Does it surprise you to see a COO writing about performance reviews? Aren’t they ‘an HR thing’?
In an early-stage company, where budgets are low and resources are in short supply, ownership for ‘people’ can often fall between the cracks. One of the reasons that a good COO is the most efficient and effective senior hire a young company can make is that ‘getting the best out of people’ is one of the role’s core functions.
And what is ‘an HR thing’ in its purest form, other than creating a structure that helps to get the best out of people?
I think of the foundations of an early-stage company as a triangle formed from finance, operations, and people (don’t worry Founders & CEOs you’re on top of that triangle getting out and about with customers and investors) and of a good early-stage COO as someone who can take oversight of all three.
In an ideal world, every company would have enough of a budget to invest properly into its HR/People function, but in the real world, that can’t happen until you’ve developed some customer traction and started bringing in some decent revenue.
Since, in a delightful paradox, you’re more likely to get customer traction and bring in some decent revenue if you’re already focussing enough on your people, what’s the best way to move forward without breaking the bank or building too bulky a process?
The MVP of a Performance Review
When you’re setting up a new company and thinking about all your dreams for the future, it’s hard not to get excited about the utopian dream of employment that you’re going to create. You swear you’ll never run things the way your previous boss did, just like everyone swears they’ll never become uncool and yet few can resist the siren song of a quiet night in once they’re over the hump of 35.
The problem is, unless he/she/they was a massive sadistic narcissist (oh boy have I experienced that), your previous boss was probably trying to do the best they could with limited resources and it’ll be similarly hard for you to set up proper systems and processes in growing company until that company has, well, grown.
Much like how you can start building your market with an MVP of your product or service, so too can you start building your beautiful dream for happy employees with an MVP of your performance management process.
In my experience, an MVP of a performance review needs the following 4 things:
Performance Review Pillar 1: A clear understanding of what’s expected of everyone
A good attack is a good defence, I think the saying goes (go sports?). A good performance review, no matter how M the VP is, starts with a good understanding of your expectations. Ask yourself if you’ve properly clarified what you’re asking from your team before you start even thinking about analysing performance against those expectations.
When I’m building a new system of performance management, I tie everything back to the Strategy - to the Objectives that each task or project is aiming to hit.
I then further split management of performance into three parts - the inputs (what are the tasks I’m asking people to complete?), the outputs (what am I asking those tasks to build to?), and the outcomes (what are the numbers we’re trying to move with those outputs and where are we trying to get them to?).
Inputs | Inputs are your tasks. They’re the effort that you’re putting into the business by taking single, small steps, day-by-day, to work towards the completion of your projects. |
Outputs | Outputs are your projects. They’re what you’re getting out of the combined effort of your tasks. |
Outcomes | Outcomes are your Objectives and Key Results (OKRs) themselves. They’re the quantitative results that you hope to see once you’ve completed your projects - the outcome of all your hard work. |
Check out my articles on The importance of good communication in a startup and how a clear strategy creates an environment of psychological safety to get started on laying the foundations for your team understanding what’s expected of them.
Performance Management Pillar 2: Room for improvement
I have never, not once in my 6 and a half years as a COO, seen a company hit all of its goals. If you’re hitting all your goals, you’re probably not setting the right goals. Not hitting your goals isn’t failure, especially in a startup. A startup, particularly a company that’s stuck the word ‘disruptive’ in its elevator pitch is, by definition, figuring a lot of shit out as it goes - if you’re doing something that’s been done before and you're following a clear path to success with obvious metrics, are you actually building something new?
Probably not. And that means that if you're building something new you’re not going to know how to set your goals properly at the start. Some, you’ll wildly underdeliver on, some you’ll wildly overshoot.
Remind yourself when going into performance reviews that numbers are going to get missed and a lot of that is going to be because you don’t know how to set the numbers properly, not that your team doesn’t know how to move forward properly - you chose them for that role for a reason.
Performance Management Pillar 3: Have the courage to accept the things you cannot change
In the 1930s, protestant theologian Reinhold Niebuhr created what’s become known as ‘the Serenity Prayer’. I’m not of a religious persuasion myself (unless you count my worshipping at the altar of spreadsheet), but I do love to borrow that prayer when I’m goal-setting. It goes like this:
“Grant me the serenity to accept the things I cannot change, the courage to change the things I cannot accept, and the wisdom to know the difference.”
2024 secular version? Some shit’s in your control, some shit isn’t. Figure out the difference and focus on the shit you can change.
In the context of a performance review, this looks like focussing on the things your employee or direct report actually had in their control and were responsible for (inputs and, ideally, outputs) - did they take those on with the appropriate focus or did they focus on the wrong things (and if it was the latter, how did you do in delivering your responsibility to help them know what to focus on?).
Performance Management Pillar 4: It goes both ways
Asking for feedback is tough. Knowing how to receive it with grace is even tougher. In the first iterations of your performance review process, you’re going to have the opportunity to learn how you’re doing as a manager. Take it.
Ask your team members how they think you’re doing - did they feel clear about the goals you set? Do they think, using the expertise you’re paying them for, that you’re setting the right goals and focussing on the right things? Are you creating an environment of psychological safety or are you being a massive douchebag?
Giving your employees and team members the opportunity to give feedback in return, creates an open dialogue that can massively improve relationships. I’m sorry to have to tell you this, but you’re not perfect and asking for information on why isn’t a weakness, it’s a huge, huge strength. So, in the nicest possible way, get over yourself.
Performance Management Pillar 5: The best framework is no framework
I love a framework. I love an organised thought and a visual learning environment. I love them so much, I’ve written four books (and I swear I’ll finish the 5th) that take simple, universally-applicable frameworks and apply them to core business problems to help you build a foundation for success - get them all here.
I love frameworks, but I don’t have a framework for you right now. If you’re looking for an MVP of a performance review, that means that you’re putting your first one together and what matters most to that process are your attitude and your intentions.
There a thousand different frameworks for exactly how to run the perfect performance review, but searching for perfection in a startup is a fruitless, frustrating quest.
Everything changes so frequently and there’s never enough time for anything and you’re always a little bit stressed.
Do yourself and your team a favour and don’t drive yourself to literal distraction trying to put a perfect framework together. Instead, just take the time to properly ask for what you need, have the grace to understand your own flaws, and remember that it's you all against the problem, not everyone against each other.
If you’re looking for someone to sense-check your MVP of a performance management framework, I offer business coaching by the hour and you can buy just a single session - check those out here or book a free call with me below.
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