Topgrading

A January 2008 article in McKinsey Quarterly shows how the image of HR, already pretty bad, has plummeted in the past decade. Among the issues is one central to Topgrading — HR advances so-called “best practices” that don’t work. Topgrading offers a unique opportunity for HR to gain credibility — to add the tandem Topgrading interview to hiring and promoting and literally double or triple the percent of high performers picked.

TORC TECHNIQUE IS ETHICAL! 

Good grief!  Occasionally someone challenges the most powerful method for inspiring interviewees to be totally honest!  In this short Topgrading Tips I’ll refresh you on how the TORC (Threat of Reference Check) works, what is the criticism, and, ahh!, 6 ways to satisfy your sense of ethics. 

What is the TORC Technique?

You tell candidates, at the first opportunity, that in order to get a job they will, at a mutually agreed-upon time, arrange for the reference calls with former bosses (and possibly peers, subordinates, and customers). At the end of the tandem Topgrading interview you and your tandem partner have heard descriptions of all bosses plus others and you (not the candidate) choose which people you want to talk with. 

Simple enough and C players stay away, because they want you to only call the references they submit — their next door neighbor, insurance agent, and priest. A players want to arrange the reference calls, because they know their former coworkers will sing their praises, making them a more attractive candidate.

Hey, your company has such a policy and you have violated it by talking to hiring managers of former A players, right?  The reason — you knew you’d be saying nice things and maybe a couple of small negatives, so you knew that there was no risk that your former A player would sue you!  After the call, you probably told your former A player what you said in the reference call, and got an appreciative thank you! 

For the past 25 years thousands of managers have reported that candidates arrange the interviews and 90% of the references are actually willing to talk.  It works, and when a company gets a reputation for requiring candidates to arrange the reference calls — to repeat — C players stay away, A players are attracted to the company, and all candidates are honest in the interviews, knowing you will be talking with their coworkers. 

Ethical challenge to the TORC Technique:  ”We’d be hypocrites!  Almost all companies have policies forbidding managers from taking reference calls (other than HR confirming dates of employment, etc.) and since we have such a policy, isn’t it wrong to have candidates ask former bosses?” 

How to use the TORC Technique ethically: 

1.  Talk to former bosses (or others you choose) who are no longer at the company where they worked with your former A player. They are not violating any company policy.  Easy. As a practical matter, A players tend to include bosses in their list of references, and some of those bosses have permission to talk, so although they are still at the company, they are not violating their company policy.  Why would the “company” (President, HR) permit the reference call with the boss?  Because they’d love it if the former A player would return to the company, and by doing the person a favor now, maybe in the future the person would come back.  And … the President and HR know there is zero risk of a law suit. 

FACT:  In 25 years, with thousands of managers asking candidates to arrange reference calls, I have not heard of a single law suit. 

2.  If the A player wants to ask a former coworker to take the reference call, don’t fret too much.  If that coworker is willing to take the “risk,” then be honorable and promise a confidential discussion, and be sure it is confidential. 

3.  Make it a “personal reference.”  One of the largest companies in the world has a General Counsel that concluded, “As long as our managers ask candidates to arrange personal reference calls with former bosses, not “job reference checks,” it’s ethical.  It’s as though this is a character reference, and that makes it seem okay. 

4.  Don’t stretch ethics — it you’re uncomfortable, don’t ask candidates to possibly ask their former coworkers to violate company policy.  All is not lost,  

5.  Simply determine who has left the company that would be worth your while to talk with — someone who was a peer, subordinate, or higher level.  And remember, customers can always be contacted. 

6.  Conduct the few remaining reference calls after you hire the candidate.  Sure, that’s like closing the barn door … you get it.  However, think about this a second.  After the person is hired, the purpose of the call truly can be developmental:  “Thanks for taking the time to share your confidential thoughts about Tiffin.  As you know she joined us two weeks ago, and by getting yours and 7 others’ thoughts about her, we can help her assimilate into ACME smoother, and we can have more information to help her formulate a developmental plan, which we do with all new hires.”  This really is an “oral 360 interview” for development. 

And here is the subtle benefit:  when candidates realize this is what you’ll do, they sure as heck don’t want to be embarrassed because you hear more negatives than you expected, so they are still apt to be much more honest and forthcoming in the selection interviews than they would have been without #6. 

FACT:  I know of hundreds of times #6 has been used, and there have been no major negative surprises, and no job offer has been rescinded.   

Satisfied?  I hope so!  If you have any comments or questions on reference checking, please shoot me an email.  The TORC Technique is so important in Topgrading, I hope you tweak it and somehow use it!

Results: 

Thank you all for participating in the first ever (as far as we know) attempt to estimate how many hours are “wasted” on mis-hires.  “Wasted” is in quotation marks because of course when we visit that ticked off customer, annoyed by the behavior of a C player, those hours spent are necessary.  And when we hold those coaching sessions because the C player is falling dreadfully short of performance goals, those hours spent are necessary.  We just wish we hadn’t mis-hired the C player, and we wish we could have devoted those coaching hours to helping an A player perform even better! 

Sigh.  So, “wasted hours” are those consumed by us and others in the organization to try to fix or do damage control for the problems caused by mis-hires. 

Ok, this was hardly a scientific study, but the results are interesting.  Respondents were asked to consider a mis-hire who was in the company at least one year and whose compensation was $90,000-$150,000.  The exact wording of the questions was: 

The number of hours per year WASTED (for you and others) because a C player was hired rather than an A player: 

Five hundred seven people responded.  Since the median response was at the high end of the 100-199 hours wasted category, it seems that the average mis-hire can cause us to waste at least 150 hours. 

Hmm.  For everyone who ever said, “I don’t have the time to spend three hours in a Topgrading Interview,” let’s follow that with, “… but I have 150 hours to waste on a mis-hire!” 

For the 2005 version of Topgrading: How Leading Companies Win by Hiring, Coaching, and Keeping the Best People we asked 52 companies to estimate the dollar cost of mis-hires, and many of you recall that the average cost (for someone earning $100,000) was $1.5 million. 

Summary:  Every time we avoid a mis-hire (of someone earning about $100,000 base) we save $1.5 million and 150 wasted hours.

Good grief.  The legal department of a Fortune 50 company tried to stifle the most powerful lever in topgrading — asking candidates to arrange calls with former bosses.  Legal lost, by the way, and topgrading won.

When candidates know THEY arrange calls with former bosses they are very candid and forthcoming in interviews — hench TORC (Threat of Reference Check), which is fact is no threat but a welcome promise to A player candidates, who WANT you to talk to bosses who will sing their praises.  C players can’t get their former bosses to talk (gee, I wonder why), and 90% of the time A players do.

Legal said that since almost all companies have policies prohibiting managers from accepting reference calls, it would be hypocritical for their company to require selection candidates to ask former bosses to violate company policy and talk about a former employee.

Bunk!  I told counsel that in many companies  candidates are asked to arrange “personal reference calls,” not business reference calls.  Some companies ask candidates to do “oral 360 interviews,” to help the development of the candidate if he/she joins the company.

 Turnover is high enough that if a candidate has had 4 bosses in the past 10 years, chances are good that 2 are no longer with the same company, so there is no company policy to violate.  Legal couldn’t argue with that point!

The main thing is that you, a manager of a former A player, WILL talk to a prospective employer because you will be doing a favor for that former A player and there is zero risk that you would say something so negative that you’d get sued by your former employee.  On the other hand, you’d be nuts to talk to prospective employers of C players you fired.

Legal departments hear that rationale and, so far, have backed off.   The TORC technique definitely helps you get the straight scoop from candidates.   What did Shakespear say about lawyers?

Recently, Topgrading got a half-page article in the Wall Street Journal — and it was not about my company, but my son Geoff’s!

Three University of Chicago professors used Geoff’s database of Topgrading assessments to identify the key traits of successful CEOs.

The key finding by the University professors?

“We found that ‘hard’ skills, which are all about getting things done, were paramount,” says lead author Steven Kaplan, a professor of finance and entrepreneurship. “Soft skills centering on teamwork weren’t as pivotal. That was a bit of a surprise to us.”

 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 night on Monday Night Football there was a segment showing how #1 draft picks had worked out.  You know what their performance has been — generally very disappointing.  I’ve heard that teams recruit largely on the basis of films colleges send, and the interviewing process is more selling than vetting “candidates.” 

Too bad — my hunch is that a very thorough Topgrading interview, digging into the young man’s course work, high and low points in high school, high and low points in college, influential people, and details of every part time or summer job …. would produce more predictive insights into how the person will actually function.  It would have been illuminating, for example, to learn that Michael Vick was involved in dog fighting.  It’s just a thought …

CEO heads are being chopped off as though it’s a version of the French Revolution, and the business world collectively shakes its head and wonders, “How do such incompetent people get hired by boards of directors?”

 The answer is as simple as it is appalling:  Crummy hiring practices! 

Boards have a Selection Committees that hires search firms that give the appearance of being thorough while concealing negatives and hyping positives of candidates.  (In my experience 10% of search executives are A players who really do a great job attracting and screening candidates).  When board members “interview” finalists it is  all very “professional,” with few tough questions asked over lunch.  And, there’s seldom an in-depth, hard-hitting, chronological Topgrading interview.  Reference checking is with people finalists choose.  What a lame process!

A few weeks ago I talked for 1 1/2 hours with one of the smartest guys on  Wall Street — a former CEO of one of the most prestigious companies.  As a board member he had interviewed a candidate for a top job and was thrilled with him … and amazed that my assessment was so negative.  The board member had asked a lot of philosophical (what are your beliefs?) and hypothetical questions (how would you handle this challenge) and the verbally adroit candidate had great responses.  But my interview nailed down a consistent record of MEDIOCRE PERFORMANCE.  The board member was very appreciative, thanking me for preventing a serious mis-hire, and for teaching him that the only really valid interview is one that scruitinizes every success, every failure, every key relationship, every key decision, and overall performance in every job.

There are now about 20 Topgrading professionals, and private equity firms use us all the time to assess management teams and candidates for top positions of companies they are considering buying or their portfolio companies.  But we rarely get calls from boards of public companies (probably because the board members have never heard of topgrading).

 Until boards of directors substitute the thoroughness and validity of topgrading for the shallow, deceptive, and non-valid approaches, the shareholders they represent will surely suffer.  This is a major flaw in our otherwise very solid economic system. But I’m preaching the choir, right?

AMBITIOUS MANAGERS SHOULD WORK HARDER TO FIX THEIR SERIOUS WEAKNESS(ES) THAN TO BUILD ON THEIR STRENGTHS

Having assessed and coached 6,500 senior managers, my experience tells me you should ignore the common “wisdom” that people should just work to keep their strengths rather than to try to fix their weaknesses.  An article in the November, 2007 issue of Training and Development (“The Positive Payoff”) conveys that common viewpoint.  It sounds sensible for the world-class miler to run miles and not to try to convert to an event he’d hate and fail at – pole vaulting.
 
Trouble is, management is like the decathlon, with a lot of “events,” and if someone is strong in 8 events but weak in 2, that person will not succeed if competitors are strong in all 10.  Management requires a lot of skills, many of which are necessary, not just desirable.
 
 I’ve sat in on a thousand meetings in which managers were considered for promotion, and the people who get promotions of course have many strengths.  However, the most important consideration almost always is that they have no “fatal flaws,” “derailers,” or serious weak points.  My role as a coach is much more to help managers fix one or two serious weaknesses than to help them maximize their strengths. 
 
In my book Topgrading:  How Leading Companies Win by Hiring, Coaching, and Keeping the Best People (Portfolio, 2005) I have a large section entitled Fix Your Weaknesses, and present case studies in which good results became even better when managers minimized a serious weakness.  Over the years I’ve also worked with some super talented people who simply could not control their negative treatment of people.  One was given 2 years to improve, but he got worse – publicly humiliating his people and peers, using biting sarcasm, etc.  He ran the most profitable division, almost single handedly, but was fired.  The CEO said, “Pete, you’re brilliant at running one division, but 16 out of 18 peers told me they’d quit if you are promoted to President.  So, you’re fired!”
 
For management jobs, my experience is that high performers who want to earn promotions quite naturally maximize their strengths every day.  They know they are great at product launch projects, public speaking, analysis of financial reports (or whatever); they love exercising their strengths, read articles and go to seminars to strengthen them, and too often ignore working on one or two competencies they must have in order to get promoted. 
 
In my book I break out 50 competencies into groups including competencies that can be significantly improved on in one year (personal organization, writing, and even treating people with respect), and those competencies that generally can’t be improved on a lot (honesty, drive/energy).
 
Actually, for individual contributors, which are most people in companies, I totally agree that they ought to stick with their strengths and what they love to do, and not waste time trying to fix weaknesses that have no bearing on their success or job satisfaction. The creative ad person is probably better off staying in marketing than maybe trying to make more money by transitioning into an accounting job that would be boring. 
 
But as soon as people move into the world of management, and particularly when they want to be promoted two or three levels – aha, that’s where all those meetings I’ve been in make it clear that weaknesses knock people out of promotions all the time!  That’s where the decathlon analogy is quite real!

SUMMARY

I am frequently asked about the value of working on fixing weaknesses and make the point:  for individual contributors, don’t bother trying to fix your weaknesses and instead go with your strengths, but for ambitious managers, fix your serious weakness(es) or your career will plateau!

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.