To read the review in its entirety, go to http://www.inc.com/magazine/20080601/a-skimmers-guide-to-the-latest-business-books.html. 

For more information on Topgrading for Sales and to order the book, go to http://www.TopgradingforSales.com.

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!   

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.  

Aric Dershem, Vice President of People Development at National Heritage Academies, gives this advice about annual talent reviews.  Rather than getting hung up on whether someone is in the top 10% of talent available in the market, ask this question about all of your employees, “Would I enthusiastically re-hire this person?”  If the answer is yes and you have high performance standards, that person is probably an A player.  That will get people into categories; describing each person’s strengths, weaker areas, and potential for development will further refine your list.

Next time you consider someone for promotion, especially if that person will be moving from an individual contributor position to a management position, go through the following steps.

 First, create a detailed Job Scorecard for the new position if one does not already exist.  Next, conduct a Tandem Topgrading Interview with the candidate.  Ideally, the interview should not be conducted by the candidate’s current boss.  However, if that is unavoidable, be sure the other interviewer is an unbiased third party.  After the Topgrading Interview, do 360 interviews with 8 to 10 coworkers.  Those 360 interviews should focus on the new job. 

Follow that process and you will be as successful in promoting high performers as you are in hiring them. 

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!

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!

Most managers jump into the selection process without ever clearly defining what an A player “looks like” for a given position. If you do not know exactly who you’re looking for, it is pretty difficult to know when you have found them. It is no wonder that most managers experience a dismal hiring and promoting success rate.

You can significantly increase your chances of hiring a high performer by spending an hour or two at the beginning of the selection process to specifically define the accountabilities for a given position and the mission-critical competencies an A player candidate will exhibit. You can think of it this way: the accountabilities are the results you expect the candidate to exhibit in the first 12 months on the job and the mission-critical competencies describe the manner in which you expect the results to be delivered.

For example, increasing revenue by 12.5% within 12 months may be an accountabilty for a sales manager. A few mission-critical competencies for that sales manager candidate may be resourcefulness, tenacity, redeploying B/C players, and customer focus.

Thinking about what results an A player needs to achieve and the behaviors you would like that person to exhibit will get you to your goal of having all high performers on your team quicker than you can imagine!

 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). 

• it’s short — a little over 100 pages.  It’s a practical how-to manual with very little theory, but some impressive case studies.
• it includes ROI models.  For years we’ve known that if only one manager in one workshop avoids one (average) mis-hire, the $500,000 savings produces a sky-high ROI.  Of course, almost every manager trained avoids at least one mis-hire in the next year or two. This little book develops the ROI model nicely.
• anticipating release of the book, three pilot programs have been launched — for Microsoft, Johnson & Johnson, and Paychex.  All three are off to a terrific start! 

Wow — sales VPs and managers are super-motivated to topgrade.  They know that almost immediately they can hire more high performers, who will assure higher bonuses for all, and whose improved sales will improve chances that the sales manager will win a promotion.

Stay tuned — as release approaches we’ll probably offer a free webinar.  The “we,” by the way includes co-author Greg Alexander, who topgraded his sales team at EMC and in one year took his region from #12 (of 14) to #1.  How about that — an author who has actually “done” what the book teaches!