A sports team, not a family

I went to a Raptors game last night. First time in two years. That team bears little resemblance to the team that won the NBA title two years ago. In fact, only three of the players remain. While I miss the old stars, this is the game. You must be dispassionate, calculated and ruthless in deciding on your team roster.

The same is true in a high growth company. The stakes are just as high. If investors have poured tens of millions of dollars into your company, they expect elite performance, leading to a massive outcome.

And let’s face it: Every issue or opportunity in a company ultimately is about people. It is imperative that you have the right people at all times.

Not a family

It is very common in the startup world to portray companies as families. I think it is time to do away with this fiction. It is time to realize that you must be as ruthless with your talent management as pro sports teams are.

Here’s the thing with family: you are stuck with them. You didn’t choose them. You can’t replace them.

Conversely, companies can and must choose who to hire. And of course, employees choose who to work for.

Startup hotbeds like San Francisco have long had high employee turn on rates. In the current environment where location is less important and salary inflation is rampant, employee loyalty feels like it is at an all-time low.

Building your team

It is the rare person (leader or individual contributor) that can continue to grow as fast or faster than your business year after year. The team member that was ideal at the early stage may not be so ideal at the growth stage.

As your company grows, you go from needing generalist to specialists. And the bar for what it takes to lead a function gets higher and higher.

It is far more likely that a team member will leave or need to be removed, than it is for them to remain and keep crushing it all the way to the finish line.

How to pick your team

For any company to scale, it needs systems. This is true for every part of your business, including how you build, grow and retain your team. In fact, this is likely the most important system. Get this one right, and your team will take care of the rest.

At least once or twice per year, take every person in the company and allocate them to one of the following boxes:

This is a system we used at FreshBooks. It helped us evaluate and segment our people based on their potential and performance. Startups are dynamic. No one person has all the skills today. So, potential for growth is key. However, results matter. So performance is just as important.

As an executive team, we would take personal ownership over getting close to and developing high potential team members. They were our future leaders. We would also be decisive about what to do with people on the other tiers, but the emphasis was on high potential/ high performance.

Now, you can’t have a team with only rock stars. You need a mix. But you need a system for identifying and growing your stars. I have found this matrix to be helpful.

In closing, no one likes letting people go. But, as CEO, you must get past this and not hesitate to make the necessary moves to have the best possible team. Good is the enemy of great. Only a great team will deliver a great outcome.

Questions to consider

Do we have a system in our company for evaluating our people? Is it effective? Is it impacting our performance and valuation in a positive way?

Do I know who the high potential people are in this company?

Do I know who the low performers are?

Do we have a system/ plan for nurturing our high performers and developing them?

Do we have a system/ plan for retaining key people and minimizing painful turnover?