Podcast Transcript:

[00:00:00] Sean Steele: G'day everybody, and welcome back to this week's ScaleHQ Podcast. I am very excited to be in your ears or eyes, however you are listening or watching this today, because I haven't actually done a solo episode for a fair bit of time. I've been busy engaging with guests, I've had a whole bunch of travel. Many of you may not know that I'll be moving to Europe soon. I will be continuing the podcast. I'll be continuing my business as normal, but I will be serving clients from Europe. So, there's a lot going on in the life of the Steele family and we have just got a lot going on. I've just come back from a trip. And so, I apologise for some of the gaps that we've had. It's been a few medical issues in the family. We've had a fair bit of travel. And so, yeah, apologies for the interruption to the rhythms. But today I have been chatting to quite a few founders recently about how they think about optimising the potential of each person in their business. And therefore, how do they do that in a way that actually unlocks the growth potential from a revenue perspective and execution perspective. So, that's what today is about. I'm going to give you a tool called the 9-Box Grid, that's going to help you think about how you plot your team against it, how you assess your team against this sort of performance and potential matrix. And then what do you do once you've actually plotted them? What are the action steps? What are the options available to you to think about? Because it's a given that fundamentally you're going to want to maximise growth in your business. But the way you get there is by having a great strategy and excellent execution. And this model ensures that you've got a clear action plan for each person to enable them to maximise that potential or to move them on if they're poor performers with low potential. And the reality is if you are leaving massive opportunities on the table and you're killing your business slowly, if you are keeping people around that need to go. Let me say that again. Having people in your business that you know need to go and everybody else needs to go who have not gone because there's no action and you haven't been decisive and you haven't got a good plan for each of those people, people who are high performers do not like carrying the weight of everybody else and it's a great way to lose great people.

[00:02:00] So, I'm going to unpack the 9-Box Talent Grid, how it works, pros and cons, and what to do with it once you've assessed people in terms of where they fit, which of course is where all the value is. So, this is going to be a little bit longer an episode and I'm going to be sharing a 9-Box Grid. So, you might want to watch, if you're used to listening to the audio version of this, you might want to watch the video version on YouTube or on Spotify, which if you click on the podcast, it opens up as a video or go to the website, www.ScaleHQ.com.au. You can click ‘Pod’ on the menu, click ‘Episode’, this relevant episode and the diagram will be in there for you. Also, we're going to be giving you a fair bit of content about what to do once you've actually assessed people in different boxes. So, don't feel like you've got to write it all down.

[00:02:40] I've already posted about this topic on my ScaleSmart newsletter, which I do on LinkedIn. If you don't follow me on LinkedIn, follow me on LinkedIn. If you do, you'll be able to get access to all the newsletters and everything that I'm covering today is already available there. So, sit back and enjoy and think about as I'm walking through this, the members of your team and where they currently sit today and therefore what you need to be doing, uh, with them in your very next meaningful conversation. So, first of all, let's talk about the 9-Box Grid. What is it? It's a commonly used framework. People use it all around the world. Allows you to assess your team based on two important factors, current performance and future potential. Like in reality, you can't have a business full of high potentials.

[00:03:21] You actually have to have a mix. You need stable team members who are good to excellent at what they do, but they've got limited ambition and they might not ever become leaders… Great. You need those people. You know, they're like the foundation of any good business. They keep it stable. They keep it working.

[00:03:35] You also need people with amazing potential who will become amazing performers over time, or maybe amazing leaders or both. But they actually need some development. What you don't need is a business full of people who perform poorly and have limited potential. Like who would want that? If that's you, call me, I'll get you the number of a good therapist.

[00:03:55] So, before we go any further, I'll try to explain this so you can visualise it before we kind of step through it, so you can imagine it. And then I'll unpack a bit more about each of these categories as we go through and what to do about them. But here's the high level. You have two axis, you have a horizontal axis and a vertical axis, and you've got nine boxes inside as opposed to a typical four box grid. You've got nine boxes here. Performance is on the horizontal axis. So, low performance on the bottom left, high performance on the bottom right. And then you have Potential on the vertical axis. So, you have low potential at the bottom and high potential at the top. It's always easier to think about performance first, and then potential.

[00:04:31] So we'll do our high performance first, then our medium performers, then our low performers, and we'll match them with their potential, so you can try to get your head around what this grid looks like in your own mind. Okay. So, let's start with the highs. High performing-High potential. Fabulous. These are the all-stars.

[00:04:46] You know who these people are in your business. You just wish that you could clone them. Wouldn't that be wonderful? Then you have high performers who've got medium potential. We call them high performers because maybe they'll rise, maybe they won't. They've got some potential, but they're just great to have because they absolutely still smash out, execute, very well.

[00:05:04] Then you've got high performers who have low potential, and you can probably imagine who those are in your business. They're the workhorses. Solid, dependable. They're not going to rise through the ranks anytime soon, and they may not want to either. That's your high performing category. Now let's talk about your medium performers.

[00:05:20] So, medium performers who have high potentials, we call them high potentials or hypos. You might've heard people call them hypos. We need to work to get them to become high performing, but they're quite often early in their careers, like lots of potential and they're doing okay in terms of their execution, but you know, they can do more.

[00:05:39] Then you've got these medium performers who are medium potential. They're like the core players in your business. So, I like to think of them as solid B's, you know, they're not a B+, they're not a B-, they're just B's. They're like the foundation. They're the bricks of the wall, you've got to have them in place. Nothing wrong with them, great to have. Then you've got medium performers with low potential. These are a bit problematic. These are your up or out grinders. Let's call them Grinders. We've got to move them up or we've got to move them out. They're satisfactory. They grind it out. But they've got low potential. So, investing in them is risky, but they are medium performing. So, it's not like urgency we've got to get rid of them. Then you have your low performing category. So that's our highs and we've done our mediums, now we do lows. All of these are low performing. So, they're all problematic.

[00:06:30] So let's talk about the categories. Low performing with high potential are like dysfunctional geniuses. They can't perform even though they should be able to, you can see the opportunity in there, but they can't do it. Then you've got low performers who've only got medium potential. These are also up or outers.

[00:06:49] So like before we had up or out grinders, these are up or out dilemmas. What do we do with you? You are low performing and medium potential. You're probably not going to grow. You're not delivering all that much. They're a tricky category, but we'll talk about those. And then you have the worst ones, the ones that none of us want. They're low performing and they're low potential, bottom left of your grid. They're just bad hires. You just got to get them out. Now you don't have to memorise these. Again, you can watch the video version, YouTube, Spotify, look at the diagram on the website. Lots of options for you to have a look at the actual model, in and of itself. And a big thanks to the website, www.aihr.com, which is the academy to innovate HR, because I have used your diagram for presentation purposes. Now let's talk about the pros of this model. It's good because it's simple. All you got to do is match your employees to the right box based on how they're performing and your assessment of their potential.

[00:07:44] It's absolutely subjective. It's your opinion, but you're going to have a good read because you're the founder. The second thing is it helps you identify valuable talents. So, it's great at pinpointing like high performers with good potential or people who are medium performing, but have high potential, and that helps you think about your development and your organisational structure.

[00:08:00] Third, it helps you identify people who need to go. And the reality is lots of us are really nice. And too often we allow people who are performing poorly and have no potential, to stay. And the framework brings to this conversation to the surface with your leaders or your co-founders or your advisor or whoever you've got in place. And ultimately, it's pretty holistic because you aren't just looking at performance, you're also looking at future potential. So, you get a broader perspective than just focusing on what they're not doing right now, because they might have some potential. It's obviously not without its flaws. Every model has cons.

[00:08:34] So here's the cons. If your leaders start waiting for an annual 9-Box appraisal before dealing with performance issues, then it's not being used correctly. Your leaders should be providing, and my clients hear this all the time from me, continuous feedback. People need to know how they're going all the time. They shouldn't be waiting for a six-monthly review or an annual performance review. In fact, I hate those. I wish you did not have them. You had a monthly, half an hour, one on one, there was a high quality conversation talking to them about their performance against their objectives, their development, the values. And you'd actually have a real conversation on a monthly basis and nothing festers and nothing waits. I mean, surely if continuous feedback models, like the model that I teach all founders that we support from ScaleHQ is good enough for Accenture and Deloitte because they have proven that better performance comes from continuous feedback rather than once a year type stuff, then it's good enough for you.

[00:09:26] But the key thing here is that the true purpose of the 9-Box Grid is actually to develop and nurture your talent. It's not actually to weed out and remove the lowest performing employees, but, if the real conversation about whether they should stay or go isn't happening with new leaders, then it's a great way to use the tool to bring that conversation to the surface, whether you're doing it quarterly or six monthly or annually.

[00:09:48] Okay. Now assessing somebody on the 9-Box Grid. So, we start using the tool by plotting the team. As I said, really simple, assess two factors. First, rate their performance, it is usually pretty easy and quick, and then you focus on their potential of a low, moderate or high on their performance in the current role. Then, are they low, moderate or high in their potential to rise into a more senior role in the future? 

Okay. That's really the only two questions. And now, do the task, put your team members on the grid. And now you've got to figure out what are the potential action plans for each of those categories?

[00:10:18] So I'm going to talk through the kind of groups, not all nine, but there's some groups that sort of go together. Let's start with the bad hires. Bottom left corner, low performance, low potential, underperformance, bad hires, whatever you want to call them. They shouldn't have been hired initially. You've got to deal with them promptly and fairly and allowing them to hang around in your organisation, turns them into like icebergs. If you invest in them, you're taking away resources from more promising employees and their low work quality is going to be dragging everybody else down and redirecting efforts towards fixing the stuff that they get wrong instead of adding value. So, you got to provide immediate…here's the strategies, right?

[00:10:52] Provide immediate feedback, short-term improvement expectations, codify it in a performance plan, and I mean short-term, I mean like the next week or two, not the next three months, like the next four weeks. Consider alternative roles, perhaps, that better harness their skills. They might exist.

[00:11:07] Okay, they probably don't, but they might exist. And if they do, I always think there's a role and an environment that suits every person. Obviously then if you're not getting improvement quickly, find a legal and appropriate and ethical way to move them on as fast as possible and then go back and review your acquisition and selection processes for talent. How on earth did they get in here in the first place? Whatever you do, don't invest in them. I would strongly encourage you to seek advice from an HR professional,  early and quickly as soon as you realise you've got one of these people in your business. If you don't have somebody internally in HR who's at the right level of capability, deal with it fairly, ethically, and legally, but get on with it. 

Okay, then we have our next least desirable category, the upper routers, the grinders and the dilemmas. Okay, so they're either medium performing with low potential, that's a Grinder, or they're low performing with medium potential, and okay, they're a Dilemma.

[00:12:01] So, the Grinders, they're sort of satisfactory, right? Investing extensively in them is not going to yield you any kind of a return. And the Dilemmas who are quite inconsistent, usually they have some potential, but they really struggle to perform. So, you need to look at the reasons behind their performance; coaching and mentoring might help. But if it's failing to get them into a higher performing tier, then you may have to make some challenging decisions. So, I would always start strategy wise with a performance improvement plan. address any role related roadblocks that might be in place that's getting in their way and any kind of skill gaps or enhancements, give them measurable expectations, tell them what successful performance looks like, and then regularly assess them and document the progress through rhythmic check ins.

[00:12:43] If the performance isn’t improving within a reasonable period, then create an exit plan, ideally assist them to find a more suitable role outside the organisation, that'd be a great outcome for everybody. Okay. Now, if you go to the extreme corners of your grid, which is our, High Performing, but very Low Potential, our workhorses or our Super High Potential, but Low Performing dysfunctional geniuses, we've either got workhorses who excel in performance, but they lack any growth potential and their work ethic should be nurtured and you should reward them, but you kind of got to avoid excessive rewards because quite often these people end up with a bit of a god like ego.

[00:13:21] They're like usually super specialist, um, and they can create little sort of fiefdoms and stuff. So first of all, like if they're a workhorse, make sure they're content. Think about how their roles might change and assist them to prepare because they're usually like embedding themselves in that role, so they're going to find change difficult. Give them incremental salary raises, but just be aware of giving them substantial increases because you end up with these sort of gods who are massively overpaid tucked away in the corner of the business, just pumping stuff out and don't promote them, because they don't have the potential. Conversely, you've got these dysfunctional geniuses who are kind of like these enigmas, these sort of rough diamonds. They just struggle to perform and you know that you need to try to get some stable performance out of them. Otherwise, you're going to have problems. So, you got to set really clear role expectations, let them know you see the potential. But also tell them there's some need for performance improvement, highlight what it is, give them some limited time to develop them, but really closely monitor that performance, because that may be something, if you can't get them out of low performing, even if they've got high potential, then they're not going to work in your business.

[00:14:21] Now let's talk about this kind of the middle set of the grid where you've got High Potentials, who are those, high potential, but average performance. That's usually because they've got limited time in their roles. They might be junior. So first, clarify, the expectation and role requirements for them. If they're junior, give them time to develop their performance, but give them consistent praise, monitor them closely, give them some job rotations perhaps to diversify their experience, get them some peer coaching from somebody else in the team, or, you know, maybe someone slightly senior and some professional development they will usually grow because they are really high potential. 

Then you have these core players in the middle, you know, reliable performers, a bit of growth potential in the current roles. Your goal is to try to get these guys, um, Into the top right of the grid. The high performers, are high performing, but sort of average to medium potential. They usually make them quite a big contribution. So, you want to try to sustain their engagement and prepare them for the future. So, here's some of the things you can do. First of all, make sure you stay engaged through regular check ins and recognition. And you know what? If they are content in their role, respect their choice.

[00:15:29] There's plenty of high performers who don't want to be leaders. Don't force them into leadership just because they're high performing. You think about how many sales people get pushed into sales management because they're the best salesperson. There is no relationship between those two things. They might absolutely hate it and be terrible at it.

[00:15:43] You know, you can use job rotations and more challenging tasks to make sure they don't get bored. And, I often would think about pairing them with mentors outside the business or inside the business for growth and giving them some upskilling opportunities. Like the strategies are a bit similar, but if they're a high potential, they're going to be able to become a leader somewhere.

[00:16:00] So you do need to nurture that desire. And as I said, if you're high performers, don't want to rise into more senior roles, that's fine. They may not want that opportunity. This is about kind of providing support and managing expectations. And then you've got your all-stars, your impact players. You know, they're your exceptional high performers who are also ready for new roles and new challenges. They're A players. They give you immense value. They usually play a really key part in your leadership succession planning. So, strategy wise, you want to give them challenging tasks. They are very capable that they will rise to it. You got to regularly check in and look for early signs if they're starting to get dissatisfied with anything and jump on it straight away. Give them some mentoring by senior members in the team or yourself or external or a mix of those. I would really encourage them to be networking with other stars in the business and with senior leaders and sometimes even externally. Subject to how senior they are, maybe there's board positions or additional advisory type things that can help them raise their profile and get them challenges. You've got to reward them generously, their contributions usually deserve both recognition and reward. 

Now, really interesting question is, your professional development budget. So, now you've got this 9-Box grid. You've plotted your team against it. You've got a plan for every single person. How do I move them up or out? You know, what's my strategy with each one, but then how do you think about your professional development budget? I know a lot of companies and I've certainly done this where we've just said, everybody gets an equal professional development budget, you know, if there's a $1000 or $2000 or $3000 or whatever the number is for their learning and development. Everybody gets it equally. But perhaps you could think about that differently and allocate it better to the places you're going to get biggest bang for buck based on the plotting that you've now done. And I don't mean a hundred percent on the all-stars and nothing on everybody else, but of course there would be weightings towards those with higher performance and or higher potential.

[00:17:48] So, if you think about how you're spending right now and on whom, I'd encourage you to consider, maybe actually you allocate 65 to 70% of your budget to your medium to high performers, as long as they've got medium to high potential. They're kind of the top four boxes on the top right of your grid. The core players, the high potentials, the high performers, and the all-stars. 65 to 70% for those four. Then maybe 20% for the dysfunctional geniuses and the workhorses, you know, give them a crack, don't overinvest because they may not want the investment or it may deliver nothing. And then you're only spending like maximum 10% on your Dilemmas, your Grinders, and your bad Hires, the sort of bottom left-hand side of your grid. That's kind of obvious. 

Now, like perhaps you're nervous about kind of applying more to those who deserve it. But I'd say don't be, you know, this is about their performance and their potential, and you've got to put your money where the greatest returns will be, but importantly, it's not about equality. It's about equity. And that is two different things. Equity does not mean equal. I think we should invest based on merit, like the potential and the performance, not just the performance and return. And so, it's about being fair, which is about equity. Equity is about fairness, not about equalness.

[00:19:01] And so I actually think you're being very unfair to your higher performing, higher potential people who are putting in a lot of effort and striving. And if they're getting the same stuff as all the people who are either completely dysfunctional, low performing and low potential, is that really fair to the higher performers who are putting in all the effort? I don't think it is. 

Okay, I know this has been a long one, but what do you do now? Well, as I said, this is an awesome tool for evaluating performance for potential and getting really clear about how you're going to manage your talent and thinking about your succession plans. The value of course is not in labelling people, but the assessment process and the discussions that come up as a result. It's an opportunity to kind of bring like unsaid views on your people to the table with your other leaders or colleagues or directors or whoever needs to be involved and develop action plans that help optimise the chance that they're going to succeed. We'll move them on, and that's it. So go ahead and evaluate your team's performance and potential, stick them on the grid based on how have you've assessed them, whether that's qualitative and quantitative tools, or whether it's just gut feel, depending on the size of the business, implement, you know, the appropriate, coaching or development or sort of talent management strategy for those distinct groups of people.

[00:20:09] I really hope you found this useful today. If you've got any questions, you can feel free to reach out to me on LinkedIn or through the Scale HQ website (www.ScaleHQ.com.au.) And I really wish you all the best in maximising the potential, helping your people succeed, which helps them fulfill their potential and as a result, helps your business fill its potential and helps you as a founder fulfill your potential.

[00:20:28] Enjoy.