Topgrading

INTRODUCTION: This article helps you answer the very common question, “What is different about Topgrading?”

For years we’ve said, “Topgrading hiring is just common sense on steroids.”  That is supposed to be a cute way of saying that adopting Topgrading practices proven to hire 90% high performers is a lot easier than someone might think, and there is no magic – just applied common sense.  But lately some executives have advised, “Don’t oversimplify Topgrading hiring methods – Topgrading is revolutionary, and before embracing it, people want to know how Topgrading values, principles, and tools differ from what they are accustomed to.”

Okay, here’s what is different about Topgrading:

1.  Hire only high performers.

Companies dedicated to hiring exceptional performers tend to pay exceptional salaries, but that seems to miss the core value of Topgrading hiring: at every salary level there are high and low performers, and Topgrading strives to help you hire only the best performers – not just average candidates but the very best available.

This notion – packing teams with the “best of class” at every salary level – is highly offensive to two groups of people:  1. those devoted to equality of outcomes (“C players need jobs, too.”), and 2. C players (who realize their job will be in jeopardy with Topgrading).  Hand out an article on Topgrading and just watch these two groups coalesce to undercut Topgrading!

2.  “Topgrading” is a made-up word and concept.

In the mid-1990s, my son Geoff Smart (of ghSMART & Co.) and I collaborated on developing a more comprehensive approach to talent management than what existed at the time.  We felt it was important to come up with a word that captured the essence of the spirit and principles that make up this concept.  “Topgrading” was the name we picked.

After all, if you “upgrade” talent you might have a team of 10 C players and replace one with a B player.  Whoopee – you’ve upgraded talent and you have a poor team.  The word Topgrading struck me as capturing the essence – packing the team with all high performers, A players, stars.

“Upgrading” talent can be embraced by C players; Topgrading means no C players.

3.  (Chronological) Topgrading Interview

The idea of a thorough chronological interview, asking a few questions about every job, is not new; every executive search report is the product of such an interview.  But search reports tend to be light on disclosing mistakes, failures, and what bosses would say are weaker points.

What we call the Topgrading Interview has been fine tuned for decades and today there are 16 basic questions about every job, including every success, every failure, every mistake, every key decision, every key relationship, assessments of every boss, estimates of what bosses would say about a candidate’s strengths, weaker points, and overall performance … plus questions about leadership, talent, goals, self appraisal, etc. … plus follow up questions.  Phew!

The innovation in the Topgrading Interview is to not overlook anything.  To achieve 90%+ high performers hired, you need 1,000+ data points.

4.  Focus on 50 Competencies.

In order to achieve 90%+ hiring success, focusing on 4 or 6 “key” competencies, which is what most companies still do, is inadequate.  This partly explains why companies hire only 25% - 30% true high performers.

In hundreds of workshops we’ve trotted out our standard 50 management competencies and challenged the participants to cut the list by even one, with this criterion:  you have to keep it if you would reject a candidate who is Poor or Very Poor on that competency.  No one has been able to cut the list by even one.  Conclusion:  50+ competencies must be accurately appraised.

But isn’t it impossible for an interviewer to accurately judge 50 competencies?

Nope!  At the beginning of workshops almost all managers say they can’t possibly do it, but at the end of the workshop – they’ve done it!   They amaze themselves!

So the good news is that managers trained in Topgrading can objectively and validly rate managerial candidates on all 50 competencies.

5.  Threat of Reference Check (TORC) Technique, the “truth serum of hiring”

This technique is simple but it works, motivating candidates to be honest.  It’s this:  let candidates know at each step in the hiring process that in order to get a job offer THEY will eventually have to arrange for personal reference calls with bosses (and others).

C players drop out and A players are happy to tell the truth and to arrange those calls.

6.  Topgrading Career History Form

Problem:  Pre-screening from resumes produces a mixture of good and bad candidates, since resumes are too often incomplete and hyped.

At a glance the Topgrading Career History form looks like an application form, but it’s much more. It requests all the information NOT included in resumes or application forms but you wish you had – complete salary history, boss ratings, likes and dislikes in jobs, true reasons for leaving an employer, and the “truth serum” – the TORC Technique (#5 above).

The Topgrading Career History Form gets only the best candidates in for face-to-face interviews.

7.  Research Base for Topgrading

There are now about 40 Topgrading professionals who have conducted tens of thousands of in-depth Topgrading Interviews on pre-screened candidates for executive positions.  Literally hundreds of thousands of times we’ve asked interviewees the talent question – what did you inherit, what did you end up with, and what did you do in terms of hiring, coaching, firing?

The point:  we’ve heard about every hiring method under the sun and never stop improving Topgrading methods.

8.  The Most Credible Case Studies

My son’s company and mine publish unusual case studies in our books and articles:  CEOs of NAMED leading companies state that their companies as a whole are doing better because of Topgrading.

9.  Managers (like you if you are an A player) can achieve 90% high performers hired.

Thanks to Jack Welch (GE Chairman at the time) approving Topgrading methods including two interviewers, the Tandem Topgrading Interview, many companies wanted to copy GE.  It’s now proven – trained A player managers can achieve 80% - 90% HIGH performers hired.

10.  Important Measures of Hiring Success

The HR world has been measuring hiring success in questionable ways – “cost to hire” people and “time to fill” jobs.  Trouble is, hiring goals are achieved if there are poor performers who are hired quickly and cheaply. Topgraders systematically measure percent HIGH performers hired.

The Topgrading Cost of Mis-Hires document is an original tool to quickly measure those costs; in only 15 minutes hiring managers become aghast at the high costs of their mis-hire, and that motivates them to learn the best hiring practices.

11. Ongoing Refinement of Interviewer Skills

Topgrading interviewers go through the Topgrading Interviewer Feedback Form, a checklist of a couple dozen good interviewer techniques, and simply give each other brief feedback and a couple of suggestions for how to do better next time.

12.  Candidates Arrange Personal Reference Calls with Former Bosses.

This is the follow through part of the TORC Technique (#5 above), and it’s simple:  after the Tandem Topgrading Interview, if the candidate and the interviewers want to proceed, the interviewers ask the candidate to do the work of arranging calls with the people the interviewers choose to talk with – usually 4 bosses, 2 peers, and 2 subordinates.  Conducting these phone interviews assures that the “truth serum” worked.

13.  Coaching New Hires Right Away

Candidates are promised coaching soon after they join, “to smooth your onboarding, assure you are productive quickly, and to begin a long-term development process right away.”  Bingo – A players love it!

CONCLUSION: Topgrading is an organic set of hiring best practices, most of which destroy what had been common hiring myths.

RECOMMENDED RESOURCE: We’ve released a brand new Topgrading Workbook, the same workbook we use in our workshops.  It has a clear explanation of each of the 12 Topgrading hiring steps, the same exercises to teach each step, and lots of new tools and methods.  Click here for more information or to order.

FREE DOWNLOADS: 1) 50-page eBook, an overview of Topgrading – click here, 2) Cost of Mis-Hires Form – click here,  3) Topgrading Vision, listing the 12 problems Topgrading solves, the skills necessary to learn, and results – click here.

INTRODUCTION: Of 50 competencies used in Topgrading, Resourcefulness is by far the most important, yet as parents we actively stifle resourcefulness.  This article is the first in a series regarding how to build resourcefulness into 2-18 year olds.  It’s Chapter One of Smart Parenting:  How to Raise Happy, Can-Do Kids (my co-author is Dr. Kate Smart Mursau, family therapist).

Click here for Chapter 1.

Recommended Resource: For dozens of fun, time-tested activities to help kids of all ages become can-do kids, get the full Smart Parenting:  How to Raise Happy, Can-Do Kids by clicking here.

Topgrading Tips will continue to offer leadership tips, but more and more case studies are popping up – successful Topgraders willing to share their insights, failures, and best advice.  So, from time to time Topgrading Tips will be a mini case study.

This short case study is amazing, the title is not hyped, and the case study has some great lessons for all managers.

Meet Aaron Patzer, founder of Mint.com, and a 28-year old who just sold his company to Intuit for a cool $170 million.  I read that he attributed some of his success to using Topgrading methods.  So I called Aaron, and here’s a brief version of his story …

Aaron grew up in Indiana, got into computers at age six, paid for school by designing websites starting at age 16, graduated Duke in computer sciences and electrical engineering, dropped out of a Ph.D. program at Princeton, and received a MSEE instead.

He joined IBM, got three patents on Play Station and quit because IBM seemed to promote people on the basis of seniority and Aaron guessed he would not have a fun job for more than a decade.  He joined a start up, wrote code and soon he was interviewing candidates on the phone.

With about a 600 IQ, Aaron wasn’t satisfied with his interviewing skills, and he picked up my big, fat book, Topgrading:  How Companies Win by Hiring, Coaching, and Keeping the Best People.  I suspect he memorized the book and particularly the Topgrading Interview Guide.  He asked the questions about education years and then investigated a person’s career by asking about – for EVERY job – successes, failures, bosses (“I figured if a candidate’s last 3 bosses were jerks, I’d be one to hire him.”), boss appraisals, and reasons for leaving.  Aaron “got it,” the power of gleaning patterns and the importance of asking “why?” 1,000 times.  He used the TORC (Threat of Reference Check) Technique and asked finalists to arrange reference calls with past bosses.

Aaron says Topgrading is the best business book he’s read, although he says the first part included name dropping with famous Topgraders, and too much “selling” of Topgrading.  He instructs his managers to go to Chapter 11 for the practical advice (which today is available in a much more exciting tool, the Topgrading Workbook – click here for information).  And I suggested that his managers read Chapter 12, the legalities of hiring, written by the largest employment law firm in the US and written to keep managers out of a minimum security prison.

Back to his success story – at age 25, Aaron was working 75 hours per week and frustrated with the additional hours necessary to manage his personal finances using Money or Quicken.  The bolt of lightning struck – he’d create the best personal finance software.

So he did it, he launched Mint.com, with occasional self doubts.  After all, he was attacking Microsoft and Intuit with no business experience, no leadership experience, no knowledge of Java web services, and by the way – no money.   Ahh, but he already knew how to hire A players.

Google Mint.com to see details of his business, videos of how someone can enter a few super secure credit card and bank accounts in 6 minutes and immediately begin saving money and time.  And it’s free.

So, at 26 years of age Aaron started hiring people for Mint.com and now he has 40 employees.  When he sold Mint.com to Intuit, the company made him head of their personal finance division, so there will be a lot more opportunities to Topgrade.

How did he Topgrade Mint.com?  He used the Topgrading hiring methods, with a few tweaks to really, really zero in to be sure he wouldn’t make a mistake.  For example, he asks engineers general questions about their methods to determine if they are so customer service oriented that they sit with users and note any frustration.

And what is his track record?  Four mis-hires out of 40.  Not bad!  A couple of others quit for good reasons – a dad died and another one of Aaron’s employees returned to Asia to take over the family business.  Looks like a 90% success record, with successful hires not just “okay,” but true high performers.

Aaron Patzer makes assembling a team of outstanding performers look easy.  He didn’t happen to mention one small factor that actually does make Topgrading “easy” – he’s clearly an A player!

Recommended Resource: The “Cliff Notes” for Topgrading is the 176-page Topgrading Workbook, a bit shorter than my 650-page tome!  The Topgrading Workbook explains each of the crucial Topgrading steps, and then presents the fun, illuminating exercises that teach how to do it.  Those are the same exercises we use in our Topgrading workshops.  For more information or to purchase, click here.

The #1 flaw, shortcoming of most leaders is mediocre listening.  That’s the bad news.  The good news is that improved listening is the single most powerful improvement most leaders can make.  Why?  Because when leaders progress from mediocre to very good listeners, their team considers them much improved as leaders overall, and specifically as motivators, team players, coaches, developers of talent, and yes – better Topgraders!

The best news:  I’ve seen hundreds of leaders improve their listening skills.  This Topgrading Tips shows how.

Being regarded as a very good leader also helps you Topgrade, because during the hiring process A player candidates ask others on your team, “What’s (your) leadership style like?”  “What do people on the team like and dislike about working for (you).”  “How are decisions made?”  “Is (the boss – you) a good listener?”  No A player wants to work for anyone, even a super A player, who is a lousy listener.

Having surveyed over a million people and coached a couple thousand senior managers, my files are loaded with my interview notes from co-workers whose boss or peer is a mediocre listener.  Even super A players toss a lot of banana peels in their path when they are mediocre listeners:  Co-workers feel diminished (“He’s always interrupting before I can finish.”  “He does emails when I’m talking.”), unappreciated (“I have good ideas but she won’t listen.”) and stifled (“How am I supposed to grow with my ideas squashed?”).  At worst sharp members of the team quit and it’s hard to recruit A players.  At best performance and teamwork are lessened.

Of the 6,500 executive assessments I’ve done, the single most common weakness listed, even for A players, is listening.  Of all the executives I’ve coached, the single most common area I’ve offered suggestions to improve is … listening.

Let’s tweak that – most leaders need to improve at ACTIVE LISTENING.

Listening is just grasping what the other person said.  ACTIVE LISTENING is playing back to the person what you heard, engaging in a dialog to really understand not just the words but what the person really meant to say, and the feelings, emotions, and passion underlying what is said.

Listening:

Subordinate: “I need a vacation.”
Leader: “You need a break – so do I!”

With ACTIVE listening:

Subordinate: “I need a vacation.”
Leader: “A vacation – I know, you’ve been working 70+ hours per week for weeks.”
Subordinate: “I know you appreciate it.”
Leader: “I sure do!  Not only your dedication but your great ideas are saving the Acme account!  You seem to thrive on hard work – what’s up?”
Subordinate: “It’s not me so much as some family obligations; I need some time … off.”
A Player Leader: (sits down, with full attention) “I’m not going to pry, but when you say you need some time off, you got it.”
Subordinate: “I don’t mean to be secretive.  Jeannie (wife) just found out she has breast cancer, and these international trips we’re scheduling will leave her feeling abandoned just when …”

You get the point.  ACTIVE LISTENING involves what is sometimes called “listening with the third ear,” which means paying attention to more than the words.  It’s being sensitive to body language, inflections, pauses, and eye contact, so that your responses show some understanding of what is not being said, what the feelings are beyond the words.

This Topgrading Tips summarizes the “nuggets,” the most successful ways managers have improved their listening skills.

1.  Conduct an email 360 survey. If you suspect listening is a weakness and you want to be sure, here’s a simple survey technique:  Just have HR (so there is some anonymity) send a 5-item email survey to co-workers saying, “Pat Smith has asked HR to survey (5-15) co-workers asking how frequently they view him as …” The scale is Always, Frequently, Sometimes, Never.
Include at least 3 items you’re sure will get high ratings (A Results-Oriented “Doer,” Hard Working, A Topgrader, etc.) but include A Very Good Listener and maybe 1 other item you could improve at – Generous with Praise, A Positive Motivator, etc.

After each item leave space for Written Comments.

2.  Ask someone you trust to interpret the (negative) survey results. If your survey results are positive – terrific!  No need to read further (unless you want to pass this Topgrading Tips on to someone who needs to improve).

That trusted advisor will help you to see yourself realistically, just in case you might be tempted to be defensive or dismiss the results.

Re-take the survey every 6 months until you are Frequently viewed as a Very Good Listener.

3.  Pretend a camera is on you 24/7 and will record all your listening, good and bad. The image of the camera has helped hundreds of managers remind themselves to listen better.

4.  “Play back” to the person what you think you understood. “Pat, let me check if I understand — you want to personally make the Executive Committee presentation because you did the study, you can best field any questions, and after a year with the company you’d like some visibility, is that right?”  If Pat has a fourth reason, she’ll say it, but at a minimum she’ll know you were a good listener.

5.  Use the “10 Dime Technique.” Put 10 dimes in a pocket and every time you are really proud of yourself for using ACTIVE LISTENING, transfer a dime to another pocket.  When you end up with most dimes transferred … you’re improving!

SUMMARY: Active listening is the turbo-booster of leadership competencies.  It’s also a really, really important skill for Topgrading interviewing!

RECOMMENDED RESOURCE: For the absolute latest innovations in Topgrading hiring, check out the all-new Topgrading Workbook.  It explains all 12 Topgrading hiring steps, and has fun, practical exercises to master each.  For more information, click here.

This article is a case study that shows how Topgrading applied to our schools can produce excellent results.  I might be a bit biased, but I really believe Topgrading is the most powerful solution to our nation’s lousy, terrible, secondary education.

The teachers’ unions are dead set against Topgrading schools; for 10 years I tried, unsuccessfully, to persuade them.  My failed pitch was:  use Topgrading methods to hire A player principals, who in turn will Topgrade their schools with A player teachers, who will teach students a heck of a lot more than what they’re learning today.  “Fergettit,” they said.

I’d never heard of National Heritage Academies until they … Topgraded their schools!  Their short case study is encouraging and inspiring!

CASE STUDY:  NATIONAL HERITAGE ACADEMIES

National Heritage Academies (NHA) has dramatically increased the percentage of A players in their organization which is noteworthy given they work in the public sector.  NHA currently operates 61 K-8 public charter schools in six states, serving nearly 40,000 students.  As a rapidly growing organization, the NHA’s leadership team participated in Verne Harnish’s Rockefeller Habits training where they first learned about Topgrading.

As a system of charter schools serving tens of thousands of students across multiple sites, NHA recognized that as a people-intensive business, their success would rely, in large part, on the quality of the people at each site. The selection of school principals was vital as they are responsible for hiring A player teachers, building culture, managing people and leading instruction - all critical to producing schools where students measurably improve their learning.

A more systematic and effective hiring process seemed to make sense, but the motivating factor to implement Topgrading was the initial Talent Review, which revealed that only 19% of the school principals hired throughout the company’s existence qualified as A players.  The leadership team made talent a top priority and proved it by taking action.

The team, led by COO Jeff Clark (now President/CEO) and the new Vice President of People Development, Aric Dershem, were trained and began putting all school principal candidates through the full Topgrading process.  Clark and Dershem dedicated two half-days each week strictly to principal hiring and conducted tandem Topgrading interviews and reference checks for all finalist candidates. The results soon followed. The number of A player principals increased from 19% to 53% in 2006, 63% in 2007, and to 76% in 2008.

A curious and disappointing thing happened in 2009; the percentage of A player and A potential principals decreased from 76% to 66%.  Many Topgrading companies have experienced a similar phenomenon.  People who qualified as A players pre-Topgrading or in the early stages of implementation do not necessarily qualify as A players as talent management practices mature…because the performance bar has actually steadily increased.  2009 has been a recalibration year for NHA.

How refreshing is that? They more than triple hiring success and then raise the bar - to hire even better.  Having talked with Jeff Clark and Aric Dershem, I suspect they will continue raising the performance bar for their educators until NHA schools are not only tops in the US, but tops in the world.

Dershem said, “Using the tandem Topgrading interview approach has been hugely beneficial for us not only because it has allowed us to hire better, but because it allows us to go back when we make hiring mistakes to see what we missed and adjust our process to ensure that we do not make that mistake again.  Going back after a hiring mistake has also helped us realize which characteristics are coachable and which are not.  We have found that principal candidates need to genuinely care about the teachers and other people they manage, have a strong achievement drive, and be highly resourceful; those qualities are not very coachable.  If they exhibit those qualities and have a willingness to learn, we can typically help them develop into a highly successful principal.”

Business results have followed.  Dershem said, “From a financial perspective, we are primarily a capacity utilization business; every seat we fill in a school generates revenue. From a quality perspective, we are focused on delivering outstanding student learning results across all our schools. Our capacity utilization has set records over the past three years while academic achievement metrics have increased steadily.  As we have increased the percentage of A players in our organization, employee satisfaction ratings have also consistently improved as we ensure we have more of the right leaders in place.”

EPILOG: Years ago the public schools in my town declined, and son Geoff and daughter Kate attended a broken down private school with a new head master couple (retired Booz Allen executive and community leader wife), who sold us with the notion of hiring nothing but A player teachers.  Lake Forest Academy became a superb institution in all respects, but the key was talent.  As Jim Collins says, “Get the Who right, and the What takes care of itself.”

NHA is succeeding in the public sector, with Topgrading central to their mission.  Now if only more of us ordinary citizens could get our elected representatives to embrace charter schools like NHA …

RECOMMENDED RESOURCE: Are you interested in learning the latest Topgrading methods and tools?  Consider attending our two day Topgrading Workshop, December 8 - 9 in the Chicago area.  For information, click here.