The most valuable assets of a new startup are the people on the team, and the most challenging task of the entrepreneur and team leaders is to spend their leadership time and energy productively. Cash isn’t always the scarcest resource startups have to invest – more often it’s the leadership capital of under-experienced and over-stretched entrepreneurs and co-founders.

Most new startup founders start out by assuming they need to spread their leadership efforts evenly across all team members. They soon find that doesn’t work, and they fall back to dedicating their efforts to the performance issue or crisis of the moment. Unfortunately this often makes them enablers of team member bad behavior, and spiraling down to a dysfunctional team.

I found some guidance in the classic book, “Lead Inside the Box: How Smart Leaders Guide Their Teams to Exceptional Results,” by Victor Prince and Mike Figliuolo, two top thought leaders in the field of leadership development. While their experience and focus is more on large organizations, I was struck by how similar the considerations are to my experiences with startup teams.

The authors define a leadership matrix of four behavioral categories and eight team member subtypes. Every entrepreneur needs to take a hard look at their current startup team, based on the nature of each team member’s behavior, and future requirements, to assess their leadership challenge ahead:

1. Domain masters. One of the most desired team member types for startups is the domain expert who is satisfied with their existing position and leadership. You count on these to deliver ongoing outstanding results. They require your lowest energy investment for the highest output. The challenge is to reward them well and not lose their loyalty.

2. Rising stars. These team members are the ones who perform well in current roles, with minimum leadership, but they expect leaders to provide them with a stepping stone to larger roles and responsibilities. If they don’t see that happening, they are prone to leave your startup for better opportunities, or revert to a squeaky wheel or even a slacker role.

3. Squeaky wheels. Team members who are capable of great results, but require an inordinate amount of hand-holding are often called squeaky wheels. An entrepreneur’s challenge with these is to wean them from their dependence on the leader, while continuing to generate solid results. Any other action will drive them to a lower category.

4. Steamrollers. Some team members may get results, but at the high cost of damaging team morale and destroying the goodwill you and your team have accrued with others. Your challenge is to reduce the friction they are causing, while building their people skills and improving their ability to positively influence others. Their friction is usually toxic.

5. Joyriders. These team members are always busy, and spend an inordinate amount of time at work, but focus on tasks they want to do, not tasks you need them to do. Your leadership task is to refocus their attention on their core responsibilities, and remove any possible distractions. Make sure they get rewarded for desired results, not time spent.

6. Stowaways. We all know the team member who expends the bare minimum amount of effort required to keep getting paid. Stowaways need their leaders to engage them on a regular basis, and measure them against peers to make sure they are carrying their own weight. At the least, other members need to see you holding this person accountable.

7. Square pegs. These are people who simply don’t have the skills they need to do the required job. The leadership challenge is to find the training or mentoring to fill the skill gap, or to find a new role that is a better match for the skills they do have. The leadership capital, and other costs to support square pegs is a huge startup resource drain.

8. Slackers. At the bottom of the value chain are team members who have the skills to do the job, but lack the drive or motivation. The leadership challenge here is to unlock their motivation to apply themselves to their work, or remove them from your startup before they have drained the drive and energy from the rest of the team.

Effective team leadership, or leadership inside the box, is really only half the challenge that every entrepreneur faces. Equally important is leadership in the marketplace, with customers, outside partners, and industry thought drivers. The time and energy to do both is beyond most mere mortals.

It’s time to take a hard look inside your box to see if you are spending leadership capital there that you can’t afford.

Marty Zwilling