We do this because schools taught us to. Tests started with a maximum score of 100 and points were deducted for every wrong answer. If tests started at zero and awarded points for every correct answer, we would be encouraged to continue doing better. Instead, we learn to fear mistakes and point them out in others.

Startups start at zero and earn points along the way. We expand our strengths instead of minimize our weaknesses. There is no maximum score. Steady progress, not expected outcome, is the measuring stick.

Treat employees similarly. An employee has a finite amount of time. Doing more good work leaves less time for bad work. Double-down on what your employees do well.

It also creates a positive feedback loop. Reinforcing great work encourages more great work, which creates more reinforcement. When you try to correct bad work, the best you can hope for is to stop giving feedback.

Maximizing good work instead of minimizing bad work requires patience and confidence. Fight the urge to tell people to “do better.” Instead, tell employees when they do something well. It takes conscious effort to find these opportunities but with practice it becomes habit. And your people will be more effective for it.

How do I give negative feedback?

By being curious.

Start with the premise that your employee did his best. Then the question becomes why would a smart and capable employee who did his best screw up?

You cannot be a good manager without a deep curiosity for this question. Weak managers assume employees took shortcuts, were being lazy, or are just dumb. This is rarely the case.

With genuine interest ask, “Why did you do (or not do) X”? Try to understand his thinking without criticizing. There are three outcomes:

1. You realize he was right and you were mistaken. It happens to me all the time. This is the best outcome.
2. He realizes the mistake on his own. This is the second-best outcome.
3. He explains why but does not realize his mistake.

The third outcome is usually because the employee didn’t understand what to do or he didn’t know how to do it. The first is a communication problem. The second is a training problem. Both are your fault as his manager.

Your job is to diagnose which situation you are in and fix it. You will want to absolve yourself and say, “I told you to do this” or, “You should know how to do that.” Don’t. Remember the premise that your employee did his best. The problem was you didn’t communicate well enough or you haven’t trained him well enough. Fixing your employee’s performance starts with fixing your management.

How do I decide what to delegate?

Delegate the work you want to do.

When I ask this question most managers respond with, “I delegated the call to Mary because she needs to learn how to handle an angry customer” or, “I delegated the report to John because he’s good at writing.”

It is funny how managers rationalize giving employees shitty work as a benefit to them. Mary’s manager delegated the call because he didn’t want to deal with the angry customer. John’s manager delegated the report because she didn’t want to write it.

Many managers treat their position as a privilege and delegating shitty work is one of the perks. They are lousy managers.

I can give you a simple rule to decide what to delegate. Delegate the work you want to do. There are reasons to do this:

1. Employees will love working for you. The work you want to do is probably the work they want to do, and they will be happy employees because of it.
2. You will train future leaders. They will see you doing the hard, miserable work that nobody wants to do. One day they will want to do it too. Not because they enjoy the work, but because they see you doing it as their leader, and they want to be leaders too.
3. You will grow. Most people want to do the work they are good at. If you delegate the work you are good at, the remainder will mostly be work you are bad at. You will struggle, suffer, and learn. That is where growth comes from.

To extend the eShares 101 sports analogy, hockey coaches talk about “skating to the hard parts of the ice.” This is the ice in front of the goal where defenders punish players. But this is where goals are scored, and those who suffer most score most. The best managers are always found on the hard parts of the ice.

How should I prioritize?

Fix problems. Then prevent problems.

You will often hear me say, “Sprint to the fires.” It is the war-cry of middle management. Our best managers fearlessly attack problems, no matter how big and painful. When you look at our best managers they never delegate the hard problems. If there is a burning building, that is where you will find them.

When your immediate problems are under control, move on to preventing problems. This is what our best executives do. It is a good way to think about the manager’s career path. The best problem-solving employees are made managers. The best problem-preventing managers are made executives.

How should I grade employees?

Don’t. Teach them to self-evaluate.

Employees often ask, “How am I doing?” I respond with, “How do you think you are doing?” Self-evaluation is the most important skill you can teach an employee. I am happy to offer my perspective, but only as feedback on theirs. They can evaluate themselves every day, minute, and second. I am lucky if I see their work once a week.

This may seem strange after years of receiving report cards and employee performance reviews. Companies (and schools) have convinced us we should be graded. It benefits the institution to do so. They can sort, rank, and filter employees. They can use it to decide who to fire and keep. They can set compensation against it. It is easer to manage employees as a distribution of scores rather than as unique individuals.

But employees gain nothing from it. It is selfish for us to reduce employees to a letter grade. Instead, we should become experts on our people’s strengths and weaknesses and help them become experts too.

We ask employees to have a ten-year career at eShares. If the only evaluation they come away with is a letter grade or employee rank, we have failed them as managers. They deserve more and the most valuable skill we can teach them is self-evaluation. They will carry that for the rest of their careers.

When do I fire somebody?

When you know they can’t succeed.

This is the only reason you need. You do not need the employee to agree with you, and you do not need to build evidence to justify your decision. If you believe your employee cannot be successful, let them go swiftly and humanely.

Performance Improvement Plans are popular because managers want the employee to agree they deserve to be fired. PIPs are cruel. If an employee is unable to succeed in a supportive environment, he will not succeed in a hostile one. You are setting him up for failure. If you are doing it to build a case for firing, you are especially unkind.

Do everything to help your employee be successful. But when you know he can’t succeed, let him go immediately.

How do I fire somebody?

By apologizing for our failures.

Unless an employee lied to you during the interview, it is your fault you are firing him. You had perfect information and decided to hire him. Either you incorrectly hired or did not support him after doing so. In both cases it is your fault.

Excluding fraud or unethical behavior, I start every exit conversation with:

“Today is your last day at eShares. I’m sorry I have to let you go. I’d like to tell you why we are letting you go and apologize for our failure in helping you be successful here. I would also like to hear your perspective so that I can be better in the future.”

Share why you made the decision. Apologize for things you did not do well. Ask for their perspective. Listen and learn so you don’t make the same mistake again.

Conclude by offering to be a reference in a way that is sincere. Provide an assessment of their strengths, weaknesses, and the type of role you think they would be successful in. My most common feedback is that the employee has great skills, but would do better in a larger company with more structure. Even as startups go, eShares can be a difficult place to work for those who need direction.

Why can’t I just tell people what to do?

Because the more responsibility you have, the less authority you have.

The higher in the organization you are, the less control you have. Josh, our head of product, is one of the top ten product-builders in Silicon Valley. In a few years he will probably be top five, if not top one. He can go anywhere he wants. My job is to keep him here. He won’t stay if I try to exert authority over him.

The same goes for his team. They are more loyal to him than me because he is their manager. If I want something built, Josh has to want to build it. I can’t order him or his team to build it.

The larger your organization, the more power shifts from you to your lieutenants. This is the fundamental shift in becoming a manager-of-managers. It is much harder than managing individuals, because you must use influence rather than command. Start practicing now.

How do I know if I am a good manager?

Employees ask you for advice.

The first time an employee asks you for advice is a magic moment. It signals that employees feel empowered in their work and trust your judgement to help them do better. Enjoy the moment if you are good enough to get it.

The converse is also true. If your employees do not ask you for advice, ask yourself why. Sometimes employees don’t feel free to make their own decisions. Sometimes they worry that asking for advice will make them look incapable. Either way you have not empowered them.

If your employees are not asking you for advice, don’t order them to. It will not have the effect you want. Instead, ask them for advice. Lead by example and they will likely follow suit.

How do I know if I have good management team?

Shit rolls uphill.

This is the logical outcome of delegating the work you want to do. If nobody wants to do the shit work, and managers delegate the non-shit work, then managers are stuck doing the shit work. And the higher up you are, the more shit work rolls up to you.

People equate promotion with privilege. That is not true at eShares. Promotion increases responsibility but never privilege. Responsibility means sprinting toward fires, doing more shit work, and preventing bigger problems.

At eShares a promotion is nothing to celebrate. Do not call the newly promoted manager with congratulations. Rather, call them to say, “I heard the news. I’m so sorry. Are you okay?”