How a $2 Billion Company Without an HR Department Is Thriving

1600 employees.

$3bn annual revenue.

No HR department.

It seems impossible and you’d think every day would be on the brink of disaster. Yet it’s working for Octopus Energy.

It’s all because the founder Greg Jackson takes an unconventional approach to company building. He’s a serial entrepreneur who preferred to learn the HR and IT functions than to create dedicated departments.

In a small company, this isn’t uncommon yet it’s unheard of for something of Octopus Energy’s size. It doesn’t appear to have disrupted their growth as their valuation soared from zero to a $2bn valuation in just 6 years.

You might be expecting to search online and a flood of negative employee reviews but the opposite is true. Somehow Octopus has maintained a 4.6 rating out of 5 on Glassdoor with a good sample size of 175 reviews.

How are they thriving without an HR department?

Treat people like adults instead of babies

When I applied for graduate roles, there was a funny dance I had to do in interviews for large companies. They all said they wanted someone who could take on responsibility and I’d try to prove this through examples.

The interviewer and I both knew in reality I would be expected to shut up and do as I was told for at least the first few years.

It’s part of the reason why I started my career at a boutique consultancy instead. I felt bad for my peers who believed the dream they were sold by job adverts. In many cases, you’re nothing more than a cog in a machine.

Greg wants to follow through on the promises made in the recruitment process. He wants to hire the best people and not put them in constraints or tie them up in bureaucracy. He doesn’t believe in “infantilizing” his employees.

The lack of strict company-wide guidelines means if someone wants more responsibility and promotion then they are welcome to try. They aren’t held back by arbitrary rules. Managers and their charges are expected to be reasonable with each other rather than rely on an employee handbook.

Swimming lessons

Greg is clear he doesn’t just throw managers in at the deep end and see if they sink. He gives them support and training so they are prepared for potential problems. Yet he doesn’t want to micromanage them:

“But we don’t tell them how to manage their team, they do it in ways which suit them and their team. There’s no fear of hierarchy, so managers’ managers have good visibility. This is essentially what we are replicating. We are creating micro-businesses across the company, just on a much larger scale.” — Greg Jackson

This structure empowers managers to be like entrepreneurs. Their passions can shine through rather than ticking boxes. This mindset is strengthened by permanent staff owning 5% of the business. The aim is to create a sense of everyone being in it together.

The pandemic tested this model and employees were encouraged to give suggestions of how to make sure people were supported. It led to Octopus creating a “listening ear program” where a trained psychotherapist teaches others how to support their peers with mental health issues. This is a voluntary program but means everyone always has someone to turn to.

Heads out of the sand

This might sound deluded still. It’s another story of a CEO who has no idea his employees are unhappy.

This would be unfair as Greg considers the people at his company so important that it should be him as CEO who takes the ultimate decisions rather than passing it off to an HR department.

Octopus Energy has an employee app where employees are asked questions about their satisfaction and can raise concerns. Greg says every Monday, the leadership team analyzes all this data as well as a breakdown of which divisions have people leaving.

This data dump means the early signs of discontent can be spotted and the root causes dealt with. While managers are empowered and adapt if their team is unhappy.

The lack of an HR department means the recruitment process takes longer but managers know their future employees much better.

“We hire people who care!” — Greg Jackson

Their performance speaks for itself

Greg’s logic is the fewer departments, the more streamlined the company and the faster it can grow.

In 2021, Octopus Energy has been racking up awards:

• #23 on fastest-growing companies in Europe by Financial Times
• The first energy provider to be recommended by Which? for four years in a row
• 12th on UK Customer Service Index — the only energy company in the Top 50!

Octopus Energy is also one of the few providers to have 100% renewable energy.

Happy employees. Fast-growing. Great service. And environmentally friendly!

It sounds like a dream for a responsible entrepreneur and it will be interesting to see if they can keep up this momentum. The company is still young and when it’s growing at this pace, there is a lot of challenges in the future. Greg’s interview with the BBC put a target on his back with many HR leaders unhappy.

The big caveat

The problem of having no HR department is you are dependent on a good-hearted CEO. If you have a problem with the boss, you’re screwed.

The startup world is littered with scandals from CEOs who crossed boundaries. THINX CEO, Miki Agrawal is alleged to have inappropriately touched her staff and taken calls whilst on the toilet. Travis Kalanick was forced to step down as Uber CEO after several serious allegations.

The paradox is the leaders who think they don’t need an HR department are the ones who need it the most. A well-run HR department can form a powerful counterbalance to a larger-than-life CEO.

Greg admits this himself.

He is a people person so the system works for Octopus and from employee reviews, the feeling seems to be returned. He had two decades of experience working in multiple companies before creating this successful structure.

He recommends founders do what suits their strengths. If they aren’t someone who wants to spend significant portions of their time looking after their people, then they should give the responsibility to someone else.

What Octopus Energy has done is prove an alternate model is possible and with the right CEO can lead to success.