Set clear, specific, ambitious and achievable goals. Measure and follow up regularly. Give credit and act with resolve. Zack Urlocker and Marten Mickos discuss performance management: a key function of a successful company.

Zack is one of the team members that built MySQL into a billion dollar company with Marten. He went on to make Zendesk ready for IPO, and is now COO of Duo Security. He also advises startup companies.

Ten tips for performance management

1. Set clear, specific ambitious and achievable goals.
2. Let employees contribute and influence in defining their goals. This is motivating and leads to improved work quality.
3. Focus. If an employee has 20 goals they are probably not focused. Distill down to three or four top items that are needed to make progress in the organization.
4. Set the bar high. Treat each person with dignity and respect, but also create a culture where there are no excuses. Everyone has been hired to deliver results.
5. Stay your course. If goals and priorities change too frequently, chaos and loss of productivity is the result. But also, if situations change during the follow-up period and the goal is no longer relevant, don’t be afraid of changing the goal.
6. Measure and follow up regularly. Don’t wait until the end of the goal period. Check routinely to see how your employees are performing towards the goals. Ask them what is needed to get back on track.
7. Step in early to help overcome obstacles and achieve results.
8. When assessing, be honest. Give credit where credit is due. Don’t be afraid of pinpointing weaknesses and airing your disappointment for goals not achieved. Follow up the discussion with an email that recaps the conclusions and next steps.
9. Act with resolve. If the goals are not reached and discussions have little effect, it is better to remove the person than to wait and see. A vacant position is better than one filled by a person who is not able to deliver results and a situation, where colleagues have to second guess, correct work done, or rush to rescue in emergency situations.
10. Never use lack of time as an excuse for not managing performance. It is a key management area.

VIDEO TRANSCRIPT

Marten: We’re here today with Zack Urlocker to talk about a skill that’s vital for the success of a company. That’s performance management. Managing the performance of the team and of the individuals on the team.

Zack: The most important starting point in performance management is to be very clear with employees about what the goals are. That is both at an organizational level – the broad goals. For example, you may say, we’re trying to build a new product and it needs to ship in Q2. And then down to the individuals’ specific goals, so each individual feels accountable. They know what’s expected of them and what they need to deliver. That might be in engineering a particular feature by a certain timeframe, or it might be in sales where they need to make so many deals happen or generate a certain amount of revenue.

You need to be clear with people what the expectations are and how you will evaluate them for success. What is it you need them to do to make the organization successful?

Marten: How do you know how to set the expectations? If you’re a young startup CEO and you haven’t set expectations before, how do you know that you’re not setting them too high or too low or in the wrong direction?

Zack: Yes it could be a problem. I would say, in general, set expectations high. Because if you set expectations high, people will strive for them. The worst thing is to create a culture where the expectations are low and people don’t really feel that it’s important.

You have to be clear about what you’re doing. Now there are many tasks, for example, in engineering where you may say, “Well, we’re trying to build this new kind of product and we don’t know how long it’s really going to take.” So you may set goals on a short time horizon.

In a stable organization I like to set goals quarterly. If you’re really in the early stages you may say, “The only thing we know is the next month, you know, we’re gonna try to do two sprints, we’re gonna deliver certain features.” Then you may need to continue to readjust the goals.

Marten: How do you balance between goals that are numeric, like a shipment date, and, and those that are not, like the quality of the product or the user experience or something that’s more fluffy and difficult to measure?

Zack: Well, I think fluffy is bad when it comes to setting goals for management.

You can have an overall vision for the team or the organization that is a mission that is somewhat abstract, but if you make the goals more specific, it’s usually helpful for people.

It shouldn’t just be the manager or the boss setting the goals. The goals should come bottoms-up from people, especially if you hire more experienced people. For example the Engineering team, maybe the leader of that team, says: “Well, here’s what I want to try to do,” and create those goals bottoms-up, so they feel that they’re really important goals for their organization.

Marten: But if you hire creative, self-motivated, passionate, low maintenance people, doesn’t that mean that you should give them loose goals because that allows them to blossom. And if you give them very exact goals you’re limiting them in their creativity and productivity?

Zack: I don’t think it’s so much limiting them. But again it depends. It’s not just about you as the boss giving them the goals. For example, there’s a creative team that I work with. They will often say, “Well, here’s what we want to do.” And if you hire the right people then they should be self-motivated. Where they say, you know, they understand the mission of the company.

Then they say, “Okay, for me to achieve the mission, these are the things I want the creative team to do.” They have their idea of the projects that will matter to your market, to the customers. And you’re much better. They are excited about those goals because they created the goals and they want to do high quality work.

You should be in agreement about, okay, at the end of the quarter these are the things that we want to have delivered. And if, as a leader, if you’re changing direction too frequently, like if every week there’s a new crisis, and you say, “Okay, well, we used to be doing this now we’re doing this.” That leads to a chaotic environment where people will feel like there’s no point setting goals, because things change all the time.

Of course in an early-stage startup, it is chaotic. So you may choose to set goals that maybe accommodate 50 or 75 percent of the time and recognize there are some things that will come up that you cannot predict. Maybe it’s an opportunity with a customer, maybe it’s something didn’t work in the product or maybe it’s a PR opportunity that you didn’t know about in advance.

Marten: So what happens then? If, if people achieve their goals, everybody is happy. But when they don’t achieve their goals, how soon do you step in? How do you step in? How do you bring it up with the individual or with the team?

Zack: The worst situation is if you set goals at the beginning of the year or at the beginning of the quarter and then you just wait till the end and you say, “Did we get it or we didn’t get it?” You need to manage consistently through that process at whatever time period it is.

So as an example, during the quarter you may say we need to ship this release and get it out on this quality and fix this number of bugs. You should have a check-in routinely with your staff to see how are they doing towards those goals, and are the goals still the right things to work on? And you want to see convergence between those things – that the goals remain relevant. And if it turns out you set some goal that turns out to be completely unrealistic or completely stupid, you should just have the courage to say, “You know what. We’ve, we’ve learned something new, we’re not gonna focus on that.” But it shouldn’t be because the goal was hard.

Zack: Sometimes that hard goal is a good thing and you should say “We still need to focus on it.” Most organizations, especially startups, have a lot of ambitious people, type A personality where they want to do everything. So when you ask them their goals, they come up with 20 things.

Say I’m focused on these 20 things. If there are 20 things you are probably not focused at all. So I try to distill down to what are the three or four top items that we really need to do to make progress in the organization? And then as a manager, think about how do you help employees achieve those goals.

You can’t just be the person asking Engineering, “Is it done yet?” You have to say, “Okay, well, we’re behind on progress. What’s getting in the way?” Okay, maybe there’s an algorithm they haven’t figured out or they don’t have a developer with certain skills. Okay, your job as a manager is to help overcome those obstacles so the team can achieve results. And look for the other thing to ask people is, “Okay, we thought we’re gonna get this done, what’s gotten in the way? What can I do to help that situation?”

Marten: So what do you do if you have a suspicion that the person has no chance of reaching the goal, but the person keeps telling you that he or she will reach the goal? How do you deal with such a situation?

Zack: This is the slippery slope of painful management.

You have to be able to have a very honest conversation with the employee. As an example, I’m an advisor to many companies, and occasionally the CEO will come to me and say, “Well, I have this person,” maybe it’s the sales person or marketing person, “and they’re not getting this done and this didn’t happen and this didn’t happen and this didn’t happen. What should I do?” My first advice is, “You need to have that conversation with that person the same way you just had it with me.”

Maybe in a less emotional basis, but you have to sit down with the person and say, “I’m concerned about your performance. We set these goals and we haven’t been able to get them done yet. How do we do things differently so we have a shot at getting them done?” And you need to really communicate that very factually. And it can’t be that you’re angry about it, and it can’t be, “Damn it, I’m the CEO, you know, these are important. You have to get it done.” You have to probe a little bit more and understand how they can get it done.

You are the coach – and I like a running metaphor because I used to run a lot of marathons. You have the stopwatch. You have to measure the employee about how they’re doing. But it’s up to them to run the mile. You have to give them feedback that says, “Okay, we’re trying to run a five-minute mile. That took you 12 minutes. How are we gonna get down to five minutes?” It can’t just be, “Well, I’m gonna work harder.”

You have to think about how do we change the dynamics to make it achievable. You should certainly give a second chance, maybe a third chance. But at some point if somebody is not performing, you just need to continue to have an honest conversation with them that says, “I’m disappointed in your performance. We set these goals, we haven’t achieved them, how do you want to proceed? How do we get this back on track?”

When you have that conversation, I also recommend that you follow up with an email afterwards. Sometimes people have a conversation, and they’re like, “Yeah, I know, I know, I really need to do better. And then they see it black and white in an email and they’re like, “Oh, this is very serious.”

Marten: But isn’t that then painful to do and couldn’t it poison the relationship and the, the work environment if you have to bring up those nasty topics?

Zack: It is much better to bring up those hard topics, but I think it’s not necessarily nasty. It has to be factual, and in a way there’s some emotion to it which is, you know, “We agreed this was important.” And you have to get to the root cause of it. Maybe they don’t have the skills that they thought they had. Maybe they’re doing too many different things, in which case you have to try to say “just pick two or three of the goals rather than ten.”

Take some things off their plate and absolve them from feeling guilty about not doing certain things so that they focus on the items that are most important. But if there’s enough of a concern that you would raise it with an advisor or a friend, you need to be able to have that conversation with the employee. It’s better to have that earlier and see if you can get them back on track. The worst thing is to ignore the situation and say, “Well, we’re really busy, we don’t really have time for performance management.”

That is like driving without a map, you know. You’re going in some direction, you don’t think you’re going in the right direction, saying, “Well, let’s just keep going.” You won’t get to the destination in that case.

Marten: So what happens then if you bring it up with an employee and say, “Hey, we’re not making progress towards the goal, we need to deal with it,” and the employee has some excuse, blames it on another person or an external thing, maybe for a good reason or maybe not. How do you know that you know the root cause? What if he is sort of, it’s not his or her fault?

Zack: It never is. There are always excuses. There are always excuses. Sometimes there are legitimate reasons, especially if it’s skills-related. In the end, especially for senior positions (at an executive level), you have to have a culture that says “there are no excuses”. You know, if you have a sales target, you just have to hit that target, because if you don’t bring in the revenues, it can be really a disaster for the company. What you want to try to do is you may listen politely when they say, “Well, here’s what went wrong,” or, “here’s why we didn’t close this deal.” Listen, don’t judge, and say, “Okay, but now we need to get back on track.” And it’s all about what is the plan for going forward, not why did we not get there. Sometimes they may say, “Well, Marketing, we want to launch this product but we’re waiting on Engineering. Engineering hasn’t shipped.”

Is a very legitimate concern. You want to create a culture where it’s clear who has responsibility for which pieces. If you don’t have a clear leader or responsibility for somebody to deliver something, then probably nobody really owns it. There is the expression that if everybody owns it, nobody owns it.

Marten: What do you do then if you come to the end of the road: somebody is not performing, you’ve tried to correct it, it hasn’t helped and you’ve given the person enough chances. What do you do? Do you just fire them or what? What happens then?

Zack: In some cases, yes, that is the answer. You have to look to say, again, if you’ve given them a second chance or a third chance, have they actually been able to improve their performance? Sometimes if people, if you say, “Okay, I need you to get these two things.” You also at some point have to say, maybe by the second chance or the third chance you say, “If we can’t get this done you won’t be able to work here.” And it’s shocking how often that is the case but it’s not communicated.

In your mind as the manager, as the CEO, you may have this view, “I need this person to deliver this, if they can’t do it, they can’t work here.” Well, you need to actually communicate that to employee –
so they understand the severity of the situation. And it’s not a judgment on the person, it’s a judgment on the role and their ability to get it done.

It is hard for people, you know, if they feel like they’re failing. And there could be a situation, circumstances outside of the company that you need to know about. For example, if they have a personal crisis with their family or a relationship – something that is a distraction to them. You need to understand those things. Is there something outside that’s getting in your way. You should take that into account, and not be too mean about it. But in the end, you still have to hold people accountable for it. And when you get to the point where it’s not working anymore, you are better off removing that person earlier than waiting. And you for example, might say, “Well, it’s better to have somebody in Sales than nobody in Sales.” Or it’s better to have a lousy manager in Engineering than no manager in Engineering. This is not.

Marten: Yeah, is that true? Not true?

Zack: Not at all. The illusion of leadership is worse than having nobody. Because if there’s nobody there then you don’t have an expectation. You say “Okay, well, we just need to get in and do it.” If you have somebody who you’re trying to be a leader and they’re not a leader, it can be bad for your organization. Particularly in a medium or a large size organization, if you’re the CEO, by the time you hear of the performance problems, everybody in the organization already knows.

In a small organization you really can’t have somebody who’s not pulling their weight and getting results. You need to deal with a person with dignity and respect and help them towards a situation. But it may be that you need to help them out of the organization and just say, “This isn’t the right fit for you and for us.” You’re not judging them as a person; you’re judging them as in the role that they were in. Sometimes people are overly ambitious. They think they want to be an architect or they think they want to be a product guru, but they don’t actually have the right skills to do the job.

Usually when you terminate somebody, you end up feeling like, “Okay, I should have done that sooner.” I’ve never heard somebody terminate an employee and then say, “I should have given it more time.” Usually they err on the side of taking too long. When you remove a non-performing employee in the organization, there’s a net gain in productivity. Everybody’s performance then improves because they’re not having to go correct that other person’s work or second guess them or rescue emergency situations, et cetera.

Marten: Right. Thank you, Zack! If you don’t do performance management, you will not have performance.