Below is an excerpt from our book Startups Made Simple: How to Start, Grow and Systemize Your Dream Business. Learn more about the book here.
It should be clear now that a leader needs to produce consistent results by having a Vision, communicating well, and creating an accountability mindset within the company. Next, we want to make sure that we’re not doing all the heavy lifting and then start developing our team and making sure they’re properly motivated to get the job done. Like the topic of Leadership itself, this topic could cover volumes, but for a small startup, there are some pretty clear things you can do to develop and motivate your team.
Define Your Ideal Leader
Different types of organizations need different types of leaders. For example, a very process-driven and detail-oriented company like mine needs a different person than a creative advertising agency or a football team. Some businesses require different leaders at different stages of the business. A certain type of leader may be better in the startup phase, but they may need to pass it to a person better for growth or steady management later.
For example, if I could create one in a lab for my company, my ideal leader would be humble, accountability and process-obsessed, move extremely fast, and be good humored and patient. They’d love improving processes, coaching people, and constantly inspiring them to greater heights of performance. Now that I know what I’m looking for (and maybe even admit that’s not me right now), I at least know what I need to work on myself and eventually whom I need to hire, promote, or develop within the company.
Right People in the Right Seat
Made famous by Jim Collins in his book Good to Great, we want to make sure the people that we hire are the right person for the job. Sometimes, we’ll find a person is terrible at one job but stellar at another, even in the same department. This is why communicating well with your team and accountability are important. If you can be honest with an underperforming employee, they will likely admit that while their current job is not ideal, they’d actually be much better at something else. For example, somebody might be working in customer service but would prefer doing sales or administrative work.
As you get more experience managing people, you’ll get better at this, but the important thing to realize is that you should try to hire the right person for the right seat in the first place. This is where it’s very important to write clear job descriptions, do thorough interviews, and have clear procedures and training where possible. If people are not in the right seat and simply cannot do any other jobs, then you’ll want to move them out of the company as soon as possible because poor-performing or toxic employees tend to cause motivation and other issues with your existing team. See Step 5 for more details on this.
Incentives can be hard to get right, but in addition to rewarding people for accountability and doing their job correctly, I believe you should pay attention to how you incentivize your team. This can vary dramatically from business to business. It’s said that the only thing Warren Buffett micromanages in the many companies he owns is the compensation plan of the CEO; he wants to make sure they’re properly incentivized for the right things and performance. You want to be careful what you are incentivizing. If you want long-term, strategic thinking but reward short-term behavior, then you will run into problems.
Some employees want recognition or praise, others want training and advancement, some want plenty of flex time or time off, and some just want cash or a thoughtful gift. As your company develops, you’ll tend to find the right incentives for the right people as long as you’re looking for them. I believe an incentive program based on the performance of the company is effective for many companies, and I’ve been paying quarterly bonuses based on profitability since my company has had employees. If the quarter comes up short, but we’re meeting specific written strategic goals, I will still pay a bonus.
There’s a lot of disagreement on how motivating bonuses really are in a business, so make sure that they are conditional on performance and can be taken away based on poor performance. They’re not a bonus if they’re expected by everyone for no good reason. Consider individual goals and other Key Performance Indicators” (KPIs) to further clarify what “good performance” means.
Regardless if it’s bonuses, parties, time off, catered meals, massages, foosball tables, or whatever, the key is to incentivize the behavior you want and hopefully align your team with the types of incentives they want as much as possible. Google, Facebook, and other businesses that basically have a monopoly (or hundreds of millions of dollars in funding) and have high-demand, high-skill employees will obviously be able to offer more incentives than a cash-strapped startup. See Step 5 for more details on bonus and non-compensation benefits.
Like many other parts of this book, I like to focus on things not to do and mistakes to avoid as a great way to prevent most problems. A lot is written about culture in companies these days, and in the case of a small startup, simply not de-motivating and frustrating your staff will get you a long way ahead of the game in developing a competent and motivated team and ultimately in developing a high-performance culture.
We can sum up team development and motivation as: define the ideal leader (so you can become or hire one), hire well, incentivize good behavior, and get rid of things that kill employee motivation. This will get you far ahead of the curve in most startups. In Step 6, we’ll go over how you’ll eventually want to build a Leadership Team to take over the day-to-day management of your company.
This was an excerpt from our book Startups Made Simple: How to Start, Grow and Systemize Your Dream Business. Learn more about the book here or see our previous excerpts here.
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