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6 tips for managing employees so they don’t underperform

In his weekly column, Maynard Webb urges founders to set clear expectations for employees, and if they do fail, to fix the problems quickly.

6 tips for managing employees so they don’t underperform
[Source photo: MARHARYTA MARKO/iStock]

Editor’s note: Each week Maynard Webb, former CEO of LiveOps and the former COO of eBay, will offer candid, practical, and sometimes surprising advice to entrepreneurs and founders. To submit a question, write to Webb at dearfounder@fastcompany.com.

Q. I’m trying to decide between raising a round and trimming expenses. Due to coronavirus we’re not hiring so we don’t need [in-house] recruiters, and there are probably some [other] people we could let go.

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—Founder of a very successful platform company

 Dear Founder,

I’m sorry you are going through this. Like so many founders, you have a lot going on. Let me try to unpack your question.

First is the cash situation. It sounds like things were going fine before the coronavirus struck and you were not needing to fundraise. Now, because the economy has shifted you have concerns about your cash position. That makes sense—you are being affected by the coronavirus crisis and you need to deal with it. Cutting expenses that you no longer need, such as a recruiter, is a smart idea. But it might not be enough, so raising money from your existing or new investors may be the right move as well. Yes, the terms may not be as advantageous as they would have been before the crisis, but if you run out of cash you won’t survive. You should have 18-24 months runway. And if you don’t, raise the money.

Next, we have to address another situation. For you, and for so many of us (as individuals and even as a nation and a world), the current crisis has not only ignited problems but also exposed issues that have previously been swept under the rug. You mentioned that there are some people who probably should have already been let go. I know it’s hard, probably one of the hardest parts of the job, but poor performers should be managed constantly, not just when you’re cutting costs.

You must keep your house in order at all times. Either the performance issue has to get fixed or the poor performers need to be managed out. Of course, you are not alone in your predicament. Some studies show that hires don’t work out 50% of the time. A few things to consider in order to better manage the situation regardless of whatever we are facing externally:

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Set expectations of excellence and make sure there is clarity on all sides. Expectations must be set high and must be both aggressive and achievable. With aggressive goals, hitting 80% of them is amazing, but hitting 100% of goals means you likely didn’t set the bar high enough.
 
Investigate always. As a leader, it’s your responsibility to do everything you can to understand the reason behind poor performance. Determine why the employee is struggling. Are they not able to give their full attention? Do they no longer like their job? Have a conversation with the person and get input from the executive team and the board to determine the appropriate next steps.
 
Communication is key. Be crisp and clear with the individual on what they must do to get better.
 
Establish a culture that allows people to ask for help early and often. Problems are good. If made aware of them early, you can solve them.
 
Fix it fast. If problems do not get better, sometimes other actions are necessary. Remember, by the time you become aware of poor performance, your superstars already know someone has not been pulling their weight. They are counting on you to address it.
 
Part amicably and celebrate contributions. Everyone is watching how the situation is being handled. It’s okay to let people go if it’s not working, but always treat them with dignity and respect, even on the way out.
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