Top Performers Revisited

The Art of Harnessing Top Performers in the Corporate Arsenal

Managers are levered, and must work hard to bend the curve on the quadratically increasing costs of their team. While there are many strategies the manager can employ to achieve this goal, the silver bullet to maximizing their leverage is optimally utilizing their top performers.

Looking at the manager’s balance sheet, the top performer is critical for the manager due to their ability to dramatically increase managerial equity and reduce the amount of debt incurred for a given level of performance. They do this by increasing the likelihood of outperformance and through reducing the amount of management hours needed to hit a given level of performance. This is the result of three things:

1. The top performer creates more individual output - they drive more impact than the average team member with the same number of hours worked,

2. The top performer reduces the team size needed to drive a certain level of impact, which reduces the impact of the handshake problem,

3. The top performer lowers the coordination costs of the team by creating more voices to help shape direction.

Interestingly, their value is derived not solely from their individual output but also from their contribution to creating a simpler and smaller team. Because managerial time is fixed, this effect becomes the dominant source of value for most teams.

However, to get this yield, the manager needs to work with top performers in a fundamentally different way than the rest of their team. They are not resources, but very specialized tools for maximizing impact.

In order to work effectively with top performers, we can borrow a management concept popularized by Keith Rabois, which categorizes team members as either barrels (those who lead and make decisions) or ammunition (those who support and execute). The top performers are the barrels - they are people who can help us aim and utilize ammunition, versus ammunition, which are people who support the direction. Tied to fungibility, barrels are a lot less fungible than ammunition, and must be used wisely and maintained carefully.

The two categories to work on with your top performers are:

• Alignment - of all the people in your team, the top performers must deeply understand and be aligned with your purpose and goals. They need to feel comfortable questioning and providing feedback on the direction, and you should be open to debating, justifying, and potentially revising based on their input, as their buy-in is crucial.

• Rewards - Due to the outsized value top performers bring, and because they are non-fungible, they should be correspondingly rewarded. Treat them like a luxury retailer treats their customers. This is because like high end customers to a luxury retailer, the value to you is so high that you cannot lose them.

Alignment

Although alignment of purpose and goals is important for all team members, it is absolutely critical for top performers due to their outsized impact. This means spending most of your time with your top performers, but for a very specific goal. The time spent with your top performers is to build trust and buy-in to your strategy.

Firstly, you want to spend time with them to make sure they understand the why behind your purpose and goals. You want to make sure that they have clearly internalized both, and are able to articulate them in their own words. Since your top performers will be the anchors of your team, this level of understanding and articulation guarantees that they are spreading a message that is aligned with your own.