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How to implement effective leadership to grow a business

By the time my co-founders and I started Hotjar five years ago, we’d had enough experience to know that old-school approaches to business leadership—micro-management, lack of transparency, and so on—wouldn’t do anymore. We felt very passionate about the fact that work needed to better adapt to our lives, rather than our lives adapt to work.

Since then, we managed to lay the foundations of a company that has grown to 75+ team members and over €16 million in annual revenue in just a few years. I want to share what I’ve learned about effective leadership and its characteristics to help other teams out there change the way they approach business and create companies where people love to work. 

Last updated

18 Aug 2022

Reading time

8 min


Table of contents

Why is effective leadership important?

Effective leadership is best described as the practice of guiding a business to success by inspiring and empowering its team members, clearly communicating the company values and vision, and influencing change.  

Micro-managing, distrusting team members, and creating an environment where people hate to go to work are all symptoms of ineffective leadership—and might actively prevent companies from building amazing products and achieve growth.

5 characteristics of effective leadership in the workplace (and here at Hotjar)

A lot of people see work as just the place they go to and come back from to make money, so they can (hopefully) live the life they want outside of it.

But in my experience, this typically leads to people feeling disengaged from their jobs and lacking a sense of purpose; they’re just doing it for the money and/or because they have to do it. That’s not an environment where you’ll get amazing results from a team. I believe effective leadership has at least five main characteristics that help you achieve the opposite—engaged, passionate employees:

1. Trust from day zero

From the beginning, we knew that taking care of our team members and making sure they cared was critical to the success of Hotjar. One of the most important ways we show we care is by creating a sense of trust in our team members from day zero.

At many companies I’ve worked at, I often felt like I had to prove myself in order to earn trust. The starting point was doubt, and only after a few months of showing that one was capable would one be granted access to the company financials or some key data. Maybe after a year we’d be given a company credit card, and we had to earn our holidays.

If we want our team members to believe in the company, we have to believe in them right from the start. So the moment someone joins the company, we don’t start with doubt: we start with complete trust. A few examples of what that looks like:

  • We give each team member a company credit card right away they can use to take advantage of our perks. They are free to spend each budget as they like, without needing any approval.

  • When people join Hotjar, they decide when they want to take time off and simply let their team know; they don’t need permission or approval.

Of course, there are processes to make sure we're not creating a mess, but as much as possible we empower each team member to make these decisions and self-organize.

2. Transparency

On joining, every team member also gets full access to all of our company financials and data. They can go in and see exactly how much revenue we’re making, how many active users we have, how much cash we have in our bank account, and much, much more.

We do this because we believe that transparency is key if we want the team to own what they are doing and feel like they are a part of something. For people coming from a traditional corporate background who never felt personally invested in the company they worked for, that’s powerful.

Obviously, to make this work, we have to carefully vet the people we bring on board—which is why we have a rigorous and publicly documented five-step recruitment process.

3. People- and customer-centric mindset

If you want to succeed in today's world, you have to be people- and customer-centric. Everyone is so connected that word of mouth has become more powerful than ever: it can make or break a company, or determine how fast you grow or how quickly you fail.

But being people- or customer-centric isn’t me as the CEO or founder telling everyone else, "Hey, let's be customer-centric." For us, the place we start creating a customer-centric mindset is by treating each team member the way we would want them to treat our customers. So, if we want our team to listen to our customers and empathize with them, we need to start by listening and empathizing with our team first. Three examples:

  • Last year, we hired an outside consultant to help us rework our values. But when we surveyed our entire team, we learned that people felt these new values were too ‘wishy-washy’. So we went back to the drawing board and came up with a set of company values that the team would really stand behind.

  • After we had the entire team go through a Radical Candor workshop, we made it a habit to regularly give each other no-bullshit feedback to help each other improve.

  • I regularly set aside a few hours in my schedule every Wednesday afternoon for CEO 1-on-1 time, where anyone in the company is free to share with me anything about how they feel things are going.

Not only does this show each team member that we care, but it sets the tone for how we want them to treat our customers in return. 

4. Empowering teams

In any forward-thinking company, you can’t micro-manage your team. People want to be given challenges and be put in a position to succeed, not be told what to do.

How do we empower teams at Hotjar?

A. Let the team lead the way

Our team members are the ones on the frontlines delivering results. In most cases, they have more information than the exec team does regarding what’s going on and what to do next.

That’s why right now, the exec team is experimenting with determining the North Star, or the main objectives we’d like to achieve as a company, but then stepping out of the way to allow the individual teams to decide how they’ll get there—what specific goals they’ll try to hit, what metrics they’ll use to measure success, and the exact actions they’ll take to reach the main objective.

When the teams come up against a blocker, it’s on the exec team to make sure it gets cleared so that everybody can continue to move forward.

B. Have team leads, not managers

Many of us have reported to managers in the past who had no clue what we were talking about, didn’t understand the team dynamics, or didn’t understand the nature of the work. To practice another principle of effective leadership, we made some very deliberate decisions about how to ‘manage’ frontline teams.

First, everyone on a team reports to a lead within the team itself: that way, the leads are on the frontlines as part of the team. They understand exactly what’s going on and can immediately communicate to the exec team should any obstacles arise.

Second, in order to make sure the lead can effectively support everyone on the team, we set a limit across the whole company of no more than five direct reports to one lead.

C. Don’t mix up leadership with seniority

At Hotjar, we are very careful not to forget about another type of leadership—technical leadership or domain expertise leadership. We call that seniority.

This is really, really important because in most companies these two things get mixed up. Usually, the most senior person tends to become the manager, which is not a good way of doing things. Not everyone with domain expertise is great at managing people, and doing so actually keeps them from focusing on what they do best.

Typically, a team lead is someone who is very good with people and at understanding how to bring the team together to get things done. This doesn’t mean that the lead is the senior-most person on a team or has the most technical or domain expertise, or even that they are the ones making the decisions.

Within each team, there might be more senior people who can help with that. In fact, we’re happy if the people with the most domain expertise choose not to become leads so they can focus on contributing their strengths to the team.

5. Create company-wide missions

Company-wide missions is something new we’re trying, and it’s really what ties together everything I’ve already covered.

Usually, as a company grows past a certain point, it’s inevitable that lines start forming between departments and the company starts to move slower.

Now that we’re at 75 people and moving towards 100, we’ve started to see early signs of this happening. So, to make sure that we can continue to be bold and move fast, we’ve introduced the concept of company-wide missions: bringing people from across different departments and different disciplines to work on a high-level initiative that is essential to Hotjar’s success.

One of our missions, for example, has to do with activating more people that sign up for Hotjar. We’ve called this our ‘activation mission’, with team members from product, engineering, customer support, and operations all working together toward one common objective. Our goal here is to let the team members own the work they are doing and set them up to succeed.

Final thoughts: building a culture that lasts

Of course, none of this would work without the right team in place. At the heart of that is a really rigorous hiring process that focuses on hiring for our values.

While we’re still relatively small and young compared to other companies, our hope is that with this approach to leadership we’ll be able to create a product that people continue to love for years and build a company and culture that last. 

5 books on effective leadership I recommend:

Jim Collins - Good to great Jason Fried and David Heinemeier Hansson - It doesn't have to be crazy at work Kim Scott - Radical Candor Ken Blanchard - The new one minute manager Jon Gordon - The Power of Positive Leadership