8. Performance Management and Non-Negotiables

This guide covers the essentials of evaluating and managing product team members, providing a clear understanding of timelines, key performance indicators, feedback processes, and non-negotiable behaviors that may lead to employee termination. By following these steps, you can create a structured approach to helping your team grow while ensuring alignment with the organization's standards.

Evaluation Timeline and Performance Indicators

When a new team member joins, it's important to establish clear expectations right from the start. This typically involves outlining the long-term goals (often called a "Tour of Duty"), OKRs (Objectives and Key Results) for immediate projects, and the expectations for the first 90 days.

Tour of Duty: This is a long-term goal or project that spans 1-2 years. It could involve launching a new feature, expanding to a new market, or improving the scalability of a product.
OKRs: These are shorter-term goals, usually defined quarterly, that help the employee understand how their work directly impacts the team and product.
90-Day Expectations: New hires often go through an initial period where expectations are set, and at the end of this period, a formal review is conducted to see if these expectations have been met.

Performance Feedback Process

Frequent Informal Feedback: Throughout the quarter, it's important to provide continuous informal feedback. This could be acknowledging successes or offering guidance when improvements are needed.
90-Day Formal Review: This is the first formal checkpoint where you assess whether the new hire has met the initial expectations. This review should be constructive, setting the stage for further development.
Bi-Annual Performance Review: Typically done at the end of each half-year, this review evaluates both the employee's impact and alignment with cultural and behavioral expectations. It’s important to follow company guidelines for performance reviews to maintain consistency and fairness.

In addition to these formal reviews, it's critical to have a Personal Development Plan (PDP) for each team member, focusing on areas of personal growth that align with both their career aspirations and the needs of the organization.

Key Elements of Performance Evaluation

Impact: The tangible outcomes of the employee's work, such as features launched, revenue generated, or customer satisfaction improvements. Different companies may weigh effort versus outcomes differently, but it's important to align with your organization's philosophy.
Behavior and Culture Fit: Evaluating if the employee demonstrates behaviors in line with the company culture, such as leadership, communication, collaboration, and ownership. These behaviors need to be assessed consistently to ensure team dynamics are positive.
Avoid Surprises: Performance reviews should not come as a surprise. Feedback should be ongoing, so by the time a formal review happens, the employee should already know what to expect regarding their performance.
Calibration: To ensure fairness, reviews are often calibrated against others in the organization. If a curve is used (i.e., a forced distribution), be mindful of how this might affect your feedback to employees, and never shift the blame to the organization for the final rating.

Promoting Employees

Promotion decisions should reflect consistent performance at a level above the current role:

Consistency: An employee should show they can perform at a higher level consistently, not just occasionally.
Avoid Checklist Mentality: Promotions should be based on more than just checking boxes. Employees should demonstrate growth and readiness through behavior and impact.
Pressure and Retention: Avoid promoting someone just to retain them. Promotions made under pressure can lead to dissatisfaction if expectations are not subsequently met.

Non-Negotiables and Handling Underperformance

Some behaviors are non-negotiable, and failure to meet basic expectations may lead to formal warnings or even termination.

Yellow Flag Process

A "Yellow Flag" process is often used to formally notify an employee that their performance is not meeting expectations. This serves as a warning and an opportunity to improve.

Context and Gravity: Clearly explain why the flag is being issued and how serious the issue is.
Formalization: After an initial conversation, formalize the warning in writing, specifying the expectations for improvement and the timeframe (usually 60 days).
Close Monitoring: During the improvement period, provide additional support and close monitoring to help the employee succeed.

If improvement does not occur, termination may become necessary. Although difficult, termination can sometimes be the best decision for the individual, the team, and the organization.

Handling Termination

Clarity: Be direct and succinct about the reasons for termination. This meeting is not for further feedback but to communicate the decision clearly.
Timeliness: Execute the decision without unnecessary delays to minimize negative impacts on both the individual and the team.
Support: Always have an HR representative present during termination to ensure the process is fair and handled with sensitivity.

Conclusion

Managing performance and growth in a product team requires a careful balance of expectations, feedback, and sometimes difficult decisions. By setting clear goals, providing ongoing support, and handling underperformance transparently, you can foster a high-performing team that aligns with both company values and product objectives.