The performance management needs of fast-growing companies

Performance management training is usually written for organisations that have stopped changing shape. Fast growing companies are a different problem, and applying the standard toolkit to them can do more harm than leaving them alone.

Talent is the constraint on growth

Research by the World Economic Forum identified talent management as one of the greatest impediments to scaling a fast growth company. In its study of nearly 200 hypergrowth companies, 55% reported struggling with talent challenges.

What makes it harder is that the challenge keeps moving. The talent problem in a start-up is not the talent problem during market development, which is not the talent problem at the stage after that. Each phase demands a different mix of people and a different way of managing them.

The balance nobody gets right first time

These companies need people performing at a high level, sustained, without tipping into burnout. Tip over and you get demotivation, turnover, and the loss of exactly the people who are hardest to replace at speed.

They also need a way to retire objectives. In a company whose strategy shifts twice a year, goals set in January can be actively unhelpful by June, and most performance systems have no mechanism for killing an objective that no longer serves the direction.

Where the standard approach breaks

Programmes that try to cover everything from government departments to Fortune 500 companies end up doing too much. Tools designed for an established organisation can actively hinder a fast growing one.

Michael Kelly, Director, Institute for Performance Management

The clearest example is the cycle itself. Established companies have historically run a single annual appraisal, the big bang at the end of the year, which is no longer regarded as best practice anywhere and is close to useless in a company that has changed twice since the goals were written.

What the cycle looks like instead

Goals held deliberately flexible, adjusted as the market or the strategy moves. Frequent informal check-ins between manager and employee, whose job is to confirm that the work is still aligned and that the objective is still worth pursuing.

For a stable organisation that cadence would be excessive. For a fast growing one it is the only way the goals stay connected to reality.

Culture carries what process cannot

A performance culture is what gets a company through a strategy change without the whole system falling over, because people understand how they are judged even when the objectives move. Formal training helps, not because it hands over a process, but because it gives everyone the same vocabulary for a conversation that is about to happen a lot.

The talent mix matters alongside it. A range of backgrounds and skills makes a company better at solving unfamiliar problems, handling stakeholders and adapting, and keeping that mix matched to the current phase means investing in some capability and letting other capability go.

The practical conclusion

Every company benefits from performance management training. The question is which kind. Material built for a stable organisation, applied to one growing fast, imposes a rhythm the company cannot keep and objectives it will outgrow.

The Certificate in Performance Management is written for business and industry with fast growing companies particularly in mind, and the free trial module opens one module in full.