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Performance management is one of the most dreaded areas for employees and
managers alike. A study conducted by WorldatWork found that ~60 percent of
respondents rated their performance management systems as “C Grade or below.”
So if large corporates also struggle with performance management, is it a lost cause
for startups? No – startups can actually do it better! Here are 5 tips to better
performance management at startups:
Performance goals are not the same as a job description. A JD could be a typical
starting point for goals but in startups, JDs themselves can be highly fluid. Also, in a
startup, you seldom have established procedures and need employees to commit to
results rather than get blind-sighted by work tasks. And you need employee
commitment to the goals and objectives.
Start with your organisational objectives and cascade them to your teams. Get into
1-1 discussions with each employee to discuss the objectives and what they need to
do to achieve them. This approach, called Management by Objectives (MBO) was
promoted by renowned professor, management and author - Peter Drucker.
Bill Packard, co-founder of Hewlett-Packard, explained the power of the MBO
approach as follows – “No operating policy has contributed more to Hewlett-
Packard's success … MBO … refers to a system in which overall objectives are
clearly stated and agreed upon, and which gives people the flexibility to work toward
those goals in ways they determine best for their own areas of responsibility.
Performance goals must clarify exactly what is expected and the measures used to
determine if the goal is successfully completed. They must be SMART:
Specific – Clearly call out the who and what of the goal
Measurable – Have quantifiable targets defined
Attainable – Be challenging, but not unrealistic
Relevant – Aligned to the role requirements and organisational needs
Time-based –Having a clear time horizon for tracking
Defining SMART goals the text-book way could create some rigidity and lead to
over-fixation with the activity - it just won’t work in the dynamic startup environment.
That’s where you need to get smart with the SMART goals! Consider – “Sell 500
software licenses to schools in India by the end of the financial year.” If the objective
is to sell each licence at Rs 1 lakh, consider setting the target as “Achieve Rs 5 crore
of revenue from...” This way, you are accommodating for pricing changes and
actually encouraging the employee to try out more innovative pricing approaches.
Similarly, if schools are only a potential customer segment for a new product, you
may decide to define the target segment more broadly.
5. Document
As a busy entrepreneur, you will probably already have tons of things taking up
mindshare. It is recommended that you document all feedback that you share. This
helps in two ways. Firstly, it helps you observe larger trends in the employee’s
performance over a period of time. Secondly, your documentation will help you quote
specific instances from the past basis which you have arrived at the larger
performance message that you want to communicate.