If you’re awesome, you’ll succeed. If you succeed, then you’ll grow. As you grow, the scale will change everything and, then, you won’t be awesome anymore – unless, that is, you change a lot of what made you awesome in the first place! This, then, is the Scale Up Paradox.
Because what got you here, won’t get you there!
Knowing what to change, when to change and how to change is the very essence of Scaling Up.
Take as an example the way in which we manage performance. A start-up can run everything on ‘check-ins’. Through frequent check-ins you can align on and zero in on who’s doing what, by when and how. You can keep on top of how things are going and whether we need a course correction. The check-in system is awesome.
Until it’s not.
Because you can’t run everything on check-ins when there are 30 people around. The ‘check-in’ system basically means that YOU are the system. You, the Founders, keep everything together. Which means YOU are the bottleneck. Your personal bandwidth is the ultimate ceiling on your growth. And that is bad news for your health!
If you’re awesome, and you succeed, and you grow, it won’t be long until you can’t sleep because of the many loose threads in your brain: tasks you need to assign headspace to, projects and people you’re not ‘on top of, discussions to be had that you can’t get to.
So to get some sleep, you’ll be forced to take delegation to another level. This is not simply a question of giving away tasks or projects; it means giving away responsibility for entire parts of the business. That’s scary. But if you have awesome people, it’s also liberating.
And that will help you sleep again. For a while. Because if your people are awesome, you’ll succeed, and you’ll grow, and pretty soon the balls will be dropping again. You’ll realise that what you assumed people were doing, they’re not doing, just because they assumed they should be doing other things. And you’ll long for the days of the ‘check-in’ system when you could be on top of everything through enough ‘check-ins’. But there’s no going back now. You’re too big. You simply can’t check-in with everyone when you’re at or beyond the 30-person mark.
Maybe you’re having a conversation with someone, at that point, and they tell you about OKR: Objectives and Key Results. Now there’s a system you can hang your keys on! A rhythm to align on key priorities and targets every two or four weeks (or every month or quarter, if you’re a bit more mature). LIBERATION!!! Suddenly you can be on top of everything without the check-in overwhelm!
It’s a thing of beauty, really.
Until it’s not.
Because if you’re awesome, and you succeed, and you grow, the day will come when those balls will once again drop. And it won’t be because the senior team aren’t doing what we agreed when we set our quarterly OKRs. It will be because the business is too complex now for OKRs. OKR’s still rely on a lot of manual alignment through collaboration and, yes, those regular ‘check-ins’ at the operating level. Even simpler than that, the balls are dropping because, suddenly, there are a whole lot of new people issues we have never had to deal with before at this level:
- Accountability vacuums: a rising tendency for important things to fall into ‘no man’s land’ with nobody accountable for them;
- Major differences in contribution: a rising number of people in cruise mode while the rest of us do all the work;
- ‘Performance politics’: lots of high performers are unhappy because people aren’t being treated fairly. Slackers are getting good reviews and rewards just because their managers are lenient; high performers, on the other hand, are getting the same as them because their team has higher standards;
- ‘Compensation politics:’ people aren’t satisfied that bonuses and increase decisions are being made fairly; and
- ‘High Performance Culture slide‘: all of this is causing relational friction and culture issues that’s impacting performance.
So, right now, there is way too much going on for OKRs and ‘check-ins’ to work. Things need more alignment and coordination than we are going to get through our team interactions. We need a new way. A new way of aligning the different parts of the business without falling into ‘check-in overwhelm’.
We need a performance architecture with more processes and systems that maintain alignment across teams.
Big words. ‘Corporate words’. Yuk. But let’s take the hair off of them.
Basically what they mean is that, around about this time, Performance Management needs a major upgrade. But WHY? And how should we do performance management? After all, you say, it’s an awful relic of industrial-age corporate management , which is why so many top employers are moving to something new .
True enough. The dilemma is that a lot of the new age “buzz” about “liberating talent to thrive” without backward-looking performance reviews don’t work in most contexts; most often, it will break things even more than a frustrating, antiquated performance management system would   .
The reality is that performance management is MUCH more complex than an annual review and, furthermore, is definitely not a ‘one-size fits all’ approach .
If you’re Scaling Up and keen to build a scalable performance management system that works in YOUR context (and at the same time reinforces your greatest culture assets), then here are 17 of the most important Performance Management1. decisions you will need to make as a leadership team:
1. Performance management intent:
What is the main goal of our PM system? Accountability for performance, coaching for development and improved performance, or both?
2. Individual appraisals:
Do we believe that focusing on individual appraisals would result in better – or worse – business performance? Does it adversely affect team work and a ‘looking beyond my scorecard’ mentality?
Given that different parts of the business are so different, should we be doing the same thing across the business? How do we do performance management differently (if we even should) in areas as different as Engineering, Sales and Customer Service?
4. Target setting processes:
Should targets be set from the top down, bottom up, or some combination of the two?
5. Nature of targets:
Should performance targets be activity targets, behaviour targets, intermediate outcome targets (closest to ultimate outcome, that are fully within control) or ultimate outcome targets (even if not within our control)?
Should we link rewards to personal performance ratings? Some say that you should just pay really well and bake everything into a fixed bonus, or into basic compensation, and fire the non-performers. Which works best?
7. Bonus pool formula:
Which proportion of an individual’s bonus should be determined by either individual contribution vs. the performance of their team or division, or the business as a whole?
8. Long Term incentives:
What percentage of Variable Incentive Remuneration (VIR) should be long term, and which should be deferred to future years (LTIR)?
How should performance ratings affect salary increases?
10. Formal or informal feedback:
What is the right balance between formal appraisal and informal continuous feedback?
11. Feedback sources:
Are there objective measures? If not, who gives input to the appraisal? If there are multiple parties, how are their inputs weighted? Is a line manager’s feedback more important than multiple, non-line individuals or ‘bosses’?
12. Performance appraisal scale:
How do we summarise individual performance assessments?
13. Appraisal frequency:
How often do we appraise performance and give feedback? Would this be per assignment or based on time, such as weekly, monthly, quarterly, bi-annually or annually?
14. Bonuses vs. career investment and opportunity:
How do we decide which individuals to prioritise for investment in growth and promotions? How do we balance bonuses vs. investment in learning, development and promotions?
15. Dealing with high performance that doesn’t produce results:
What do we do when people perform well, though don’t deliver the business results due to issues outside their control?
16. Performance management Roles:
Who does what in the performance management process? What belongs to HR? What belongs to line managers?
17. Performance management Software:
When do we move from Excel (or similar) to software products that streamline this process for small businesses? What are the best packages for our business?
If these are questions that you have but do not know how to answer, or if these are questions you did not know you were asking until now, then come and learn how to start and run this process at our ‘10X Performance Management’ boot camp on 23 June 2017.
Venue: The Focus Rooms, Sunninghill, JHB
Cost: R4,100 pp (exc VAT)
- Bring 3 for the price of 2
- 30% referral discount for bringing founders of other ventures