Brad Smart isn’t a household name . . . at least, not in my household. But he holds a PhD in management psychology and is the author of “Topgrading: How Leading Companies Win by Hiring, Coaching, and Keeping the Best People.” In that book, Dr. Smart advocates a system whereby a company identifies its “A-Players” (top performers) as well as those who have the potential to become A-Players. B- and C-Players who do not show the potential to become A-Players are either re-assigned to roles where they could become A-Players, or they are asked to leave the company. Legendary CEOs Jack Welch (General Electric) and Larry Bossidy (Honeywell) were early adopters of Dr. Smart’s “Topgrading” concepts. What did such titans of American business see in these concepts? For the answer, please continue reading below.
“Hire the best, fire the rest”
I couldn’t find whoever coined that phrase, but it does capture the essence of Dr. Smart’s concepts for hiring and promoting people.
The thing most people don’t understand about “Topgrading” is that it applies equally to everyone in the organization, not just to the key management spots. That is, you not only want A-Players in the executive suite, you also want them on the loading dock. Easier said than done, right? Especially when you consider that an “A-Player” is generally defined as someone who is in the top 10 percent of the talent available for that position. That means they’re hard to find, and because they’re in demand, they will expect to be paid at, or even above, the top of the pay scale for their position. But if, compared to B- and C- Players, they work more efficiently and effectively, show more initiative and resourcefulness, innovate more, and display better leadership qualities, they’re worth what you pay for them.
Among the companies he studied. Dr. Smart found that only one-fourth of people hired or promoted turned out to be A-Players. Or, to put it another way, they had to go through three mis-hires before they got a good one. And as we know, a staffing mistake can be very costly. Just how costly is open to debate because data on this is sketchy at best. At a minimum, the company is out-of-pocket whatever the mis-hire was paid in salary and benefits, plus recruiting costs for the mis-hire as well as recruiting costs for the mis-hire’s replacement. Now, if Dr. Smart’s 1 in 4 is to be believed, multiply this bundle of costs times three. But beyond that, the costs of staffing mistakes can get spectacular. Consider, for instance, the cost of “ lost opportunity.” Or worse, ask any manufacturer the cost of a product recall. So while hiring A-Players may be difficult and expensive, mis-hires can cause situations that are orders of magnitude more difficult and more expensive.
Consider one other thing. A-Players don’t like to play with B- and C-Players. They want to play with other A-Players. Genuine A-Players are always trying to improve their game. B- and C-Players can’t help them do that. A-Players can. So if you have A-Players on your team, they may be at risk of leaving if they find themselves surrounded by Bs and Cs.
OK, so if there are strong arguments, financial and otherwise, to becoming a topgrading company, how exactly do we do that? Where do we start? For the answers to those, and other compelling questions, please read our next post, “Hire the best, fire the rest”, (Part 2) on June 15.
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