January 7, 2025

Spotify's solution to the Great Resignation is to treat employees like adults. And it's working.

John Kim

Co-founder @ Paraform

In this blog

A “we’re all adults here” approach to WFH“Talent attraction” as a recruitment principleLetting opportunities Echo Innovation starts with the right mindsetThe real reason people quitThree tactics you can implement to improve talent retention:

While Silicon Valley panicked about remote work killing productivity, Spotify ran a simple experiment: What if we didn’t treat our employees like children? What if we prioritized trust over supervision, and let people continue to work from wherever they want?

As a result, they’ve observed lower attrition, faster hiring, and a more diverse workforce. Keeping the Work from Anywhere policy isn’t the only way Spotify has taken an active, considered approach to talent attraction, development, and retention.

A “we’re all adults here” approach to WFH

Most tech execs find “fully remote” a scary phrase. Give employees freedom to work remotely, and they'll pack up their desks to trade Slack messages for slacking off. Productivity will plummet, and company culture will disintegrate.

In reality, Spotify’s Work from Anywhere policy shows the exact opposite. Very few people chose an extreme, (working fully from home or from the office). Instead, most folks kept doing what they were already doing, with some making changes that ultimately helped company retention. What actually happened:

• Only 2% of employees moved to a different country. (Uprooting your life just isn’t something most people can (or want to) do.)
• A mere 4% of US employees relocated to a different state (mostly NYC folks moving to New Jersey).
• 60% still chose the office as their primary workspace.
• Attrition dropped, compared to their peer companies, during the Great Resignation
• Employees had a higher sense of flexibility and autonomy.
• Productivity increased (fewer IRL distractions mean deeper focus).

Spotify decided to treat their employees like adults, and found that when you trust people to make good decisions, they usually do.

“Talent attraction” as a recruitment principle

Most companies go looking for the “best” talent. Spotify’s Chief Human Resources Officer, Katarina Berg, thinks this mindset makes you miss the people who might be right for you. Instead of the standard "top talent" playbook, Spotify built a talent attraction machine, prioritizing attracting people from all backgrounds. They’ve built out pathways for people with non-traditional backgrounds to ‘join the band’, and see attracting talent as a part of every single employee’s job. Spotify’s talent attraction efforts include:

• Tailored programs: Spotify has multiple programs to attract diverse and underrepresented talent, including Opening Act, Aspiring Marketing Professionals, and their Tech Fellowship.
• Partnerships: Spotify collaborates with global organizations (including Sponsors for Educational Opportunity, Blacks in Technology, Society of Hispanic Professional Engineers, Out4Undergrad, Bright, Beela, and Data Tjej) to identify underrepresented talent for roles.
• Campus engagement: They actively engage with student organizations like the Society of Women Engineers and the National Society of Black Engineers during campus visits.
• Innovative approaches to recruiting: One Spotify recruiter created playlists with hidden messages to attract developers. While not every company can use their own product for recruitment (though some like Loom do), this is a creative way Spotify uses their own product to hire.
• Prioritizing an internal talent marketplace: Their Echo tool (more on this below) is considered crucial for both talent attraction and retention.

Letting opportunities Echo

Spotify knows that not everyone wants to climb a vertical career ladder. So they engineered their own internal talent marketplace, to help folks move laterally as well.

The AI-powered marketplace, Echo, doesn't just match employees with opportunities according to their skills — it helps them explore part-time projects, mentorship opportunities, and growth paths based on their goals. It's not just another HR tool; it's a retention engine that works by giving employees what they actually want: growth without having to leave.

Spotify’s internal-first approach to talent goes beyond trying to fill talent gaps with existing employees first. It means actively working together with employees to help them set and achieve their professional goals.

The company recognizes that it can feel hard for folks to develop their careers in a distributed-first environment. They believe Echo helps the company attract and retain talent by:

• Aligning employees’ personal goals with business goals. Employees who are unhappy in their roles might be better suited to contributing to a different one.
• Fostering diversity, inclusion, and accessibility by increasing each employee’s access to development opportunities. The platform matches talent based on skills, experience and development goals, letting folks expand beyond traditional backgrounds.
• Having an internal talent marketplace is a positive signal to talent. It demonstrates the company values employees and is invested in their growth, even beyond their current role.

Innovation starts with the right mindset

Every tech company claims to value innovation. Most slap it on their values page and call it a day. Spotify went the opposite direction: they reverse-engineered what actually makes people innovative.

“We want our people to grow to make the company grow, so how do we do that? How do we encourage learning and a mindset that allows new thinking and innovation to happen?”

Their conclusion? Innovation doesn't come from hiring "innovative people." It comes from creating an environment where it's safe to fail. While many companies optimize for short-term performance, Spotify tries to play a longer game. They've found people perform best when they're learning with a growth mindset, and having fun while doing it. Optimistic employees take bigger swings, and bigger swings lead to bigger innovations. Here’s how Spotify promotes a healthy growth mindset among employees, to enhance a culture of learning and innovation:

• Growth Mindset training is available to everyone. All employees are encouraged and reminded to take it.
• The team values effort and learning over being smart and safe. They want people to feel safe to fail, and to be open about failures as they happen: “We encourage employees on all levels to own failure, learn from it, move on and grow.”
• They set examples from the top down. When CEO Daniel Ek gives his welcome speech to new employees, he doesn't recount a standard success story. He tells stories about his failures and what he learned from them. The message is clear: if the CEO can own his mistakes and frame them as opportunities, so can you.

The real reason people quit

When many companies lost talent during the "Great Resignation," most blamed remote work and a difference in generational values. Spotify called out something different in an HR blog post: toxic workplaces, mediocre managers, and a low sense of community.

They want to build an environment where none of these things are the reason for someone’s two-week notice.

While similar companies were setting up elaborate hiring systems to filter for "top talent," Spotify focused on creating an environment where talented people could actually do their best work. The results speak for themselves – since 2021, they’ve achieved 50% lower attrition, faster hiring, and increased diversity.

You can build the strongest hiring pipeline in the world, but if your environment isn’t optimized for retention, you're just funneling people into a broken ecosystem. Spotify’s talent strategy is actually quite simple: treat people like adults, actively invest in their growth, and give them real autonomy. Turns out that's good for both culture and business.

Three tactics you can implement to improve talent retention:

1. Create growth pathways beyond promotion

You don’t have to build your own talent marketplace to adopt an internal-first talent strategy (though it definitely wouldn’t hurt). Let employees take on work outside their core role, normalize regular conversations about career goals, and focus on skills-based matching to ad-hoc projects as opposed to solely role-based matching.

Linear creates and disassembles teams on a project-by-project bases, and Doordash makes it clear from day one that they value “General Athletes” who learn quickly and operate across functions.

Startups: your lack of rigid structure is an advantage here. People are expected to be nimble, learn quickly, and grow along with the company.

2. Enforce what actually matters

The remote-vs-in-person debate is missing the point. Either way, focus on measuring on outcomes over hours logged, designing meetings around productive collaboration, and investing in team community-building regardless of whether you have physical offices.

We see many startups choose to operate in-person because they place great importance on building from the ground up together. But we also see incredibly successful teams like Shopify effectively shift to a remote model while retaining their distinctive culture. The important thing is aligning your work structure with what actually drives results. What kind of work policies help move the needle? The answer might not be enforcing a harsh return-to-office mandate.

3. Consider culture as an emergent property.

Not every bold bet pays off. As an employer, do you prefer a culture where people take risks only if they feel like there’s a high chance of success? Or do you want employees to prioritize potential impact, even if something is risky? Most companies claim they want innovation, but few create environments where it feels safe to innovate. Here's how you can start:

• Kick off team meetings and standups with lessons learned. Make "what did we learn?" and “how will this affect what we do next?” more important than "did it work?”.
• Create blameless post-mortems.
• Have teams (and leaders!) honestly discuss failures, and how the lessons will impact decisions going forward.
• Budget time for learning projects. This could also look like company-wide hack weeks, or a policy like Google’s 20% time, where employees are encouraged to spend 80% of their time on core projects and 20% on other “innovation” activities they’re interested in.