man, there's a lot. Everything. There's pay equity analysis and understanding what's fair and what's the market. And there's benchmark data, which there are versions of, but there's nothing that's great and in real time and all of that.
There's these moments when companies go through and review everybody's compensation at the same time. And they might do that once or twice a year. And it's chaos for HR teams to manage: spreadsheets everywhere, stuff out of date, manager conversations and approval chains. It's a real headache.
There’s also how people can understand what their own comp and equity are. Equity compensation has such a long way to go. Where is it today, what will it be like in the future and how are employees able to understand what their risks are? What's the real value? What does the strike price mean? What does this mean for my taxes? How does this unlock? What happens if I leave the company? I think nearly every aspect of compensation can be improved.
I'm curious about AI-based automation: Is that currently part of Lattice? Is it going to be, in the future?
It's not yet, but I do think there's a big role for it. AI is an inevitability. The thing that scares me would be if we got to a place where performance reviews, self-reflections and feedback were all done by a robot. I wouldn't like that. It's not just about the feedback itself, it's about the process of thinking, “What has this person done well in the last year, and how can I best influence the way that they're thinking to help them grow and succeed?” And I think the process of thinking about that stuff is really valuable. A lot of people, myself included, sometimes find doing things like performance reviews draining … but so is exercise, so is eating vegetables, and the process of these things is really important.
What do you think has changed the most in the last year or so when it comes to what employers and employees are expecting from their people management systems?
So, the last year has been wild for this. You don't have in-office drop-bys, you don't swing by someone's desk anymore. You can't have an impromptu meeting, you don't overhear people in the office. So people are going to demand more from their tools, because people still need community and connection, and they need to understand that they’ve got their manager’s ear when they want it. I think that’s going to put more pressure on software systems to stand in for the water cooler and the three-hour, in-person meeting and all the rest of it.
How often are you expecting or wanting people to check in with Lattice? Daily, weekly, monthly or just when they're doing their performance reviews once a year?
If I'm a manager, one of the things that's important is that I give recognition and feedback. And I can't do that as easily in a remote context. And I can't just walk by and say, “Great job.” In lieu of that, it’s important to have a system that captures those things for me. So it's not that I'm going to do it all day, every day. But there's a shift from verbal to written, and that gets captured in a place like Lattice.
Retention and recruitment are the big things that everyone's worried about right now. What do you think are the top three or so things that companies can do to recruit and retain the best talent at this moment, when everything's so competitive?
I believe that the way to attract and retain is to give lots of agency, trust and autonomy to people. And I think that is a shift from the historical standards. Some companies do have a mindset more of command and control, assign and push. I'm a much bigger believer in companies that have a really clear and purposeful mission and have a great system of values that employees can gravitate towards.
Does that mean more asynchronous work? Does that mean letting employees work when they want to? What are some big examples of what you’re talking about?
It means letting people manage their own time and schedules. Don't tell them exactly what hours they need to work beyond some reasonable amount of coordination across teams. Vacation policies also fit into that same idea. I think giving people general goals rather than explicit, detailed directions fits into this mentality. Even better, letting people pick their own goals when they've got the context and are in a position to do that.
The other thing that is on everyone's mind is burnout. How do you reckon with this at Lattice, and what are you doing to either proactively or retroactively deal with it?
It's really hard. People in a Zoom world work harder. There was a lot of fear that people were going to slack off. And it's like, no, they just work. It's not healthy. We've tried all sorts of stuff. We've done mental health days where we basically would give people days off randomly and periodically to just unplug and have a day to relax. And we encourage managers to be thoughtful about these things and to make sure that they're checking in with people and that for people who over-work one day, the next day we go easy. We try not to let stuff drift into the nights and weekends that much. We have a very long-term mentality on that kind of stuff. Another one is just making sure that work volume doesn't get out of hand.
The other thing I think is also really big is checking in with people to make sure that they like their work. Another big source of burnout is when people just don't like what they're doing. Working 30 hours a week on something you hate will burn you out much faster than working 60 hours a week. Managers need to be thoughtful about checking in with people and saying, “Hey, is your work bringing you joy? Are you still motivated and inspired by what you're doing?” You can easily burn somebody out even if you say, “Hey, sign off every day at four.”
Lastly, let’s talk funding. What are you going to do with $175 million?
We're just gonna, you know, buy bitcoin [laughs].
We're going to use it to hire and grow the team. We're a software company. All our costs are people costs, more or less. So this [will go toward] funding that. It lets us continue growing the team, investing in product, hiring around the world, building our go-to-market teams and all the infrastructure that we need to keep scaling the company.