Mendzment - “Doing things the right way”

Key Insight

● Incentives, i.e., rewards. What we reward we get. Always has been and always will be. This is a very simple principle that in management is often rapidly forgotten, and we end up with some perverse reward structure where, for example, employees who roam the office and brag about how much they work are rewarded, while others do nothing, and none of them can name the main company goals. Another example is giving employees a small fixed salary, and then expecting them to deliver 1000%, create revolutions in the market, work overtime, and die for the company. We must be very aware of what we reward, and the work that effectively achieves the company’s goals must be rewarded well! Balkan bosses often won’t give bonuses or equity, and then ask why the state of the Balkan economy is as it is.

● Metrics - How would you know who achieves goals (and prevent management by “I do the most and others do nothing”)? You must measure it. Every person at any moment should know how they are performing, ideally expressed in numbers. Meritocracy is the best shorthand, and there is no meritocracy without metrics. For each position you must have clear, predefined metrics and expectations, and regularly measure them. Transparency about performance at the company level is very good for the company because it prevents any “I do and he doesn’t” narrative at its core, and becomes increasingly valuable as the number of employees grows.

● Profit-sharing / ownership - I’ve heard: “Communism failed because it didn’t account for human greed.” It makes a lot of sense. Everyone wants what’s good for themselves, and if they don’t feel they are working “for themselves” people simply won’t give their maximum. In every company a certain share of ownership (in startups about 20-30%) should be given to employees, and then their goals align very well with the company’s goals, and therefore the need to “manage” them decreases drastically. The most capable and valuable should have the most. People who helped the success of your company should be rewarded. Logical and fair.

● The skill of delegation is very important, and there are two basic ways to delegate:

○ Delegation by method - The manager creates methods for performing the job and writes SOPs (Standard Operating Procedures). The employee is only obliged to follow procedures and nothing more. This delegation is worse and more primitive, because it does not build trust; the employee cannot come into their own, but it has its use in repetitive, manual jobs. For example, it’s used for factory workers, construction, cleaners, cooks...

○ Delegation by results - The manager, together with the employee, agrees on the expected results and together writes the methods and SOPs. The employee is fully responsible for the results and finds the best way to achieve them (with the manager’s help). The manager gives trust to the employee and they have regular check-ins with feedback. The result must be easily measurable. This is a far superior approach for any more complex job, especially when delegating something we don’t understand (which is actually common). We explain “why,” not “how.”

● Listening and understanding - a skill that is very neglected, especially in the Balkan region. “I am the owner, I am the smartest, why should I listen to someone…” is a common attitude here. However, if you listen carefully, and try to understand, you will be able to solve and prevent many problems. This is an extremely important skill for both leaders and managers. Even when they listen, the vast majority of people listen to respond, not to understand. The goal is to understand even when we don’t have a crucial answer at that moment. Listening and understanding is the best and quickest way to build trust. We all have a very good detector for “this person is not really listening to us,” and when it lights up, trust is very hard. A very good strategy for this is to let people talk, and even when they finish, give them a little more time, a moment of silence won’t hurt, and they will usually continue, and say what they were most hesitant to tell you.

● Do not manage more than 5 people - you simply cannot give them the necessary attention. To manage one person well requires a lot of time. It requires listening, attention, socializing, support, monitoring results, and many other duties, and when you add all that to your regular tasks you’ll come to the point where you cannot perform any of your tasks properly, and you become a bad manager, and the employees notice. If you need to manage more people you’ll need to create layers and a hierarchy, where those reporting to you manage their people further, of course with your help.

● Everyone must always have a replacement - as soon as you appoint a person have them train their replacement. Of course this isn’t possible if you have 7 employees, but if you move into double digits, this becomes very possible. Too much dependence on a single employee is a huge risk for the company and success. Even if we manage to keep that employee motivated and happy forever, there are external factors (“bus factor” – the probability that someone gets hit by a bus) we cannot control.

● Regular performance review cycles + raises/rewards - In our region this practically doesn’t exist, but it is extremely important for employee happiness and company culture. This is one of the best tools for building trust and a sense of security. The ideal period is 6 months, with predefined goals. This should also include feedback from colleagues who worked most with that person. The reward can be a raise, bonus, additional company shares, extra days off, and if none of the above is possible (if it isn’t possible to do any of these), even praise and public recognition. Praise and public recognition are underappreciated and can mean more to employees in some cases than material rewards.

● Regular cycles of celebration and rest - Our region has many holidays and days off, but they aren’t used in the best way. If we go on vacation in the middle of a project when the situation is tense, we won’t rest, and we won’t work on the project, and when we return we’ve forgotten half the context. A good manager should plan work and projects so they are always finished before “rest,” and have a little “celebration” at the end. This is an art, and it’s not always easy to fit all the pieces together, but it’s something managers should think about. One idea is that all employees take vacation at the same time (one week quarterly), which would significantly ease things for managers but is a bit harder for employees because you lose flexibility (of course, if someone must stay on duty, they go a week earlier or later). In the new startup I’m launching this will definitely be standard policy from the start. My personal opinion is that a small loss of flexibility for employees will bring a lot of effectiveness to everyone, so it’s a better choice.

● Autonomy - Your job as a manager is simply to enable all conditions for the most productive work, give goals, set up a measurement system, and not interfere. Micromanagement is something used only in the last moments, if the employee is basically on the brink of termination, and in general should be avoided as much as possible.

● Try before you buy - Always organize a trial work if possible. Interview, recommendations, LinkedIn profile, all of this is great, but until you work with the person you don’t really know how that person works. Recommendation is okay if it’s from someone you really trust, and if that person has worked with the person they recommend intensively. Trial work can easily be organized for one weekend on a mini-project (which can be a “fake”), and it should always be paid. Ideally it lasts a week or even a month, but even one weekend can reveal a lot. It’s important to understand that there are people who aren’t good at selling themselves, but are very talented, and you might only realize this through a trial.

● Risk - Risk is something people in our region fear, however if we want to do something a little different and try to win a new market, risk is necessary. If we encourage others to make decisions, then we should encourage them to take risks. Of course, with risk come mistakes, but if those mistakes are in a small percentage (10-20%) and not catastrophic, your company will surely progress a lot from the risks that paid off. Calculated risk is actually the reason many companies exist and make huge money.

● First principles - Popular in English as “first principles.” What does it mean? It basically means plain use of the brain, thinking and logic. There must be no “sacred cows,” and everything should be open to discussion and criticism. To the question “Why are we doing this this way?” the answer “That’s how those before us did it” is wrong! Go deeper, ask “Why?” five times. This is hard to measure but very important.

● Company culture - The biggest killer of a company is a failed product, but the second is bad culture. Bad culture is extremely dangerous for many reasons, but it’s not that hard to prevent bad culture in a company. The first thing to do is prevent injustice, and we’ll do this by having a fair and transparent system that’s the same for everyone. This is a smaller problem at the start when the company is small, but becomes very important as the company grows. You must know how to advance, how raises are obtained, how terminations are obtained. The second biggest problem in culture arises when employees feel they are working on useless things, when the company isn’t progressing, isn’t profitable, where pessimism and toxicity arise.

● Fast termination - It’s very simple, if you’ve given one chance and it didn’t work, you gave feedback and another chance and it still isn’t working—time to part ways. I and many others err when we drag this out for 6 or 12 months and try 5 times. This can all be resolved in 2-4 weeks and must move at that speed. Also, if we see politicking and cliques, gossip and “I work and no one else talks,” negativity and pessimism, give feedback and if it continues, terminate. This is especially important in the early stages of a company when every hour of effective work matters.

● Accountability / Justice - TBD