People Leaders in B2B SaaS: long tenures but a difficult journey to the C-suite
Benchmarks on timing, tenure, and backgrounds of some of the most successful People leaders in growth-stage European SaaS
In today's rapidly evolving B2B SaaS landscape, the role of People leaders has evolved as quickly as the companies themselves. The post-COVID boom, the following bust and restructuring, the focus on Rule of 40%, combatting attrition in sales teams, shifting structures of GTM teams…. the list goes on. We believe it’s one of the hardest roles in an organisation today - partly because no matter what decision you make, you’re bound to make a lot of people unhappy.
To get to a clearer picture of what good looks like in European B2B SaaS, we analysed 30 top European B2B SaaS scale-ups. We included some of the most recognisable companies with HQs in Germany, France, United Kingdom, and BeNeLux that have raised Series D+ to understand the evolution of their People functions and the profiles of their People leaders, reviewing close to 100 individuals.
Our focus was on three key areas:
Timing of the first People Leadership and Chief People Officer hire
Tenure of People Leaders
Typical Backgrounds
Timing of hires gives us an indication of how Europe’s top B2B SaaS companies prioritised the People function in their growth journey. Tenure provides insights into the stability and continuity within People leadership roles. Backgrounds reveal the diversity of experiences that leaders can bring to be successful.
There are some interesting findings. Above all, what stood out for us is the distinct path that People Leadership takes compared to other executive roles, especially in the timing and background of hires.
Below are some of the key highlights we found.
Timing of Hiring People Leadership and First Chief People Officer
Out of 30 companies analysed, 30% hired their first People leader after seed funding, 37% during Series A, and 17% at Series B. The remaining 16% were hired at Series C+.
It was a surprise to see some organisations doing without executive leadership of the People function as long as Series C+. In those cases, we typically saw the role assumed by an HR Manager, who reported to the CFO/COO. There was no external indication (Revenue, Glassdoor, or otherwise) that showed these businesses lacking.
Our assumption here is that with the right CFO/COO + HR Manager combo, you can get away without hiring a senior People leader as long as an organisation is still fairly small and the challenges are also mostly internal. At some point, however, even the most resistant organisations need to face the fact that running a People function demands strategic and undivided attention, leadership presence for key internal comms moments, and the ability to respond to external market events and pressures.
Looking at when organisations brought their first C-level People leader into the business, this typically happened at Series C+ (80% of the time).
This is a very different evolution to the function than the Commercial side of the business, where the first Chief Revenue Officer or equivalent is hired 86% of the time before Series C.
Contrary to the somewhat still persistent narrative that People leaders don’t always get a seat at the table, in our sample looking at mature B2B SaaS scale-ups, 90% of the time they had a C-level People executive. The days where HR was a support and admin function in a business, reporting to the CFO, seem to be mostly behind us.
Tenure of People Leaders
Good news. People leaders have pretty good tenure. Only 15% of the close to 100 leaders we looked at stayed in the organisation for less than 1 year. A good 45% had tenures of over 2 years. We detected no correlation between background or years of experience and tenure.
This sits in stark contrast to the tenure of Commercial leaders - circa 70% of commercial leaders don’t last 2 years, with a whopping 35% not making it past year 1.
Our hypothesis: Commercial leaders typically earn quite a bit more than People leaders ($600k OTE vs $350k OTE for Series D technology companies). There is more limelight and pressure on revenue leaders to deliver measurable results. And it takes longer, perhaps, on the People side for strategy and tactics to have measurable results to assess performance.
Typical Background of People Leaders
Whether it’s Director, VP, or C-suite - People Leaders come into the role with a decent level of experience. 63% of the individuals we looked at had between 15 and 25 years of experience.
Whereas it really mattered for Commercial leaders whether they had previous B2B SaaS background (60% of them did, and 60% of turnover happened when they didn’t) - for People leaders it doesn’t seem to matter at all. Only 25% of the leaders had prior B2B SaaS experience with most of them coming from B2C (technology) companies.
Our hypothesis here is that People leaders can move freely between B2B SaaS and B2C companies - in both directions - whereas Commercial leaders will struggle with this. B2B SaaS is also relatively younger and more “niche” than B2C, so there is a smaller talent pool. As more European SaaS companies gain maturity and scale, they will be primarily looking for CPeOs with experience in scaling up organisations. There is a limited pool of CPeOs in Europe who bring this experience in SaaS, so it makes sense to look at B2C companies.
For early-stage startups (Seed to Series A), 45% hired a Talent Acquisition (TA) professional who transitioned into a broader People role, while 55% came from broader HR/People domains. At later stages (Series B+), only 20% hired a former TA expert into a leading People role. For all later funding stages, the talent hired had HR/People backgrounds exclusively. This makes sense: in the early days of building a SaaS business, a good chunk of the tasks are hiring-related, offering opportunities to recruitment professionals looking to switch into broader People roles.
Interestingly, 80% of companies that hired their first People leaders at Seed/Series A brought in a more senior People leader by Series B or C, instead of promoting from within. This comes in all shapes and forms: sometimes this was a Director replacing a Head of, or a C-level replacing a VP, etc.
When it comes to getting promoted to the C-suite, it’s a tough journey. Only 2 individuals from our sample joined an organisation as a VP and were later promoted to the C-suite.
Most C-level leaders either had the CPeO title previously or came from larger, more corporate backgrounds. Of the 42 Chief People Officers in our pool, 83% already had the title before they came onboard while the 17% that didn’t came from larger organisations than the company they joined.
We’ve heard it often from VPs of People looking to grow into CPeOs how hard that transition is and how limited the opportunities are in Europe. It is rare to find C-level People leader opportunities in the early stages of a company’s development - as discussed above. This likely only happens when a Founder has a pre-existing relationship with the person. Once a business matures and it’s time to find a C-level leader, it seems that there is very little appetite for taking any risk with the leadership experience of the hire.
This also aligns with our above finding that more CPeOs come from B2C than B2B. When you’re hiring a Commercial leader, you have to hire for B2B SaaS knowledge first and you’ll be more willing to hire on potential and give a VP Sales the opportunity to step into a CSO role. On the flip side, for CPeOs, you have the option to tap into a completely different talent pool to pick executives who have held roles of similar scale before.
If our sample is a good reflection of the broader market, this represents a difficult environment for People leaders to get promoted to C-level within European B2B SaaS.
Finally, and unsurprisingly, 73% of the leaders we looked at were female. This is the leadership role with the most women compared to all other functions.
Closing Remarks
Our analysis of People Leadership in B2B SaaS scale-ups reveals several interesting insights that challenge conventional narratives.
Contrary to the belief that People leaders don't have a seat at the executive table, our data shows that 90% of mature B2B SaaS companies have a C-level People executive, signaling a long-time shift from HR being a support function to a strategic leadership role.
One striking finding is the tenure stability of People leaders compared to their Commercial counterparts. With 45% of People leaders staying over two years and only 15% leaving within a year, they exhibit significantly longer tenures than Commercial leaders, 70% of whom don't last two years. This suggests that the People function, despite earning less, faces less turnover pressure, possibly due to the longer time frame needed to see the impact of their strategies.
Interestingly, background diversity doesn't seem to hinder People leaders' effectiveness. Only 25% had prior B2B SaaS experience, with many transitioning from B2C roles. This flexibility contrasts sharply with Commercial leaders, where previous SaaS experience is crucial, and lack thereof contributes to a 60% turnover rate.
The trend towards hiring more senior People leaders at later stages, predominantly from larger organisations, indicates a preference for proven experience in scaling businesses. However, this also highlights a challenging environment for internal promotions to C-level roles within European B2B SaaS, with only 7% of companies promoting from within.
If you’re a Founder or CEO hiring a People leader, you’re lucky to have a broad hunting ground and pool to hire from. Even more so with the recent market downturn, there is an excellent pool of talent not just from the B2C market but also in the B2B space, who are more likely to consider new opportunities.
If you like these articles, then you’re in luck! We have a few more interesting research pieces lined up for the rest of the year!
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