How 'topgrading' improves the odds of hiring winners
“A star is worth five to 10 average performers.”
– Jack Welch, former chairman and CEO, General Electric
As consultants, we have the opportunity to work with and observe highly successful companies as well as those who struggle year in and year out. Two companies may be in the same industry working in the same city, yet only one is a recognized leader who owns a significant market share.
Why do the two companies, selling the same products or services, perform so differently? Because the exceptional company employs exceptional managers and employees. Just as in sports, where championships are won by the teams that recruit well and fully develop the best talent, success in business also is based on cultivating a talented team.
Yet recruiters and hiring managers too often rely on outdated sourcing methods and interviewing techniques that fail to accurately assess talent – practically guaranteeing mediocrity.
Management icon Peter Drucker noted that hiring decisions involve the highest stakes and the longest-lasting consequences. Yet despite the presumed wisdom of investing the effort and expertise to make sound decisions, managers succeed perhaps only one-third of the time. Other experts suggest that only 25 percent of hiring decisions result in the addition of A players; seventy-five percent of hires and promotions, then, miss the mark.
Failing to consistently hire A players is costly and directly impacts profitability. Recruiting, interviewing, training and trying to develop are expensive, and when a position has to be reopened, the organization cannot recapture that lost opportunity to reap results.
As Drucker pointed out: “In no other area of management would we put up with such miserable performance,” or permit such a poor return on investment.
The challenge of finding top talent
Why do so many employers – while perhaps giving lip service to the notion that hiring, developing and retaining the best talent are essential to building great organizations – nevertheless fail to do so?
Too much is left to chance when:
- Senior management fails to define what “top talent” means in the context of its organization.
- Job descriptions are boilerplate, and fail to outline performance goals and expectations.
- Solo rather than tandem interviews are conducted, even when assessing senior and middle managers.
- Interview guides stop short of drilling down into questions about successes, mistakes and lessons learned in a given candidate’s former positions.
In his book “Topgrading: How Leading Companies Win by Hiring, Coaching, and Keeping the Best People,” Bradford Smart advises employers on removing chance from the hiring process – a process used successfully by organizations like General Electric, Honeywell and the American Heart Association.
Smart defines an A player as one “who qualifies among the top 10 percent of those available for a position. … ‘Available’ means willing to accept a job offer: at a given compensation level, in a specific company, in a particular industry, in that location, with specific accountabilities.”
Key elements of a topgrading approach
How can organizations of all sizes ensure that 90 percent of hiring and promotion decisions involve A players?
Smart advises employers to get to know the total person as well as possible. Strategies include:
- Having two managers and one peer conduct in-depth interviews.
- Soliciting not simply resumes, which present information the applicant wants the employer to know, but also a “career history form” – a detailed set of questions regarding each position and education. When executed properly, this form reveals likes and dislikes about past jobs, and provides a rich picture of the applicant’s strengths, weaknesses, motivating factors and other telling data.
- Asking applicants to arrange reference calls with their bosses from the past ten years. High performers, confident that former bosses will speak positively about their performance, will be comfortable doing this.
Conclusion
In the best companies, recruitment is a way of life. All senior managers view “topgrade” hiring and promoting as crucial to achieving strategic goals, Smart says, and managers are held accountable for hiring A players.
As competition for top talent intensifies in 2008, companies that hope to achieve market dominance or boost market share must focus on assembling exceptional teams. Recognizing the ineffectiveness of outdated recruiting and development practices is the first step toward attracting the individuals that will truly make a difference in the organization’s performance.
