Topgrading

For those Human Resources professionals out there who want to implement Topgrading but are having a tough time convincing “the organization” it is worth the time and money, here is a suggestion that may help you significantly.  Figure out how much value a Topgrading Initiative will add to the bottom line and let the data help you persuade others. 

Here are the steps:

1. Spend 15-20 minutes with management team members working through a cost of mishire exercise.  Average those costs for each level of management.

2. Ask each of those managers you meet with in Step 1 their opinion of the organization’s hiring success (”When we hire from the outside, what percentage of the time do those people turn out to be A players, high performers that fit our culture?”)

3. Plug the numbers into this equation: (100% - Average hiring success rate) x number of hires per year x Average cost of mishire = Annual cost of mishire (at this level).  Do this for each level and you have the total annual cost of mishire to the organization.

4. Estimate how implementing Job Scorecards, the Career History Form, Tandem Topgrading Interview, and In-Depth Reference Checks will impact hiring success.  For instance, if you find that the current hiring success rate is about 30% and you plan to do the implementation without professional assistance, you could expect to improve to 60% success in the first year.

5. Calculate how the improvement in hiring success will reduce the cost of mishires, and from there you can calculate an ROI for a Topgrading implementation.

Here is an example of a company that has a 30% hiring success rate, hires 10 managers per year, and has an average cost of mishire of $500K

Total current annual cost of mishires = $3,500,000

The ROI will be astronomical.  Also, based on our research those are extremely conservative numbers and only address the effect Topgrading will have on external hiring.  The returns will increase exponentially if you implement Topgrading-based processes for promotions and developing incumbent managers!   

Though some clients are sticking with the categories A, B, and C player, many have simply begun discussing whether someone is an A player, has the potential to become an A player on a timely basis (usually within a year), or is a non-A player without A potential.  Based on Topgrading’s definition of A player, a high performer who is in the top 10% of the talent available for the pay, it really doesn’t matter whether a person is a B or C player - there are A players out there who will do that job for the same compensation and perform at a much higher level.  Research from several sources estimates that a top performer is twice as productive as an average or below average employee. 

Just keep in mind that A potential is not a perpetual category.  If you deem someone “A potential” and that person has not improved enough within a year to be considered an A player, it is probably time to figure out where that person can be a high performer elsewhere.    

Another trend we have noticed, and recommend, is the separation of the administrative accountabilities of the human resources function and talent management.   Too often those administrative responsibilities such as benefits and employee relations take precedence over packing the organization with A players.  The administrative things are often acute problems, fires to be put out now, while having a lower-than-possible percentage of A players in the company is more of a chronic problem. 

Several Topgrading organizations mentioned in previous posts separated those jobs after they began implementation of Topgrading tools and principles.  They realized that managing talent is a big job; a big job that has the potential to have a gigantic positive impact on the organization.  Aric Dershem (VP of People Development, National Heritage Academies), Danielle Robinson (Topgrading Director, Rudy’s Country Store and BBQ), and Travis Isaacson (Director of Organizational Development, Access Development), all have one main focus - increasing the percentage of A players in their respective organizations.  

A recent book, Hard Facts: Dangerous Half-Truths & Total Nonsense, included Topgrading. What an honor! Ooops — it’s a critical review! Oh, no, after three decades of helping companies improve from 25% to 90% high performers hired, the “fact” is — Topgrading is all “BS?” (my initials, get it?)

The book says, p. 89, “Smart’s book Topgrading emphasizes the “fact” … that A players hire A players … The War for Talent makes the same point … We call it the Rule of Crappy People: Bad mangers managers hire very, very bad employees, because they are threatened by anyone who is anywhere near as good as they are.”

“Duh,” you say! Obviously there are exceptions, which I have pointed out in various writings, but does anyone want to seriously challenge something as obvious as A players trying to hire A players? Maybe college profs think, “Gee, our C player dean hired A player me!”

Actually, the authors go on to cite research with college kids that really does support the Rule of Crappy People — conscientious college students tend to hand hang out with college students, and a guy I was in my Ph.D. program with (Frank Schmidt) did study showing really smart people tend to hang out with really smart people — “certainly part of (Smart’s) A player profile.”

Maybe I’m being defensive, but get a life, academics! In the Epilogs of my books I beg the scientific community to research important topics, such as how Topgraders double and triple their hiring success. I wouldn’t waste any time trying to scientifically “prove” that A players tend to favor A players, and C players tend to favor C players!

I had the opportunity to speak with Marlis Oliver earlier this week. Marlis is the Area Director of K & N Management in Austin, Texas; K & N Management owns four Rudy’s BBQ & Country Stores in the Austin area. Marlis has been instrumental in transforming K & N into a true Topgrading organization.

We often get asked the question, “Should we Topgrade our organizations from top to bottom?” Marlis would answer that question with a resounding, “Yes!” K & N not only does tandem Topgrading interviews for management candidates, they conduct Topgrading interviews on EVERYONE that joins the organization, including the people that clear the tables and clean the floors in their restaurants. They realized early on that their hourly employees are the ones that have the most contact with customers, making it imperative that they are A players.

The results have been astounding, proving to Marlis and the rest of K & N’s management team that all of the time spent selecting the right people and regularly monitoring their performance has been worthwhile. K & N currently owns four Rudy’s BBQ & Country store franchises; those four locations do more food volume than any other restaurant in Austin, their four locations perform better than other franchise locations…and last year they experienced double digit store growth!

As the cover article (”Get Your A Players Here”) in Workforce Management (March 3, 2008), suggests, A Players are winners and Topgrading is the way to get them.  As soon as they release the pdf we’ll post the article.

 This week people have read the article and I’ve gotten a bunch of emails asking if A players always succeed, and the answer is no!  There are no guarantees that come with embracing topgrading (other than our money-back guarantee on the accuracy of our “second opinion” assessments of candidates;  no one has ever requested their money back, incidentally).  But here are a couple of the most common ways a Topgrader can fail:

 1.  Bad luck.

As you know, business involves taking risk.  A players can do all the due diligence in the world to mitigate risk, but they can still fail.  There are plenty of A players at Bear Stearns, UBS, Citi, and Merrill Lynch who are getting terrible results and getting tossed out onto the streets because of the sub-prime virus.  Hey, they all didn’t cause the mess!

Bad luck comes in the form of new competitors, economic blips, terrorist acts, some country over-protecting competitors in your industry, Congress withdrawing subsidies, Supreme Court vagaries, your coming down with a nasty disease.  Hey,  ca-ca happens.

ADVICE:  Hang in there.  A players are resourceful and persistent.  They don’t give up easily, but when they fail they pick themselves up and move on.  Curt Clawson became CEO of what he thought would be a Good to Great company, but a day after joining Hayes-Lemmerz he discovered accounting irregularities.  Even the board didn’t know of the problems. The company soon went into Chapter 11; it was bad luck but the company was failing.  It took a couple of years and major change, but today the company has a 1-1 debt/equity ratio,  a strong balance sheet, and a solid future, all because after bad luck Clawson persevered, topgraded, and succeeded.

There is someone you might have thought of as an A player, who just this week said something  like, “The glory in mankind is rising from the ashes.”  Elliot Spitzer.  No more A player status for this guy … he’s going to have to rise a lot, and avoid those hot ashes (ahem).

2.   Bad boss(es)

I’ve assessed/coached 6,500 executives, each with an average of 10 jobs, and after asking all the topgrading questions about all the jobs — how they succeeded/failed/made decisions/etc., I’ve accumulated 65,000 of those case studies.  Since a high percentage of executives I interview are A players, I’ve heard a zillion examples in which really sharp executves were hindered because the boss — imposed a futile strategy, refused to listen to good ideas, failed to topgrade the rest of the team (so peers were C players), or felt threatened and actively undermined the A player.

 ADVICE:  If you’re the A player with a C player boss — hit the pause button; don’t hastily quit.  I’ve seen plenty of C player bosses who eventually performed as A players because they topgraded and assembled a team of A players whom they could trust.  Good for them!  Hey, stick around when that boss says, “Pat, I’m putting a together an A team and I’ll be relying on you and others to help us all succeed;  my job is to topgrade and empower the team so you all have fun, learn a lot, and achieve huge success.”

A final suggestion — perform solid due diligence on bosses before changing jobs.  I have a thousand examples in my files of confident A players NOT checking out the boss enough, and failing because of that boss.  Do reference checking — ask present and past subordinates of the executive you might work for what he/she was like, the good and the bad.

 But … if you find yourself reporting to a chronic C player, look for an exit stategy, either within the company or with another  company.  ‘Tis better to slow your career a bit, succeeding in a lesser job, than fail in a bigger job with an excuse that sounds like, and is, an excuse – “I failed because I went to work for the wrong boss.”

                                ANNOUNCEMENT  TO LICENSEES 

In a few days we’re going to send you (free) a revised, turbo-boosted Topgrading Career History Form;  it will save you a LOT of time prescreening candidates and it will assure you will screen IN the A players.  Of course you can choose to make the changes or not. There are 3 changes:

1.  An Introduction that alerts candidates to the TORC Technique, essentially telling them that in order to get a job offer they will probably be asked to arrange personal reference calls with former bosses (which is a hint for them to be totally honest in completing the Topgrading Career History Form).

2.  Boss ratings.  They are asked to guess at how their last boss in each job would (and might!) rate them.

3.  Motivation to leave.  They are asked whether they quit on their own, were fired, or if it was “mutual.”

The combination of the three innovations will make the Topgrading Career History Form even more efficient.  Just email candidates, “Thank you for sending your resume;  in order to continue the selection process please complete the career history form.”  A week later you sift through 30 completed career history forms and quickly zero-in on just the candidates who are in the right comp range, who have not been job hoppers, who say their bosses will rate them at least 4 (on a 5-point scale) and who generally have left jobs on their own for better jobs (as opposed to being fired or having too many “mutual” departures). 

 AMERICA’S FIRST GREAT LEADER  

    
Guess what?  If the Pilgrims hadn’t Topgraded, we’d probably be speaking Dutch, Spanish, or French.  The Pilgrims elected William Bradford Governor of the Plymouth Colony, and he did far more than carve the first turkey at the first Thanksgiving in 1621.  He probably should be called:

“The Grandfather of America”

Here’s the short story:

The Pilgrims arrived in the New World, with half the Mayflower passengers dead in the first year.  William Bradford was thought to be dying but nonetheless was elected Governor of Plymouth Colony.  Not only was he the first person elected on our soil, but he was re-elected 30 times.  Because he succeeded, the colony succeeded, and then thousands of Brits came over – the Puritans, who did nasty things like burn witches and push the natives off of their land.  Eventually America embraced what William Bradford, A player founder of our country, introduced, including:

1. Democracy (He led through what he called “Town meetings” – sound familiar?)
2. Free enterprise (Socialism just wasn’t working, and the Pilgrims were about to jump back on the Mayflower and give up until Bradford introduced free enterprise.)
3. A secular (non-religious) government (He conducted civil, not religious marriage ceremonies.)
4. Women’s property rights (Men, if you’re divorced, blame Bradford for losing half the property.)
5. Peace (Governor Bradford and Chief Massasoit had the only treaty not broken by the whites.)
6. Trial by jury (12 jurors – sound familiar?)
7. A popular holiday – Thanksgiving!

In 1995 I published an article in the Mayflower Quarterly entitled America’s First Great Leader:  William Bradford of Plymouth Colony.  If you’d like to read it (maybe over the Thanksgiving holiday) just click (here).
 

Last week I was in Turkey and heard about a man who has to be one of the most successful leaders of the 20th century — Ataturk of Turkey. I couldn’t believe what people were saying about him, so I picked up some biographies (best is Ataturk: Founder of a Modern State). This guy was the most courageous and effective change agent and leader imaginable.

In a nutshell: It’s WWI, and the Ottoman Empire lost, but Mustafa Kemal (later added a last name, Ataturk), a military leader for the Sultan, didn’t give up. He decided to start a country, call it Turkey (like the US losing a war but someone trying to salvage part of it, say, Massachusettes, with a new name). Trouble was, the “Turks” had no identity and the people were backward (think 12th century), superstitious, hyper religious, and lazy. Not many A players.

Ataturk, who had never lost a battle, realized his vision — he started popular assemblies that ultimately elected him and made him supreme commander and he whipped the Allies and separately the Sultan’s forces. At the same time he led processes to get his country and the world to recognize a new country (Turkey) and a new constitution that substituted a democracty for a theocracy, gave women full rights, stimulated free enterprise, and the value of world peace (in other words, giving up wars for expansion).

Unbelievable! He converted a totally backward religious people into a secular state. As an aside, I can’t believe the US has been mistreating Turkey — the perfect model for how Iraq might change, and it’s next door to Iraq.

The biography has some fascinating leadership insights — like how to defeat armies (militarily), Islamic fundamentalists (war of ideas and values), and move a heck of a lot of cheeze. He changed the language (discarding Arabic in favor of Roman), got everyone to add a last name (too many Mustafa guys), and helped a populus of lazy goat herders to become hard working capitalists. One of his tactics:

Pretend a change isn’t necessary, sneak it in, and then claim it was inevitable … while constantly adding A players to the ranks of supporter.

If you liked this blog, read about a dude who, against all odds, started a country (called the United States). Nope, not George Washington, but William Bradford. Read a short synopsis of full article I published by signing up for the monthly newsletter Topgrading Tips and keeping your eye out for the next issue.

How to be a HAPPY A player.

About 6,000 interviews ago I began taking advantage of high achievers I interviewed by asking those in their 50’s:

How would you live your life or manage your career differently, if you could start over?

I heard the same responses again and again, so ever since I have passed on their wisdom to executives I’ve coached.  A lot of executives said these words of wisdom, though “obvious,” helped them as much as learning to Topgrade!  Hmmm.

   1.  Fix broken pieces in your life now, or they will get worse.

The single most read page (p.195) of my book Topgrading explains the Life Balance Scorecard.  It says if there are six important parts of your life, rate them OK or NOT OK, and fix those that are NOT OK, or else.  Or else what?  Hundreds of high achievers said they were not truly happy unless ALL important parts of their life (career, family, health, etc.) were at least “OK.”  The happiest of the A players said all the important parts of their life were, if not great, at least “OK.”

   2.  Don’t neglect family.

As you’d expect, this advice comes from thousands of A players who have been divorced and didn’t really get to know their children.  They say they kidded themselves at the time – “I’ll be a workaholic for just another year or two and then get balance in my life.”

In retrospect they say they really could have, and should have, invested more in their most important relationships.

   3.  Pay attention to health.

The high achievers stopped smoking, but about half said their exercise, eating, sleeping, and stress-relief habits were not so hot during their 30’s and 40’s.

   4.  Live within your means.

A lot of the high achievers made at least one terrible job move out of desperation –financial desperation: “With my expensive life style, I had to get a higher paying job.”  That’s what they thought at the time.

Their advice:  Save and invest for rainy days and retirement.

   5.  Plan your career early.

Since 85% of the high achievers I’ve interviewed were self-made, from the “other side of the tracks,” they didn’t get great career advice early in their career.  They listened to mentors who helped them succeed in the short-term, but not long-term.  So, general managers started their broadening processes (MBA, request to be cross trained in sales, etc.) much later than ideal.  Career plans can obviously change, but A players suggest recruiting mentors who think long term. 

   6.  Topgrade.

Did you think I’d neglect this?  Prior to Topgrading A players built their “virtual bench,” their Rolodex of talented people they’d recruit.  That’s how they put together teams of 50% high achievers.  These days high achievers continue to hire from their virtual bench. But when hiring others, they achieve 90% success using:

• the tandem approach (two interviewers), and
• the Topgrading Interview Guide, to be sure all the right questions are asked and they learn the full, chronological, career history.

And, by hiring and promoting better, and redeploying Non A players, they ratchet up talent so their teams have not just 50% high performers, but 90%.

These 6 bits of wisdom definitely improved my life, and I hope some of it helps you!

Why People Don’t Support Topgrading

This morning a client HR executive, widely respected for driving the Topgrading vision in an 8,000 person division said to me:

“If people don’t support Topgrading they’re
a C player or they don’t get it.”

She’s right. So, she is the educator, cheerleader, and general emissary, constantly sensing skepticism and addressing it through one-on-one conversations, mini workshops for small groups, handing out Topgrading handbooks, and encouraging the sharpest managers to use Topgrading methods (so that they experience the positive results and they help sell Topgrading to laggards). The high performers are direct and up front with their concerns — all they need is some more education. In the past skeptics had to wait for a Topgrading workshop or read Topgrading, but it’s easier to educate sharp managers these days. If you don’t have the time my client has to personally educate people, just hand them the small Topgrading handbook or suggest they watch the 1-hour Topgrading video.

But watch out! The C players are passive–aggressive, pretending to support Topgrading but secretly trying to derail it. They fear Topgrading will cause them to be replaced by a high performer. Hmm — maybe they’re not so dumb.

That’s why all sharp managers must pay attention to excuses and confront them:

C player: “I couldn’t find a tandem partner so I interviewed her alone and want to offer her a job.”
You: “Nope — I’ll choose a tandem pair (of high performers) to interview her.”
C player: “I’m desperate so I’ll just hire this C player.”
You: “Nope. Plan ahead next time and now do the full court press in recruitment, but no way will you hire a C player.”

Recommendation: When launching Topgrading, ask high performers to help sell the changes by educating and positively challenging skeptics.

Why A Player Human Resources Loves Topgrading

Sometimes Topgrading has been portrayed as a CEO initiative, with HR tagging along.  Of course, CEOs are major advocates, since their performance is so obviously connected to talent in the organization.  When CEOs hear about Topgrading  and learn that some of their peers are improving hiring and promoting success from 25% to 90%, they go nuts.  “How can we be so far behind other companies in picking people!?”  It’s unfortunate when they have to drag HR to the party, to direct HR to embrace an A player standard, or to train managers in the superior Topgrading Interview process.  C player HR managers balk, but the A players love Topgrading, because it enables them to:

• Earn respect.

Historically the HR executive has been like the field goal kicker, a second-class citizen except during a few moments of glory (a successful labor negotiation, or whatever).  Why?  HR used to be the least accountable function.  However, Topgraders measure hiring and promoting success, install procedures to improve it, and they are held accountable for improving talent.  When they are credited with dramatic improvements in talent, they get respect.

• Earn high salaries.

HR has historically been the lowest paid function, but there are more and more exceptions.  When HR can show plummeting costs of mis-hires and mis-promotions, and improvement in percent A players in management from, say, 50% to 80%, they earn the bigger bucks.  A recent study by Aon identified 172 HR executives who were among the five best-paid managers in their companies.

• Enjoy marketability.

If Topgraders don’t get the recognition and rewards they deserve, they can find another job in a nanosecond.  Hundreds of Topgrading companies are eager to hire Topgraders in HR, today!Yesterday (as I wrote this), the new head of HR at a Global 100 company told me why his predecessor had been fired.  The CEO had been lamenting 25% success in hiring and when the former head of HR resisited at introducing Topgrading, he fired her.

• Lead.

Typically the CEO wants superior talent and is willing to make the hard decisions (raising the bar, firing C players, etc.), but most rely on HR to lead the way, to outline the strategy and tactics, and to execute well.

Fortunately some parts of Topgrading are pretty easy to install.  Introducing Topgrading Interviews does NOT mean scrapping existing HR practices.  The job analysis, job description, and round-robin behavioral interviews are kept.  The Topgrading Interview is tacked on, so the change can be smooth and easy.

In talent reviews Topgraders in HR typically have the deepest insights into people, because they are frequently asked to be the tandem interview partner to a hiring manager,  HR managers become the most accurate at predicting who will succeed, fail, grow, or fade.  That knowledge, of course, converts to leadership.

In my experience, which includes in-depth assessments of over 600 HR executives, the A players love Topgrading and the C players don’t.