This is a summary from the book Topgrading, by Bradford Smart. An informative read if you have a chance. Below are key points that you can take and use immediately in your business.
A common trend we see when coaching entrepreneurs is that they’ll get stuck looking at hiring new team members as a cost rather than an investment, or they can’t seem to grow their team quickly enough.
As you’re building your business, your team will need to become one of your strongest assets.
Whether you believe that you can’t find good people, you don’t know where to find good people, or you don’t know how to delegate, these are all challenges that can be overcome.
Building a good team starts with hiring.
Here are some of the biggest hiring mistakes to avoid:
- Don’t assume that what’s on someone’s résumé describes everything about them.
The résumé is simply to help them “get in the door” of your organization. Don’t take it at face value and assume you know everything about them. Unfortunately, you will experience dishonestly by weak candidates who try to get away with lying on their resumes and “faking it” in their interviews.
- Don’t forget to do a background and reference check.
If this seems like it may take a lot of time, you can outsource this part. However, it’s worth the time and investment in finding the right hire. BUT…. Remember that often we are unable to verify what information is uncovered.
- Make sure the potential hire is aligned with your values.
Spend time understanding what’s important to them and what they really want. Don’t simply ask them, “Do you align with these values?” Instead, ask them questions to understand what motivates them and what their ambitions are, and see if they line up with your values from there. These types of questions prevent insufficient information uncovered during the interview process and prevent candidates to be selective in what they share about themselves.
You’ve heard it many times before – the most important asset in your company is your people. Yet, most companies struggle with hiring and promoting the very best people at every salary level.
This is what separates the highest performing companies from mediocre companies.
Fortunately, according to Bradford Smart, there’s a cure, and it’s called Topgrading. Follow this process, and Smart suggests that you’ll quadruple your hiring success and ability to spot and promote high performers.
Before we get to the steps, let’s quickly review the top 3 myths about Topgrading so that you don’t accidentally dismiss some of the information below as irrelevant to your business (or skip this summary altogether).
First, Topgrading is not only for big companies. This is a hiring process that can work inside companies of all shapes and sizes. That means you, the Entrepreneur.
Second, Topgrading is not about getting rid of C players. Ideally, Smart suggests, underperformers will fire themselves for failing to accomplish what they committed to.
Third, Topgrading is not about rank and yank. Jack Welch famously had his managers force rank all of their employees each year and fire the bottom 10% of performers. This IS NOT what Topgrading is about.
Now that we’ve covered what Topgrading is not, let’s move on to what Topgrading is.
What Is Topgrading?
Topgrading is about filling at least 75% of the positions in your organization with A Players. You do this by hiring and promoting people who turn out to be high performers at least 75% of the time.
Smart says “at least 75%” because no CEO or manager gets there and says “Well, that’s good enough.”
Which brings us to the question of what an A-Player actually is.
Smart defines it as “someone in the top 10% of the talent pool available.” B players make up the next 25% of talent available, and C players make up the bottom 65%.
The most important factor when it comes to “availability” is the compensation level. Meaning, you want to find the A-players for the particular role you are hiring and at the compensation level you are offering.
Rather than paying more for A-Players, Smart suggests you focus on getting A-Players for every job, with the salary you can afford.
The most important competency of an A-Player is resourcefulness, which means they get much more done than B or C players with the same amount of resources available to them. It’s a combination of energy, passion and analytical skills all wrapped up into one.
There are plenty of reasons you should consider following to Topgrading process. Here are a few of them:
- In a team full of Bs and Cs, your A-players will spend too much time preventing and fixing problems of low performers;
- Topgrading companies get disproportionately better talent for the money they spend;
- A-players are talent magnets.
The Key to Topgrading: The TORC Technique
The key concept that makes the entire Topgrading process work so well is the TORC Technique. It’s your truth serum for interviews.
It stands for Threat of Reference Check, and it lets your candidates know, at each step of the hiring process, that the final step in the process is for them to arrange personal reference calls with their former bosses.
There are two main benefits of this technique.
First, it scares away C-players, saving you a lot of time and energy during the interview process.
Second, it ensures that everything they tell you throughout the interview process will be as close to the truth as you are going to get because they’ll understand that you’ll be fact-checking everything they say.
Now that we’ve got that out of the way, let’s move into the steps.
Step #1: Measure your baseline success hiring and promoting people and your costs of mis-hires
The first step in the Topgrading process is to determine your baseline for hiring success.
Start with the people you’ve hired over the past three years, and then label them a high-performer or a mis-hire.
From there, estimate the % of your past hires that are top performers, and the % of your past hires that you’d classify as mis-hires.
Next, complete the exercise again for the people you’ve promoted over the last few years.
Then, to bring the pain of your hiring mistakes home, calculate the cost of these bad decisions based on the number of hours you’ve wasted on the mis-hires, along with the costs of replacing them. The research Smart has done shows that misfires cause an average of 300 additional hours worked on top of the cost of finding their replacement.
Now that you know the actual costs of poor hiring practices, you’ll be much more likely to do something about it.
Step #2: Create a clear Job Scorecard (not a vague job description)
The next step is to create a Job Scorecard so that everybody knows what A Player performance looks like.
It should include the measurable accountabilities for the first year, the numbers they need to achieve, and the ratings they should achieve in core competencies.
When it comes to the core competencies for the job, Smart suggests that most people list 5-10, when in reality there should be up to 50, especially for management jobs. He also suggests that you should color-code them in the following way, based on how easy they are to change through coaching, training, and experience:
- Green = relatively easy to change;
- Yellow = hard, but doable;
- Red = very difficult to change.
This allows you to identify the competencies you absolutely need to see demonstrated before somebody is hired and determine which competencies can be trained after they are onboard.
Step #3: Recruit from your networks
Now that you have your Job Scorecard, you are ready to start recruiting. The most effective and cost-efficient way to do this is recruit from your networks of high performers that you and your team know personally.
There are two types of networks. The first network is the A-Players that you’ve worked with. The second network is the Connectors that you know can introduce you to more A Players.
Smart suggests that every manager on your team build and maintain lists that contain at least 20 A Players and 10 Connectors. In fact, he suggests that this should itself become a Job Scorecard accountability.
To motivate your team to keep on top of it, pay “bounties” when they refer other high performers.
Step #4: Screen candidates with the Topgrading Career History Form and Topgrading Snapshot
C players know how to write A Player resumes, so they are mostly a waste of your time when it comes to identifying high performers.
The Topgrading Career History Form helps solve this problem by including information that a resume doesn’t include, like:
- Full compensation history;
- The true reasons for leaving previous jobs;
- Estimates of boss ratings for performance;
- Likes and dislikes;
- Honest self-ratings of competencies; and
- A self-appraisal
Those types of questions, along with the Threat of Reference Check, cuts through the clutter by proving honest, complete and verifiable information.
Step #5: Conduct telephone-screening interviews
The next step, rather than doing an in-person interview, is to do a telephone interview. Why? Because you can usually weed out weak performers quickly over the phone, saving you hours of time for each job you are hiring for.
There are seven steps for doing this well.
- Review the Topgrading Career History Form.
- Tell the candidate that you’d like to ask them some questions, and tell them you’ll be asking them to arrange personal reference calls with former bosses.
- Describe your company and the position.
- Invite them to ask questions about the job.
- For their last two jobs, ask them about success, failures, their boss’ appraisal of performance, and their reasons for leaving.
- Ask two questions each for three critical competencies.
- If you are going to go through to the next step, explain the rest of the hiring process.
Step 6: Conduct competency interviews
In this step, you’ll be creating a competency interview guide. It includes four questions about each competency (remember, management jobs should include up to 50 competencies), along with culture-fit questions.
To give you a flavor of what these questions might look like, here are two competency questions for change leadership:
- In what specific ways have you changed an organization the most (in terms of direction, results, policies)?
- What is an example in which you think you could have done a better job of change management?
The goals of this interview step are to determine whether or not you want to continue the process with the candidate, and to allow them to ask further questions – A Players will always have a lot of questions.
Step 7: Conduct tandem Topgrading Interviews
The Topgrading Interview – which uses a trained tandem partner setup – is the most powerful hiring tool in the entire system.
You use two interviewers instead of one because it helps get insights from different points of view, tones down individual biases, and helps ask better questions. There is one primary interviewer who asks most of the questions, and a secondary interviewer who takes most of the notes.
It is a chronological interview starting with the candidate’s school years, progressing through the first job all the way to the present moment.
The interview typically takes three hours to complete (for a management position), which is why the previous “weeding out” steps are so important.
The three hours should look roughly like the following:
- Opening chitchat: 10 minutes.
- Education: 20 minutes.
- Work history: 155 minutes.
- Plans and goals: 10 minutes.
- Self-Appraisal: 15 minutes.
- Competency questions: 30 minutes.
For more detail in what goes into this part of the process, the book includes an interview guide.
Step 8: Interviewers give each other feedback
Immediately after the interview is over, take a few minutes with your interview partner to get and give feedback.
Specifically, using the interview guide you develop on your own (or using the one provided in the book), go through each step of the interview and find areas where you could have done a better job.
Smart suggests you do this because most people are not good at interviewing, and so part of the Topgrading process is to be deliberate at getting better at it.
Step 9: Write a (draft) executive summary
After you’re done giving each other feedback, it’s time to write an executive summary by reviewing your notes and rating the candidate on the competencies in the Job Scorecard.
Most people jump to doing the reference checks before writing any kind of reports, but Smart suggests that would be a mistake for a number of reasons:
- The analysis sometimes leads to asking more questions before going on to reference checks;
- The analysis you’ll do in writing the summary will help you determine which reference checks you’ll ask them to arrange;
- The analysis will help prepare you for which specifics you’ll probe the reference-check about.
To help you perform the best possible analysis of the candidate information, here are some key principles that you’ll want to keep in mind:
- Look for patterns. The patterns you identify across their career, and across 50 competencies, is what will allow you to see where they’ll likely be in the next three years.
- Assume that at some point strengths become weaknesses because in times of pressure we tend to overuse them.
- Understand that recent past behavior is the best predictor of behavior in the near future.
If you decide you want to move forward to the next step after you’ve created your executive summary, ask the candidate to set them up.
Step 10: Conduct the reference calls
Ideally, you’ll do the reference calls with all of their bosses from the last decade, and also one or two people from the current place of employment.
Here are some of the questions you’ll want to make sure you cover:
- What are (the candidate’s name) strengths? Weaker points?
- How would you rate their overall performance?
- Why did they leave?
- After telling them about the job they are applying for…how do you think they will fit in such a job?
- What would be your advice to me for how I could best manage them?
After doing all the calls and finalizing your executive summary, decide whether or not you want to give them an offer.
If they accept, you are on to the next step.
Step 11: Coach your new hire/promotion
Congratulations, you’ve hired yourself an A-Player. Now that they are on the team, it’s time to start coaching them.
As Smart points out, A-Players not only accept immediate coaching and feedback, they expect it. When this coaching and feedback is delayed, two big problems arise:
- If they feel like they are not getting the support they need during onboarding, they may give up and quit.
- You delay their productivity and development.
There are a few simple things you can do in order to make sure the relationship starts off on the right foot.
- Review your executive summary with them, going over every strength, weak point and every developmental suggestion you made.
- Ask them to create an Individual Development Plan based on your recommendations.
- Ensure that the individual development plan includes quarterly reviews.
Step 12: Annually measure your Topgrading success
Finally, this step closes the loop on the Topgrading process by measuring the hiring success and the costs of mis-hires.
In particular, if Topgrading isn’t used across your organization, you’ll want to compare the instances where it was used against the instances where it wasn’t used.
If your experience is like most companies you’ll find a dramatic increase in your success ratio and a dramatic decrease in costs from mis-hires.
Topgrading is a lot of work, and might even seem like overkill if you are used to freewheeling the hiring process.
However, as Smart points out, even if you only create a Job Scorecard, use the Topgrading Career History Form, do the Starter Topgrading Interview and do the reference checks, you’ll be much further ahead and hire more top performers than you ever have before.
At EntrepreneursRx, we cannot emphasize enough the importance of putting the work into hiring the right people at the right time. There are no short-cuts here. Your business cannot afford for you not to do this right.
Are you ready to take the next step in optimizing your business?
Take the plunge and get a free comprehensive business health checkup, today!