One of the most challenging thing to do in a startup is to keep your eye on employee growth and development, while fighting the day-to-day grind of helping to build your business. On the one hand, there is no point looking at employee career development since if the company doesn’t succeed it doesn’t matter, whereas on the other hand to build a sustainable and successful company, investing in employee development is a must.
So the essence of employee reviews is to make them relevant in a specific, timely, and succinct manner without any ambiguity. Let’s examine how we may do that with a single question that can sum up any other form of evaluation.
Looking at the Net Promoter Score for inspiration
The Net Promoter Score (NPS) was popularized in an HBR Article (that you can download from here) by Bain Fellow, Frederick Reichheld. The NPS boils down customer loyalty & satisfaction into a single question, where the net positive answers have a strong correlation to a company’s growth. See this graphic from the creators below, which sums it up:
What’s so beautifully elegant and simple about the NPS is its capability to take so many ambiguous and complicated factors and synthesize it into a single question. So, when managing all of the aspects of a startup, I wondered whether there was a logical equivalent? As the article writes: “if growth is what you’re after, you won’t learn much from complex measurements of customer satisfaction and retention, you simply need to know what your customers tell their friends about you.”. The quest is to find an equivalent for startup employees and the startup’s chance of success.
The Performance / Potential Matrix
One that we’ve been using is the Performance / Potential Matrix, which is well detailed by Dan McCarthy in his post. This model is great in providing two simple dimensions to evaluate performance, and provide a set of actions, as seen here:
As you may know, while I love a good matrix, and this one is very succinct, it still leaves results open to interpretation. For instance, is performance related to the organizational structure, extenuating circumstances, or another factor. In essence, I think while moving in the right direction, this model still leaves ambiguity.
The Netflix “Keeper Test”
Another place to look is within one of the best reads on company culture and values, as authored by Netflix. Their legendary deck has been well-circulated in outlining the “Nine Behaviors and Skills” the Netflix team looks for in its recruits and employees, and underlies all of its personnel evaluations. However, while the nine performance areas are excellently defined, Netflix has a single unifying question, called the “Keeper Test” to sum everything up:
“Which of my people, if they told me they were leaving in two months for a similar job at a peer company, would I fight to keep at Netflix?”
While excellent, I feel it needs a slight modification to better match the needs of a small startup, which gives rise to what I call “The Carryover Question”.
“The Carryover Question” and its corollary
For a startup I believe nothing says more about a commitment to a team member than whether you would work with them (or hire them) again, for the “next gig”. That is, would you want this person to be a co-founder, or early team member; bottom line, would you ask them to come with you if you were launching another startup. This gives rise to the “carryover question”:
How likely is it that you would want this person to join your next startup?
The corollary to this question, which is similar to the Netflix Keeper Test, when viewed through the eyes of a startup lens, would look something like this:
How likely is it that you would be worried if this person joined a competitive startup?
The idea here is that if you launched another company, and an current team member joined a competing new startup, how scared would you be?
I think these two questions are extremely telling, and great predictors of the effectiveness of your team. Moreover, while I don’t have the empirical evidence behind the studies in the Harvard Business Review article, I would assert that startups that have high “Net Carryover Scores” (calculated as % of ‘carryovers’ minus % of ‘leave-behinds’) would have greater likelihood of success…or at least, are better places to work.
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