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Mar 2, 2016

The title of this post may sound like the most obvious advice in the world.

But in the land of employment branding and Silicon Valley startups, it’s not.

The party is over for Zenefits. Once the golden child of the HR technology scene with a funding round that valued them at $4.5 billion, they are on the wrong side of the roller coaster right now.

They sacked their founder and CEO, laid off 17 percent of their workforce, and the fun’s not over yet. They’ll likely still have to pay massive fines for alleged compliance failures and see their workforce depleted and turned over.

Founder and former CEO Parker Conrad’s ouster has been in the cards since that massive funding round closed, though. Conrad’s inexperience in scaling and operating a company in a highly-regulated industry like insurance felt doomed to fail.

Reforming a company culture – but some are grumbling

Venture capitalists don’t like to see their investments get pissed away, either. I assumed he’d be out within a year and that Zenefits would be better off for it.

I might still be right about the latter point, but it’s going to take awhile to clean up the mess made by Conrad and his cronies. New CEO David Sacks has a lot of work to do and the first thing he is doing is rewriting Zenefits’ culture.

Entertainingly enough, this is a move that’s not universally applauded.

Grumblings of anonymous Zenefits employees have made their way to a few news stories and comment sections as the company has attempted to curb office drinking and sex in the stairways (for real). Even as Zenefits tries to fix the issues from their alleged institutionalized cheating and reinvent a culture on the fly, some worry they will lose their mojo and bleed talent in a very competitive Silicon Valley.

They say that like it’s a bad thing.

Zenefits has moved so far off the reservation, it might take a complete employee turnover cycle to turn the company around. If you loved the day drinking, (alleged) cheating, reported compliance miscues, and using manual data entry as a way to overcome lacking technology, you probably won’t love a compliance-focused company that needs to improve their offerings and make its investors happy before it blows through all that dough they gave them.

Bad through and through

As part of my job, I do a lot of discovery and research to learn what makes an organization tick.  It’s not in my nature to do value judgments on culture. There’s a lot of companies I wouldn’t work for that make for good clients, do great work, and are otherwise outstanding.

But Zenefits’ culture sucked. Its recklessness was destined to fail in an industry where precision and compliance are table stakes. While the tech press lapped up stories about disruptive HR technology, they failed to take a critical look at the many red flags.

It’s safe to say the company won’t get that benefit for a long time. And it’s hard to see a path forward that doesn’t look bad, at least in the short term.

Of course, it’s easy to play the hindsight game but I’ve been down on Zenefits for a long time. The agency I work for had a scathing post that was written right after their funding round closed. I’ve heard too many stories from former Zenefits clients about their shoddy work. Meanwhile, everyone else was losing their mind over how Zenefits was going to make HR obsolete.

This isn’t to highlight that I’m brilliant. You already knew that (I kid, of course).

The first step to get the company back on track

Shaking up Zenefits is the right thing to do. Killing their crappy company culture was step No. 1 of 546 to get on track.

The moves from Zenefits and their new CEO so far gives me more confidence in the company going forward. Who knows if Zenefits will eventually become a bust? A lot of things have to go right in any case to make back that sort of investment.

But, one less failure point can’t be bad, right?

This originally appeared on the Lance Haun blog.