Efficiency is a big thing for any startup. You are efficient means you could do more with less. It is a crucial survival skill when you are always operating in a resource constraint environment. Despite the immense importance of operational efficiency, many companies struggle with it, resulting in unproductive behaviors.
One common challenge early-stage companies face is ensuring team productivity. This lead to unnecessary hiring and spending in unproductive areas. This was what happening at the online service marketplace startup Sheba just about a year ago. Sheba has developed an internal performance appraisal system. It is a scale of 4 - the best performance being 4 and worst being 2 and below. “Our average was below 2 in early 2017,” says Sheba Founder Adnan Imtiaz Halim in a yet to be published interview with FS. Sheba just closed its seed round of US$1M in investment at that time. It had already grown to a sizeable team and was operating in a host of verticals. “We had a large operation team,” says Adnan, “which has become really small now as we continue to improve our team productivity and automate most of our operations.”
Since the quarter 4 of 2017, Sheba has been obsessed with improving its internal team productivity. It has invested in developing systems and ensured that the system is being followed religiously. It has invested in tools that are used daily. It has invested in automation to improve the performance of its people.
After months of rigorous hard work, it has come to a point where its average is now above 3 with a couple 4. “From less than 2 we have come to an average of above 3,” says Adnan, we have a long way to go and we are constantly pushing it but this has been a worthwhile journey.” There is a lot to learn from Sheba’s journey. Because improving your individual performance will affect your other areas of operation, significantly increasing your chance of success as a startup.
Here are a few lessons that you can use at your own company from Sheba’s experience.
Although we talk a lot about data and data-driven insights, most companies scarcely measure their internal team performance. This is a costly mistake. Because when you don’t measure an important metric like the performance of your people, you are likely to miss out on a lot of opportunities to improve. Measuring the performance of your team not only allows you to see how you are doing as a team but also to identify challenges your people are faxing towards reaching their full potential and helping them out in doing so. Sheba has built a culture of measuring every bit of what people are doing at the company and how they are doing.
“We have implemented this system of PI signing company wide every month. These things get measured” says Adnan. It uses Atlassian's JIRA to collaborate as well keeping track of what’s going on in the company.
The advantage Sheba has is that its performance appraisal takes place quarterly, which means if one employee underperforms one quarter she still gets the chance to make it up in the next two quarters. It also helps employees who struggle to keep up with their responsibilities through in-house and outside training.
This renewed focus on team performance has been of tremendous help to improve Sheba’s overall performance. It has been able to bring down the number of people in its operation team and produce a better result. It has also been able to identify challenges for its people and help them overcome those challenges.
One of the initial steps towards a more productive organization could be taking stock of your organization - tracking down the smallest details of the performance of your team and identify areas where you could readily improve. But for achieving the desired performance, you have first know the numbers.
How to implement it:
Step #1: Develop a system for measuring performance and get the buy-in from your people
Step #2: Identify the key metrics you want to incorporate into the system
Step #3: Find a tool to collect comprehensive data of your operation
Step #4: Develop a system to give honest feedback and have the necessary discussion
This is again something we hear a lot from entrepreneurs and senior leaders a lot these days. While there has been some improvement regarding overall cultural practice in many companies, empowerment of the people in its real sense is not something that we see often. Empower often ends with giving a lot of responsibilities without critically thinking about giving enough authority to carry out the duties.
“We have truly empowered our people,” says Adnan. People at Sheba run their own performance evaluation, and they identify their own problems and when they need help them ask for it.” Sheba has also developed a system where it turns every major milestone into a project, which then gets broken down into several companies and a project lead becomes responsible for the entire project. “About 60 projects are going on at Sheba at this moment,” and each of them has a project lead who is responsible for the success of the project. “I get to see the progress report of every project on a daily basis,” says Adnan.
At the same time, Sheba also allows its people to make mistakes. When a newly promoted manager makes a mistake, it does not go and rescue him right away instead let him or her make the mistakes and learn from it. “Some teammates had struggled at one point of time, says Adnan, with a big project, made mistakes. We helped them at times but also allowed them to tussle with it. It sometimes slows us down, but eventually, it helps in developing people, which has long-term benefits, and we are already seeing some of it, adds Adnan.
How to implement it:
Step #1: Give people enough authority to perform on their responsibility
Step #2: Promote and enable self-assessment and accountability
Step #3: Develop a high tolerance for mistakes
Step #4: Reward and recognize people who try and perform
Startups are fragile entities. The only way you could increase your odds of success is by working hard and doing so as a team. While teamwork is critical for startup success, it is often challenging to keep your people motivated and drive them to achieve the organizational ambition.
The reason being people could not visualize their future in a startup company. In most early-stage companies, putting together HR processes and systems take time and often come as a less important priority. That leaves a void and teammates wonder around trying to figure out their future at the company. Often it becomes a source of friction and a challenge to motivating people.
“We have mapped out at least two years career path of every one of our people in the team,” says Adnan. And it has been beneficial for us in keeping people motivated. One of the areas Sheba has been working on for the past one year is developing solid HR practices.
It has been investing in experiments and finding the right ways of doing it. Adnan said it has helped Sheba to improve company morale and improve engagement of the people. It natural for an employee to try and invest herself when she sees that he has a future at the company.
How to implement it:
Step #1: Hire a people officer and task him or her with developing the process
Step #2: Develop career roadmap for everyone in your team
The path to achieving organizational productive could vary company to company. But there is no alternative to getting there without improving the performance of your people. Many startups, particularly one that raises venture money, often show wasteful tendencies in the early days - hiring more people than required, investing in areas that are unproductive, swiftly increasing operational expense. But the path to a sustainable business is quite simple: you have performed at your optimal as an organization.
Measuring your organizational output, empowering your people and developing the best HR practices are some of the sure-fire ways to achieve the goal of an efficient organization.