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A company is nothing without the people who keep it running—but how can you, as a business leader, ensure those people are bringing their best selves to work?
That knotty question was the subject of the latest installment of Your Next Move, Inc.’s ongoing series of interviews with top business leaders.
“Without good performance management, your best people might leave and your worst habits stick around,” Inc. editor-in-chief Mike Hofman explained at the top of Thursday’s episode, which was produced in collaboration with Capital One Business. “We’re going to talk about how founders can build a sustainable and effective approach to managing performance as their companies scale.”
Joining Hofman in conversation were two CEOs from the wider Inc. community: Daniel Chait, co-founder of repeat Inc. 5000 honoree Greenhouse, which offers hiring software; and Christie Horvath, founder of the pet insurance company Wagmo, which entered the Inc. 5000 pantheon this year at No. 1,082.
Performance management can be uncomfortable, Horvath said, since it often involves telling an employee that they’re not doing their job perfectly. That means having hard conversations—something that Chait emphasized is a skill you can hone through practice.
“Defining what good is—even knowing, ‘What are you trying to manage that person to do?’—isn’t always so obvious,” he said. “What good versus great actually means requires a lot of thought. It’s not always easy to get right.”
At one point, faced with an executive team that was struggling to give and receive feedback, the Greenhouse chief executive even brought in an outside expert who shared a feedback framework with the team: “Get a micro-yes, and then talk about the behavior and how it made you feel. … You have this little checklist in your head.”
Horvath also recommended role-playing the feedback process ahead of time so that leaders can get comfortable approaching those conversations with staff.
Of course, sometimes feedback isn’t enough and you have to let someone go. When that’s the case, Horvath said, it’s always best to get it over with.
“Every time I’ve ever had to exit somebody, I’ve always wished we’d done it sooner,” she explained. “It’s never worth waiting. Your company is so much more resilient than you think; your team is so much more resilient than you think. It really detracts from your top performers. So it is your job to make the unpopular decision [and] make sure that your top performers are surrounded by other top performers.”
The moment you start thinking about letting someone go, Chait added, is probably the right time to do it. That’s likely what’s best for both the organization and the individual, who would probably be a better fit elsewhere, he explained.
But you can make those decisions less painful.
“Be great at hiring,” Chait advised. “If I knew that I could hire an amazing ‘A’ player the minute this person’s out of that seat, I feel much more comfortable about making that change, whereas part of the fear that people always have is, ‘Gosh, if I get rid of this person, I don’t know if … the next person will be as good.’”
Another key consideration when it comes to managing your team is burnout. Sometimes there will be stretches of high-intensity crunch, Chait acknowledged, but it’s generally important to create a sustainable work culture so that when those periods do come up, everyone’s ready to handle them.
“I’ve had conversations with people in my teams,” he said, “where I’ve told them, ‘You’re creating a risk for the business in the way you’re working. You haven’t taken a Saturday or a Sunday off in three months. One day you’re going to come to me when I don’t know it’s gonna happen, and you’re going to catastrophically explode and quit—and that creates a big problem for me.’”
When it comes to making performance management a day-to-day task, both executives have developed their own distinct processes and philosophies. Horvath, for instance, asks her direct reports to check in with her about their strategic performance—on an “out of the weeds” level of abstraction–every month.
“’Let’s take a step back,’” she’ll say. “’How are you feeling about how you’re doing this month? Are you feeling supported?’ That way, when you get to that semiannual or whatever performance review, where it’s all documented and it’s a whole process, there’s no surprises.”
A poll of the audience watching this episode reinforces this notion:
Chait, meanwhile, said he’s sought to implement an ethos of “good is good” at his company.
“If everybody at the company did their job to a good level, we’d be in a really good spot—but it’s not great,” he explained. “What does it really mean to be transformational? What does it really mean to be great? … That’s a better place for us to find ourselves in.”
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Brian Contreras
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