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Open Source Startup: Performance Management Framework

Welcome to Chapter 2 of Open Source Startup: Performance Management Framework. For a table of contents, head over to the Introduction here

Once you start building a team, the single most important thing to do is get them aligned with the vision and get them moving in the same direction (as fast as possible). Do not underestimate how difficult this is. You may think everyone is in the same boat simply because they arrive at the same office. More often than not, everyone is rowing in a different direction and the cox (you) keeps changing the orders.


You can read for months on how to set up a performance management framework (we prefer to call it Goals, far less authoritarian) - and by no means do I think ours is the best. I've just always liked to go for something that is simple, something that can be created and moulded together with your employees and something that errs on the side of transparency.

There is a movement towards competency-based performance reviews - which is largely fancy talk for actually engaging with your employees around performance. Figure out WHY a goal was hit or missed. Include skills and personal development goals in expected outcomes. Don't be scared to remove goals that are irrelevant, especially when the goal posts change. Be fair.

That's how you grow people.


Notes and things to think through:

Have a strategy. You can't expect everyone to move in the same direction if you can't codify the direction. The simplest way to do this is to come up with 3-6 strategic drivers that best describe what you're trying to achieve in this cycle (usually a year). Strategy grows and morphs, but if you can't keep it consistent for a 6-12 month period, you're probably not giving yourself enough time to test it - or you've got the wrong strategy.

A strategy can be as simple as you like. It's a direction pointer, nothing more. Here's an example of some of forgood's strategic drivers.

2017: 

  • Make forgood for Business work 
  • Get more clients (or fail fast at this model)
  • Prepare for SCALE (build process and structure)
  • Build cool shit (that people actually want) as quickly as possible
  • Create an Ecosystem of Value
  • Keep the public site growing
  • Add value to Causes above and beyond volunteers/goods donations
2018:
  • Increase stability, runway and revenue
  • Grow the platform (bigger, better and more engaged activity from users)
  • Better Giving Experiences. Improve the quality of Volunteers.
  • Better Giving Experiences. Improve the quality of Causes and their level of engagement.
  • Create New Giving Experiences.
You can see how these slowly mature with the business and as certain approaches success/fail. Level 2 strategy would include more specific numbers-based goals (amount of revenue, % growth, % engagement/uptake). We tend to add these numbers into the detail of each driver - but having a very defined and realistic number to aim at is extremely liberating. 

Once you've got a strategy, you now have a framework to align performance management to. 

You can't set a goal or require an output that doesn't fit under a strategic driver. Common sense, no? If you find that you're setting goals for employees that don't really fit under one of your strategic drivers, you're doing something wrong. Don't delude yourself, it's easy to do - allow this check and balance to help you set the correct outputs for your team. 

Think about the measurement scale you're going to use. The scale you'll find in the template is quite complex, but that's why I like it. It allows for nuance. 

There are two levels: meeting the job requirements and quality of output. On this scale, anything above a 6 is good. 6.5 is really good. 7+ is great. This obviously introduces its own set of complexities, as people are trained to think that 6 out of 10 on a 10 point scale is pretty crappy. So consider yourself warned. 

This approach does solve many of the problems typical rating scales have: lack of nuance, too easy to choose a midpoint and too hard to defend your position (my 4 out of 5 could be very different to your 4 out of 5).  


Feel free to substitute any scale you feel comfortable with.

  • 3 point scale: below expectations, meets expectations, exceeds expectations
  • 5 star scale
  • Out of 10 scale
  • 4 point scale (has no midpoint, which is useful)

Weighted scorecards help create focus. A simple weighting against each of the strategic drivers then provides a simple but effective way for carving out different roles. Sales roles will look very different to support roles - and will focus on different parts of the strategy.

The template allows for 5 strategic drivers and a Personal Development section - and generates an overall score based on the weighting attributed to each driver.

Think about how often you're going to do performance reviews. Many big companies do performance reviews once a year. It simply isn't enough in the world of startups - the goal posts change too often. Currently at forgood, we do "goal reviews" every 4 months, with check-ins at least every 2 weeks. This provides enough time to get a good chunk of work done, but also allows for outputs to shape against the changing nature of a startup business.

Link performance management to incentives. Here's the real trick: there's no point putting so much effort into performance management (and the requisite coaching and communication it requires) if you can't link it to incentives. Create a policy where scores affect increases and bonuses - then you make it real.

Don't know if you can afford an increase for your team? Just use the phrase "available increase". If you're not growing or getting funded, then there is no available increase. You may have to get clever with incentives to keep energy levels up though... Look out for a future post on this!

Go forth, have those "tough conversations" and row in the same direction!


Disclaimer: The information in these posts work for us. I cannot and will not guarantee that they'll work for you. Consult the right professional to make sure.

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