People are the most vital asset of any Startup. The founding team, the early hires, marketing guys, software gals, interns and freelancers are all essential to success. What is the best way of managing performance? How can feedback be shared between peers? Is there a good model for allocating rewards? These are tough questions and there is no HR department, no set of processes and no track record to help answer them.
Talking and listening
Fortunately there are some simple principles to follow. Managing, reviewing and evaluating people is all about talking and listening. Processes, reporting lines, formal measurement all have a place especially in larger organisations. The value lies in time spent with people, preferably one to one, asking open questions, listening heedfully and sharing honestly and directly.
See the whole board
Past and future performance are the product of many factors. Try to make sure you cover a wide range of areas when talking to your people. Technical skills, teamwork, communication, leadership skills, energy and commitment are all part of the picture. Many Startups have plenty of hard metrics to use and these can be valuable but the wider picture is also important.
One useful tip is to look at the performance of teams to shine a light on individuals. Even in the early stages, different groups of people will have contributed to each project or task so every individual will have a unique combination of teams to which they have contributed. Reflecting on how these teams have performed can be very insightful.
Make sure any appraisal or evaluation is not a one way process. Upward feedback and peer to peer review are a great way of enhancing your credibility as a leader. More importantly, it is also a great way to learn and improve.
Openness and honesty
Lack of “transparency” is a common complaint about appraisal processes in large corporates. The reality is that some judgement is always involved - people are expressing opinions about people. An exactly measurable and predictable outcome is not possible. Openness and honesty are the watchwords. Be as direct and clear as you can and ask the same of all your people. This is especially important when dealing with reward. Pay, share awards and bonuses in small Startup teams are often the hardest choices facing a CEO. You can’t always get agreement but you can at least be clear about the reasons.
Keeping the books
Process is less important in the early stage environment but there are a couple of points to keep in mind. Try to have feedback and review often enough to be fresh and relevant. A fixed time schedule may not work but review of key projects such as a major product release could make sense. Keep some form of written record of the outcome which both parties to the review would recognise. You may never need this but employment law is a minefield and proper record keeping could save enormous amounts of time and money.
Performance matters but potential counts
Think about past performance but also about future potential. As a Startup it is the ability of your team to grow with the business that is most important. It is also what matters most to each individual. Of course reward for effort is welcome but guidance and options for developing, learning and leading are the best motivation in my experience.
Whether you are giving a hard message or rewarding a brilliant performer, be open and honest, talk about the person not just the numbers and reflect true potential. Even those who leave your company as a result will thank you.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.