Delivering the Systems and Expertise You Need to Confidently Make Great Hiring Decisions
Conor Neill, a close friend of mine and a prominent Entrepreneur in Spain, wrote this short story below for the Entrepreneurs’ Organization’s blog. It’s a great reminder of just how important attitude is in hiring.
Two men, Bill and Frank, begin working at a hotel the same day. They are intelligent, educated and ambitious. The manager of the hotel greets them and hands them both doorman uniforms. They are to begin opening and closing the doors, helping with bags, flagging taxis, etc.
Bill thinks “Doorman? I am worth more than this! I could manage this hotel better than the current guy.” But he doesn’t have an alternative offer and he needs the money, so he does the job anyway. He maintains a pained grimace on his face and deals with customers and other staff in a negative way because he is “better than this.”
Frank, in contrast, thinks “Okay, doorman. It’s not what I had in mind, but hey, I get to spend some time outside, get to meet the customers, and I’ll learn about how this hotel works.” He sets to work with a smile on his face and finds that he quite enjoys the small challenges he faces as a doorman at such a prestigious hotel.
After six weeks, a position at the front desk opens up, and the hotel manager immediately thinks of Frank. Frank is promoted and immediately brings his positive attitude to the front desk of the hotel. Several years later, Frank is the hotel manager. He leaves late one evening and there, opening the door with a hard-wired grimace, is Bill.
Is it luck, or is it fate? Bill will spend forever in a job that he hates and Frank will love every job that he is given. This story is such an inspiration, because it encourages me to always stay positive about my responsibilities and to find the reward in every remedial task. When hiring staff I spend more time exploring attitude and self-motivation than I do exploring capabilities. I also spend time looking to direct my employees toward challenges that are motivating for them.
When it comes to running a business, I’ve learned it’s not just about the results, but the work you put in. That’s where successful people thrive.
The story told of Icarus was his attempt to escape from Crete by means of wings that his father constructed from feathers and wax. He ignored instructions not to fly too close to the sun, and the melting wax caused him to fall to his death.
What in the world does this have to do with making better hiring decisions?
Simple: in order for Icarus’s wings to melt there had to be a sun. And in hiring, the sun means a lot more than you can possibly imagine.
I grew up in the Northeast (AuSable Chasm to be specific). Summers were exceptional! We had long days where the weather hovered around 80 degrees and the sun wouldn’t set until about 9pm. My sisters and I would play for hours in the river behind our house. I’d compete in baseball games that would start at 6 and end at 8:30 but there was never any need for the fields to be lit because the sun hadn’t set yet. The way I’m describing it you’re probably thinking to yourself, “that sounds like paradise.” For those couple of months a year, it was.
But with every ray of light there’s usually a dark tunnel.
For us, that was winter. It was dark when we woke up, dark when we got on the school bus and then dark again when we got out of school around 5pm. We’d literally never see the sun except through some windows as we walked from classroom to classroom. Add to that it was often so cold and overcast that you couldn’t go outside anyway. This kind of environment became oppressive to a lot of people (my Dad, for one). It wasn’t until just 25 years ago that people started recognizing what was happening. Wikipedia has this to say:
Seasonal affective disorder (SAD), also known as winter depression, winter blues, summer depression or summer blues, is a mood disorder in which people who have normal mental health throughout most of the year experience depressive symptoms in the winter or summer, spring or autumn, repeatedly, year after year.
Once regarded skeptically by the experts, seasonal affective disorder is now well established. Epidemiological studies estimate that its prevalence in the adult population of the US ranges from 1.4 percent (Florida) to 9.7 percent (New Hampshire).
The US National Library of Medicine notes that “some people experience a serious mood change when the seasons change. They may sleep too much, have little energy, and may also feel depressed. Though symptoms can be severe, they usually clear up.” The condition in the summer is often referred to as reverse seasonal affective disorder, and can also include heightened anxiety.
How can this knowledge help you as a Leader and Hiring Manager? Simple: Behavioral-based interviewing, when conducted properly, means you should avoid questions that allow someone to answer with their opinions. Whether or not someone has lived and thrived in “the North” or “the South” before should absolutely be part of your interviewing process. Just because someone says they’ve “Always dreamed of living in Seattle because they’ve heard great things” doesn’t mean they’ll be able to survive the lack of sun. The same goes for Austin – the summers are brutal and we don’t go outside much at all from late June until early September.
SAD is real. Accept that and use the knowledge to your advantage when making a critical hiring decision that will involve moving someone from one latitude to another.
A couple of months back I interviewed Patrick Thean about the success he’s experienced in building scorecards for new hires. He provided some great suggestions of the metrics he’s used along with the real-life example of presenting a scorecard to a prospective hire to help her “opt out” of the interviewing process because she determined she wasn’t capable of the job.
- You failed (as the Hiring Manager) to clearly articulate what you needed someone to do
- You failed (as the Hiring Manager) to tell the new hire what you needed them to do
Having a scorecard is a HUGE first step in making sure that you’ve put in the time to define what will determine success for someone who’s just joined your team.
Last month (January ’11) I had the opportunity to meet Pepe Charles from MAP. He’s an expert in helping organizations develop what they call “VITAL FACTORS”. You won’t be surprised to learn that these vital factors are another name for…wait for it…scorecards.
I asked if they’d be willing to share their proprietary vital factors with you as readers of this blog. They graciously said yes and so you can find a very robust list of things that you can measure across departments and skill sets here.
The day that I heard Pepe speak about these vital factors he brought something up that really stunned me (and I was also a bit embarrassed for not having thought of it myself earlier). There’s a very high likelihood that you’ve heard of the acronym SMART for goals. It commonly accepted that the acronym stands for:
- S: Specific
- M: Measurable
- A: Attainable
- R: Realistic
- T: Timely
What Pepe suggested was that the A (typically referred to as attainable) should actually stand for AGREED TO. What a revelation!
In summary, I now have 3 reasons why someone you’ve just hired won’t work out:
- You failed (as the Hiring Manager) to clearly articulate what you needed someone to do
- You failed to tell the new hire what you needed them to do
- You failed to come to an agreement with the new hire on what they needed to do
The EO Network recently launched a blog entitled Overdrive. I follow this in my RSS Feed and today it rewarded me with an article that I’m sure you’ll appreciate heading into a New Year.
This external content was provided by Dr. Todd Harris, a Director of Research at PI Worldwide.
INTERNAL AND EXTERNAL INFLUENCES ON PERFORMANCE
Organizations throughout the world have increasingly adopted team-based work structures. Consider the following points.
- As many as half of the Fortune 500 use teams in some part of their operations.
- Studies of managers show that they spend 30 percent to 80 percent of their time in team meetings.
- An insurance company found that their average executive spent two out of every five working days collaborating with small groups.
- As many as 11 million meetings occur daily in North America.
Most models of the organization of the future are premised on teams surpassing individuals as the primary performance unit in the company. Clearly, changes in the world of work such as advances in information technology, globalization, hyper-competition, knowledge-based work, and worker empowerment will mean the workplace of the future will be much more collaborative than its predecessor.
Unfortunately, many organizations have found that teams are not a universal panacea. In fact, academics and management consultants often cite a “50-percent failure rate” for teams, in that half of work teams fail to achieve their goals. To perform well, a team must surmount three hurdles. It must (1) exert sufficient effort to accomplish the task at an acceptable level of performance, (2) bring adequate knowledge, skill and ability to bear on the task work, and (3) employ task performance strategies that are appropriate to the work and to the setting in which it is being performed. Performance on these three “hurdles” will be influenced by factors that are both “internal” to the team and factors that are “external” to the team.
- Task Structure: Is the team task clear, and consistent with the team’s purpose? Does the team have a meaningful piece of work to do for which members share responsibility and accountability, and that provides opportunities for the team to learn how well it is doing?
- Team Composition: Is the team well staffed? Is it the right size, given the work to be done? Do members have the expertise required to perform the task well? Do they have sufficient interpersonal skill to function collaboratively? Are team members so similar in background and perspectives that there is little for them to learn from one another? Or are they so different that they risk having difficulty communicating and coordinating with one another?
- Core Norms: Expectations of what is “acceptable” team behavior tend either to be “imported” to the team by members or established very early in the team’s lifespan. Articulating these “norms” ahead of time via a “team charter” or “team vision statement” can be very helpful, and should cover areas such as how the team will make decisions, communicate and evaluate itself.
External team factors to consider include:
- Reward System: Does the company’s reward system provide recognition, reinforcement and compensation that are contingent on team performance? Are rewards administered to the team as a whole or to individuals within the team? Does the reward system truly encourage team members to work collaboratively?
- Educational System: Is training or technical assistance available to the team for any aspects of the work for which members do not already have adequate knowledge, skill or experience?
- Information System: Does the team have ready access to the data, tools and other resources that enable superior performance?
- Organizational Culture: Does the company for which the team works have a collaborative culture that genuinely fosters and supports teams? Or is it a culture that still promotes and recognizes individual achievement? Do the company’s top leaders really “buy into” the concept of teams?
Those who create, lead and evaluate work teams in organizations should focus their efforts on these internal and external factors that support effective team performance.
Last week Major League Baseball was rocked by an incredible story that screamed “Blog About Me!”. Cliff Lee, an 8 year veteran pitcher who’s had the chance to play in Cleveland, Philadelphia, Seattle and Texas, was the most sought after free agent of the off-season. The Rangers, who had his services for a mere 15 starts (plus the post-season) were so enamored with him that they attempted to “break the bank” to keep him in Texas. The Yankees, who have more money than any other team and like to throw that money around, offered him the second most lucrative contract for any pitcher in the history of the league (second only to their other starter, C.C. Sabathia). Lots of other teams had visions of sugarplums as well thinking that they had a chance.
In the end, Cliff Lee shocked everyone and returned to Philadelphia. A “dark horse” that didn’t even show up on the radars of any of the sports writers, Lee accepted LESS money ($50mm less to be exact, from the Yankees) to come back and play with the teammates that he really liked.
“You can definitely sense the fact that these guys step up and are up for a challenge and rise to the occasion and come up big when they need to,” Lee said before the 2009 World Series. “It’s not just one or two guys, it’s everybody. It’s a special team. To win the World Series (in 2008) and be back just proves that fact. There’s a lot of confidence here. Everyone expects to be successful.”
His former (and now current) teammate Raul Ibanez did a nice job of reinforcing what Lee was saying:
“We have a bunch of guys who are not concerned with getting attention,” Ibanez said. “They just want to win and they don’t care if they get the credit for it. It’s amazing what you can accomplish when you have that mind-set, and that’s not by accident.
No one doubts that Cliff Lee is a special, special talent. What else can you deduce when a single guy shows up and changes a team’s entire track record? Some examples:
- In 2008 Cliff arrives in Philadelphia and they win their first Championship since 1983. They returned to the World Series in 2009.
- In 2010, after a mid-season trade, he arrives in Arlington and helps the Rangers reach their first World Series in Team History.
What can you learn from Cliff Lee, Philadelphia, Baseball and the Yankees? Culture really does make a difference. Below, I’ve included a video (one of many) that were created by people who LOVE this guy and are so excited to have him back in Philly – quite a different story from a place like NYC where the money’s great but the egos are huge, the spotlight is brighter and the pressure is exponentially stronger.
One other thought: Jack Daly shared with me that people who make a Career Change typically regret their decision twice in the first 30 days of being in the new role. If you had someone great who left your organization recently for more money or for more spotlight, you might consider calling them and taking them to lunch just to catch up. You just might be surprised how many times the grass wasn’t greener for them on the other side of the fence and, with just a bit of urging, they’d happily come back.
Author’s Note: The song that accompanies this video is explicit – and I’m not going to apologize.
A couple of weeks ago I challenged you, as a Business Leader, to evaluate if your company was “In Demand” through the example of Supply & Demand that you learned in ECO 101. This week, I’m shamelessly poaching a short post that I saw on Daniel Pink’s website that takes the discussion of DEMAND to an entirely new level.
Before I share, here’s the definition of Microeconomics from Wikipedia:
In contrast to macroeconomics (which involves the “sum total of economic activity”), microeconomics is a branch of economics that studies how the individual parts of the economy, the household and the firms, make decisions to allocate limited resources.
Put more simply, Microeconomics is “the little things”. From my experience, it’s these little things that make all the difference with regards to both attracting and then retaining talent.
Here’s what I found on Daniel’s blog [it's a write in nomination from a reader from Louisville]:
“I know from your blog that you like signs, so I’m attaching the photo of a sign I saw at our local zoo this past weekend. It is not emotionally intelligent, but it certainly illustrates extreme extrinsic motivation. It seems this construction company feels that company swag is exactly the kind of thing that will motivate employees to stay safe. I can hear the employees now, ‘Well I was going to carelessly wave this nail gun around for a while, but I’ve got my eye on that windbreaker.’ “
People make decisions to either (a) Run Away from Pain or (b) Run Towards Pleasure.
How are you allocating your limited resources to influence the decisions that people are making about whether to take a job or stay in that job on your team?
Patrick Thean is the author of Execution Without Drama and in June 2010 I got the opportunity to hear him share some of his thoughts on creating specific scorecards for Manager Level talent and, because I get so many questions from hiring managers and business leaders about this exact topic, I felt like a blog post to share his suggestions was worthwhile. Here they are:
KEY PERFORMANCE INDICATORS FOR MANAGERIAL SCORECARDS:
RELATIONSHIPS & PEOPLE
- Voluntary Attrition
- Keep Smart (learning, furthering themselves)
- Employee Net Promoter Score
- Dry Powder
- Burn Rate
- # of Months of Cash (Runway)
- Quality & Bugs
- Supplier Mistakes
- Project Health Index (actual vs. plan)
- Sales against plan/quota
- Pinkie Report (Patrick’s idea for his sales team – if this deal doesn’t close I get your pinkie)
- A/R Quality
- # of days to Close & Report
The following letter was written by a fellow Entrepreneur who needed his top Technical Talent to really understand what he was getting into by asking to take on the role of CTO as the company continued to grow. I’ve taken out any personally identifiable information but I DIDN’T remove any of the CEO’s requests because I wanted each of you that read this blog on a regular basis to be able to see how well thought out this is and how he did such a good job of explaining his vision for the role, what it would take for the current employee to move into that role and what they would be responsible for. But he didn’t stop at that, he gave him options! Proactively realizing that it would be likely that the employee wouldn’t want the role of CTO after seeing what went into it, he described the four other roles that the employee should consider pursuing instead so that the employee didn’t read this and get the wrong message that maybe he wasn’t “wanted” any more.
There’s a lot that everyone, including myself, can learn from how well this CEO communicates.
A CTO’s role and responsibilities
A Chief Technical Officer is an executive-level position in a company who is focused on technological issues within an organization. It typically involves overseeing Research and Development activities, and formulating long-term visions and strategies at the officer level.
CTO’s focus on planning, budgeting, and business management. They see technology as a tool to solve business problems. In my option, the challenge we’re currently facing is that we view technology like a toy – one that we enjoy playing with but not focusing on its real purpose – to finance our team and solve business problems (with a focus on the finance). We solve problems with technology, we respect it, we enjoy working with it, can sell it, but there is a higher order ROI (Return on Investment) and applicability function that a CTO must perform. And that’s where I see us coming up short.
What it takes to be a great CTO
Admittedly, we’re both inexperienced with defining this particular role. To compound the issue, you haven’t been part of a bigger company to observe what a CTO does. You don’t know what you don’t know yet. If you’re restless and in a rut, this may surface in future challenges as well in terms of how you perceive your value. I learned long ago that technology is perishable and you have maybe 6-8 years of being a super geek before you need to reinvent yourself or face becoming obsolete. And with the extreme changes in technology, that window is getting smaller and smaller. To take the next step in your career development, I suggest changing your perspective. Perhaps try thinking the following ways:
- Think bigger. Be responsible for the transformation of capital – be it monetary, intellectual, or political – into technology to further our objectives. You must combine your strong technical background with business development skills in order to create and monitor business value from IT assets.
- Think differently. I get the impression that you’re struggling with knowing what our business is supposed to be. Simply put, it’s a machine that solves problems for money. Period. We need to accept and remember business fuels technology. Technology does not fuel the business.
- Think strategically. Start looking at things differently. Technology is nothing more than a tool that is used to solve business problems. As a corporate officer, your primary concern should be long-term strategy and “big picture” issues while still having deep technical knowledge of the relevant fields we occupy.
How do you get there?
Becoming a great CTO and technology leader is going to require you to at least double the amount of effort you’re currently putting in – and that’s no exaggeration. There’s a lot you’ll need to learn. This requires a great deal of restraint and will force you outside of your comfort zone. I realize this will not happen overnight. But, I believe in you, and if you want to take the next step in your career development, here are the things you’ll need to do.
- Read every day. You must set aside time every day to read blogs, newsletters, books and magazines. This is non-negotiable. Put the time on your calendar, shut off your phone, IM, email, etc and read.
- Better communicate your vision. Be more proactive in what you want the team to accomplish, what our product should do, and what you hope it can achieve. You’re the driving force with building our product suite, and it needs to show! This needs to be done on a daily basis. You must reinforce your views every day.
- Know the competition. You should be able to rattle off a list of our competitors without hesitation. You should be able to tell me exactly what they’re doing, who they’re targeting, what kinds of features and benefits they have, and how we’re different and better than them.
- Know the players in the space we occupy. You should be obsessed with our marketplace. You should be able to list off every major company out there we could possibly do business with. You need to know how their technology works and how we can work with it.
- Know the latest technology trends. You must be up to date on the latest platform decisions whether it’s .NET or PHP. You need to have a view on whether Ruby on Rails is worth the hassle. What I’m getting at is technology is changing very fast. You don’t want to be left with an obsolete skill set in case .NET falls out of favor and/or something better comes along. The only way to prevent this is to know what’s happening now and what’s coming down the road later.
- Forge relationships with the players in the space we occupy. You need to get out there. You need to become comfortable in the role of wearing the company’s public face when it comes to all things technology. This will require you to start proactively talking to people and introducing yourself to them. Start attending trade shows and conferences, contribute to discussions on online forums, find people on LinkedIn and introduce yourself. Consider even taking a public speaking class through your local Toastmasters club.
- Meet other CTO’s. Start rubbing elbows with people like you at other companies.
- Properly manage and mentor the team. This means you must make time every day to meet with your team to discuss issues and roadblocks, discuss technology trends, and get to know them better. In addition to, I suggest meeting every other day to or two times a week to do code review as well.
- Travel to our office at least once a month. I’m not convinced what we are doing can be done remotely. Being successful will take a herculean effort. As such I’d like you to plan on spending most of your time here each time working face-to-face with the guys.
- Find a mentor. I highly suggest a mentor. That’s the only way you can be sure that the CTO role is right for you. You’ve got to talk to someone who actually does it. I certainly haven’t been a CTO but I have worked alongside them. It’s a demanding job and not right for everybody.
- Take ownership and be more accountable. You know what’s required to get the job done, not me. You have to enforce deadlines and dates. This is what successful companies demand. We can’t be any different otherwise we’ll always miss our deadlines and dates.
Do you still want to be CTO?
As you see, it takes a ridiculously large amount of work and discipline to be a CTO. I’ve never faced this issue before and it isn’t easy. But being in it now and seeing how much is required of a CTO, I don’t want to presume that this is something you want to be. I’d like you to reflect on my suggestions above and work with me to define what role you want to play in the company.
Other roles for you to consider
I want to help you find out what you love doing while being careful at the same time not to pushing you into something that you’re not, or not ready for. If you decide the CTO hat is not for you, I want you to consider the following alternatives:
1. The Lead Architect – Every great technology startup needs one of these – this is not unique to our company. If we don’t have somebody inside our organization that is setting the technology direction then I’m convinced we’ll never head for greatness. Either our core is innately technical or it’s not. It’s what makes Google, Google and Facebook, well, Facebook.
I believe that every great technology startup has the technology visionary inside the company. This needs to be you! You not only need to own all the technology but you need to dictate what it is we’re building and why – every day.
Trying to work without this person is like wanting to build a world class sky scraper but not having a great lead architect and civil engineer. They provide the vision for our infrastructure. The problem that many inexperienced startup CEO’s like me make is confusing these people for the people who lead the technology team. Most often they are not. The deepest thinkers on technology architecture are seldom good team leaders. They often aren’t great at planning development work. The best technologists often aren’t amazing people managers. Sometimes they are introverts.
2. VP Engineering – First and foremost, a VP of Engineering is a people manager. They have the respect of their team because they’re technical by training. But they’re that rare breed that also understands the human element. They know how to motivate their people. They know how to get people to hit deadlines. They know when it’s OK to push hard for the team to hit a deadline even if it means yet another all-nighter or weekend. And they know when to tell me (the CEO) to shove it because the team has reached maximum stress / effort. A great VP of Engineering manages me (the CEO) as well as the team below him.
In my view it is important to distinguish the difference between the CTO and the VP Engineering. The VP of Engineering is the person who still has great technical chops but prefers not to be a developer.
The VP Engineering aspires to manage teams. They feel comfortable with C# but are also whizzes in Excel. They are sticklers about managing unit tests, system tests and regression tests. In fact, they’re passionate about automating testing overall. They know how to estimate work units, how to manage the agile development process and how to get the most out of their teams. VP’s of Engineering are essential to making sure the trains run on time. The VP of Engineering is also our company’s primary interface to our future head of product management and often the VP of Engineering is somebody I would bring with me to meet clients and to win big deals.
3. Program Manager – This title almost sounds like a consultant’s job. It is not somebody that we need just yet. However, it is one of the more critical roles as we scale our company. As we head into the phase where we get real customers paying real money for a period of time we’ll have a whole new set of issues. Examples include:
- Every time you release new features you need to update our technical documentation
- Updating our marketing documents including our website
- Somebody needs to be sure that customer service is alerted to the new features and are trained in how to handle these functions with customers
- New features need to be rolled into PR strategies and competitor analyses
- New features need to be documented so the rest of us know the latest and greatest about how to differentiate from the competition.
Many startups have never faced these challenges because they haven’t hit scale. Trust me, as we grow these issues become the key to winning large customers and keeping them happy.
4. Lead Developer – This person is the most senior of all developers on staff. They are typically the go-to person on projects they are assigned. Their entire function in the company is to product top-tier code while acting as a mentor to other developers that are more junior.
The lead developer typically reports to a CTO or VP of Engineering and is a key part of their team.
In summary I hope this didn’t scare you away. On the contrary I’m here to help you. You’re an incredibly gifted and talented individual that does so many things right. At the same time, however, you have a lot to learn and achieve. We both do. I hope this letter identifies what steps we need to grow this company and helps you to reach your full potential.
I had the good fortune of hearing Cameron Herold today while I am in Boston for EO’s Entrepreneurial Masters’ Program. His topic was “Leadership at 100 MPH” and a lot of the focus was on hiring with predictability and not making mistakes that really could really hurt your company.
For 2010 we’re proud to sponsor Cameron because we agree with what he teaches to Entrepreneurs and Business Leaders around the world. While I’ve heard him speak a number of times I always get a few new things each time I hear him. Here’s some quick thoughts from today that hopefully you can benefit from:
- Culture’s hard to build and easy to destroy. One of the fastest ways to destroy it is to not fire people who clearly can’t do the job they’re in. Not only that, you’re doing that “problem” employee a disservice by asking them to live on pins and needles while you’re “too chicken” to let them go.
- When you’re hiring someone new onto a team, don’t ever let your team’s “average performance” drop. More pointedly: if you’ve got 6 people on your marketing team and you’re about to hire a 7th, make sure that the person you’re hiring is at least more qualified and better than 3 or more of the existing team members to keep raising the bar.
- Ensure that you’re very clear on what your needs are when hiring and then make sure you can “smell the right person from a mile away”. Cameron used the example of going duck hunting with his grandfather as a child. Early in the morning, as the sun was coming up, small V’s of ducks would appear on the horizon and even as they were just specs a mile away Cameron’s grandfather would be able to tell whether or not they were the right ducks for them. “Nope, put your gun down” he’d say. When pressed to explain why he would clearly describe wingspan, formation of the flock and altitude. The business application isn’t a hard jump to make: it’s easy to get excited when you’re in the thrill of the hunt but you have to be very clear about what you’re hunting.
- Staying with the aforementioned parable, when Cameron was out duck hunting they’d always bring decoys to go by their blind. To an amateur, a decoy is a decoy. However, to the experienced sportsman, the use of decoys will make or break your time on the water. Choose the right decoys with the proper placement and you’ll have plenty of opportunities but choose the wrong one and you won’t attract a single target to shoot at. Business application: if you walk outside your office and look at the front door and you’re not impressed with the look, what’s an A-Player going to think? If your reception area is unattractive and your office sounds like a funeral home, how’s that 28 year-old superstar going to feel when they show up to learn more about your company culture? The morale of the story: if you’re not using the right bait, you’re going to end up eating really nasty fish or not eating at all.
- Are all of your Hiring Managers fully aware of the background that you’re looking for in team members 2 years from now? If you’re hiring for the people that your company needs TODAY, and with the scorecards of the performance targets they need to hit this month, you’re likely not attracting the A-Players who will move your company forward. Instead, they’ll be the people who will keep your company stable. Are your Hiring Managers guardians of your culture? Are they clearly aware of your company goals?
- Tread carefully during negotiations with top performers and try to avoid including profit sharing as part of their compensation plans. When you’re growing like crazy, profit-sharing can be a great bonus for people for their work but if your key players rely on profit-sharing bonuses to pay their bills and maintain their lifestyle they’ll bail as soon as the company hits any rough spots – and that’s when you’re going to need them the most. Build compensation packages that key team members feel is fair for the work that they’re doing and then have any profit-sharing programs be the cherry on top.
And lastly, Cameron shared the matrix of Jack Welch at GE used when evaluating his teams. Nicknamed “Neutron Jack” for his often rash and emotionally-devoid decisions, he was also widely regarded as one of their very best evaluators and developers of talent. In fact, Jack was the first CEO to implement executive-level Topgrading. This simple 4square was his way of slotting and categorizing talent that he already had on his team. I found it both really easy to understand/remember while also profound.
Here’s the image:
- F = FIRE THEM. NOW.
- C = COACH THEM – THERE’S STILL A CHANCE.
- H = HANDCUFF THEM. MAKE SURE THEY”RE LOCKED UP FOR THE NEXT 5 YEARS.
Tags: A-Player, A-Players, Brad Smart, hire better, hiring, hiring manager, Interview, jack welch, job description, recruit don't absorb, Retention, Scorecard, talent acquisition, Topgrading, topgrading methodology
If you’ve read this blog for any length of time you’ll know that the impact of incentive-based compensation on recruiting and retention is something that I’m both passionate and opinionated about. I’ve often referenced Dave Kurlan as being one of the top thinkers of our time with regards to sales-based compensation. But only a small portion of the typical company’s workforce is their sales team.
People in Sr. Leadership and Human Resources are likely familiar with the studies that have come out about how, on a list of the Top 10 reasons why people take or stay in a role, money typically ranks 9th or 10th. Thanks to Henry Sauer (the Dean of Rackspace University), a friend who I’ve recently had the privilege of getting to know better, I received the book DRiVE. He sent it to me because it had a profound impact on him and the way that Rackspace is working to retain their culture of “Fanatical Support” as they continue to grow.
I began reading this book as I was on a plane last week headed up to visit with a client in the Boston area and recognized quickly that this was going to be a page-turner but its information was not going to be easy to digest (and even harder to implement). On the same flight I read a new report that Dave Kurlan just released about the tenure of salespeople and how tough it is to retain them.
I wanted to share some snippets of both the book’s most compelling findings in its first 100 pages as well as interesting things from Dave’s white paper.
From Dave & The Objective Management Group:
My most recent study and analysis has shed light on some of the characteristics that determine longevity, or to use a more familiar concept, turnover prevention. Turnover, whether voluntary or involuntary, occurs when one party, either the employer or employee, is unhappy with the other. More often than not, the turnover is voluntary, and the employee resigns when income, culture, degree of difficulty or management practices are not to the salesperson’s liking. Involuntary turnover occurs less often because most sales managers are too patient, accept mediocrity, and avoid confrontation, especially a potentially uncomfortable termination.
We live in an era where employees no longer remain with a company for most of their lives. It is not unusual for a younger employee to work for several companies before they turn 30. Today, turnover is inevitable and when you consider the unique dynamic of the odds of a salesperson succeeding, the risk of expensive turnover increases dramatically.
He goes on to talk about the 5 Factors that he’s identified that are the leading indicators in predicting longevity and success for a salesperson:
- Figure It Out Factor (FIOF): In the case of retention, those who achieve overnight success tend to look for the next challenge more quickly than those who are slow and steady. Showing these talented salespeople a career path with growth opportunities, more responsibility, and promotions can offset the risk of losing “A” players too quickly.
- Sales Quotient (SQ) [Author's note: the proprietary score assigned to a candidate based on the OMG pre-hire assessment test]
- Supervision: Sales Managers must be able to effectively coach, mentor, motivate, challenge and develop these salespeople to increase their levels of success and earnings.
- Experience: Salespeople with experience – at least 5 years – are much more likely to be retained for 5 years than salespeople with less experience.
- Compensation: Salespeople who are compensated mostly by commission are twice more likely to be retained than salespeople who are compensated mostly by salary.
When you consider that salespeople are often classified as “wired to sell”, incentivized to chase deals/revenue and are often have the opportunity to earn uncapped income when they are successful dangled before them, it’s easy to think that it is because they are motivated by money. However, after reading DRiVE, I don’t believe that it is necessarily the money that is motivating them.
Here are some examples of why (taken directly from Daniel Pink’s book DRiVE):
*Author’s note: Mr. Pink references “Motivation 2.0” throughout the book. Motivation 2.0 is defined as follows: 50,000 years ago we were trying to survive as a species. Our motivations were obtaining food, running away from saber-toothed tigers and copulating – an early operating system called Motivation 1.0. As humans formed complex societies that required cooperation to get things done, M.1.0 was inadequate because it was based purely on biological drive. We developed a second drive: to see reward and avoid punishment more broadly. Motivation 2.0 was based on the theory that the way to improve performance, increase productivity and encourage excellence was to reward the good behavior and punish bad.
The trouble is that Motivation 2.0 assumes we’re the same robotic wealth-maximizers I was taught we were a couple of decades ago. Indeed, the very premise of extrinsic incentives is that we’ll always respond rationally to them. But even most economists don’t believe that any more. Sometimes these motivators work. Often they don’t. And many times, they inflict collateral damage. In short, the new way economists think about what we do is hard to reconcile with Motivation 2.0. What’s more, if people do things for lunk-headed, backward-looking reasons, why wouldn’t we also do things for significance-seeking, self-actualizing reasons? If we’re predictably irrational – and we clearly are – why couldn’t we also be predictably transcendant?
Bruno Frey, an economist at the University of Zurich, has argued that we need to move beyond the idea of Homo Oeconomicus (Economic man – the fictional wealth-maximizing robot). He suggests that the new model is Homo Oeconomicus Maturus (Mature Economic Man). He says that this figure, “is more ‘mature’ in the sense that he is endowed with a more refined motivational structure.” He goes on to write, “Intrinsic motivation is of great importance for all economic activities. It is inconceivable that people are merely motivated solely or even mainly by external incentives.”
Consider, the revelations that he revealed above were within the first 30 pages of the book. Fortunately, he’s got another 185 pages beyond this that continue to drive home his point. I’ll be blogging more in the future about many of his theories and also attempting to integrate them into the HireBetter Team’s culture and performance-centric environment. For now, if you’re not ready to go out and buy the book, I’ll share with you one other area of thought that, for me, was when I began to realize he was really on to something and that nearly all employees, even salespeople, are being motivated to perform and produce for reasons that aren’t monetarily driven. Rather, monetary reward becomes the proverbial “cherry on top” that is the result of the intrinsic motivational factors that pushed the employee to perform.
“An object in motion will stay in motion, and an object at rest will stay at rest, unless acted on by an outside force.”
Newton’s first law of motion is elegant and simple – which is one of the reasons why it is powerful. Everyone can understand it. Motivation 2.0 is similar because at its heart are two elegant and simple ideas:
Rewarding an activity will get you more of it. Punishing an activity will get you less of it.
Newtonian physics runs into problems at the subatomic level. Down there – in the land of hadrons, quarks and Schrodinger’s cat – things get freaky. The cool rationality of Isaac Newton gives way to the bizarre unpredictability of Lewis Carroll. Motivation 2.0 is similar in this regard, too. When rewards and punishments encounter our third drive, something akin to quantum mechanics seems to take over and strange things begin to happen.
Of course, the starting point for any discussion of motivation in the workplace is a simple fact of life: People have to earn a living. Salary, contract payments, some benefits, a few perks are what I call “baseline rewards”. If someone’s baseline rewards aren’t adequate or equitable, her focus will be on the unfairness of her situation and the anxiety of her circumstance. You’ll get neither the predictability of extrinsic motivation nor the weirdness of intrinsic motivation. You’ll get very little motivation at all.
But once we’re past that threshold, carrots and sticks can achieve precisely the opposite of their intended aims. Mechanisms designed to increase motivation can dampen it. Tactics aimed at boosting creativity can reduce it. Programs to promote good deeds can make them disappear. Meanwhile, instead of restraining negative behavior, rewards and punishments can often set it loose and give rise to cheating, addiction and dangerously myopic thinking.