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THE OPERATING
TABLE

I break Startups down into their component parts and show you how to build for success.  


Performance Management


The beauty of the startup ecosystem is that anyone can start a business and become a leader. A downside of the startup ecosystem is that anyone can start a business and become a leader.


Being a leader means becoming accountable for the emotional health of your team. That's hard to navigate, especially if you're doing it for the first time. There's no universally-agreed manager qualification so a lot of it gets figured out along the way, which can have a really hideous effect on how your team feels and, subsequently, how they're performing at work.


I speak to a lot of Founders who tell me that their team isn't meeting expectations. 9 times out of 10, it's because those expectations aren't being properly communicated. When you're not explaining in a clear way what it is that you expect of people, it's also impossible to measure how well those people are doing in their roles.


Let's explore how objectivity in communication of expectations and performance management can bring huge benefits to your business.


I'm going to break down the two into three categories - inputs, outputs, and outcomes - but, first, let's look at what objectivity actually is before we go on to why you should care about it in communication and performance management.


What Is 'Objectivity'?


There are four key terms to get familiar with when you're thinking about building a performance management system that actually works. You may very well know these terms already, but I’m passionate about making business advice accessible to everyone and I don’t want to steam ahead without laying some foundations. 

‘objective’ (adjective)

Something that is ‘objective’ is something that is clear, measurable, and based on facts. An objective measure is one that is free from personal opinions or feelings, it is entirely data-driven. I’ll talk a lot in this book about ‘objective goals’, these are goals that aren’t open to interpretation, they have one definition of success. An example of an objective goal could be “£1m in revenue” or “100 customers more than last year”.

‘subjective’ (adjective)

On the opposite side to ‘objective’, something that is ‘subjective’ is open to interpretation. A subjective view isn’t data-driven, it’s based on personal experience, emotions, and beliefs. It can’t be measured in a yes/no way because one person’s definition of success is different to someone else’s. An example of a subjective goal could be “lots of revenue” or “more customers than last year” Both are clearly open to interpretation based on each person’s definition of ‘lots’ and ‘more’.

‘quantitative’ (adjective)

Similar to ‘objective’, ‘quantitative’ means something that is based on a numerical value (think ‘quantity’). A quantitative goal has a clear, single definition of success that is illustrated using a number. Examples of quantitative goals that a business might set could be a revenue number to hit, or a number of customers to convert.

‘qualitative’ (adjective)

Like ‘subjective’, ‘qualitative’ means something that isn’t numerical, something that is based on feelings or opinions (think ‘quality’). A qualitative goal could look at things like attitudes or perceptions, but wouldn’t have a clear definition of success.


What we're looking for in good communication and performance management is more quantitative objectivity and less qualitative subjectivity - i.e. less room for interpretation and confusion to brew when your company is growing at speed.


The Significance of Objectivity


Aside from removing room for interpretation and confusion, why should you care about objectivity in communication and performance management?


Do you like profits?


According to a Gallup study, companies with an engaged workforce are 21% more profitable. Good communication and good performance management standards are the foundations of an engaged workforce.


Do you like equality?


Per Harvard Business Review, subjective performance reviews can create a delta of up to 900 basis points between how male and female employees rate the effectiveness of a company's review process.


From the article: "...lack of structure led to very different reviews that tended to advantage men—describing them in ways that align with leadership and providing them the coaching they need to advance, while offering women less praise and less actionable guidance to work with."


Clearly there are significant (and quantitative) benefits to employing good communication and performance management processes, so let's break down how to go about doing that.


Using Inputs, Outputs, and Outcomes in Performance Management To Create Objectivity


As always, let’s start by defining the terms so that everyone is on a equal footing.


n.b. The performance management framework I'm using below is taken directly from my best-selling book How To Write Your Strategy. Get your copy for only £4.99 at the link below and learn how to link your performance management framework right back to your mission as a business.


How to write your strategy


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.

 

When starting to think about managing performance, it’s really common to think only about the outcomes (hitting the Objectives or delivering against the Key Results), since these are clearly laid out in your strategy as the numbers that denote success. 


However, when monitoring and managing the performance of your organisation, especially when you’re starting out, it’s important to assign value to all three - to inputs, outputs, and outcomes. Yes, your Objectives and your Key Results are the outcomes that you really desire and are thus the scores that you value most in the grand scheme of your organisation’s progress, but you can’t always control the outcome of your work. 


The market context of your businesses (the changing wants and needs of the customer, the things that your competitors do to try to beat you in the market, and the wider macro-economic impacts of the economy as a whole) is not yours to control. Yes, you can impact customer wants by promoting products designed to fit their needs, and your moves in the market will impact how your competitors respond, but you can’t entirely control these forces.


Consider the Covid19 pandemic; from one day to the next the market context for restaurants or office space or grocery delivery shifted in entirely new directions and even the best-laid strategies of those companies could not have insulated against that. 


You can’t control the market, especially not when you’re launching a new business. Sometimes, you will spend hours designing projects and scoping tasks and still miss your Key Results and Objectives because of what is going on in the market. 


What you can control is how you show up every day to put effort into the tasks (inputs) in order to complete your projects (outputs). And there’s nothing wrong with rewarding yourself and your team for that hard work. These rewards will increase your motivation for tackling the hard work of replanning all your projects to try to get closer to your Key Results next time. 


How you split the value you assign to inputs versus outputs versus outcomes will be your own choice to make, and you’ll learn as you go, but a rough guide would split the rewards for completion equally as a starting point. 


Assuming you’re designing projects (outputs) that you think will move the needle on your Key Results (outcomes), you should reward yourself for the work that’s gone into completing each of the tasks (inputs) and finishing the projects - even if you don’t hit the outcomes. This took a lot of effort, you will have shown up each day, hour after hour, to complete your tasks to finish your projects - that’s really an exceptional achievement. 


Metric

Weight on reward

Inputs (tasks being ticked off)

1/3

Outputs (projects being completed)

1/3

Outcomes (OKRs being reached)

1/3


How you reward yourself depends on the resources you have available and whether you’re working alone or with a team. If you’re working with a team, you could, for example, tie compensation into all three to keep motivation levels high even in difficult periods. 


For example, if you’re paying a base salary and a bonus, split the bonus into thirds and pay out based on tasks finished, projects finished, and Key Results hit and show the team members that you value the hard work that they put into their tasks and projects, even if the Key Results were missed.


You can then learn from the results that you did see and better design the projects and tasks for the next period. 


Metric

Weight on reward

Bonus Payment (Assuming 10% bonus on base salary at UK median level)

Inputs (tasks being ticked off)

1/3

£1,100

Outputs (projects being completed)

1/3

£1,100

Outcomes (OKRs being reached)

1/3

£1,100


If your team is large enough to include both individual contributors and managers, you could think about weighting the rewards for the individual contributors more towards the tasks (inputs) and projects (output).


For the managers, you could weight the rewards more towards the Objectives and Key Results, as it will be their responsibility to design the projects that will lead to the best outcomes. 


This way you’re incentivising the individual contributors to work hard on the day-to-day tasks and you’re incentivising the managers to design the most impactful projects, and you’re giving some accountability to everyone for the outcomes. 


Metric

Bonus Payment Individual Contributor

Bonus Payment Manager

Inputs (tasks being ticked off)

1/3 or £1,100

1/6 or £550

Outputs (projects being completed)

1/3 or £1,100

1/6 or £550

Outcomes (OKRs being reached)

1/3 or £1,100

2/3 or £2,200

Total Payment

£3,300

£3,300

You’ll find the right balance for your organisation. The only hard and fast rules here are:


1. That there be some acknowledgement of the effort that goes into tasks and projects, even if the Key Results and Objectives aren’t entirely met. This level of consideration for the work of your team will go a long way towards them viewing you as a good leader, which, in turn, will positively impact motivation. 


2. That if you’re measuring your team on tasks and projects, you’re especially strict on the fact that every task has an owner, a definition of success, and a deadline. If you want to reward your team for meeting their inputs (tasks) and outputs (projects), you need to have objectively, quantitatively communicated to them what is expected, by whom, and by which date. 


It’s worth noting here that if you want to rate performance based on inputs (tasks) in a way that is clear and fair, you will need to employ a Project Management System (PMS), such as Asana, Monday.com, or Trello, to keep track of everything.


I’ve researched the PMS market in depth and, based on that research, recommend Asana as the best tool for tracking inputs and outputs. Asana allows you to easily assign tasks with clear deadlines, measures of success, and owners, and allows you to track which tasks have been ticked off and which projects have been completed. 


It’s really important to keep your team motivated if you want to achieve the success that you dream of. If you’re working alone, I’d argue that it’s equally, if not more, important to reward yourself and keep yourself motivated. Building a business from scratch is hard and doing it by yourself is hard and lonely.


You don’t need to spend thousands of pounds to reward yourself for hitting all your inputs and outputs or achieving an outcome - maybe take yourself out for a little coffee or give yourself a break to recognise the value that you’ve been adding to your growing enterprise. 


Conclusion


At its very basic core, an objective system of performance management is simply asking:


"Did you do the thing I asked of you and did it lead to the result we thought it would?"


i.e. did that person perform well against the expectations of the role? There's little room for the kind of bias-led subjectivity that creates that delta between male and female views on the effectiveness of a performance management system and thus less space for the subsequent reduction in company performance.


By incorporating objectivity into the management of inputs, outputs, and outcomes, companies, no matter how small or young, can create a culture of transparency, accountability, and continuous improvement. Objective performance management not only enhances individual and team performance but also contributes to the overall success and longevity of a business. As you embark on the journey of building and scaling your early-stage business, consider embracing objectivity as a strategic ally on the road to triumph.


If you want to discuss anything I've covered in this article further, why not book a free Discovery Call:




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