Your Philosophy Around Talent Makes A Difference

Your Philosophy Around Talent Makes A Difference… Having a company full of “A Players” does not guarantee success, but it significantly raises your prospects.

As a Business Coach, I have worked with many organizations and see the differences between the companies that produce short-term success, long-term success, and those that flounder. There is a vast difference in how the long-term winners build their organizations and their results versus everyone else. The factors that cause these results are known, often discussed, and rarely emulated. Your philosophy around talent matters!

Identify any company you consider great, and you will find that the greatness was 20 years in the making. You have probably heard revenue is vanity, profit is sanity, and cash is king. If you are producing high levels of success in all three measures, you should be proud. Not many companies can boast such performance. And still, you may not be built to last. What worked in the past may not work for the future. 

Most businesses will never be innovative, transformational, or trailblazers. However, all can have extraordinary growth in revenue and profits. An example most of us know is Southwest. They don’t have the most revenue (10th), largest fleet size (5th), or passengers flown (3rd). However, they broke the mold when measuring cumulative profit over 30 years. And, they copied and better executed another companies business model. 

As a business coach, I help companies build great companies and develop the best leadership practices to stay great. I help address organizational habits that cause growth ceilings. Or worse, your habits could lead to a decline or even failure. I see my job as a blind spot remover. One of the keys to your success is your leadership philosophy around talent.

First Who Then What

You can’t discuss enduring success without addressing the elephant in the room. Your business will only be as good as the people that operate in it. Jim Collins nailed it in “Good to Great, “first who then what!”

Many companies have a few great people, but few can boast the best talent throughout the organization. Most leaders will tell you that they are great at selecting people, but the data proves otherwise. Most companies don’t have the measures to know and only use their income statements as their measuring stick. The stark truth is that at least 30% of your employees are not performing and hiding in plain sight.

As I wrote in Your Business is a Leaky Bucket, even great leadership cannot overcome the limited abilities of “B” or “C” talent. Often, leaders can only go as far as those they lead. Think about it from a coaching perspective. You could have a world-class coach, but if you have a team of players with mediocre athletic ability, you’ll only get so far. The coach can draw up all the plays he wants, but the team has to execute them on the playing field. Players have to make split-second decisions and make the plays as the game unfolds. The players determine whether you win or lose. Business is no different.

Great leadership puts a person in a position to excel and succeed, but that person still has to do all the heavy lifting. It has been said that a great leader is like a gardener who plants seeds, makes sure that the soil has the right nutrients, and then nurtures the soil. The gardener cannot grow his crops, and he can only provide the right conditions for growth and plants the right seeds. 

Trust me when I say it is imperative to have A-rated talent to obtain optimal results. Then it takes leadership to keep them at that level. Now, don’t think of this as a process of rating people. Instead, it is about establishing the standards for every employee. Only after specifying measurable objectives can you hold your team accountable. Incomplete hiring and accountability practices, not putting people in the right seats where they can excel, failure to hold people accountable to key outcomes, and weakness in your culture represent poor leadership.

One of the biggest profit leaks in your company may be related to your philosophy regarding personnel. The highest cost in most companies is payroll; therefore, your biggest asset or investment is people. How seriously are you and your company taking this investment, and how disciplined are you in demanding that it produces an adequate standard of performance?

I have enjoyed coaching excellent teams and have experienced the pain of excessive numbers of wrong team members. It is no surprise that when the leadership team is weak, so is everyone else. An “A Player” will not survive a “B” leader or tolerate being surrounded by “B” coworkers. Birds of a feather flock together. We have looked at the success rate of our engagements, and Clients that put heavy investment in filling their organizations with “A Players” far outperformed the rest. Worse, companies with “B” leaders, particularly CEO, moved sideways at best. We would use the same process, same coaches, and double the effort to help the “B” team. We always fail to make sustainable progress with a “B” team.

What Are “A” Players?

 “A” players are employees who consistently meet productivity requirements (performance standards) and consistently live your company’s core values. Your productivity requirements should be set at a high bar and be readily achievable. Do not place the bar so high that it takes a unicorn to fill your position. Regardless of the role, strong performers can produce at two to three times the output of their peers. Many organizations, however, label the wrong people as their “A” players. You may be favoring people you can identify with more personally, that you have less conflict with, who have organizational tenure, who have the most institutional or industry knowledge, or that you consider loyal to you. They are not necessarily “A” players. If you are like many leaders, you may be giving more weight to only a few attributes or qualities you find important. Unfortunately, those may or may not be critical to the position’s real mission, purpose, or success.

I had a client who had an issue with his controller and was leaning toward dismissal. This was a sales culture, and the CEO favored outgoing and communicative people. He felt the controller did not fit his culture. The controller was reclusive and preferred to work in a quiet place to concentrate. Also, this controller was not afraid to tell the CEO when the company was wasting money, even if it was the CEO doing so. The controller was very focused on precision and getting things right. She often voiced concerns when other leaders exaggerated their points or made decisions with no supporting data.

The CEO failed to realize the issues he had with the controller were not related to her skills and talents. Instead, they were related to her behavioral style, which differed from the CEO. The controller’s behavioral style helped balance the leadership team and was essential to her being a suitable controller. Being the decisive and outgoing communicator that the CEO preferred was not a necessary quality for being a competent controller. The controller lived all of the core values of the business entirely. Moreover, everything produced by the department was helpful and accurate. Furthermore, she treated the company as if its assets were her own, protecting the owners.

So what causes someone to be categorized as a “B” or “C” player? A “B” player consistently lives all of your organization’s core values but is not meeting 100 percent of their position’s productivity requirements. A “B/C” player performs at the required levels but does not consistently demonstrate one or more core values. “C” players are failing to meet the performance and values standards. In all cases, anyone who is not classified as “A” should only be kept on your team if management believes they can become “A” players with proper training and coaching within an acceptable period. If not, the best thing you can do is replace them speedily.

Three Types of A-Players

Earlier in my career, I took over a new role and fired our top producing salesman. The owners thought I was nuts. We had about 20 salespeople and his book represented 20% of our revenue. What the owners were not seeing was how he affected everyone else. I spent approximately 5 hours a week dealing with issues presented because of this person, including a sexual harassment claim, which turned out to be a repeat offense. I stuck to my decision and fired him. In the end, our company, which had been declining in sales the three years previous to my being hired. After firing this toxic employee, revenue started growing immediately. Within 30 days of firing him, our largest client (representing 10% of revenue) called the President and said it was about time. They had been diverting business to our competition because they found him toxic. They immediately began ordering more from us.

There are three types of “A Players:”

A1 – They are great in their current position. We would hire ten more just like them. These people are not promotable, love what they do, and are passionate about their work.

A2 – Is someone you believe can be promoted 1 level. They have done very well in their current role and have the skills, desire, and ability to take on higher responsibilities. They can help produce more people just like them by sharing their knowledge and experience and representing your core values daily.

A3 – Is someone you believe can be promoted to two levels or more. They have traits, capabilities, and the desire to lead others.

One last comment about “A Players.” Too often, leaders create arbitrary performance standards. I have found this to be a large problem. The standards are set, and no one consistently hits them. When people miss them after giving 100%, they can be labeled as “not performing.” This leads to lower performance and eventually termination. I recommend you use much rigor in developing reasonably high-performance standards. Failure to do so costs you a lot more than you realize.

Eight Questions to Ask When Someone Does Not Perform at an “A” Level:

(1) Have you adequately communicated expectations?

(2) Has this person been an “A” player in the past? If so, what has changed?

(3) Does the person have the skills and knowledge necessary to perform his or her job at a high level?

(4) What training is required to get this person to peak performance?

(5) Has the organization created unnecessary barriers to this person becoming successful?

(6) Do you believe this person will achieve productivity within a reasonable amount of time?

(7) Does this person believe in your core values, and is he or she willing to live them?

(8) Which processes, if fixed, would lead to better success in the future?

Answering these questions will help you diagnose the issue(s). Sometimes team members are well past the rebound zone. That is, you simply cannot resurrect their performance. Other times, with a little redirection and emphasis on coaching, mentoring, or training, an underperforming person can bounce back. Either way, you have to determine the exact problem and then take great strides to address it.

Why is the “B” and “C” Performance Issue Not Being Addressed?

The primary reason employees are permitted to underperform is a lack of clarity in leadership. Leaders are often too busy doing their jobs to focus enough time and energy on what they want from their team. And when they have a good idea of precisely what they desire, often they do not adequately communicate it. Even then, performance is usually not being measured to allow a person to be held accountable.

Most sharp business owners do measure the performance of their businesses on at least a monthly basis. Still, they fail to relate that measurement to individual employee performance properly. By not requiring a specific level of performance, monitoring that performance, and holding employees accountable, you allow your employees to establish their performance requirements. Common sense tells me your employees will set lower work standards for themselves than you would.

You may be wondering how “B” and “C” performances can cost a company millions and go unnoticed and unaddressed. The primary reason: There is no financial statement line item to quantify the cost of the lost clients, lost productivity, mistakes, and lost opportunities attributable to these nonperforming players. This begs the question: Why would you ever even consider keeping a “B” or “C” player?

 When Do You Keep “B” or “C” Players?

Keep a “B” or “C” player when you confidently believe they will become an “A” player within a reasonable amount of time. If you cannot define how and when that will occur, stop fooling yourself and cut the cord. With that said, you may have to keep a person on board until hiring their replacement. At times, prematurely forcing a vacancy will be too disruptive. Be careful. I find that keeping the wrong person is costing you far more than you ever imagined.

Leaders have many excuses for not replacing their “B” or “C” players. All of the reasons boil down to either leadership laziness or just plain poor leadership. Let’s again clarify the definition of the “A” player. They are not extraordinary. They are people who meet the requirements of their positions and fit your culture. Anything less, and you are overpaying for a position.

Every company leader I have met who had a cash flow problem or was unsatisfied with their growth or profits also had a people problem. Growth problems attributable to bad strategy are the result of people problems. Companies that choose the right people (including advisors, consultants, and coaches) are less likely to have strategy problems. Think about it. The employees of any business are like the cogs that keep a machine running. Doesn’t it make sense that the machine won’t operate at optimum performance when you have broken, incorrect, or rusty pieces inside of it?

It is rare to find a company that already had the processes in place to allow them to demonstrate that at least 75 percent of its employees were “A” players. In fact, most had 40 percent or even less. Many initially believed they had 75 percent or more, but that was a wish and a prayer, as they were not tracking any performance indicators to prove their people were performing.

Research shows that replacing even one “B” or “C” player with an “A” player has a significant impact on a business. Some companies misunderstand what could happen if they commit to doing what it takes to achieve A-player performance in every position in their company. They create walls or personal obstacles, some of which sound like this:

 – There are not enough “A” players out there.

 – It will take much longer to hire people.

 – It is too complicated.

 – It takes too much workforce.

 – It can’t happen in our industry.

 – I have to fire everyone who is a “B” and” C” player.

 – “A” players must be paid more than “B” and “C” players.

The truth is that these are all myths and limiting beliefs, allowing leadership to continue to justify poor hiring practices and maintain the status quo.

The Container Store provides one of the best examples of building an organization with “A” players. I was fortunate to hear Kip Tindell, founder of The Container Store, share his formula for making a great organization. He built his company from a small start-up to one of the most respected businesses around. By enforcing an “A” player mantra, his company grew 20 percent a year to well over $1B in revenue. His formula has five crucial keys to success:

(1) Pay – They paid 50 percent to 100 percent above the industry average. Tindell knew one great person could do the work of two to three ordinary people. “A” players pay for their “extra” salary threefold, so overall labor costs are lower than the competition. His people are incredibly proud to be part of the company.

(2) Recruiting and Retention – To win, he knew he must only hire great people. “A” players only like to work with other “A” players. They do not want to be surrounded by mediocrity. They would choose to be in his company to be on a great team. They wanted more of the best and brightest out of school. This means his recruiting process had to be phenomenal to find and select the right people and never settle. This resulted in less than 10 percent turnover in an industry that typically experiences over 100 percent turnover.

(3) Training and Onboarding. Tindell provides eighty-four hours of formal training in the first year compared to the industry average, which is eight hours.

(4) Real transparency and communication. Your leaders and managers can thrive with clear communication and transparency. If they don’t feel sufficiently informed, they feel left out, and their performance will suffer.

(5) Culture is everything. Free the employees to choose the means to the ends, but tell them the foundational principles to use in making those decisions. All employees will give you 25 percent of their efforts, considered the bare minimum amount of productivity required to keep your job. To get the other 75 percent, they have to love their manager and culture.

In each of these steps, you’ll quickly come to a singular conclusion: Great leaders invest enormous time and energy into their team. They create a culture that invites in “A” players and demands an A-level performance.

 Actions to Take

What steps can you take to build a high-performance organization? Just like any machine that takes proper maintenance and attention to run smoothly. Lack of timely care to problems leads to more costly repairs. So likely, we can all agree it is much more efficient and cost-effective to ward off those repairs. People already spend enormous amounts of time interviewing candidates. They need to learn the right techniques and processes to determine whether the people they interview are the right choices for the positions. The real challenge is instilling an organization-wide commitment to high-performance standards, and practice makes perfect.

There is no one-size-fits-all sort of remedy. Different companies require different solutions. Remember that you’re dealing with real people and problems, so do not remove the compassion from the equation. Classifying someone as “C” or “B” in their current role does not mean they cannot become an “A” player in another position or possibly in their existing position, with just a little more training.

It has been said, “That which gets measured gets done!”When measurement tools are in place, leaders are shocked by how many employees fit the categories of “B” and “C” players. This performance gap costs companies millions in profit leaks. However, you can take several steps to resurrect and improve your organizational productivity.

 Six Steps to A-Player Status:

(1) For each position in your company, identify two to three key performance indicators that the person in the position has direct control over and would prove they are performing well in their job. Establish a high but realistic standard for each indicator.

(2) Communicate these indicators and the standards to the person in the position and measure actual performance versus the rules you’ve set.

(3) Establish a process for continually reinforcing your core values with all of your employees.

(4) Every quarter, review how consistently each member of your team lives your core values and meets the performance expectations of their role

(5) Put employees who are not living your core values or meeting performance expectations on definite performance plans to direct them toward achieving the desired performance.

(6) Take immediate action to help employees who are not meeting their requirements. Those who cannot meet your standards should be replaced.

 

Howard M. Shore, Founder and CEO of Activate Group Inc., is a bestselling author and serial entrepreneur specializing in liberating leadership teams from the barriers holding them back personally and professionally. During his 35+ year career, Howard has helped create over $1 Billion of value and authored two best-selling books, The Leader Launchpad and Your Business is a Leaky Bucket. Howard cut his teeth as the owner of several successful companies and executive for Fortune 500 companies like Ryder Systems, AutoNation, and KPMG. Howard has become a sought-after business mentor, executive coach, and keynote speaker. His clients work in family-owned, multi-national, public, and private companies ranging from $1 million to over $1 billion in annual revenue. With a 30-year track record of success, he guarantees any organization using his methods and systems will become more profitable, stable, and scalable.

Seven Techniques to Winning The War on Talent

I am impressed by the number of companies that are experiencing revenue records. And, surprised that in a large majority of cases, business should have been much stronger. Almost all of our clients have had to walk away from business or defer revenue. The primary reason has been related to people. While supply chain challenges have been a significant factor for some, two-thirds of the issue revolves around people. The number one challenge has been having had the wrong people or finding enough of the right people.

While many leaders have pity parties, others have taken a different approach. The truth is that your people’s issues are internally rather than externally driven. Yes, there are more job openings than people actively looking. Yes, many of the people who are applying are less than ideal. However, when was the last time you did not have this same problem! While many companies struggle to fill a few positions, others add hundreds of employees per month.

One client I work with had about 60 Employees in December and is now approaching 200 employees seven months later. They are on track to hire over 50 employees this quarter. They accomplished this while many other companies in their same industry are experiencing difficulty recruiting far fewer employees. There is a clear difference in how my client has approached winning the war on talent. They chose to follow the steps of other companies that were having success and not falling into the trap of listening to others that were not.

If hiring the right people is negatively affecting your business, I recommend you keep reading…

Before I get deep into how, I want to clarify that you probably need to raise rather than lower your standards. I am finding that a primary reason for your company is that you have been building a team with misfits, half-fits, people that lack hunger, and others that may be productive and a nightmare for everyone else to work with. This significantly deters the right people from applying or accepting your offers. Remember the saying, “birds of a feather flock together.” Be careful not to build the wrong flock.

When you accept lower standards, you create significant issues. And while you may try to persuade me that it is better to hire poor talent than none at all, I will respectfully disagree. Hiring success requires that you hire someone who consistently demonstrates all your core values and produces reasonably high productivity standards over one year. Those standards typically rise over the year. Anything less is a miss-hire. When you miss-hire, here are examples of the cost:

    • Let’s assume that lower hiring standards cause hiring success to be 25% (the national average). To correctly fill ten positions, it will take 31 hires before you have to fill them with the right people. Consider how much extra burden (recruiting, productivity, management time, training, and so on) it places on your organization.
    • Wrong people suck the life out of your best people. They infect the right people.
    • Wrong people cause lost business.
    • Wrong people damage your company’s reputation.
    • Wrong people cause right people to quit or not join your company.

I am sure you are reading this and thinking, “theoretically, you can’t disagree, but what do you do when you need people, and the right ones are not presenting themselves. I have identified seven techniques companies are using right now to win the war on talent.

Allocate Proper Resources

If I looked at how much organizational time and resources go into finding more of the right people, I will bet that you would receive a failing grade. You should be willing to work as hard (if not harder) to find people as you do to get customers, service customers, and create products and services. With the right people, it becomes easier to get and keep a customer. Product quality and service levels go up. To be a top-performing company, you must build a talent acquisition model that is the standard for your industry.

In every case where a company has a recruiting problem, I find a resource problem. For every eight people to be hired in a month, you need at least one full-time professional recruiter. Recruiting is not placing advertising on job sites. That is marketing, not recruiting. Recruiting is reaching to and communicating with candidates. Recruiting is a specialty role that requires the right type of person, knowledge, and skills. Just because someone works in Human Resources (HR) and has a professional designation does not make them a recruiter. Many HR people hate recruiting, suck at recruiting, and want to be doing something else. If you need a recruiter, hire a recruiter. Another common issue is delegating recruiting to administrative staff. This is the equivalent of putting a rookie in a position that requires a veteran. This is a war and you need the right weapons and strategies to win it.

The client I mentioned above has six full-time recruiters who all make six figures. What do your recruiters make? My client’s minimum standard for recruiter productivity is 100 applicants per filled position and two people hired per week. Essentially 1 in 100 candidates is employed by my client. They make every candidate complete three assessments, undergo several rigorous interviews, and have some of the highest standards of all companies I have ever worked with.

Engage Everyone

Every person in your company should be engaged in recruiting! When you are proud of your company, why wouldn’t you? Asking people for referrals and engaging them in a process is different. Engaged means it is important to them. Ask an overworked person how you can help, and they will tell you to hire more people. Yet, they know and interact with lots of people all the time. “And birds of a feather flock together.” They need to be part of the solution. If you want more people like you have, teach them how to help fill the company with great people.

Do you have a process to engage employees? Have you provided them with the knowledge, tools, and resources to help bring in candidates? Do you have a financial incentive that is worth their time? Does everyone know what positions you are trying to fill? Do they know what to look for? Have you made the process easy for them to help? If not, you are missing huge opportunities. The right approach leads to better candidates, more candidates, and often your best employees. If you are not receiving a significant number of candidate referrals from employees, they either hate working there, or you have a bad process.

Segment the Market

Similar to identifying customer segments, you need to identify employee recruitment segments. Everyone is not an ideal candidate for your position. One of our clients hires a lot of salespeople. They figured out that many of their best employees came from the car industry. These employees were well trained, well-screened, and could make far more than if they sold cars. As a result, most of their recruitment efforts target people who work for or worked for car dealerships.

Another client needs people in construction-related work and realizes that they have high success with former military people. So all of their efforts for certain positions are focused on getting access to people that are in the process of transition from military to civilian life.

Reduce No Shows

A problem that has always existed is people who applied for positions and never showed up for their interviews. With government stimulus packages to help unemployed workers, it seems to have exasperated this issue. Whether or not that is true, you need a process that discourages these people from wasting your time. We have found that requiring applicants to complete assessments before they are considered for positions weeds out the not serious people. That, combined with a quick phone screen, can help you minimize the effects of no-shows.

Increase Process Speed

Another common I see, which often is the consequence of the resource issue I mentioned above. Does it take too long to complete your hiring process? How long from when someone submits a resume to when they can get to “yes” or “no.” If it takes more than four weeks to complete your cycle from resume to offer made, you are going to lose great candidates. The lower the level, the faster your process should be. If it is a front-line position, set your goal to a two-week cycle time. They have lots of options, this is where the biggest shortages are, and the early bird gets the worm. The longer it takes to complete the process, the less interested someone will be to work for you. Customers require speed and employees are your most important customer.

Raise Pay

For any of you that have read my book, Your Business is a Leaky Bucket, you will not be surprised to find this suggestion. There are many case studies where companies paid far higher compensation than their competition and had higher net profit statistics. This happens when you are more proficient in hiring the right people. Great people do three times the work of the average worker. Finding the best people and compensating them leads to more ideal candidates and higher retention. Don’t look at compensation, monitor return on the payroll. The later is where the secret to success lies.

Leverage Virtualization

If you are one of those people that believe that people have to work in your office to be productive, you are missing a great opportunity. While I know you likely have positions that require people to be in your office, there are many situations where that is not true. By being willing to allow people to work anywhere, you increase your pool of potential candidates. When we were hiring an executive assistant, we picked markets where we thought more high-quality candidates would be. This not only increased our candidate pool, but we also found that we were getting far better candidates in other markets. In the end, we hit a home run with the person we hired. Virtualization is here to stay and can be a key weapon in the war on talent.

Conclusion

If you can’t fill positions fast enough, have too many underperformers, it is an internal problem, not external. Put the best talent at your biggest problem. And engage all employees to be part of the solution.

Howard Shore is a business growth expert who works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or the other activate group business coaches please call (305) 722-7213.