Recommendation 1:

Emphasize value creation and carefully consider metric breakdowns.

At some point, the sequence of 【goal-performance-KPI-layered breakdown】 became a tightly bound combination. Many startup companies, even in their early stages, assign work tasks and plans to employees through "metric breakdown," seemingly believing that following a plan can achieve set goals.

However, reality often defies expectations: goals are not met, and team motivation suffers.

Let's pause here and collectively address these two questions:

① Are your goals definitive, certain, and stable?

② Apart from step-by-step breakdowns and numbers, are there other ways to achieve goals?

For startups in the VUCA era, where internal and external factors and conditions are rapidly changing and continuously ambiguous, akin to sailing through fog and storms, catching glimpses of a distant lighthouse (the goal). The exact route to reach the destination, even the captain finds challenging to provide.

In this scenario, for the company's top leadership, the primary task is no longer about informing each crew member about how many nautical miles to sail in the next hour to reach the shore. Instead, it's about exploring paths and methods within the current challenges and uncertainties. Ensuring a safe journey to a region where the lighthouse is clearer or evaluating if there are better islands worth landing on.

Let's illustrate this with a real-life example:

Situation in Region A

Unsure of the next steps, the CEO found themselves deeply perplexed. Imagine if company S, when preparing to enter a new market, did not solely rely on sales targets as the rigid metric but instead tried to answer a few questions:

• Can we replicate our past successful experiences (products/pricing/sales team) in region A?
• What high-potential customers in region A are worth investing resources in?
• If there are discrepancies between our expected targets and actual outcomes, what are the reasons? ......

Would specific actions and results differ?

Now, our focus has shifted from "goal management" to "managing goals." In the pursuit of maximizing value creation, what outcomes should we aim for?

These outcomes could be financial returns, decision adjustments, cognitive iterations, or team growth.。

Therefore, during the performance management goal-setting phase in the 0-1 stage, startup teams should pay particular attention to the following key points:

• If quantified goals lack authenticity, temporarily set aside numbers and focus on completing critical actions and retrospectives.
• Provide top-down direction, but also solicit bottom-up suggestions to assist in goal setting and ensure everyone contributes their talents.
• If using the metric breakdown method, in the initial stages, keep it broad rather than detailed, aligning with the strategic intent of the phase.

 

Recommendation 2:

CEO and team leaders: Be a coach before being a referee.

At this point, you might start pondering further:

The four-step closed loop of performance management includes goal setting —— performance coaching —— results evaluation —— and results application，But now, if the goals are hard to quantify, metrics can't be broken down, and it's tough to agree on defined actions, how do you track employees' performance? How do you distribute bonuses?

To answer these questions, perhaps ask yourself another question:

• Is the ultimate goal of performance management to track employee performance?
• Distribute bonuses?
• Or to create value together with the team, ensuring everyone's efforts yield returns?

I believe the answer for the vast majority of CEOs would be the latter. And why many CEOs often find themselves in deep insecurity is often due to missing a crucial but easily overlooked aspect of performance management: performance coaching.

Without control over the process, results naturally lack certainty. Imagine a football team without a coach, only referees on the field; it would likely be a frenzy of red and yellow cards, with uncertain effective goals scored.

Assessment aims to decide rewards and penalties, while coaching aims to enhance performance, which is the organization's ultimate goal.

Unconsciously, people shift the coaching responsibilities that leaders fail to bear onto subordinates as "poor performance," a highly misleading process—where the organization seems to make the right judgment but fails to boost performance.

Therefore, as the team's top leader, you must constantly remind yourself: be a coach first, then a referee; only by being a good coach can you be a fair referee.

The encounter of tech-savvy leaders with the younger generation of employees is a common scenario in today's startup companies.

This adds a considerable challenge to performance coaching.

In fact, besides formal "1-on-1 regular meetings," there are many other ways for performance coaching, permeating every aspect from organizational design to cultural development.

We have summarized some "wisdom" from member companies to share with you:

• Diminish control, emphasize self-drive: such as flat distributed organizational structures, flexible offices, OKR work methods.
• Encourage bottom-up initiatives, leave room for innovation: like voluntary team formations, setting challenging tasks.
• Provide immediate feedback, not postmortem analysis: continuously correct and iterate during the process, allowing employees to perceive the goodwill of the coach.
• Identify employees' motivation and capabilities combination: conduct targeted performance coaching, reasonably widen the incentive gap.
• Allow ambiguity in the 0-1 phase, but ensure acceptability: comprehensive evaluation, acknowledge process contributions.
• Foster collaboration between business and HR: while enhancing business focus, prevent HR from getting stuck in "professional self-indulgence.

It is important to note that we are not advocating for "ambiguity," negating "decomposition," or rejecting "defined actions." If your business has stable data and proven process indicators directly leading to high-value creation (such as production-oriented companies, laboratory strong process management work, etc.), conducting as quantitative assessments as possible at this point can help improve organizational efficiency and employee performance."

 

 

Recommendation 3

From Day One: Data Accumulation and Reflection for Future Readiness

When it comes to performance management, if we say that for startups with fewer than 50 employees, the focus is on 【defining value and concentrating resources】, and for companies with 50-150 employees, it's about 【emphasizing competition and efficiency】, then when an organization grows beyond 150 employees, it truly reaches a point where ''systematic development'' needs to be considered.

At this stage, the complexity of the CEO's management, the breadth of business leaders' responsibilities, and the organizational hierarchy all enter a new phase, demanding higher standards for organizational regularity, fairness, and cultural strength.

Many CEOs of companies find themselves confused at this stage, seeking advice on performance management as their teams rapidly expand.

Here's a recent case study to share:

Situation in the Tech Company

From this case study, we identified three key issues:

1. Data (Lack of historical accumulation)
2. Awareness (Inverting priorities for bonuses over assessment metrics)
3. Collaboration (HR and business departments working independently)

In such a scenario, directly seeking a specific method to break down metrics to an individual level not only fails to achieve the goal of improving organizational performance but may also sow the seeds of management risks. In fact, as the core management system of an organization's operational status, performance management is worth preparing for from Day One. When an early-stage team reaches a relatively stable phase (e.g., the first 50 employees), it is more appropriate to start laying the groundwork for performance management.

We have compiled some key tasks for your reference:   

• Early emphasis on recording: Focus on reflecting on specific events and the direction of iteration, clarifying the key points of system development.
• Continuous data accumulation and analysis, including: 

① Refining key indicators through performance management of key projects/positions/personnel.

② Gradually summarizing patterns, establishing the rudiments of performance management and incentive schemes.

③ Identifying outliers based on a certain level of data accumulation, iterating on plans over several cycles.

• Establishing the "tone" of performance culture: Recognize commendable externalized behaviors, set up benchmark figures/events.
• Based on early accumulation, establish a relatively basic performance management framework (such as management methods and related templates).
• Identifying future leaders from the early team, implanting performance management concepts early, and directing leadership development.
• Founders and business leaders leading by example, investing time in high-quality one-on-one performance coaching with the team.
• Regularly updating the market situation: Keeping abreast of the latest talent evaluation mechanisms and talent incentive models.

 

 Further reading : 

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