The role of a Founder or C-suite executive at a start-up or scale-up is comprised of two main components - people management and decision making. A central concept to both of these components is alignment.
A lot of ventures can become misaligned and this can hinder growth prospects of your venture significantly. You want everyone in your rowboat to know exactly where the rowboat is going, everyone to be actively rowing, and everyone to be content whilst rowing.
What are some alignment pitfalls to avoid and address so that your rowboat stays the course?
Cultural Alignment
Cultural misalignment occurs when staff don't share the same wants, desires and values as the founding team and therefore the company (I'm a big believer that culture starts from the top).
Cultural misalignment can be caused by subtle differences, like whether you, as a Product Manager, believe you should stick to a regular cadence of release, versus the department lead thinking you should wait until the release is 99% perfect. This isn't the end of the world, and you certainly don't want a bunch of clones working in the team as diversity (both in background and in views) helps to grow the company, but it can build up and cause fraction within the team.
Or the cultural misalignment can be more fundamental, like whether you, as a Marketing Manager, were wanting a lifestyle business but signed up to a high growth business that comes with longer hours and much more pressure to perform. This can lead to frustration creeping in and therefore a lack of motivation towards the role.
A great example of cultural alignment done right is the Army. Recruits know exactly what they are signing up for, and the Sergeants ensure that everyone is across the wider strategy, including immediate next steps, and how their specific role impacts the wider strategy. Everyone is pulling together towards these goals. There is clear cultural alignment.
As referenced in my previous article on hiring, cultural alignment often starts before the talent has joined your venture, as job ads and interviews are mis-selling the reality.
Career Alignment
A key part of managing high performers is to ensure that their current role aligns with their future career aspirations. Of course, this needs to fit in with your venture. If an existing Salesperson asks you to create a role for them which doesn't make any sense for your venture then it'll likely be a short conversation.
Here's the litmus test: do your current 1-2-1 discussions include broader discussions about your career aspirations? Or do they only focus on your current role, with a particular emphasis on prior performance?
If you fall into the former camp then chances are you're working for a decent manager and a company that understands that the best way to motivate their staff is to really help them with their future career (probably at another company).
If you fall into the latter camp, then you're more likely to be another cog in the wheel. Punch in and punch out when you arrive and leave the workplace. Hardly inspiring stuff.
“Leadership is about recognising that there’s a greatness in everyone, and your job is to create an environment where that greatness can emerge.” - Bill Campbell
Helping your staff with their wider career also has the benefit of them spreading the word of your startup and how great it is to their new opportunity. If you really smash things out of the park on this front you could even replicate the PayPal mafia, like Wise, Monzo and Revolut have, where ex-employees go on to start their own ventures or have high-flying positions elsewhere. This has a flywheel effect on your hiring, as people will recognise your venture as a great breeding ground for future success.
Ambitious high performers likely won't stay with your company for long if you aren't clearly helping them to advance their career, especially in the fast moving tech sector.
Remuneration Alignment
This is the golden goose for alignment in business. I'm a big believer in bonus schemes, commission, share schemes and similar structures as they incentivise your team beyond the consistent pay cheque. This is even more the case in early stage start-ups where there is a lot of value on the table that investors and employees alike are trying to get access to.
To illustrate this point, let's compare two hypothetical compensation plans:
Ellie - receives $40,000 in salary, a contractual bonus each quarter based on hitting certain targets, and shares in the start-up she works at which vest after a four year vesting period.
Mohammad - receives $45,000 in salary.
Whilst Mohammad will get slightly more in his guaranteed pay packet each month, there's nothing in the compensation plan that drives him to work as hard and efficiently as possible. He gets the same amount no matter what. The start-ups long term prospects and exit strategy are of no use to him, except for the logo on the CV if it becomes a unicorn.
Compare that to Ellie, who gets a little less in her guaranteed pay packet each month. She has considerable upside in her package, both individual upside based on her specific performance, and collective upside based on the broader success on the start-up and it's exit strategy. She has skin in the game and will adopt the ownership mindset which is a tremendous benefit to her company.
Between Ellie and Mohammad, who do you think is more likely to go above and beyond for their start-up? Sure, there are exceptions to this, where employees on the more 'basic' compensation plan will act as though they are on an 'enhanced' one, and vice versa, but broadly speaking it's clear which plan is more likely to evoke greater output and more interest in the longer-term viability of the company. The vesting aspect also encourages retention, of course, which is huge when it comes to top talent being courted by other high growth tech companies.
Remuneration alignment also helps cultural alignment, as everyone has table stakes and will want the best for the company. As a Founder, giving away a slice of the pie to ensure everyone in the team shares in the success of the company is one of the best things you can do to ensure alignment and to attract and retain great talent. Not sure where to start? Check out this informative post from SeedLegals.
Parting Shot
Misalignment is a common and damaging aspect to start-up life. Founders need to be constantly sniffing out instances of misalignment and correcting it, whether that's cultural, career or remuneration.
Hiring people takes time and retaining great people is tricky. Set yourself up for success and get a high performing team who are all pulling in the same direction so that you can have your own PayPal mafia after a successful exit.