Managing Employee Performance towards the Top Level.

From Jan Andriessen – henQ (@JanAndrssn)

In a recent article in NRC Handelsblad (i.e. a Dutch daily evening newspaper) some of the outstanding attributes of Netflix’s people management are outlined. Many of these attributes reflect practices that I think should be the aim of any startup that aspires to have a lasting international impact. Below I listed some people management best practices based on the rules for success I induced from Netflix’s culture as well as henQ’s portfolio:

Every employee should be KPI responsible
Your organization is all about achieving your mission. You achieve your mission by breaking it up in sufficiently small chunks such that you can steer your organization in the short-term with full focus. These small chunks are your KPI’s. Every single person in the organization should be responsible for one or more little chunks (KPI’s), and they should understand how these contribute to your firm achieving its mission.

Don’t be tempted to tell people what to do, rather make them responsible for their own KPI and continuously coach them on how to more efficiently reach it. Don’t punish people or freak out about relative underperformance in the short-term. Rather show them you are there to help with finding alternate means to achieving their KPI.

If you set the right KPI’s and evaluate and coach people on them consistently, you will have an immediate boost in company performance. Even better: you won’t need any regular office hours, vacation policy, or any other corporate nightmares.

Reward performance and fire if necessary
Don’t be afraid to explicitly reward good performance and fire people who are consistently not delivering on the KPI(s) for which they are responsible. It is important to do both and both are equally difficult to do.

The best people will get demotivated when the difference is immaterial between how they are being treated versus people who don’t deliver. Top performers will lose motivation when they do everything right but there are too few positive rewards (e.g. higher pay, training opportunities, more responsibility, praise, etc.). Their performance will drop and eventually they will leave for a place where their skills are properly rewarded. On the other hand, when good people’s performance is rewarded but there is no consequence to underperformance, the feeling of being dragged down by the poor performers will have the same destructive effect.

It is also unfair towards a poor performer to keep him or her on. This person is likely to be happier and better performing in a different environment. By letting him or her go you give this person the chance to discover where he or she could be happy and a top performer. It is the toughest but best way of helping someone figure out who they are and what they do best.

Delegate or die
Delegate as much as you can realistically delegate. Even if you are better than everyone else at every aspect of running the organization, you still need to delegate to the max. If you don’t, you will inherently stay the equivalent of being self-employed without personnel. To be clear: that is not an organization with substantial international impact.

The best way to delegate: spend a lot of time on setting the right processes that will enable you to hire and retain the best people (e.g. KPI and reward systems). If you don’t set the basis from the very beginning, when hiring your first few employees, then five years down the line – when you will hire your 1000th employee – your organization will be a total mess. As with software architecture, you cannot allow for any technical debt.

Concluding, to follow the above best practices requires a lot of discipline and sacrifice. It is absolutely fine if you don’t want to abide by a policy as strict and challenging, but then you shouldn’t expect any outsized successes. Most companies that make it end up being an SME and that is fine. However, if you are working on setting up an organization like the above then please reach out. I would love to contribute, learn from you and have a lot of faith in your organization performing well. I would be delighted to somehow be a part of it!