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Software Companies Require Great People to Build Them

January 25, 2023
Written by Dougal Cameron

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The People Part 

Sitting at Rice University in the modern coffee shop on campus it is hard to not notice all the various types of people swirling about. The space is open and cold. The coldness of the esthetic exposes the viewer to the grove of oak trees surrounding the Brochstein Pavilion and the warmth of the people within. Further still, it highlights the people – each engaged in some exploit of their own journey, focused, talking, thinking, dreaming… It is a very human space. 

Software companies are human spaces. The intent of software is to magnify human potential. Except in rare (and often yet unproven) environments, all software is worn by a user – like an exoskeleton – to perform a task. This exoskeleton gives the wearer super-powers. It conveys a form of omnipotence, elevating the wearer to a new height of potential. This transformation is core to the excitement people get when using a new product. It invites the user to try it on and find its limitations. 

In addition to the aim of the output of a software company. All software is still made by people. The creation process is extremely intimate and frustratingly difficult. Software ideation, creation, distribution, and execution requires communication. And not just from one or two contributors but from hundreds. And not in a tangible easily inspected medium, but in thought-stuff written so detailed that no one person can possibly contain the entire breadth of it. Modern systems span millions of lines of code and become exhaustingly complex. Furthermore, the result must hit a feeling from a mass of users that each have individual as well as collective needs. The product must land in the intersecting Venn diagram of different users’ circles of indifference to gain traction. Success is challenging. In fact, the process is so difficult it can be hard to imagine any product gaining traction.  

People are essential to the work of all software companies. Knowing how, where, and why to employ people in a software company is a key task of any founder. At the early stage, the people centricity is even more acute. Later stage companies have already achieved the seemingly impossible fit mentioned above; they nailed the Venn intersection. However, early-stage companies are trying to achieve the fit while solving a multistage multi person game of collective Pictionary while speaking different languages.  

The following chapters represent my best attempt to prepare founders for the challenges in the road ahead. People are your best asset in achieving the impossible. Succeeding requires making your company a human space. It requires elevating your team above the mundane and into each person’s giftings; into their created purpose. This is a high calling and worthy of attention on its own merits. Whatever the outcome of your journey, the way you treat people will last. It will follow you. It will sit on your mantle as an achievement or whispered about you as friction for future opportunities.  

Here is an overview of the chapters ahead. 

  • In ‘People are Worth What They Cost’ – I discuss the importance of paying people what they are worth as well as the founder barriers to getting okay with what seems like a lot of pay. 
  • In ‘Leverage Tech to Leverage Your People’ – I discuss the role that software plays in elevating the human condition and why founders are sometimes resistant to using it. 
  • In ‘Talent Acquisition Matters’ – I discuss the importance of thoughtful talent acquisition as a growth objective of the firm. Companies do not create jobs for people; people build companies. 
  • In ‘Onboarding Matters’ – I discuss the vital role onboarding plays in activating human potential. 
  • In ‘Take an Intentional Role to Building Your Culture’ – I talk about culture formation and why it is vital to craft it. 
  • In ‘Build a Clean Organizational Structure’ – I discuss the keys to an efficient organizational design. 
  • In ‘Data Driven Results are Essential’ – I discuss the power of transitioning to a data driven organization. 
  • In ‘Incentives are the Wind in the Sails of High Performance’ – I discuss the importance of incentives on aligning people toward the intended results to drive performance. 
  • In ‘Talent Retention’ – I discuss the silver bullet to retain talent; spoiler there isn’t one. 

People are Worth What They Cost 

Thesis: Software companies are leveraged-people-service firms. Man-hours are the input and man-hours saved are the output. The better your people, the better the machine. 

Our faith in freedom does not rest on the foreseeable results in particular circumstances but on the belief that it will, on balance, release more forces for the good than for the bad.

― Friedrich A. Hayek 

Human beings are born with different capacities. If they are free, they are not equal. And if they are equal, they are not free.

― Aleksandr Solzhenitsyn 

We live in a relatively free market. The traditional barriers of education and connection for labor advancement have been falling precipitously and while there are some pockets of friction, the whole of economic advancement and skill acquisition have become Galileo’s frictionless plane. People have choices on where they work. 

In the realm of software, the war for talent is as extreme as it is ironic. Software magnifies human potential. This means that software, all still made by humans, is also making that labor input more powerful and more strategic. Software doesn’t replace humans; it equips humans with superpowers. But this also makes enterprising humans strive for higher pay. 

A founder’s pay anchors the company, literally 

Entrepreneurs are opportunistic. We hunt for deals and deal on hunches. The labor problem is particularly interesting for the entrepreneur. Not only does the drive to find a deal come into play but the entrepreneur is anchored on what they are being paid as a starting point. Reciprocity drives the founder to cap new hires at their pay. However, this often hamstrings the company. 

The talent a founder needs skews to the more expensive side of a range. This is because founders need experienced talent that is also risk seeking. Experienced talent that is not risk seeking would never apply for a position at a young company. However, the combination of experience and risk appetite means a small pool of potential candidates… supply and demand… hence, skew expensive.  

A story of an anchored company 

Most founders learn this lesson the way I did. In a past company I ran I fell into the salary anchoring trap. I met several qualified candidates and because I had presented a pro forma to investors which included my pay I felt anchored to that pay as a maximum. However, that artificial limitation is market friction. It is a de facto price control which likely results in adding a bias to the set of potential candidates. Now, if that price control is set below market (which is likely), the accepting candidate either doesn’t know their worth or isn’t as experienced as the founder thinks. This worked out poorly in my story. Several hires and tough conversations later I had learned my lesson. Good people are not cheap. 

The costs of anchored hiring 

Founders learning this lesson the hard way will discover several areas of cost implications. First, they will hire the wrong person more frequently than not. This results in dead costs associated with the salary for the time between hiring and the team member off boarding. Those costs can be steep. Another area of costs is the organizational impact of the wrong person. This could dwarf the direct costs to the role by stimulating a ‘right person’ exiting the company. Additionally, there are initiatives launched, systems changed, and strategies communicated which all must be redone. Then, lastly, and most importantly, the opportunities lost because of the detour of the wrong hire. These opportunities can be the difference between an exit and a failure. The early-stage journey is fraught with danger and not one to take lightly. 

The antidote to the chaos is to pay up for talent 

The antidote to this pitfall is simple in theory and difficult in practice. Experienced founders know to check the market for the proper rate for talent and then lean on the higher side of the range. This is because the stakes are higher as illustrated above. The antidote is to pay up. The talent you need demands a premium and if the people you are talking to for the role do not fight for that premium it is either because they aren’t worth it or they don’t know better. The former will become apparent later and the later will realize their mistake and discontentment will settle in. 

Conclusion, people are worth what they cost 

People are worth what they cost. Hire cheap and you are optimizing for the short run. If you do that, you don’t need to worry about the long run because your company won’t make it that far. Founders need good people to offload tough issues. Learning this lesson the hard way, results in unimaginable chaos at best and, in most cases, abject failure. 

Leverage the Tech to Leverage Your People 

Thesis: The highest ROI for a founder is investing in the productive capacity of their people. 

Mechanical advantage in motion physics is the quantification of force amplification through using a tool. The concept explains the impact on weight handling from a pulley to the amplification of force achieved through gears on a bike or in a transmission. It is expressed as: 

The simplest visual of these forces working is a circular or continuous lever like a screwdriver where the radius of the handle exerts force amplification of the hand through the connection to the radius of the blade… the wider the handle, the easier it is to screw in or out an implement. 

People need leverage to elevate into higher productivity 

People are the greatest asset in any software company. The costs they represent make up the lion share of total expenses but thinking about the impact of people as an expense is reductionistic! People are critical to the proper development of any software company. The formula for leverage can help illustrate this fact. The people in a software company are the force exerting object, the output capacity of the software company is the force impacting object and the mechanical leverage is the degree to which the people are supported in their productive capacity with technology and training. The founder’s goal should be to maximize the mechanical leverage to drive profit through more efficient output capacity. 

A founder’s past prevents viewing leverage as a worthy investment 

Founders often ignore the impact of investing in their people. This is due to a similar anchoring effect that blinds them to the potential. Most founders have scrapped and hustled through the early days and are well acquainted with spending hundreds of hours learning things ineffectively. In some cases, this is not smart, but often it makes sense: they are trading what would be a leisure hour for a learning hour. For example, watching a Khan Academy on reading financial statements while cooking. Employees, however, aren’t driven by the same founder equity chunk to make that trade off a wise decision. As a result, the idea of spending $7,500 to send an employee to a class on reading financial statements feels extremely excessive. 

Similarly to training, founders often ignore the impact of better systems; and more premium versions of the systems they use. This is particularly ironic given that these companies are making systems for other businesses to buy! Once again anchoring is the distorting force. Founders have often scrapped by with the free option and dealt with the resulting lack of productivity. This is because they don’t value their own time; hence, the desire to optimize it doesn’t appeal. We too often sit in this tension without recognizing the benefit we would receive even if just to our personal productivity. 

The logic behind the disfunction is the low opportunity cost of an hour in the early days 

Part of this systematic underappreciation of the founders own time comes from logic. In the early days it is hard to know where an application of hours would yield the most benefit. Also, the early days often have a lot of downtime. Founders are waiting for deliverables from vendors, models from accountants, documents from lawyers, etc. etc. This waiting can blind them to the true value of their time. The perceived opportunity cost of the time is zero… but this is not true. 

In a prior company I fell into this trap. We had a support ticket system that cost $49 per month per agent. It seems outrageous looking back on it now, but I could not imagine paying $49 per month for fifteen employees. As a result, the entire company shared one account. This meant that one team member filtered and routed tickets to the broader team by email. This “worked” in the sense that it seemed to save $600+ per month, but the responsible employee quickly became wholly dedicated to performing a service that could have been replicated by a $600 expense. In addition, and more importantly, the employee’s routing activities suffered from mistakes typical to human processes. After we recognized this and upgraded, everything got better: our ticket turnaround first response fell from 4 days to 1-hour, full resolution fell from 14 days to 3 days, customer satisfaction improved from 6/10 to 9/10, and – best yet – the team’s feedback was that the entire process of supporting employees ‘felt’ easier. This later benefit is hard to quantify but looking at our pro forma we got away with 2 less new hires than the team was advocated for while improving results: that translates to a 10-15% productivity gain WHILE improving results.  

Introspection and self-work are key to the founder seeing leverage as an investment opportunity 

The experience of investing in my people to discover the exponential impact it had on cost, quality and output proved catalytic in my thinking on people leverage. Since so much of a software company’s process is people centric, investing in people is a key activity for any founder. This starts with the difficult task for any founder: evaluating self. The primary barrier to investing in the proper tools, training and support is the founder’s perception of ‘ought.’ 

We often think how long something ‘ought’ to take or how a project ‘ought’ to have gone. But we fail to recognize two essential things. First, the founder’s capacity to spend a leisure hour exceeds that of her employees. This means founders will have much more time to throw at the problem of ignorance or inefficiency. This additional time has a compound effect. Not only does it tend to perpetuate inefficiency (‘if I can do it, then why can’t they’) but it also cheapens the perceived marginal cost of an hour.  

If a founder is making $100K per year, then their 40-hour work week rate is $48 per hour. However, if the founder thinks of themselves as working 100-hour work weeks, then this rate drops to $19 per hour. Most of us won’t do the math explicitly, but you can guarantee that your subconscious is doing that math. Second, the founder’s ability to determine ‘ought’ on the fly is fundamentally different than an employee. Let’s say the founder is enmeshed in a project to create a pricing framework and quoting tool that spans the organization and accounts for all the permutations of a potential engagement.  

It is easy to mentally envision what that could look like from a benefit-to-the-organization perspective, but in practice it is not an easy task. The devil is in the details of execution. But the founder has the trump card. Hence, when amid execution, the founder can decide to change up the requirements and make strategic short cuts. This latitude, even if granted to the employee explicitly, will never exist in a similar way. As a result, the founder can regulate the time needed to complete a task while an employee often cannot.  

Getting past ‘ought’ and viewing the capacity of your team as a function of the experience of your team members and their access to tools, training and support is a prerequisite to any successful founder journey. 

Selecting the right leverage investments 

Once the founder has evaluated the distortion their own work styles have had on their ability to see mechanical leverage as a valuable decision, then the founder must select the right leverage investments to make. Widespread and open-ended surveys will yield ineffective results. The founder must look for ways to widen the handle of the screwdriver. For this, I like to think about the problem in four dimensions: time, quality, communication, and memory.  

Time related leverage has the effect of creating more ‘time.’ This means the employee (or founders) input of an hour has a greater output. Time leverage investments could include faster computers, faster internet, more reliable systems (i.e., eliminating downtime), templates (excel models, word documents, forms, etc.), and the like. All of these have the common impact of propelling the time of the team. Time leverage can also be achieved through training. Effective cross training of a team means less reliance on subject matter experts and, therefore, less bottlenecks in the company. Be wary, however, of the inverse relationship between cross training and quality failures. A dangerous team member is one who thinks they know enough but are in the capable novice zone. 

Quality leverage investments have the effect of minimizing repeat or repair work. These investments are usually required to bolster the productivity gains driven by other leverage investments through preventing damage. They can include investments like templates (just like above), quality manuals and documented processes, structured review of outputs (particularly of cross trained employees), and the like. Quality can also be impacted by training as well. 

Communication is a key area for leverage investments. The communication problems in software companies are legion and grow exponentially with cross training and employee growth. Interestingly, I have noticed communication breakdowns to occur more frequently as the communication frequency increases alongside other leverage investments. That makes communication breakdown a byproduct of productivity gains. This dynamic can tank a growing company. Customers get missed, vendors feel abandoned, the message is muddled… things get bad. So how should a founder invest in communication leverage? Training, training, training. Tools often promise better communication or more extemporaneous communication, but the reality is that unless the team is encouraged to slow down (ironic given the productivity investments) the problems will continue. 

The last dimension is memory. A company’s memory is how it improves. The memory is also often key to retaining value. Software companies store value in contracts and contract control is often woefully lacking in companies. Customers frequently operate under a hedgerow of the best of either remembered verbal ‘promises’ or contracts on a clause-by-clause basis. This means the company must invest in memory to combat this problem as well as enable efficient onboarding of new team members, transferability between employees as departments grow and shift, among other benefits. Investing in memory retention typically involves some form of compliance training as well as easy to use digital retention. 

The power of leverage is that it elevates your people 

These four investment dimensions drive leverage. They provide a framework for a founder to consider the areas they can focus to bolster their team and drive better results. Ultimately, the power of mechanical leverage in a people context is liberating the mundane of the human input into its creative zenith. It liberates people in their giftings to be fully actualized in their calling. This liberation is a blessing; it is a natural good. It benefits the business but also the employees. No one wants to do a job that feels inefficient. 

Talent acquisition matters 

Thesis: Talent acquisition can get overlooked but is one of the most important functions of a founder with multi-million-dollar consequences. 

Measure twice, cut once…

– Big Daddy (my grandfather), but probably someone else before him. 

My grandfather, Todd Simpson, was known by many as Big Daddy. If you could meet him, you would know why. He stood 6’8” and weighed in at more than 300 lbs. at his peak. He was a big man.  

Big Daddy had many creative hobbies. He was an accomplished businessman as well as an inventor, creator, woodworker, rancher, farmer, reader, and more. His creative pursuits required precision. However, Big Daddy, while creative, was also curious. His mind would wander while on a task. And that wandering could lead to trouble. 

I spent most summers at our family ranch with Big Daddy and Big Mama (who is 4’10” and weighs nothing at all). Mornings would find me starting a new project and evenings on the river fishing. In one instance, Big Mama commissioned Big Daddy to build a carport. Big Daddy, not one to do anything small, took up the challenge. With the lumber, paint and tackle ordered, the project commenced. 

Big Daddy decided to pre-cut all the lumber to batch the work and make the project more efficient. It sounded like a great idea. We were about halfway through the cutting phase when he realized that the saw trainer he had constructed was not the right length; we had cut all the lumber the wrong size. 

He looked at me with a grin I knew well and said “Dougal, you know you should always measure twice and cut once.” With Big Daddy, sometimes the lessons were driven home by a vicarious demonstration like this one. In our excitement to drive efficiency we rushed the most important inflection point of the process: the measurement. And by doing so, we had threatened the entire project and rendered null all our hours invested. 

The inflection point of talent acquisition 

Talent acquisition is a similar inflection point. Often founders rush the acquisition because they wait too long. Then, after rushing the hire, they fret about with a team member who is ill equipped and ill trained instead of rushing the exit process when the fit is not right. They flip the order; and it invokes chaos. 

The solution is to slow down. Hiring is a multi-million-dollar decision with wide ranging consequences. The right hire (with the right leverage) can unlock growth and push the boundaries of what the company can do. Conversely, the wrong hire can set the company back years and soak up needed resources. Hiring requires awareness and fit between the candidate and the role on aptitude and culture. This fit cannot be competently established on gut. 

The founder journey encourages speed at the exact moment that care is most needed 

Most founders get lost in the swamp of actions that need their attention. In the early days, the founder is involved in all decisions. As the company grows, founders see their role diminish and begin to lose control. This loss, if not appreciated, can lead to founders re-inserting themselves or continuing to push the boundaries of the company in new ways. The result is a lack of time. This lack of time can permeate through the organization and cause a hurry mentality that drives measure once cut twice results. 

Founders focusing on important inflection points is a cure to this ill. Focus requires intentionality and purpose and the inflection point, if valuable enough, warrants that attention. Founders need to focus on talent acquisition. 

Founders focusing on talent acquisition is a powerful leverage point in a company’s journey 

A founder focusing on talent acquisition means driving the process to find the right candidate. Clearly as the organization grows the founder will not be in every hiring process. Therefore, it is important to demonstrate the intentionality of the process. Those the founder hires will see how they are hired and replicate that (hopefully improve upon that) in their own hiring.  

A good process requires a few things. First, a large network to get a pool of qualified candidates. Since culture takes so much time to evaluate, the first cut is usually a skill based one. The question of that cut is whether the potential prospect has the background necessary to argue they could be competent in the role. 

How to evaluate competence 

Competence is both easy and hard to evaluate. On the one hand, proof of past work done can support the statement hypothesis that the candidate could continue in that role. But how can you truly know if the past work is similar? Companies differ in the critical tasks a role must perform by stage. A CFO of a midsize trucking company might (and very much might not) have relevant task related competence in the areas needed for a similar sized software firm. However, on paper, the role might look similar. Likewise, the CFO of a larger venture backed software firm may seem to be similar in complexion to the needs of a smaller bootstrapping software company, but in practice the founder may find that the day-to-day cash management so incident to the bootstrapping process has no equivalent in the larger venture backed firm that uses quarters of performance and cash needs as its financial reporting aperture instead of daily cash needs. For competence evaluation, the key is to explore the key processes the hire will manage in the company and then dive into an evaluation of whether the candidate seems to have experience enough to manage those specific processes. The starting position at this stage is a hypothesis of no-fit; try to support that hypothesis and build your best case. 

To evaluate competence, the founder needs to have a healthy pool of candidates. This pool should be larger than just the founder’s network. Successful founders will lean into friends of friends and invest time with people that could lead to a candidate. This effort will increase the weak tie referrals that will offer context to whether the founder’s immediate network is as impressive as we are often prone to think it is. The time invested in this network building can be useful going forward so make sure to develop strength in the ties and have a plan to maintain the relationship to ensure it can be effective. This takes time and focus. And it takes time when you don’t have a pressing need; this is often the hardest commitment for founders to make. 

Evaluating culture fit 

Evaluating the culture fit is extremely difficult. Founders should be careful not to dismiss the difficulty of this stage. When asked, few of us can even define culture. Yet, when an employee doesn’t work out due to culture, it is palpable – obvious. How can something undefinable lead to a definite outcome? That paradox isn’t as bullet proof as many of us think. 

Culture is the expression of the values of a community; it is the amalgamation of activities, beliefs, and language. In the business context this means the people that the founder considers as ‘the team’. Cultures are personal and specific and often defy management, though they can be nudged (more on that later). For evaluating culture, founders need to get real with what ‘is’ rather than what is hoped.  

Culture activities consist of the work and non-work-related activities that the team often talks about, does together, or displays doing. For instance, a hospitable culture will be evidenced by people inviting each other into their home or hosting a colleague on a trip. A caring culture will be evidenced by gifts, words, and acts of service when someone is in need. In some ways, hopefully all high performing teams have at least some of these features, but for it to represent a company’s culture, the activities will feel important, celebrated, talked about, and evident.  

Culture beliefs consist of the beliefs driving the activities and the language. For instance, a hospitable culture might have an insecure belief about a need to be loved. That belief might manifest in ugly ways. A person with a secure belief in their capacity for and receipt of love might find the way the hospitable activities occur to be trite and insincere. Evaluating the belief behind the activities and the language is essential to understanding how it will be perceived.  

Language plays a huge role in culture. The tone and vocabulary used add a dimension to the activities to better reveal the beliefs of a community. Does the team curse? Is the team aggressive in their feedback? Does the team side skirt tough conversations with non-comital language? While some of these options could be perceived to be unhealthy, the reality is that a culture can hold together with what otherwise would seem unhealthy if there are consistent (and semi-normative) beliefs driving logical actions and language. In other words, and not satisfyingly, a culture can hold together if the beliefs, activities, and language all hold together – yes, circular… I know. Evaluating this element of culture requires listening and not trying to hear what you want to hear. 

The culture dimension is most likely to be rushed and is most crucial 

Culture is an essential element of talent acquisition because it is the lived experience of the team and because it is developed through a democratic consensus making process. Not everyone gets an equal vote, but everyone votes. Hence, evaluating the beliefs of a new team member is essential. Please note this doesn’t necessarily mean religious beliefs, but it can mean that! The new team member will change the culture of the company. The larger the company, the less the impact the new team member will have on the culture; but there is always an impact. 

Evaluate your company’s culture first 

Founders evaluating culture must first evaluate what the current team believes. Once accomplished, the beliefs should be evaluated against the language and activities of the new hire to see if they are consistent. Similarly, the founder can ask probing questions or pull stories from the candidate to elicit congruence (or lack thereof) with the underlying beliefs. For instance, in the hospital culture above, one could ask “tell me a time you were hosted and how it made you feel.” Each word and each action give the founder a clue into whether there is a fit. Founders should be particularly wary of disconfirming evidence of culture fit. A candidate will be at their most adapted and normative behavior during the interview process. Hence, small signals tend to grow into sirens over time.  

Once the founder has confidence in the candidate comes the compensation stage of the discussion. Founders tend to feel compelled to get talent as cheap as they can. The problem with this is discussed in depth in “People are Worth What they Cost.” Founders treating this as a critical inflection point need to carefully evaluate the amount of compensation that is right for the role against the requirements of the role. A CFO making a bottom 25% compensation for a similar sized company is unlikely to be successful unless the expectations are also bottom 25%. However, there is also the cultural wage impact problem for a team. 

In a growing company, early employees usually get promoted to management positions. This promotion often doesn’t come with pay increase that would be required if each role were hired from outside. This presents a problem when a new team member joins and is making a lot more than the existing team. Pay fairness and equity is a devilish force; it can destroy a culture. People are primed for reciprocity and fairness and can quickly detect when it is lacking. Hence, founders need to be aware of which team members are underpaid relative to what a third-party experienced hire would make. This does not mean everyone needs to be paid at the level a third-party hire would require. Often internal team promotions lack the relevant external experience to command higher pay, but they have relevant internal experience that makes them effective. Even still, however, the founder needs to ensure those team members feel heard and understand what they are paid and why. 

In the salary negotiation, my experience is to be candidate and upfront and resist the temptation to try and ‘find a deal’ when hiring people. This is a difficult dance and pricks a core insecurity for many founders. Leaning into the conversation in candor and knowing that the candidate in question is not the only possible candidate out there can pay huge dividends in ensuring a proper fit. 

The hiring process is difficult and the impulse for founders is to shirk the duty and hire the first person that ‘might work’ that they find. However, true excellence in hiring comes from a deliberate and thoughtful process. Founders must treat it with the tender care reserved for the multimillion-dollar investment it represents. Measure twice, cut once.  

Onboarding Matters 

Thesis: Onboarding is essential to activating the magic of creative talent. 

If freckles were lovely, and day was night, 
And measles were nice and a lie warn’t a lie, 
Life would be delight,— 
But things couldn’t go right 
For in such a sad plight 
I wouldn’t be I. 
 
If earth was heaven and now was hence, 
And past was present, and false was true, 
There might be some sense 
But I’d be in suspense 
For on such a pretense 
You wouldn’t be you. 
 
If fear was plucky, and globes were square, 
And dirt was cleanly and tears were glee 
Things would seem fair,— 
Yet they’d all despair, 
For if here was there 
We wouldn’t be we.

– If by e. e. cummings. 

In a prior organization, I found myself stretched too thin. I had waited too long. Tasks were dropping left and right, and the team was overwhelmed. Instead of pulling back what we were doing (the only legitimate option) we pressed forward with hiring people and rushing the process. Worst yet though, once hired I threw them in headfirst and expected results. This expectation would be hilarious if it wasn’t so damaging. The new team member was introduced to several key accounts and told to manage the issue list and interface with the internal team to get the customer’s problems resolved. Predictably, this failed… 

I should have known that. But I was lulled by the potent poison of potential. Founders often ebb and flow between the sundrenched hills of possibility and the valley of despair. Give us a thread of hope, however, and to the hill we go! No one wants to be in the valley. Even fewer want to do the work of climbing out, instead too many of us are content with the sliver of sun peeking through the dark canopy and then close our eyes to the reality and hope. We rest in ‘if’, or more likely ‘if only’. But if this could lead to good results, then ‘we wouldn’t be we’. 

Resisting the abdication of responsibility is a core lesson for all founders to learn. And it is very evident in the process of onboarding. Assume for a minute the founder has done a good job of finding a great candidate. The process was thorough, and they had the self-discipline to measure twice and cut once. They picked right (a bold assumption!). At that moment the siren song of abdication drifts in on the wind. Only thoughtful and primed founders have the power and restraint to resist it.  

The first step in effective onboarding 

The first step in onboarding is to resist the temptation to rush it and get into the ‘value’ of the hire. Instead, this process takes time and intentionality. Founders should expect to invest most of the new hire’s available time in onboarding tasks for at least a month. For most teams, this seems outrageous at best and impossible at worst. 

The six dimensions of onboarding 

There are six dimensions of effective onboarding: history, role, team, culture, expectations, and resources.  

  1. A new hire must know the history of the company. History is the field the game is played upon. Without it, the new hire will re-learn old lessons, enter conversations mid-sentence, and otherwise struggle to become effective. History includes more than just the history of the firm, but rather: how the strategy changed over time, key inflection points in the company’s journey, key successes and failures, and other milestones. Particular attention should be paid to the culture-defining stories that bonded the team together before the new hire joined. Skipping this important step can lead to distance and separation from the start. 
  1. The role itself. That may seem repetitive (and it will feel like it). But too often oceans of misalignment come from small streams of misunderstanding. Reiterating the role and belaboring it to the point of absurdity is key to ensuring the new hire has the information needed to be successful. It also has the benefit of pushing past the shallow misunderstandings that can so easily tank a new hire. 
  1. The team, both immediate and broader, is an additional dimension of effective onboarding. The goal with team onboarding is to both introduce the new hire to the existing team as well as greasing the wheels of social acceptance for the new hire. This involves more than just an email intro, but rather sharing personal information of existing team members (and an easy way to learn names!) as well as encouraging the new hire to share personal details about themselves to develop shared interests and forge a bond. Most time will be given to the immediate team, but meeting the broader team is also essential to effective onboarding. The more senior the role, the more time will be spent on meeting the broader team even outside the immediate department. Senior roles are viewed as an extension of the company itself and, therefore, are powerful ways to encourage buy-in from the broader organization. 
  1. Culture onboarding is close to team onboarding but mostly focuses on clarifying the beliefs and helping the new hire with the language and activities. This can take the form of creating venues for the new hire to engage with the team about their activities that align with the broader culture beliefs. Or it can be more prescribed through presentations and physical representations of the company culture. At Golden Section, we produce a Journal that acts as one piece of a cultural onboarding process. Success for this onboarding component should feel to the new hire like they found home; they found their people. 
  1. All new hires want to know what is expected of them. Expectation onboarding, therefore, is crucial. Without it, the new hire is left to their own to discern expectations from verbal and nonverbal cues; this can lead to a disaster. Expectation onboarding is concerned with clarifying the KPIs and deliverables that the new hire is expected to create and maintain. In addition, this is the stage where policies and the like are conveyed. Hopefully this has the effect of avoiding those awkward new hire mistakes like reimbursing a non-reimbursable expense or coming in late to a hard start meeting. Expectation onboarding, when done right, prevents those awkward moments that can badly damage a new hire’s ability to see this company as their home. 
  1. All employees need resources to get their job done. Sometimes that is simply access to an SME or free time on their own schedule to create a new strategic plan. But often it takes the form of capital resources like a budget or access to shared services. Resource onboarding is a crucial step in the onboarding process and should be specific and clear including the expectations about its use. Failure to properly define the resources can create the vague reality of underperformance with legitimate blame on lack of resources; that’s a manager’s worst nightmare. Founders, do yourself a favor and clarify the resources for the new hire to use to hit the expectations. 

Unlocking brand ambassadorship 

An outcome of effective onboarding should be creating another brand ambassador. For software companies, people are the lion share of the organization and usually from and in the industry the company serves. This means they have effective networks for the company’s marketing and sales functions. Furthermore, a properly onboarded employee should be excited about the company’s potential to bring customers to the stated ‘promised land’ and, therefore, would be effective at communicating the company’s unique point of view.  

Creating a brand ambassador means sharing with the new hire the company’s unique point of view and equipping them to explain the company’s history, value proposition, and service offerings. This requires documentation and resources that can assist the new hire in onboarding into that information as well as stories about how the company has shown up in the past. Effective founders won’t miss the opportunity to create and leverage another brand champion from the most powerful brand resource – the people. 

Effective onboarding unlocks the potential of the hire 

Effective onboarding is the process whereby a new hire goes from hopeful potential to contributing team member. It is also the process that protects the new hire from the many dangers of joining a new culture that can so easily tank that new hire’s prospects. Lack of onboarding threatens the effectiveness of even the strongest candidates. In fact, if a founder can’t dedicate the time to effectively onboard a new team member, it is best to avoid hiring them altogether, even if that means slowing growth (or shrinking). 

Take an Intentional Role in Building Culture 

Thesis: Culture can just happen, but good effective culture takes intentionality. 

O hearts that break and give no sign 
Save whitening lip and fading tresses, 
Till Death pours out his cordial wine 
Slow-dropped from Misery’s crushing presses, 

— 
If singing breath or echoing chord 
To every hidden pang were given, 
What endless melodies were poured, 
As sad as earth, as sweet as heaven!

– The Voiceless, Oliver Wendell Holmes

Default is almost always wrong. It is easy to get philosophical with that statement and whether you agree depends upon your view of the goodness of stasis. Whether you agree or not, however, default – defined in this instance as ‘do nothing’ – must result in a bad outcome because of the impact entropy; the second law of thermodynamics. Things are decaying, this doesn’t mean matter is destroyed, but rather that it is changing and not necessarily for the better. It takes energy to prevent the slow march of decay from wreaking havoc on your company’s culture.  

Default mindset creates a chaotic culture 

Default in terms of a company culture is to do nothing. It is easier to let an off-culture comment to slide or participate in an event that isn’t quite right. It seems hyperbolic and extra to make a big deal of a small thing, but the small things are exactly where the fight ought to be had. When the cultural influences are small and manageable, they can be contained, it’s when the actions and language drive a new set of beliefs get inculcated into the team that the trouble begins to manifest; and at that point, it’s likely too late. Social network theory supports that proximity and likeness to others can drive adoption of new beliefs through shared practices and language. This adoption can happen subconsciously. And once it does, the founder is up against the subconscious of the entire team to try and change that belief structure. 

Given the social network challenges, forming culture is not as easy as forming organizational structure, or a product, or a new service. It takes systematic and frequent attention on the stories told, the activities supported, and the language used. The founder’s job is to be the vanguard of the charge toward the belief structure that she wants to see in her organization.  

The founder’s role in culture building is to lead 

The founder’s role means missing out on things the team is doing that are ‘fun’ if they are not culture-aligned. For instance, if a fast and loose party culture starts to take hold and the founder is concerned it is leading to a belief that work is good only unto its utility to serve pleasure, then the founder’s role would be to not attend those events.  

This means sitting out! It is uncomfortable and not fun, but it is the role of the leader. The entire leadership team should be engaged in driving culture. This is particularly the case in fast growing organizations where new team members are coming with their own histories as well as embedded activities and language around their own beliefs. 

Beyond the founder and leadership team’s intentionality, the company can elevate on-culture stories and heroes. These elevations will broadcast to the team the things the company wants to support. This can have a power effect, but only if that elevation spurs activities or language within the organization. Otherwise, it is just a poster in a break room. 

Culture requires constant attention 

Culture requires constant attention. The default of avoidance on this topic results in a predictable outcome – a culture that no one wants. The most powerful areas to push back are in the small things. Without that pushback those small things grow. They become stories and sneak into the language and eventually change the underlying beliefs.  

Build a Clean Organizational Structure 

Thesis: Muddy organizational structures breed underperformance and anxiety and worst yet eject top talent. 

My post college career started at the Federal Reserve as an analyst to several executives including the Houston branch manager, Bob Smith. Bob is a legend in the Bank. Not only did Bob serve in the US Navy rising to the rank of Rear Admiral, but Bob also served more than forty years at the Federal Reserve. My new hire onboarding packet included A Message to Garcia among several other military case studies of naval exploits and ship operations. Bob’s management background gave rise to many of my favorite anecdotes today. He was and is a true leader. 

Like many inspiring leaders, Bob had liturgies and language that his people learned quickly. One of the most frequently repeated was ‘who manages the white space’ when referring to the areas on an organizational chart that existed between the boxes with people’s names in them. As an early twenties with little to no active management experience, this did not mean much to me. I filed it away until I would learn the power of his catchphrase. 

People organization is a project on its own. Effective organizational design does not happen by accident and, more importantly, takes time, intentionality, and effort to achieve good results. This is to ensure the white space does not get missed; and most of the time, it does. 

Mapping organizational activities to leaders and teams 

The first step in organizational design is to determine the key activities of an organization. This is easier to do in the early stages, but re-organizations follow this same principle. The key is answering the question: “what does the company do?” 

The answer is normally a series of processes that each need a leader who is responsible, accountable and in charge of that process (or processes). Then under that leader an organization develops to achieve effective results on that process. Sometimes the processes are interdependent with each other in which case a matrix organization starts to develop. This can work when effectively mapped out and by ensuring accountability and responsibility follow each other up and down – and across – the organizational chart.  

Once the set of processes are determined, then the founder can look to the team she has to determine the best way to achieve those processes. This leads to the first step in organizational design – it starts with the leaders. Each process needs to be led and a company has powerful resources in the unique giftings of its leaders. Answering “who will manage what” is based upon the giftings of the leaders and not on what a particular leader ‘wants to manage’. The goal is effectiveness, not assuaging everyone’s egos. 

After determining the leadership of the processes, then the challenge of designing the team starts. Organizing the team depends upon the type of work to be accomplished. For instance, a sales organization can be designed with the lead generation activities in their own silo with the account management and technical demo activities in another each with their own leader and with an internal vendor-client relationship. Or, lead generation, account management and technical demo activities can all be pooled into a team setting and allocated to a specific product or region. The former is better for a narrow product where volume is the goal while the latter is better for a more complex product offering where careful handling of a live prospect is key. Carefully considering the activities the underlying process needs is key to designing a good organizational structure to serve the process.  

Effective organizational design requires good people management. And even the best managers have a hard time spreading over more than five people. So be careful in your design that you don’t overload a manager in the organization with a ton of direct reports. It is best to limit the direct reports to four assuming that there will be some stretch times when the manager will have up to six before a new manager is hired and a new team created. 

Ensuring authority follows responsibility 

Authority to control a process should come with the responsibility for that process’s output and effectiveness. One of the fastest paths to organizational chaos is to drive a wedge between authority and responsibility. If you do that, you get a zone of white space with no one managing it.  

And while we all know that we don’t want someone trumping our authority when it is our ass on the line, it is so hard to exhibit restraint when we see things that we want done differently in a department that ultimately reports to us. But resistance is key. Bypass a manager and you strip their authority. Do that and they will reject the responsibility. Then you’ve got full blown upward delegation, and instead of the organizational leverage that effective organizational design should bring, you will get stuck in the organizational equivalent of a hazmat spill during Houston rush hour traffic… disaster.  

Providing channels of communication and authority between departments 

Software companies are interrelated communication machines. Departments depend upon each other. There will always be internal reporting and vendor-client relationships between the functions of a software company. Setting up effective rules, fostering collaboration and trust, and providing a guide for communication are keys to avoiding disasters. 

Good cultures can get crushed by departmental infighting. The beauty of all ships pulling together can turn into the Persian fleet at the battle of Salamis. And given the decay present in all things, departmental infighting is a guarantee unless energy is expended to prevent it. 

Effective rules for departmental communication start with clear boundaries of responsibility and authority. These are essential. Create two owners of a process and you are certain to get a trainwreck. A second set of rules guides the necessity for effective key performance indicators to gauge whether a department is effective or not. If the lines are clear, then the KPIs will tell the story. This takes all blame away from the under-performing department who has only one option – look internally.  

Fostering collaboration and trust starts from the top. Departmental leaders need time together to develop a shared understanding of their common goal as well as a comradery they can use to overcome challenges when they arise like interpersonal conflict between their teams. This is particularly true of departments with several connection points or inter-related vendor-client relationships. 

Communication seems like it should flow naturally but this is rarely the case. The organization needs guidelines. Certain pieces of information should be required to flow across to departments when those departments need to be in the know. Frameworks like RACI can help clarify when a process should create an ‘inform’ output for another department. 

Preventing departmental chaos 

Departmental chaos is inevitable in software companies. The mark of an effective founder is what happens when it arises. Deadlines are missed, people drop the ball, communication is forgotten… the sources of the chaos are myriad, but the response is the same – press in. Founders need to press in every time there is departmental problems whether they are interpersonal or friction common to high performing teams operating in interrelated near proximity.  

Some keys to preventing the conflagration that can erupt off departmental chaos are to inculcate mental fortitude in your team through applicable mental models. One such potent model is Hanlon’s Razor. This states that nothing should be ascribed to malice what can be ascribed to stupidity (or, kindlier, to absent-mindedness). This is a powerful tool that transforms the ‘why’ behind an action from contempt to complacency. It defangs the wolf, it tames the fire… and, in the right moment, can prevent key team members from hashing it out in a way that healthy egos can’t come back from.  

Clean organizational structures create a safe playing field for high performers to score 

A clean organizational structure that is aligned to the needs of the organization, designed for the gifts of the leaders and logically oriented to the nature of the underlying tasks create playing field for high performance. Designing the org chart is an essential part of the founder journey and, like many things, both urgent and important. The good news is that if you have not been intentional yet, it is not too late. Dig in, set a plan, set aside the right amount of time (umm… a lot) and get it done. 

Data Driven Results are Essential 

Thesis: People don’t like to be measured because stuff happens but failing to measure means when ‘stuff happens’ it can be blamed anywhere. 

Adam Wells and Adam Day collaborating and talking over an array of pink and yellow notecards

A parable from the Sufi mystic Nasreddin illustrates the founder journey interaction with data driven insights. 

As the story goes, someone notices Nasreddin crawling looking for something in the streetlights outside his house. They ask what he is looking for; “My key,” he replies. So, they both begin searching with the passerby helping. After a while, the other man asks, “where exactly did you drop it.” Nasreddin replied, “in my house.” Confused, the man asks, “then why are we looking out here?” “There is more light here than inside my house,” Nasreddin replied.  

Many founders track what they have access to rather than what they need to make good decisions. Data driven decisions mostly relate to determining whether a process is working. Normally, but not always, this relates to the performance of people. Tracking data on people’s performance is not only essential, but also extremely difficult.  

There are two readily apparent reasons for the difficulty. First, people do not like to be tracked. Hence, determining the data that is relevant and ensuring buy in to keep it relevant is hard. Second, people like being creative, this means that we want to be doing varied and creative things which means not the same thing every day. This variation defies data driven performance measures because of the varied nature of the task. 

These challenges, and the forethought necessary to establish the right measures, represent just a few of the challenges to becoming truly data driven in people performance management. However, the challenges dwarf the potential benefits. Data clarifies performance. This ensures that top performers are recognized and celebrated. In addition, data protects temporary setbacks by offering additional explanations. Data provides caring management potential. 

Why people hate being measured 

People hate being measured. Though there are many reasons for this, the most relevant to people management is that measurement implies there might be underperformance which can be perceived as a lack of trust. A founder thrusting measurement upon his company is sure to receive pushback – if not outright then he can be certain that internal trust has degraded. 

The keys to successful data centric management include clear communication for why, the upside, and a clear understanding of how the data is collected. Clear communication for why is essential. Team members need to know the importance of being data driven. The reasons can be specified to the company but usually revolve around the imperative to build a compendium of information on how the company is performing to support new hires as the company grows. This, in addition to the secondary benefits of the data, present a compelling case that most employees should appreciate. The secondary benefits could include things like performance against a brand promise or response times in a support center which are important customer facing data points that encourage revenue growth and customer loyalty. Clear communication on the reasons behind data tracking are essential to getting employee buy-in. 

The team should also know the upside for the organization becoming data driven. This includes better customer responsiveness. High performing team members want to work in an effective organization; this involves data. In addition, high performing team members want to be recognized when they… high perform; this involves data. Finally, data driven frameworks provide explanations when a team hits a setback. It can reveal other causes for the setback besides underperformance by the team. Sharing the upside of data driven frameworks is key to getting buy-in. 

Finally, a clear understanding of where and how the data is gathered is essential. This allows the founder to ensure the team knows to support the data gathering but it also ensures if the data is messed with the founder can address the act appropriately. Months of execution can be torpedoed by a few small intrusions by a team member. This can be extremely problematic to a founder who is relying on her people to perform.  

Confronting the realities of your people and how they will react to being tracked is an essential step in shifting an organization to a data driven approach. Founders need to understand the potential for resistance and address it. They need to communicate the why behind the change, sell the upside, and explain exactly how the data will be gathered. 

How measuring is caring  

Measuring your people is caring for your people. High performers want to be celebrated when they perform. This requires a data driven framework to accomplish. In addition, people measurement ensures that when things slip due to exogenous factors, there is data to support how and why that occurred.  

In a prior organization, one step in an assembly process was thought to be the bottleneck. The team would frequently complain about being backed up in that area. This led to constant requests for more resources and additional investment to relieve that bottleneck so the entire process would achieve its result. However, when we put a process flow together and started tracking each step and the assumed time it would take to accomplish each step the data become more in focus. It became clear that the bottleneck was not the assumed area. And, in fact, the work in that step had been decreasing over time. Hence, the problem of the process throughput was mostly in the failed handoff between steps which was an easy remedy. Had we stopped at what we were measuring to begin with, we would have invested hundreds of thousands of dollars to no effect. 

Measuring ensures the management team’s interventions are calibrated and focused on what matters. This helps all employees by liberating them from the despair of blaming the wrong thing to being able to assist in elevating the company out of a production problem. Better yet, it ensures a team is not unfairly castigated because of faulty assumptions. 

The keys to effective KPIs and measurement 

Like effective organizational design, effective KPIs and measurement revolve around identifying the areas of responsibility and authority. If a team member cannot control an outcome, then measuring it is a difficult thing to use to hold them accountable. Nearly all team members in a software company control a process and a process creates a deliverable in a period. This means three things can be measured: time, quantity, and quality. 

Time based measurements revolve around the amount of time a process takes to finish. This is important if time is a factor in a brand promise to customers or to efficiency for the organization. It is not always a factor. For instance, while you would be smart to measure the time the sales leader takes to turn a lead into a closed-won deal, you might not care to measure the time it takes for the office manager to complete the restocking of the office supplies. Time measurements should focus on when time is extremely relevant to defining the process output and efficiency as ‘good.’ 

Quantity measurements revolve around the number of deliverables a process created. This is the most common to measure and can be turned into a binary. In the earlier example of an office manager, you might ask “did the supplies get restocked?” as a binary indicator of whether the process was accomplished. Best practice on quantity measurements is for the measurement to be taken during process fulfillment. For instance, in the silly example of the office manager, the process could be proved to be complete if the invoice from the supply company was booked in the month. 

Quality measurements are the hardest and most subjective to measure. But much like the Nasreddin example, they are also ‘where the key lies.’ Quality measurements ask ‘how effective is the quantity.’ Here, the founder will need to spend a lot of time evaluating an effective approach. Surveys, inspections, audits, and the like are all used to evaluate quality. There is no silver bullet to effective quality measurement. 

Effective KPIs are timely, extemporaneous, and tracked during fulfillment. These principles ensure the KPI will be relevant to evaluating performance of a team member. In addition, the founder should take care to explain the why, illustrate the upside, and define how the data is tracked to the team. Buy-in on the KPI is essential to unlocking the results hidden in the promise of a data driven company. 

Incentives are the Wind in the Sails of High Performance 

Thesis: Incentivize the results you need. 

The management classic ‘On the Folly of Rewarding A, While Hoping for B’ by Steven Kerr is widely read and has one simple refrain “it’s the reward system, stupid!” While most founders might agree on wisdom of using reward systems, it is rare to find a reward system that is appropriately designed. Reward systems need to incentivize the results the founder wants to see while not incentivizing the opposite. 

How incentives matter 

People respond to incentive because however noble the person, we are all self-interested. This interest drives our decisions even if on a subconscious level. Tying each team members interests to those of the company is a key role for the founder. 

The difficulty for a founder is designing an effective reward system. Thinking through alignment might be easy enough but thinking through the negative side effects of a given incentive decision is a lot harder. Every incentivized action has an incentivized reaction. These can present a potent and dangerous risk to the organization that, if left uninspected, can spell doom. 

The keys to effective incentives 

Effective incentives are tied to the behaviors that are aligned to the outcomes the founder wants. Focusing solely on the outcomes can reward behaviors that the founder would prefer not to occur which can create negative externalities. Effective behavior-centric incentives are timely, controllable, and specific. 

A timely incentive is one that is close to the completion of a behavior. Nearly everyone has that story of the company they worked at that paid out the incentive comp at year end. The variables were fuzzy and the ‘formula’ a black box. All this did was salt the earth for every other founder out there to overcome a distrust of true variable-based compensation tied to behaviors. As a rule of thumb, quarterly payouts are about if the timeline should get from the specific behavior. 

Controllable incentives are those which the underlying team member can impact rather than co-dependent actions that require or involve multiple people. A team member should be able to perform the behaviors and thus get the incentive. Otherwise, it is just a commission. And there’s nothing wrong with commission-based incentive compensation, but that won’t create behavior networks that drive true enterprise value. 

Specific incentives are exactly that; specific. The temptation to express an incentive in a range is high. Unfortunately, that sets up both parties for frustration. The founder is expecting the low end of the range and the team member is expecting the high end. 

Founders should avoid a few things with incentives. It is tempting to pay out an incentive if someone gets close to achieving the behavior – i.e., ten outbound phone calls away from the goal… But this is a mistake. It is better to lean into the discomfort of sticking to the deal than find yourself frustrated by an entire organization getting paid incentive compensation with little to no behavioral adoption. 

The importance of the owner mentality and how to unlock it 

The owners mentality comes from providing long-term equity incentives to employees. This is essential to ensuring the behavioral networks incentivized through more tactical methods are also balanced with a long-term viewpoint. It is also important to ensure that the timeline of this ‘long term’ focus is aligned with the founder.  

If the founder is building a forever lifestyle business, then equity won’t mean much for the team. However, if the founder is building to exit in five years, the team very much needs to know that! The owner mindset helps ensure the vision and values of the organization are expressed by each team member when the founder is busy elsewhere. That is the essence of leverage and the essence of alignment. 

Careful consideration of incentives and how to align the team to the outcome you want is essential for a founder. Too often we reward A while hoping for B as the management classic from Steven Kerr illustrates. This is a tale too often told. Don’t end up there. 

Talent Retention 

Thesis: Retaining talent is a proactive game that takes introspection and humility and will kill your company if ignored. 

The sweat dripped from my forehead into my eye, burning… Through the fuzzy view I could peer at the barbell descending and ascending from my chest to a dangerous height. My arms started to shake and tremble. Just five more reps, I thought. I was sure I couldn’t make it but was resolved to try; to give my last in a vain attempt to get there.  

I hired a trainer a few months before to learn how to work out in a gym. Interestingly, probably from childhood trauma, my desire to enter a gym was next to zero. I resolved to solve that negative identity and, therefore, hired a trainer. I gave him two rules: 1) no machines I can’t use on the road, and 2) no pushing past breaking to create soreness that prevents future workouts for weeks. He agreed to the rules. 

A few years prior to this I had several friends get into CrossFit. Each time they were convinced that my life would be better if I would only join them. Each time I did, I regretted it. It torched my body and rendered my dreams of an active lifestyle moot for weeks. 

Back to my workout… I surprised myself getting to the last rep and through trembling arms I pressed out the last rep. As I started the descent to sweet relief of rest, the trainer said ‘three more reps’. Expletives erupted in my mind’s voice. I had given it all but now the goal post was changing. Trust evaporated like water on a frying pan. 

Talent retention requires good expectation setting and ensuring the follow through on those expectations are met. Consistency is a component to trust. Fail at consistency, fail at follow through and you will see trust evaporate. If that happens, then expect retention to drop like Galileo’s ball off the Tower of Pisa. 

How do you know your team likes working at your company? 

Founders can manage the sentiment of the team in several ways. First, a founder can inspect the expectations that they set in the hiring and onboarding process. Understanding these expectations allows the founder to determine if they are about to ask for one more rep! Second, a founder can use surveys and quarterly feedback requirements from managers to determine employee sentiment. Effective monitoring is key to knowing whether your team likes working at your company. 

Expectation mapping is the most impactful way to identify ways that your organization might be asking for one more rep than expected. This starts with knowing what is communicated in the onboarding phase. In addition, founders are wise to inspect the expectations that each new team member brings into the company with them. For instance, what were the team member’s prior experiences at other workplaces or what norms were they swimming in that they now expect to have in your company. Expectation mapping is hard work, but the most important tool to discerning where sentiment can go. 

Surveying and feedback are helpful but often lacking in candor. People frequently pull punches on what they share so be prepared to read between the lines. Small frustrations are rarely the actual problem and are often hiding extremely large dissatisfactions with the organization. Do not be complacent with survey or manager feedback. Listen to it and let the small word speak loudly. 

Why employees leave 

Employees leave when expectations are not met, or they see a better vision for their gifting outside the company. Knowing the gifting of your team is essential. It is also important to note that a founder’s goal should not be retention at all costs. Sometimes it is valid for a team member to be sent by the company and encouraged in their next step. A healthy organization includes people moving into their gifting which might not be within the four walls of the organization. This is not only healthy but builds a flourishing community. 

The silver bullet 

The silver bullet in employee retention is knowing that there is no silver bullet. The closest you can get is recognizing that expectations matter, gifting matters, listening matters and, finally, being open handed with your team matters. Helping people get into what they were created for is an essential component of a high performing culture. It removes the discomfort that is implicit in a high performer as they begin to realize that their gifts are better used elsewhere. All things equal, you want to know that as soon as possible so that you can be a part of that journey.  

Software companies are people companies 

The cold reality of software feels scientific and data oriented. It can look like the processes and goals are so rigid, so sharp that the potential for creativity and human input is squeezed out of existence. But nothing can be further from the truth. Walk into a software company and you will quickly feel the chaos of potential. Any active software company is teeming with human creativity. This teeming can be unto the lamentable end of a misery factory or the elevated potential of a balanced sustainable company. I have worked in and ran both types and I strongly urge you, dear reader, to fight for the later. Balanced companies elevate their people to the ideal of what it means to live in a vocation – to be used in one’s gifting. 

Every person has unique gifts. Regardless of whether you think these come from God or by accident or some other permutation, all of us know the pain of doing something you were not meant to do. We have language for this; it’s called misery. Founders have a special task. Not only are they charged with carving a marking into stone, but they also must do this with a team. It is possible to ‘succeed’ by some measure while caring little for the people who join you on the journey. But I contend that this is a poor ideal of the future; it is a penumbra on a hot day when you want shade. Lean into your people and the outcome can become truly meaningful. 

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