Performance Management for Startups: Where to start?
Are you struggling with troublesome team members? Are some of your high-performers leaving prematurely?
If so, you may have a performance management problem.
Luckily, there's never been a better time to consider what a next-gen performance management system may look like for you. There are more tech offerings available than ever before for tracking performance in early-stage companies.
But it's important to not immediately jump into technology as your "silver bullet."
Performance management is, at its heart, about creating the conditions for your people to perform at their very best. To accomplish this, your managers need people development skills, such as:
recognizing and developing strengths,
identifying weaknesses in ways that leads to improved outcomes,
helping people make rapid progress towards their goals,
and inspiring people to reach their growth edge for continuous personal and professional development.
Imagine what your company could achieve with managers who knew how to apply these skills well?
Unfortunately, most startups don't consider the power of a well-designed perf system with well-equipped managers.
When Performance Systems Go Wrong
Before we get into what a next-gen perf system could look like for your company, let's consider the conditions that often lead to the implementation of crappy perf systems.
Unskilled Managers: If your managers don't have at least a moderate grasp of the skills mentioned above, then don't expect much from your perf system. Worse yet, managers who don't know how to guide people well could lead higher turnover down the road. As Gallup research indicates, it's not uncommon for people to leave because of a boss who doesn't know how to help them set goals and manage priorities. Let's be clear here - a perf system is not a replacement for poor management.
When you implement a perf system without skilled people managers, the whole thing becomes an onerous affair. Your team will go through the motions, answer standardized questions, and fill out related online documentation - but they will not have the honest and inspiring conversations that lead to real growth. They may even falsify information or try to game the system in some way. Yuck.
Desire for Oversight and a Standardized System: Some startups implement a perf system because they believe it's a way to provide oversight of managers. This usually occurs when managers are not sufficiently monitoring and tracking individual progress in ways that are easily visible to senior leadership. In other instances, startups are looking for a way to gather company-wide data that may be siloed within departments. They want to standardize a patchwork of ad hoc systems within the company.
When you implement a perf system out of a primary desire for oversight or standardization, the whole process can be perceived as a symbolic and bureaucratic endeavor. People will participate, but not out of a true desire to learn and grow from the experience.
Emphasis on the Individual: Let's say you have managers with great people skills. Your whole company is excited about creating a system that will help everyone get better together. Now what do you do? Well, of course, you start looking for existing tools, platforms, and templates to help you.
Except there's one big problem. Almost all the existing resources on performance management focus exclusively on the individual.
Your startup's success is not dependent on individual performance. It's dependent on the collaboration of individuals working together.
When you implement a perf system focused exclusively on individual performance, you send the message to your people that success is determined by individual effort alone. That's the antithesis of the teaming mentality needed to help your company reach its ambitious milestones.
How to Create a Next-Gen Perf System for Your Startup
To help you design the ultimate perf system, I put together a series of questions for you to consider.
1. What's your motive?
In my mind, there's one primary motive that will lead to the ultimate perf system for your company - it is the desire to create a High-Performing Teams. Decades of research has found that High-Performing Teams are defined by three factors:
they meet or exceed the goals set by the organization.
they are learning and growing as a team.
they are learning and growing as individuals.
Of course, this is an aspirational goal when you are just starting out. It's a powerful intention for an early-stage company to want to become a high-performing organization. And this is the kind of intention you want to percolate throughout your culture so that everyone is united around a worthy end goal.
2. How will your performance system reflect your values?
Your company values are key for informing the process and content of your perf system.
Process: What do your values say about how things are run in your company? How can you ensure that the perf system process - how it's communicated, how it's designed, and how it's implemented - is a reflection of those values?
Individual and Team Attributes: What do your values say about how people produce good work, both as individuals and as a collective? How are these values reflected in the individual and team attributes measured in your system?
3. How do your people want to grow?
Your perf system is a structure to help your people become the leaders they want to be. Numerous studies, including Deloitte's 2016 Millennial Survey, indicate that young professionals today want a workplace where they are opportunities to progress and learn to be good leaders. This factor alone is second only to a good work/life balance.
To help your people develop in this way, it's helpful to think about both vertical growth and horizontal growth. For vertical growth, what does career pathing within your organization look like? How do those who want to manage teams progress within your company? What does the path look like for those who want to hone their craft as rockstar individual contributors?
As you consider vertical growth within your company, keep in mind that people are not expecting to spend the rest of their life within your company. In line with the "Tour of Duty" concept, today's employee-employer relationship is all about being forthright and thoughtful about the ways that employees contribute to the company within a 2-year or 4-year span. As you design a V.1 of your of your career pathing program, consider how to create learning experiences in ways that lead to significant and measurable outcomes within a pre-defined time frame.
For horizontal growth, you'll want to consider the skills that enable your people to perform well within their existing roles. That includes upgrading collaboration and creativity skills, as well as project management and other process-related abilities. Including the development of "horizontal" skills in your perf system is a stellar way of encouraging people to attend to their continued growth while occupying the same position over time.
As you develop your company's career pathing journey and consider the horizontal skills your team needs to do good work, don't do this in isolation. Get your team involved! Conduct interviews, hold an internal focus group, or perhaps have a design session to identify the most pertinent growth areas for your team and how your perf system can support them.
4. What skills do your managers need to develop your people well?
Now it's time to consider the skills your managers need to help people progress over time. In thinking about the horizontal and vertical skills identified in the previous exercise, how well equipped is your leadership to mentor and coach people for desired growth?
My hunch is that many of your managers will need some help in this area. Early stage startups are characterized by leaders who are often domain or technical experts, but not necessarily good people developers.
Here are a few ideas to consider as you think about training for your managers:
In-house Skillshare Sessions: This is a great approach if you have some internal expertise within your management. Skillshare sessions take the form of a more experienced leader sharing their methods with less experienced managers. This can also take the form of a user-generated group learning session, where managers suggest and digest relevant content together (e.g. TED talks, management books, podcasts) and discuss how the content informs the ways you help people develop in your workplace.
Workshops and Trainings with External Providers: Bringing in external trainers to equip your team with the necessary coaching skills can also be helpful. Look for providers who have a solid grasp of adult learning principles and a system for evaluating impact before and after the training. Ultimately, you're helping your managers develop new norms and habits, which is not easy to accomplish in a singular workshop alone. Consider providers who provide ongoing support to ensure these new habits are in place over the long-term.
Executive Coaching and/or Group Coaching: Another option is to bring in coaches to work in a one-on-one or group capacity with your leaders. With this approach, you give your managers more opportunity to practice their new skills while receive ongoing guidance with an experienced people developer.
5. How will you encourage performance over time?
Now you're ready for the fun part - planning and structuring a system for individuals AND teams to progress on a regular basis.
First you need to help your people plan for the growth and performance they want.
Growth and Performance Plans:
Among some of the questions you'll want to consider in your plan include:
What is your goal for the next quarter? What would be a truly epic win?
What are your strengths? How can they help you achieve your epic win?
What is your Growth Edge? (the one area of improvement that would make the biggest difference to your personal and professional development)
Secondly, it's important to think about the structure and cadence needed to help people make progress towards their goals. Individuals and teams need to pause on regular basis to reflect upon what's working and what's not. These "sideline" conversations are key for encouragement, course-correction, and creative problem-solving. They usually take the form of:
One-on-one check-in sessions: These meetings take place between the manager and direct report for ongoing coaching and support on a weekly or bi-weekly basis.
One-on-one in-depth sessions: These are longer mentorship meetings between manager and direct report. These usually happen a quarterly basis, when new projects and tasks are delegated for career and professional development.
Team coaching sessions: These meetings take place between the manager and team to reflect upon team process and dynamics, as well as to improve outcomes and increase team capacity in the future. These happen on a monthly, quarterly, or as-needed basis.
6. How will you track performance over time?
Lastly, consider how you want to track performance over time.
Some startups use their own version of docs and spreadsheets to document growth and performance outcomes. Other startups look for off-the-shelf tools to log outcomes (see Lattice, Betterworks, Reflective, and Zugata, to name a few).
Some of these tools are helpful for nudging managers and team members to regularly engage in growth and performance conversations. Some also provide useful participation metrics that may be instructive for thinking about how to evaluate the outcomes of your perf system endeavors. In a future post, I'll do a side-by-side comparison of these tools to better evaluate their utility for tracking performance for startups.
The careful reader will notice that the last step I mention here is to consider the role that technology plays in your next-gen perf system. When you consider the people development that needs to happen sequentially, or at least in parallel, with the technological design of your system, you will be much more successful over the long-term.
When you take a moment to consider the questions above, your perf system will more authentically inspire your people to produce their best possible work for your company.