Carrots and Sticks
Driving urgency and motivation in your team
A frequent theme in my executive coaching conversations is urgency—how do I get my team to move faster? One great model for building high performance teams is Frank Slootman, the former CEO of Snowflake, who led the data platform company to a blockbuster IPO in 2019. What’s remarkable about Frank isn’t the IPO, but his track record: Snowflake is the third time he’s led a company through transformative growth and blockbuster exit. He’s been able to repeatedly deliver through his leadership. When Snowflake announced his departure, the stock plunged 20%.
Frank has written extensively about his management approach in his book Amp It Up. When I first read it, I concluded that ‘Frank is not a nice guy‘ due to some controversial elements in the book:
Topgrading: systematically upgrade talent in key roles over time. Instead of waiting for your team to fail, replace them proactively any time there’s a higher caliber person available.
Quick to fire: act quickly to get the wrong people off the bus. Instead of coaching them to a better place, switch out people quickly.
Quarterly bonus: Every single quarter, the company has to earn their bonus and each person has to earn it too. There is a chance of getting zero.
More recently, I listened to a podcast interview and drew a very different conclusion: Frank is actually doing something brilliant. I missed that he’s building a workplace that is insanely great for high performers, and terrible for low performers.
The Carrot-and-Stick Approach to High Performance
Think about workplace incentives as carrots and sticks, where these are your levers to attract talent and foster performance culture. Carrots are rewards, promises and positive aspects of the job. Sticks are penalties, threats, and negative aspects of the job. Let’s examine the experience for a low performer and top performer through this lens.
Life as a Low Performer: Clear Consequences
In Frank’s workplace, his sticks are obvious: He’s going to fire you if you don’t perform. It’s an intense environment focused on results, even when circumstances beyond your control matter. If you’re not pulling your weight, you’ll get quarterly feedback coupled with the possibility of a zero bonus. You can’t just meet the bar once, you need to regularly justify why you’re there. You know where you stand.
Life as a Top Performer: Bathed in Glory
What I didn’t fully appreciate from the book was how much he puts into the carrots. If you’re in sales and you close a top customer that the company desperately wants, you are “bathing in glory” as Frank describes it. You get a big announcement, you get an additional equity grant, and everyone is sending you notes. The CEO makes time out of his day to give you a personal call. You are the champion, and everyone knows it.
“I’m big on recognizing great work. Great people need to be celebrated and rewarded and singled out in every way possible,” Frank explains.
It must be an incredible experience to be a top performer. You are at the top of your game, and everyone around you is too. There’s camaraderie and a sense that everyone is together in this. You know where you stand.
In order to make space for such large carrots, Frank makes some controversial moves. For example, the company is highly inequitable. Bonuses, paid out quarterly, are allocated on a bell curve so that the top performers could be making 2-3x and low performers making zero. This rewards high performers but breeds resentment among those who aren’t.
If you’re a top performer, this must be a wildly attractive place to work. Finally, a place that appreciates me!
If you’re a poor performer, this is a terrible place to work. What drudgery!
To create his high performance team, top performers are pulled in to the culture. Equally, poor performers must be driven away. (And you better have a fantastic recruiting engine in place to support it.)
The Trap: Copying Without Understanding
I’ve seen founders attempt to apply Slootman-esque strategies to drive performance and intensity in their teams. One founder told his team to work 6 days a week until they were profitable, and cut a wide swath through the team firing poor performers. He doubled down on execution, making expectations clear and holding everyone accountable. Though they had a blockbuster quarter, in the months following several top performers left, undermining the gains. What went wrong?
Instead of blindly copying the work tactics to build a performance culture, it’s important to examine why they work.
Sustainable performance cultures must reward, not just punish, the best people.
The sticks are the visible, easy part, where you see companies demanding 996 schedules and firing the bottom 20%. Increasing the intensity only drives people away. The hard part is making a big enough carrot for top performers to stay and thrive. The founder’s top performers left because it wasn’t appealing enough to stay in such an intense and demanding job.
Design Exercise: Evaluate Your Carrots and Sticks
Here is an exercise you can apply to your own organization.
Directions:
For both a top performer and low performer, map out their experience in the organization. For an example, look at the Snowflake description above. What is their experience of the positives (carrots) and negatives (sticks)?
Battle test it: look at a great hire you’d LOVE to get, and weigh your offering against other companies.
At most companies, the difference in experience for a top and low performer is minimal. Top performers will get more recognition, a slightly faster promotion cycle, and potentially a higher bonus percentage. Low performers get less, but it’s hard to get fired (though this situation is changing). Because it’s balanced, you get great retention but not necessarily high performance.
Frank’s approach might work particularly well for a high-growth company on the cusp of IPO. He’s successful because he can offer the ultimate carrot of sharing in the financial success of the company and riding off into the sunset.
Many companies are not in the position to offer that and need a different approach. If you can’t get your top hire, what’s the next best thing? “Hire people ahead of their own curve. Hire more for aptitude than experience and give people the career opportunity of a lifetime,” Frank advises.
Own Your Differentiation
To create a company that attracts and retains great people, it’s important to put effort into designing a workplace that truly excites them. Copying what everyone else does will make you look like everyone else.
While you may not adopt Slootman’s model, it’s a masterclass in differentiation. He’s put up a big “GO AWAY” sign for those that don’t fit, and a tempting paradise for those that will.
This is essay #5 in my series to conquer my fear of writing.