Using a 9-Box framework to drive performance at your startup
How to manage performance and potential when you're building a high-performing team
Startups at Seed and Series-A stage have unique problems when it comes to performance management, leveling, titles and compensation.
Of course it’s well documented that successful founders and startup leaders avoid titles at all costs. But that’s not so realistic; as soon as you have a handful of ambitious, high impact employees on your team they are going to demand clarity on their career path. And when you want to recruit that killer outside leader for your sales team or to manage your roadmap, you’re going to need to define both title and compensation. These are forcing functions to get structured in your approach.
I recommend mapping your functions to levels first; you’ll create a high level rubric that aligns levels cross functionally. Like this:
You’ll then define each of the functions and roles more clearly, creating a leveling rubric that you can use for internal performance reviews, promotions and compensation changes, and for new hires:1
Now that you’ve got your levels, you can rate the performance and potential of each member of your team. To do this you can use 9-Box Framework.2
The 9-Box rates employees according to their Performance and their Potential.
What is Performance?
Performance measures an employee’s production relative to the expectations of their role.
You need the employee’s level as context for this evaluation as different levels come with different expectations for production and impact.
It’s important for our managers to understand what those expectations are and for employees to understand and buy-in to those expectations.
It’s also important to think about the expected production you need from every role and think about performance in context of actual, historical impact - you have another dimension, potential, to rate what they might do in the future.
What is Potential?
Potential is an assessment of an employee’s ability to grow their skills, leadership, and impact to the business.
An employee does not necessarily need to check all three boxes at once to be high potential; depending on role, high potential could mean progressing through to the senior IC level and then producing consistent high quality results in that role. Or, high potential might mean that an employee progresses rapidly into leadership, team building and management and cease producing as an IC at all.
Ideally you can connect potential to the company’s business goals and objectives. Projecting out to your 1-year, 3-year and 10-year time horizons, can you see this employee contributing impact and growing with the company across all three? Those that you see continuing to grow all the way through your 10-year horizon are your Stars.
A note on a really common mistake. Time and again I have seen founders and first-time CEO’s conflate Performance with Potential. This can cut in both directions:
Someone who shows up internally as smart, data-oriented, a great presenter and frequent contributor on Slack in visible internal channels can seem productive even though they haven’t actually delivered anything tangible to make an impact. Don’t be fooled! That’s Potential.
Someone who just gets stuff done all day long but is focused on a producer role (like a Support rep, or a junior engineer) might not show up visibly to the executive team as a high impact contributor. But go deeper! Are they towards the top of the team in reliably delivering on their responsibilities, and can you measure that impact on critical operating KPIs or outcomes? That’s Performance.
Some roles are always recognized for their Performance (e.g. an Account Executive closing business) but others are often missed (e.g. a Support rep who consistently meets ticket resolution quotas and gets great CSATs). There’s a bunch of psychology behind this related to what an executive team wants to pay attention to and where its investors focus.
Other roles are often recognized as Performing when really what they are showing is Potential. Product managers can live here a lot - they communicate really well, produce great internal documents, and seem to understand strategy. But have they shipped? A Product Manager cannot be high performing unless they have (1) shipped projects that (2) drove company KPIs up and to the right. Until they do, they don’t get to show up in the high performing bucket.
Anyhow, what you need to do is keep those levels in mind, assess production and potential, and then map your team to the framework. Even just a quick sticky note exercise, in my experience, can give you useful data:
In my theoretical 11-person team, I get this breakout:
Now you translate to action:
2 of these employees should be terminations; don’t waste any more time on someone who isn’t a fit. The opportunity cost is simply too high. If you still need the role, go hire a future star. If you think the performance issues were out of the individual’s control, re-think whether you need that role on your team.
You’re giving 2 promotions - keep your stars happy! This could mean more levels as an IC and better comp; or it could mean adding or increasing management responsibility and titles. In any event make sure a promotion comes with additional responsibilities that will drive greater impact for the company.
You’re giving 3 employees a merit-based increase; and you’re going to further challenge the High Performers with increased responsibilities and opportunities to grow.
You need a good plan for the manager to execute for 2 of these employees. One is an inconsistent player who goes on a PIP (Performance Improvement Plan). Typically that lasts 2 weeks if you’re super urgent, or up to a quarter if the skills to master are complex. The other is your potential star. It’s not OK to keep low performers around for long but if the talent is there, you might be able to reframe responsibilities, goals, or expectations to drive performance quickly. Someone like this doesn’t get a PIP, exactly, but the manager has to invest cycles in driving better performance pretty urgently. Potential stars who don’t get moving towards performance will leave if they don’t feel the progression.
You’ve got 2 more employees who are on track, and you can observe or put some goals in front of them to develop further. They’re not getting a raise but they’re meeting expectations so they should get a solid performance review.
Now, in this team, you’re looking at hiring for 2 people, putting an action plan in place to turn around the performance of 2 more, and challenging 2 to level up. You probably have yourself and one more manager on this team of 12 (including yourself). Think about how much additional management overhead you can take on. The reality is you’re probably at your limit here, with hiring plus performance management for 2 more roles on each manager’s plate. In general a manager’s span of control is up to 8 direct reports, and at any given time only 2-3 “people” projects within that group (including hands-on development of a potential star, hiring and training someone new, or managing a performance issue) is realistic for any one manager. So be mindful of your ratios when you’re making decisions.
Run this process at least annually - you’ll be thankful you put some rigor behind your performance management. It’s critical if you want to build and scale a high-performing team.