How do I even begin performance reviews at a startup?

Teams large and small should push to do performance reviews, even in the face of costs and limited resources, BECAUSE:

• The cost of losing an employee is rarely higher.
• Your startup will not reach the next level if you aren’t developing your people at a clip equivalent to 1.5 promotions/year/person.
• The ability to effectively self-evaluate, helped by consistent feedback cadence, makes people 10 times more efficient.
• Employee natural tendencies and behaviors are amplified under pressure. The better they understand their own tendencies, the better they can improve them.

As with any heavy lift, starting is the hardest part. AltSchool & First Round’s account of a performance review system ends with a single piece of advice: “Just start!” I couldn’t agree more. So how did we start our performance review process at Classkick? This isn’t a tale of glamour and hockeysticks. It’s just a story about Step 1.

We noticed members of our team asking for elements of what might be a performance review system: more feedback, formal feedback, help clarifying or acknowledging personal growth, guidance on career paths. We also had a team member say, “There are so many things we have to actually do. Can’t we afford reviews later?” Both sides have merit. We certainly agreed with one engineering advisor (who was employee 15 at his now ~2,000 person company) when he said “If someone’s asking for a full scale, formal review process at this stage, they may not be the person to help the team reach to the next stage.” On the other hand, everyone who has done reviews said it was absolutely worth the activation energy, however daunting. We even talked to someone who went through that process at AltSchool for multiple quarters. Their assessment: Very painful, but very effective in creating a great organization.

So in response to this debate, we said what we always say: What’s our mvp?

The purpose of performance reviews is to help develop and grow team members. To whittle down our mvp, we researched how others did it, and in parallel, asked our team what was most important to their development, at this stage of the company and their career.

External Research

Our external readings consisted of 14 articles, rubrics, and employee levelings. We also talked to 8 companies, two HR reps at top-5 tech companies, an early team member at a unicorn, and three startup CEOs. In total, we did about 5 hours of external research. The big takeaways:

• Those who facilitated some kind of continuous feedback were very glad they did.
• None of the startups (<20 employees) did performance reviews.
• Large companies have very well defined tracks for career growth. Small companies have very little to no definition. AltSchool seems to be an exception, starting an intensive process at 25 people.
• Successful feedback culture at large companies started when the company was very small.

It did stand out that the small sample of startups we interviewed didn’t do reviews. Conflicting information is what make decisions difficult. The way you make them is by knowing your solution requirements, or acceptance criteria, to the best of your ability. Enter: the internal investigation.

Internal Investigation

Staying lean means getting absolute clarity on what the team needs, rather than postulating and building a system based on theory. There’s no sense in spending a minute of resources if you don’t even know the thing the team needs to develop and grow. Here is a 5-minute questionnaire we used and a graphic summary of team feedback. Important = leads to achieving goals. Urgent = requires immediate attention.

This was vital in carving out a lean review system with minimal fat. We had our mvp starting point!

Areas of Focus

• Facilitate timely and continuous feedback for all employees and managers.
• Set clear employee goals and support employees in achieving these goals.
• Keep time overhead to a minimum.

Save for Later

• Define levels of professional progress and leadership roles.
• Incorporate promotions based on level and leadership into review process.
• Incorporate compensation increases into review process.

In short, we are beginning with a light system of spot feedback, 360 feedback, and OKRs. It is designed to take 5 hours per quarter, per employee. We don’t know that it’s perfect, but we know it’s based on the team’s “acceptance criteria”, so we’re going to give it a shot, evaluate, and evolve.

So far, the effect on the team has been awesome! On the first week, we had one positive and four constructive spot feedbacks — the opposite of our desired ratio. To quote One-Minute Manager, “Rather than catch people doing something wrong, it’s most important to catch your teammate doing something right!” So we improved it, and on day one of that change, 50% of people gave positive spot feedbacks. It immediately elevated our morale with a sense of celebration!

This was the introduction to how we started formalizing a team review and feedback culture. I’ll write a future blog post about full implementation details and progress to date.