Your Philosophy Around Talent Makes A Difference

Your Philosophy Around Talent

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

employee team meeting

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.

“People”: The Secret Ingredient to Success

In simple terms, you can measure your business success by how well you get customers, keep customers, and the efficiency of your operations. Many companies measure their success by revenues, income and other traditional accounting yardsticks. The problem is that the accounting approach measures how you did but not how you should have done. For example, take a company that grew 20% last year, and had $10 million in revenue. Its management team was weak, so it lost an additional 20% growth, missed out on another 5% in net margin, and had unnecessary turnover of 10% in client base. So this same company (assuming a 10% net margin) could have seen another $800K added to their bottom line. The one secret ingredient was “people.”

While I like the idea of coaching, training, and other means to develop people, these tools will never replace the sheer power of hiring the right people in the first place. You can not turn a chicken into a duck or a pig into a cat, which is what many owners try to accomplish. Much more effort needs to be put into hiring top performers in every seat and promoting the right people. The cost of not doing so is huge. There are all kinds of forms to calculate the cost of mistakes out there. In Brad Smart’s book “Top Grading” the cost of a mis-hire was calculated to be 14.6 times base salary. So to put that in to real terms, someone making $100,000 is going to cost your firm $1.5M over the lifetime of their employment in lost opportunities and mistakes that happen.

In tangible terms we can always see the difference between “A” players and the rest. The “A” players’ productivity is 3 times the productivity of the others. The higher the “A” players are in the firm, the better the consequences.  The easiest place to look is in your sales department. The top sales people do far in excess of your average and bottom producers. Go into programming departments. The top producer outputs far more than anyone else. You can go in to any department and position and measure the same difference; the top producers will give you 3 times the output.

Before I move further, let’s clarify the definition of “A” player because many owners say they cannot afford them. “A” players are those people in the top 10 percent of talent available at the pay grade you have defined, for the tasks you want them to do, and willing to do it in your market. In many cases organizations are already paying for “A” players, but the lack of discipline in their people processes allowed them to hire “B”s and “C”s.

Here are some signs their might be a problem with discipline around people:

  • There are no measurable key performance indicators in place to know whether each person is achieving “A” performance.
  • 90% of employees are not considered “A” performers.
  • “B” and “C” players are not fired or redeployed when they cannot become “A” players.
  • There are no talent reviews of people to see who are “A,” “B,” and “C” people.
  • People are almost never fired, and loyalty is the most important value of the company.
  • When there is an open position, the candidate pool has no “A” players.

There are a lot of justifications offered regarding the lack of performance. The reality is companies are making big mistakes in their hiring practices. They say things like “I have gotten my money back on this salesperson because we got enough deals to cover his/her salary.” This ignores the fact that the person did not reach quota, sucked up a lot of management time and energy, hurt company reputation, and created a hole in the organization when they suddenly left. Had the company hired correctly, the ”A” player would have met quota, still be there, and have a lot of momentum right now. Here are some good ideas to follow to dramatically improve your people processes:

  • Move away from behavioral interviewing and use the “Top Grading” process for interviewing.
  • Use assessment tools in your hiring process.
  • When promoting employees use the “Top Grading” process.
  • Have at least 2 KPI standards for every position, and if people are not able to meet them, redeploy or replace those people. For help on KPI there is a website www.kpilibrary.com.
  • Do performance reviews annually and define whether someone is an “A,” “B” or “C” player. If they are a “B” or “C” decide how they can become an “A.” If they can’t, it is time to let them go.

Review our website to understand how an executive coach or business coach can help you increase the success of your career and business, or contact Howard Shore at [phone link=”true”] or shoreh@activategroupinc.com.

Take Control and Increase Growth: Article 2 of 4

The purpose of this article is to help business owners understand the key daily decisions that influence dependence on external funding and either limit or expand the growth potential of a business. There are essentially 4 decisions: 1) cash; 2) people; 3) strategy; and 4) execution. This article (#2) addresses how your decisions about people affect growth and identifies 6 ideas for growing your business.

Some of the most difficult and important decisions a leader makes concern people. Decisions about people have a dramatic impact on growth. Great people develop strategies. These are the people who think about how to beat your competition. Great people execute strategy better than average people.

It is critical that a company try to hire the very best person for each and every position. The smaller your company, the easier it is to see your mis-hires. For example, if I have 5 employees and 1 is a mis-hire, that means 20% of my workforce is ineffective and is dragging down the other 80%. The larger you get, the less obvious your mistakes may become.

In the Harvard Business Review article “How Fast Can Your Company Afford to Grow” by Neil C. Churchill and John W. Mullins, the authors explore the precise calculation of how fast you can grow a business without running out of cash, discussing how using cash to hire the right people can play a major factor in your growth.

What is the Impact?

Too often there is a disconnect between the importance leaders attribute to hiring and the discipline they put into their hiring process.

Responsibility for hiring is treated too lightly.

Not enough time is invested in selecting each person.

The right assessment tools are not used.

Adequate direction to make the right decision is not given.

People ignore facts that are right in front of them when making hiring decisions.

Consequently, companies typically hire less-than-ideal candidates, using “gut” and intuition instead of solid information. It is estimated that companies are lucky to hire a good person at least 50 percent of the time, and only get great people 10 to 20% of the time. It is no surprise that executives find themselves working more hours, having more stress, and feeling that they have to do everything themselves.

Based on extensive research published by Bradford Smart, PhD, in “Topgrading,” the average cost of mis-hiring someone whose base salary is under $100,000 is $840,000 (approximately 8 times salary), and the average cost of mis-hiring someone in the $100,000-$250,000 base-salary range is $4.7 million. Even if you believe your number is only one-half or one-third of Dr. Smart’s estimates, it is important to realize that getting and retaining top performers for every position from the receptionist to the CEO impacts your cash and growth in a significant way.

6 Ways to Improve Growth by Hiring the Right People

There are 6 ways proven to maximize a company’s growth potential through its people:

  1. Improve Your Interviewing Skills – Dr. Bradford Smart is a guru in hiring the right people. His program was used by Jack Welch and, to my knowledge, is the most used in Fortune 500 companies. Dr. Smart’s Top Grading process teaches unique interviewing and hiring principles, practices, and processes. You can access their information on DVD at Top Grading Tools so that your company can use these same strategies.
  2. Assessment Tools – Using assessment tools in the hiring process can increase your hiring success fivefold. The best tools allow you to create customized benchmarks for both your organization and the position you are hiring for. As you screen candidates, they take the assessments online and are compared against the benchmarks. We help our clients use Objective Management Group’s (https://www.objectivemanagement.com/) assessment tools for salespeople because these tools are 95% predictive and are the only tools we have found to be focused on salespeople.  For all other positions, we also recommend TriMetrix© (http://www.ttiltd.com/results.php) as they focus on the behaviors, values, and skills of the ideal hire. There are a lot of good tools out there – some a little better than others – but the most important recommendation is to use something.
  3. No Compromising – It is very common, particularly in smaller organizations, for leaders to justify promotional and hiring decisions based on time constraints, market limitations, or some other self-limiting issue.  In other words, the decision-maker will hire or promote a less-than-ideal candidate based on a short-term constraint that may or may not truly exist. However, even when a real constraint exists, the long-term benefit to the company is most times best served if diligence and patience prevail.
  4. Pay Above Average Wages – When considering trends (e.g. aging, education, competition, inflation, globalization, etc.) you compromise your ability to compete in the future unless you are willing to pay better-than-average wages. There is little doubt that we will face an employee shortage in the future, creating wage pressure. It would be better to be ahead of the curve on this front. Your goals over the next five years should be as follows: 1. double revenue per employee, and 2. increase wages by 50%.  My prediction is that companies that have strategies to keep wages low at the front lines and in their factories are going to have a really hard time in the future.
  5. Provide More Training – The first thing that companies do in a downturn is cut training. There should be no surprise that employee and customer dissatisfaction soon follow. Top-performing companies do not slow down training; they increase it. Every company should require a minimum number of hours of training per year for each worker. Achievement of training quotas should be reflected in performance evaluations and affect whether or not someone can be promoted. The results of training are measureable in terms of employee retention, employee productivity, employee satisfaction, and customer loyalty.
  6. Provide Coaching to Executives – Right Management Consultants recently revisited a detailed study on the benefits of business/leadership coaching. The study examined results realized by 100 executives/managers, mostly from Fortune 1000 companies, who participated in coaching programs that typically lasted from six months to one year. They reported that the employers received 6 times the value to their bottom line of the cost of these programs. In addition, the companies that provided coaching programs to their management and leadership teams realized improvements in productivity, quality, organizational strength, customer service, and shareholder value. They also received fewer customer complaints, and were more likely to retain individuals who received coaching. Individuals who received coaching reported experiencing better relationships with their direct reports, immediate supervisors, peers, and clients. They also reported better teamwork and job satisfaction, reduced conflict, and renewed organizational commitment.

In Summary

Hiring decisions have a dramatic impact on how fast your company can grow. Hiring and retaining the wrong people uses cash, while hiring and retaining the right people creates cash. Therefore, hiring and retaining people should be given at least as much thought, time and energy as serving external customers and developing products and services. By utilizing the suggestions in this article, you will dramatically increase your hiring success, increase employee productivity, improve employee retention, increase customer loyalty, and drive more growth.

Contact me today to learn how Activate Group helps individuals to increase their success and works with organizations to attain consistent revenue and profit growth rates of at least 20% annually. Call [phone link=”true”] or e-mail me at shoreh@activategroupinc.com.

Reference taken with permission from Gazelles, Inc. Growth Tools, Mastering the Rockefeller Habits by Verne Harnish, and Gazelles Systems Intellectual Property release 4.0. Howard Shore is a Gazelles Coaching Associate.

11 Keys to Acquiring Top Talent

The perennial challenges for would-be employers are how to maximize the talent caliber of the people they hire for positions in their company, how to accelerate acquiring top candidates, and the cost of acquisition. The reason most companies fail to get what they say they are looking for is a combination of attitude and discipline.

The first key, and the most important, is a firm’s attitude toward acquiring top talent. When I refer to attitude, I mean “habits of thought”. Most senior executives and managers do not love recruiting people. If you compare recruitment to their primary business function or role, they find it quite uninteresting and even a distraction from what they feel they should be doing. It is something they have to do so they can get back to their real job.

Some other common (and equally undesirable) habits of thought include:

  • We cannot afford the best talent so we have to settle for whatever comes through the door.
  • We are not a big company so we cannot attract the same quality of people as a big company.
  • I do not have time to interview people.
  • Even though my existing person is not doing a good job, I am better off keeping him/her because it will save me the time of recruiting and training the new person.
  • There is no talent in this town.

These attitudes are going through people’s minds prior to even starting the process. If not dealt with, these negative habits of thought definitely impact the ability to maximize one’s effectiveness as a recruiter and help the company select the best people.

Acquiring talent is a process just like any other in your company. In order to improve one’s skill at something, one must first have a passion for mastering the process. A company must evaluate its talent acquisition processes to make sure that they include all of the following steps. When any of these steps are not followed well, you have a weakness in your process that increases the likelihood that you will not hire the right person.

1. Job Profile – Do not start recruiting until you have completely defined the position profile. The profile must identify: position description, key performance indicators of a job well done, accountabilities, who this person will report to, who will report to this person, who their internal and external customers will be, competencies required, critical success factors, and key process ownership.

2. Advertisement – It is important to know where the most success is happening for the type of position and level of person you want to recruit. Posting a position is supposed to attract the candidate’s attention over all the others, qualify appropriate candidates, and screen out bad ones.

3. Assessments – Many companies are misusing assessments. By law, if you are using assessments in your process you need to screen all candidates. A person becomes a candidate as soon as you receive the resume. Negotiate a per-hire pricing with your assessment company. In addition, one assessment does not fit all. For example, I find that Objective Management Group’s assessments are the best for sales, while behavioral-based assessment is good for other positions.

4. Phone Screening – This is not supposed to be an interview. The purpose of phone screening is to determine which are the best candidates. If these screenings are taking more than 10 minutes, they are being done improperly.

5. 1st Interview – Key stakeholders are involved in the first interview process. The key is to do the job right the first time to avoid bringing back someone too many times and slowing down the process. Top people do not stay in the market long and get discouraged easily. Tandem interviews are highly recommended, and structured in-depth interviews such as the one presented in the book “Topgrading” by Bradford Smart should be used. A common mistake by an interviewer is to not allow the candidate to do most of the talking, and there should be little to no “selling of the position” during the interview.

6. 2nd Interview – This interview should be scheduled soon after the first. Be ready to sell the position, answer their questions, and have a few follow-up questions after the first interview. This is the time to close the candidate.

7. Compensation – Be strategic with compensation. Too many people get into the comparison trap, which causes myopia. Think about how each employee can create value and compensate them relative to their contributions. If step one is done well, it becomes easier to be creative in this step.

8. Reference Checking – Validate the critical information collected during the interview that caused the desire to hire the applicant. The candidate should help in setting these up. “A” players will always do this.

9. Background Checks – Do them.

10. 90-Day On-Board Routine – If you bring your employee on board in the wrong fashion you may permanently destroy your relationship with that employee. Many employees leave within the first 6 months, and the root cause is a failure to bring them on properly. Many were the right people for the jobs.

We have found that when organizations follow the steps well, they save themselves a lot of time and money. In addition, they usually need fewer employees because the people they have are top performers. Take the time to today to shift in mindset and decide to become the best acquiring talent in every seat in your organization. It is well worth the effort.

Howard Shore is a business growth expert that works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. Contact Howard Shore at [phone link=”true”] or head over to out business coaching page for more information.

Experience vs. Results When Hiring and Promoting?

Many of the companies we work with and come across define their recruiting criteria incorrectly, and some do not even realize they have a problem.

The typical initial problem statement is, “We need to fill a position with a qualified candidate.” Defining “qualified” is where they tend to go wrong. Some go on to say, “We will have better results when we hire from the inside than from the outside.” Others insist, “We should only look at people that previously have worked in this particular function for a certain number of years.” Or, “We want someone that has been in our industry before so we won’t have to teach them our business.”

What these criteria and the initial problem statement often overlook is the real problem in the company. There is not an “A Player” in every position, and the company does not make defining, finding, keeping, and growing “A Players” a necessity

When filling positions in a company, there is one common denominator that gets overlooked consistently in almost every company I come across. If you want to solve a problem, it is important to first define it correctly. Once you have defined it correctly, you can then come up with the questions you need to answer in order to solve your problem. Redefining “We need to fill a position with a qualified candidate” as “We need an “A Player” in every seat” forces you to redefine your expectations for the position and the criteria for the candidates. Many people you might have hired using the old definition should now not get past your screening process. Here’s a case in point.

There is a Fortune 500 Company that I deal with that recently made some big moves in its management team. This company has had a track record of having good people. At a social gathering, some of their employees were telling me about the person supposedly being groomed to become CEO and about the one just promoted to CFO. I know both these people. They have been with the company for a long time, and are people I like, trust, and respect. Both are well credentialed and very smart. However, neither one is qualified to fill their new position, and their track records inside that company prove it.

The new CFO is technically sharp and was great in his previous position, and management should have stopped there. The CFO of a public company that wants to grow must have vision. This is the new CFO’s biggest weakness. He is not a strategist, and you cannot teach someone to be strategic. It is a capacity a person is born with or not.

The other vital talent is leadership ability. As one of the top 3 people in the company, the CFO must be someone that can inspire everyone in the company to achieve greater levels of performance. They must be able to find, grow and produce top talent. This person has never done either. He tends to focus on the negative rather than the positive, is really hard on other people, and places too much emphasis on the technical aspects of accounting (his comfort zone) rather than the financial aspects of business to help grow the company. He was an “A Player” in his former position, but will wind up a “B or C Player” in his new role.

The CEO-apparent is a different story. Everybody loves him for his engaging personality, his Ivy League background, his quick wits, and positive outlook. He has worked in every function in the company, which is what makes him so appealing. He got promoted fast, furious and young. So why do I think there’s a problem? Results! His first claim to fame was a really large project that he was in charge of in his early days. The project was projected to cost $50M. It came in at over $200M, and never did what it was supposed to do.

His proponents will say that the cost overruns were approved by others; he did not make those decisions, and that he made sure stuff got done as decided. I say that he should have had the insight and courage to stop this monster from the start and help senior management save hundreds of millions of dollars. All the next stops showed no remarkable results for the company, just promotions for him. So, what the company now has is a very smart politician taking its reins. Perhaps he should run for governor in our next election.

This is significant because an “A Player” will produce 3 times the value to your company as a “B or C Player” yet they all cost the company the same amount of money in terms of compensation. Ironically, many times the “A Player” is misperceived as “B or C” player because they are pushing back instead of “going with the flow.” They are saying, “Do not go through with this massive project because it is a train wreck,” or they are asking to try to do things a different way. If you micromanage them, they cannot innovate and give you the results you need.

The next time you fill a position in your company, ask the right questions:

  • What are the key performance indicators of “A” performance for this position?
  • What are the key success factors for producing this performance?
  • What qualities does the person need to have to produce this performance?
  • What track record do you want to see for you to trust that they can do this job?
  • What are the cultural aspects of your company that are important to consider when choosing a candidate fit?
  • What values must a candidate have in order to be hired, and what questions will you ask to test whether they’ve demonstrated those values in the past?
  • What early warning indicators will you put in place so that you can tell whether things are working?

Howard Shore is a business growth expert that works with companies and people that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at [phone link=”true”] or shoreh@activategroupinc.com.

Four Key Training Factors

What are the factors that cause the difference between successful and unsuccessful training initiatives? While every project is different, we have identified four key factors:

  1. systems, processes and culture
  2. results mindset
  3. trainability
  4. commitment

Activate Group chooses from processes and principles that have proven to yield consistent success for many years. The results have occurred across different countries and continents and have been used in almost every industry. We find that it is best to not reinvent what works. Instead we work hard to focus on proven practices.  The challenge lies in the four key factors discussed above.

Systems, Processes and Culture

CEOs and the rest of the leadership team come in all different sizes, shapes, styles, and backgrounds. Those variations influence how people behave, hiring practices, motivation schemes, degrees of accountability, amount of focus there is, strength of culture, and so on. This will have a direct influence on the success or failure on training initiatives.

As a result, we do our best to learn as much as we can about your systems, processes, leadership styles, and culture before designing a program. By learning about the organization and its people we can understand how your organization and its leadership may inadvertently compromise the success of the initiative. These obstacles need to be addressed to help maximize success and return on investment and energy.

The key here is to understand that training is change, and change begins in the company, not with the consultant or trainer. The job of the consultant or trainer is to provide processes, systems, knowledge and/or tools that can help you change your culture and how your people operate in that culture. The consultant or trainer can help the leader identify thought processes that are getting in the way of progress. It is the senior leadership’s responsibility to show their organization that they are committed to making these changes to their own thought processes to drive results – even if that change is not comfortable! If you have an open mind and are committed to change, then your people will step up.

Results Mindset

There must be a results mindset to training. While this seems obvious, it is common to find training programs that are done for the sake of training.  Many organizations have not thought through the “why” of training and, the outcomes they are trying to achieve, and how in the short- or long-term they intend to affect the top and bottom line. All training should have a positive impact on your bottom line. In addition, companies should determine the proper allocation of their cost structure to training. Management must carefully prioritize training to target those initiatives that will have the biggest impact on bottom line. Properly planned training reduces turnover, improves productivity, increases quality, reduces the number of people needed in the organization, increases customer retention, and/or leads to more sales. Benchmarks to measure progress should be predetermined and tracked.

Trainability

This is the most important issue of all. When an organization does not like employee performance the first response is to throw them into training. However, would you send an accountant to medical school? Typically the best accountants would not make great doctors as they possess and were born with different talents. Talents cannot be taught in a training class. We can teach people skills and knowledge, but if they lack the core talents for a role, they will still underperform in that role. Very often companies have not done the proper job in the hiring process, and rather than taking the proper steps to acquire appropriate personnel, they are hoping that training will make their problems go away.

Using assessments we try to help our clients determine whether they have properly hired people into the right roles to begin with. Or if they are promoting someone, whether that will be the right move. Otherwise, they will be providing training to the wrong people. You want to provide training to people that can and will perform well in their position. Many companies have a policy of “a hope and a prayer” that their poor performers will turn around after attending training. This has never worked well and will continue to be a bad practice for companies.

Commitment

Just because an organization made a decision to do training does not mean there is a commitment to that decision. Typically for an organization, training equals change. Companies use outside trainers to gain access to methods that are typically better than what currently exists inside the company. There is a belief that the current internal system is inadequate. However, the new ideas conflict with the traditional belief systems of many of the employees and even the executive team.

While this is known, management underestimates the challenges that will be faced when people push back and do not want to change. They are unrealistic on how long it will take for people to permanently and consistently change their old belief systems to the new ones that are required to implement the new processes. Most initiatives should take a minimum of 9 to 12 months, and most leadership teams are not patient enough to wait. While they begin to see results, these are leading indicators and sometimes not as large as management had envisioned, or the measurements are in the wrong areas. They fail to recognize the value of the programs and stop too early because of their lack of full commitment to see things through.

Great leaders look for a training organization that will help them properly evaluate and understand the impact of their systems, processes and culture on the results they want. Such an organization helps clients structure a program with measurable results and just don’t design training for its own sake. They focus on training the right people and look to work with clients that are committed to seeing their programs through to the end.

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 his firm, please contact Howard Shore at [phone link=”true”] or shoreh@activategroupinc.com.

3 Tools for Effective Employee Recruitment

Acquiring talent is a process just like any other in your company. The entire recruitment process is a sometimes long and arduous one, and therefore it is a magnet for shortcuts and rushing. Don’t give into the temptation to save a few hours of time and end up with bad candidates that cost your company thousands in the long run.

Tools You Must Utilize When Recruiting

Every recruitment effort should utilize the following three tools as the first three steps in the process:

1. Job Profile: Completely define the position as the very first step in the recruitment process. Use the job profile to identify and communicate the job description, key performance indicators, accountabilities, detailed reporting structure, internal and external customers, required competencies, critical success factors, and key process ownership.

2. Advertisement: Posting a position is supposed to attract the candidate’s attention over all the others, qualify appropriate candidates, and screen out bad ones. It is important to know where the most success is happening for the type of position and level of person you want to recruit.

3. Assessments: Employee assessment tools are an important component in your overall hiring process because it is an objective rather than subjective measurement tool. While they do not provide you will all the information you need, they do provide you with critical information you cannot get from an interview and can increase your likelihood of making a better decision. By using an objective tool, you can compensate for subjective techniques such as interviewing questions where question and answering can vary greatly and leave a lot of room for variation in opinions, different interpretation, inconsistency in application, and more chances for you to make mistakes in the process.  We have found that proper application of assessment tools can help you:

  • Save a huge amount of time.
  • Level the playing field on resumes.
  • Reduce some human errors.
  • Improve the number of qualified candidates.
  • Increase the quality of candidates that make it to interviewing stage.

Have you tried recruiting without using these three tools? What was the outcome?

Call Howard Shore for a FREE consultation at (877) 692-6211 to see how an executive business coach can help you run a more effective business or become a more effective leader.