This post by Randy Komisar first appeared in WSJ Accelerators, 9/23/13
Building successful businesses starts with having the right people at every level. But, sometimes you put the wrong people in the wrong roles.
You can hire brilliantly, but ultimately everyone will sometimes make bad choices. Jobs change. People don’t step up. Organizations pivot. You need to understand who is an underperformer and who simply is incompetent.
As an investor, when you have a floundering founder or key executive, you need to manage the situation aggressively. As a first step, consider adding a mutually respected independent director who can arbitrate disagreements and coach the co-founder. The director needs to be someone whose judgment you both agree to respect.
For underperforming employees, start by looking to the individual’s peers to judge their performance and fit. Fairness is paramount, even if the person is unable to improve. Other members of the team judge management on how fairly they treat the person in question. Be sure expectations are understood, and if appropriate, give them a short time to demonstrate they can raise their game.
Don’t make corrective actions personal. It is a personnel decision, not a personal decision. If there is a role for which a floundering founder might be better suited, consider changing their position. The tough question is whether the person is incapable of performing – or simply not performing. If it is the former, act decisively.
We need managers that don’t make people cogs in a wheel but instead get all the wheels spinning together. That starts with giving people clear priorities, and communicating, what decisions are being made and why. It’s about taking individuals and making them 10% or 20% or 50% better than they thought they could be. This is where the bulk of management’s time should be spent.
When co-founders struggle with underperformers, the issue often has to do with management’s inexperience. Sometimes they fail to set clear expectations. Sometimes they fail to provide regular feedback. And sometimes they simply fail to act despite clear signs of trouble.
Another common error is allowing a performance issue to turn into a morale issue. Every company hits stumbling blocks; allowing them to become major issues is almost always management’s fault.
Not least, managers need to avoid acting impetuously or unpredictably, potentially leaving the full team to question management’s thinking.
Also keep in mind that smart managers avoid simply firing staff that see the world in a contrarian way. When you hire diverse groups of people, you end up with different perspectives, different styles, different experiences … and you end up with conflict and friction. If you can manage this kind of creative friction – and not everyone can – you’ll have a highly innovative organization.