posted on February 15, 2007 10:49
To continue on my last blog about attracting and hiring the best talent, I will discuss a concept that I call aligning the stars – where stars refers to an entrepreneur’s top employee talent. Although I originally got the term from the book, Aligning the Stars, by Tom Tierney, the concept that I employ and is discussed here is quite different (although I do love the book). For the most part, the concept mirrors a balanced scorecard, but applied to an employees’ performance in a start-up environment. My first experience with a balanced scorecard was at Price Waterhouse in the early nineties where we evaluated performance relative to “clients, people, and firm”. The same type of a balanced scorecard methodology can be used to evaluate the hiring of employees, writing job descriptions, and aligning startup business plans with allocation of employee activities.
From an HR capacity perspective, it is my observation that there are three strategic elements that must be in alignment for a business to run on full steam:
• Employee objectives
• Business objectives
• Client/customer objectives
Although I feel strongly that the alignment of these three strategic elements are important in ANY fully-functioning business, it is particularly important in a small start-up business. Any misalignment of these elements leads to business inefficiency and a less than optimally functioning team. And as anyone who has started a business knows, an optimally functioning team is key.
As I discussed in my last blog, start-up employees need to understand the tradeoff between short-term compensation and long-term reward. A startup that is in the top percentile of compensation is destined to fail. And since a start-up’s success is not overnight, to help ensure the sustainability of the business model and to avoid burn-out, it is imperative that there be a significant overlap between employee, business, and client objectives. In a large company, salary can make up for any misalignment when an employee’s career objectives are not being reached because of the misalignment.
As I discussed my last blog, there are a number of factors that tend to drive an employee—and not all of these factors can be satisfied by a small startup business. Of course there is compensation, balanced between short term cash compensation and long-term reward. Individuals that tend to thrive in startups are those that don’t mind taking the risk of forgoing short-term compensation the risk for some larger long-term reward.
In addition, there is the nebulous “entrepreneurial spirit”. To be successful in a startup, an employee needs to have the objective of truly being entrepreneurial. Although financial reward is certainly often a factor, successful entrepreneurs are not driven by the same motivations that drove the California gold rush. I define one with entrepreneurial spirit as someone who enjoys the process of being an entrepreneur, including the thrill of building something from scratch and being proud of one’s accomplishments – whether or not is the next Google. This spirit is not limited to being involved in a startup business.
The same entrepreneurial spirit can be channeled successfully into a large business. This is often manifested in terms of being a division VP or a practice leader. Nonetheless, identifying individuals with the tenacity it takes to be successful in this role is critical to the individual’s success.
Other than these broader objectives, it is up to the startup’s leaders to make sure that the employees’ more tactical objectives are aligned with their job description. For example, does the employee want to develop over time from a junior developer to a security specialist. But if the business doesn’t need a security specialist, it is likely that that employee will not give their 150 percent focus (aka “alignment”) on the company that is required in a startup.
As I began discussing above, the alignment of the employee’s objectives with the business objectives is critical. One way to ensure this is through the ongoing employee goal-setting and review process. This process includes:
• Sharing the business plan and near-term business objectives with all employees
• Setting employee goals with each employee and illustrating the connection with the business’s objectives
• Reviewing each employees weekly activities and progress relative to achieving their personal objectives and it’s alignment of the business objectives
By making the above items transparent and keeping them up to date, you help to ensure that everyone in the organization is moving toward achieving the organization’s business objectives.
Finally, but not least is the client or customer’s objectives. Of course, as I described in earlier blogs – we are all here to satisfy client/customer needs. Therefore, it is necessary to make sure that there is a direct line of responsibility between employees and making sure that clients are cared for.
Whether the startup focuses on a mass market or is professional services-oriented, there should be a direct connection between customer satisfaction and employee evaluation. This connection needs to be formally documented, monitored, and indexed to the employees’ review. And in the spirit of alignment, we need to make sure that an employees personal objectives are aligned with the needs of the client.
In conclusion, many entrepreneurs, including me, do not like to spend a large quantity of time on HR-related activities. The time spent on HR is time not spent building other aspects of the business. Nonetheless, it is imperative that startup leaders invest in attracting, cultivating, and retaining their top talent. It is only through being surrounded by top talent that a startup business can succeed.