Here’s a question for you. Who runs your recruitment? Your HR Manager? Or is it out-sourced? It staggers me how something that’s so critical to success is often delegated to someone who wouldn’t know a talent strategy if it bit their head off.
Finding good people, or ‘A-Players’, to work in your business is the single, most significant change you can make to your profitability. It’s the difference between chugging along and motoring down the fast lane. If you want to scale your business, finding the right talent is vital. Yet many companies have no plan for recruitment. And they carry far too much deadwood. It’s like running with a backpack full of bricks. Completely unnecessary and exhausting.
There’s always a shortage of good people in the labour market. The ‘Great Resignation’ is making that more challenging. If you feel like you’re losing the war on talent, it’s imperative to create a talent strategy. Commit to increasing the percentage of A-Players in your business, and the effect on productivity, profitability and engagement will be exponential.
For something this important, you need a plan. Get total buy-in from your Executive Team that talent density is now your focus. Instead of delegating it to HR, take ownership of it at the executive level. Give it to one of the directors and make it your theme for the next quarter. And the one after that.
Talk about the impact of A-Players. They’re defined as the top 10% of available talent for a given job, salary and location. You know when someone’s an A-Player because you’d enthusiastically re-hire them – every time. They drive profitability and growth and are respected for their high levels of integrity.
Just before lockdown, one of our clients came on-site to discuss their approach. They wanted to grow their business to £100m in three years. So, they needed a significant increase in headcount – from a couple of hundred people to seven hundred. We worked with the Executive Team on a talent strategy. They decided where these people were going to come from. And where their offices would be based.
Because they wanted to promote from within, they realised they needed to create a new management training scheme. The aim was to train high performers to become managers before they earned the job title. There’s a whole slew of behaviours that come with being a manager. Far too often, people are promoted because they’re the best salesperson or the best software developer. But management skills are different to those needed to be a domain expert.
Do you wish your employees behaved more like owners? So that you don’t have to tell them what to do constantly? Well, that’s precisely how A-Players behave. They instinctively do the right thing. As a result, they can be coached rather than managed. And that means less management overhead.
Remember, ‘good is the enemy of great’ according to Jim Collins. To scale and scale quickly, you need A-Players. Their benefit to your business will be exponential. We’re not in the industrial revolution anymore. You’re not looking for people to put widgets into boxes. In this type of work, even if your box packing skills were the best in the world, you’d only be able to double your output. Instead, this is about cognitive ability, and it’s a power law. An A-Player could be 10, 20 or even 100 times better than a B or C-Player. Google says their software developers are 350x average. Yes, you might have to pay them more. But the benefits are exponential.
Returning to that heavy backpack full of bricks. You don’t need that on your shoulders. The solution’s easy. Get rid of the bricks. If you’re carrying B or C-Players or, even worse, toxic As, you need to take some brave pills and weed them out. Remember, a C-Player is occupying a seat that an A-Player could occupy. At the very least, make sure your Executive Team isn’t carrying anyone. If you have average performers here, you need to move them to a different role or drop them out of the top team entirely.
Too often, companies plough on because they’re avoiding having difficult conversations. When we started working with Wirehive seven years ago, I would sit in board meetings and see their fear around letting poor performers go. They thought these C-Players knew too much, and any new person would know nothing. They weren’t convinced they’d go to market and find anyone better.
Over time, we helped them shed the people holding them back, and it’s been so satisfying to see their growth. When we speak to the directors now, they tell us how much easier everything seems. All the negativity and toxicity has gone.
The difference in the way businesses and sports teams are run always amazes me. In the US, the NFL (National Football League) have a salary cap. This prevents teams from paying more for players. Because of this, there’s a focus on coaching and developing great talent. That fits with businesses. So why don’t more of them plan for this?
When I was UK MD of Rackspace, we knew we wanted to scale fast. So, we set up Rackspace University to ensure we could grow our talent. A load of graduates were hired and trained up in the technical skills we needed. We also brought in some grey-haired people to give the organisation some scaffolding. I remember one guy I hired who was 62 and a sales coach. He told me I was the only person to have interviewed him in six months. From day one, he was upfront. He wanted to work for three years and then retire. How refreshing! There was no politics – just a desire to do purposeful work with exciting people. After he retired, he sent me a note thanking me for giving him the job.
I’m always staggered by the amateur way so many businesses handle recruitment. There are many things you can do to improve your process. Mirror what Google do. Produce job scorecards. Make sure every candidate has four interviews. And conduct interviews in pairs.
I’ve just re-read Ben Horowitz’s excellent book, ‘What You Do Is Who You Are’ and he ponders why businesses mismanage interviews. It makes it so much harder to get the right people on board. Most managers aren’t adequately trained in interview techniques. If finding good people is so critical, this is ludicrous. Put in the time and effort to get this right.
Last year, we helped one of our clients overhaul their entire approach to recruitment. We started with scorecards, projecting a year forwards and working out what needed to be done in each role and how we would measure success. Compelling job ads were written based closely on this information and managers were trained to interview for the suitable characteristics. When we did a retrospective a year later, out of the 23 people they’d hired, 19 were A-Players. Two hadn’t made it through their probation and only one still had a question mark over them. They’d substantially increased their percentage of A-Players, which had a dramatic effect on their business growth.
How do you know whether your talent strategy is successful? We always suggest metrics. Friday Pulse, or something similar, will give you a sense of management skill and engagement. It clearly shows you who your good managers are and where you have a culture of success.
Use a labour efficiency ratio to measure impact on productivity. As this increases, it should start to flow through to profitability. Work out your ratio now and over time, track it by product, customer or team. This will give you valuable feedback as you swap out the C-Players and toxic As for higher performers. You should also see an improvement in your Net Promoter Score or similar customer satisfaction survey. Remember, no customer will love your company before your team love it. So improving engagement in staff should have a knock-on effect on customer happiness.
Dominic has spent 14 years working in sales, marketing and business management within the IT sector. He has held executive positions at Peer 1 Hosting, IT Lab and Rackspace. At Peer 1 he built the UK business to £30m run rate in 5 years. He won many awards for creating a great place to work. At Rackspace Dominic built the UK company from four to 150 staff, and increased annual revenues from £595,000 to £25 million in just four years. Under his management, Rackspace was recognised as one of the most outstanding workplaces in Europe, and won several service awards for its Fanatical Support TM. Dominic has a BSc in Agricultural and Food Marketing from Newcastle and a MBA from Sheffield Business School. Dominic is also a regular public speaker on creating great places to work and achieving continuous client satisfaction and an assessor on the Sunday Times Customer Experience Awards.