Sharing equity with your team can be a powerful motivator, and there are two basic ways most firms do it.
Every business has the occasional fire. When it hits, you should have plenty of people who we call “Firefighters” while avoiding folks we label “Snow Cones.
“Every business, from successful startups to well-established corporate giants, hits a rough patch or two. It’s just a part of doing business.
But if you’re going to weather those storms as an organization, you’ll need people who can handle the heat and won’t melt under pressure. In other words, you should be hiring plenty of who we might call “Firefighters” while avoiding bringing on folks we might label “Snow Cones.” Let me explain. Continue reading Are Your Employees Firefighters or Snow Cones?
A word of caution for any entrepreneur who has founded a business and remains active in it: you might need to fire your CEO – yourself.
Of course, every owner of a growing business knows what it’s like to play multiple roles. But let’s focus on the distinction between two of them: owner and CEO.
When you’re hiring, think beyond the skills and experience a candidate might have and assess whether you want a patriot or a mercenary.
When you’re thinking about hiring people, especially those in mission-critical-type positions, you need to use caution because the stakes are so high anytime you make a bad hire. But beyond whether they are an A, B or C Player and the skills and experience a candidate might have, you also need to assess whether they are a patriot or a mercenary. Let me explain.
Patriots are employees who seek to join your company because they believe in your organization’s purpose and mission. They want to contribute to the cause. Maybe they are drawn by what your company does or how you do it because it resonates deeply with their own personal beliefs. This can be a very powerful draw for some job candidates, many of whom might even be willing to make personal sacrifices like taking less pay, relocating their family or even working long hours for the opportunity to be part of your organization. Patriots are also deeply loyal to the organization and tend to stick around even when times are tough and the bullets start flying. We often see startups filled with people like this who choose a job based on its higher purpose rather than higher pay because the organization doesn’t yet have the resources to offer much in terms of compensation.
Mercenaries, on the other hand, choose their next job based on how it will benefit them as an individual. You can identify a mercenary right away just by looking at their resume, where you’ll find lots of short tenures and plenty of job-hopping – something that’s common in job areas like sales and software developers. That’s not to take anything away from a mercenary’s skills: they are usually very talented and in demand. The tradeoff is that, unlike the patriot, if a mercenary’s personal needs aren’t being met, they are likely to jump ship at the first sign of trouble. Usually, they are just there for the money.
Why The Distinction Matters
One reason its critical to understand whether you are hiring a patriot or a mercenary is that your choice will impact your culture. Patriots are the people who live your culture on a daily basis and do things the way you want them done. Mercenaries, on the other hand, don’t always think the rules apply to them – especially if they are producing results.
While mercenaries can be very valuable to the growth of your company, you need to understand that they also carry a risk to your culture – at least depending on your business model. If you run a bond trading firm, for example, you might rely on a staff of 100% mercenaries – and that’s a good thing. But for most of us, especially those of us who want to build a company and a culture for the long haul, we need to be careful about how many mercenaries we have on staff relative to our patriots.
Consider the example of a company a friend of mine owns that operates in the government contracting space. It’s a tough business that relies a lot on relationships and social networks to be successful. That means that having a top-notch business development person is critical to any company’s ability to land new business. These folks have a very specialized, and valuable, skill-set – which means they can be hard to find and retain.
In the case of my friend’s company, he was fortunate to hire one of the best business developers around. And this guy delivered: he landed several large orders for the company (that he was well compensated for, by the way.)
But it also became apparent that digesting the work involved with those contracts was going to take my friend’s company at least a year to work through before they would be able to go out and bid on any new business.
Guess what happened? My friend’s business developer jumped ship rather than risk earning less by waiting for the company to chase new work.
This is a classic case of what happens when you hire a mercenary versus a patriot, someone who would have been willing to shift roles or jobs in the interim as a way to stay with the company and be part of its success over the long haul.
Both patriots and mercenaries can play important roles in your organization’s success. Just know what you’re hiring up front so you can plan best for the long run of your company.
Many companies rate their talent well above average. Besides being untrue, this is a dangerous strategy as your top performers will leave you if you do.In the mythical town of Lake Wobegon, made famous by Garrison Keillor on National Public Radio, it is said that all the children are above average.While you might laugh at that joke, it’s worth asking: are all the people in your organization rated above average and how do honestly assess the talent in your organization?
In my work with the Inc. CEO Project, we’ve actually found that most of the CEOs we work with tend to hand out inflated grades – especially to the members of their executive team, all of whom tend to receive above average appraisals.
In the HR world, this is called a “central tendency problem.” In other words, it’s statistically unlikely that every member of an executive team is delivering above-average performance. No doubt some of them are. But all of them?
Consider a recent report released by the Government Accountability Office, or GAO, which said that some 73% of 1.2 million high-level federal workers received performance scores of outstanding or fully successful. Just as surprisingly, just 0.5% of these employees delivered minimally successful or unacceptable work – which, if you do any work with the government, you know is not the case.
This helps illustrate the point about how crucial it is to take an honest and objective look at how the talent in your organization is performing. But how do you do that?
One approach is what GE famously took under Jack Welch when it placed people into performance bands: 20% of the company was exceeding expectations (A players); 60-70% was meeting expectations (B players); while the bottom 10-20% performed below expectations.
What this model told us was that most of the people in an organization perform at an average level, which makes sense. But what turned people off about this approach was that GE also fired the lowest performers each year with the idea that they could then hire A and B players to replace them.
The key lesson we can learn from this system of defining who is an A, B, or C player, is that there is value in seeing how the talent in your organization stacks up. So next time you conduct performance reviews, have your HR team make a list of how many people performed at each level. Clearly, if you find that you have a bunch of low achievers, you have a big problem on your hands! But if most everyone falls into the over-achieving bracket, you also need to reassess how you’re evaluating your talent.
One key reason why this is so important is that if you allow a central tendency problem to persist, you will quickly alienate your true A players. If your truly exceptional performers feel like they are being lumped in with lesser players and being rewarded the same way, they will leave and look for an organization that will recognize and reward their capability.
That means you will be effectively downgrading your talent across the board; something no organization can afford to do.
What you can do instead is that if you have a problem with honestly assessing your talent, it’s time to reboot the system and reset expectations. Make it more demanding by shifting the entire curve downward. What used to be outstanding should now be considered average. What used to be considered good is now below average. Doing this allows you to be more discriminant about how you allocate everything from raises and promotions to stock options to your true top performers.
While it might be nice to live in a place like Lake Wobegon, be wary if you find that everyone in your organization thinks they are above average. It probably means your performance appraisal system is broken – and your company’s long-term performance might be at risk because of it.
There is a single question that you can use to assess whether candidates understand the job and if they are A or C players.
The secret to hiring your next great employee might come down to how someone answers a single question. And you won’t be asking what kind of tree the person would be or about her Myers-Briggs profile. It all comes down to measuring performance. Let me explain.
The authors of the book Who suggest you can immediately begin to distinguish A players from B and C players, beginning with your initial phone screen. You do so by telling a candidate exactly how you will be measuring his or her performance in the job you’re hiring for.
How candidates react will tell you plenty about them. C players, for example, probably won’t be able to hang up the phone fast enough, since they don’t want any part of being measured. A players, on the other hand, will take your bait and get excited for the chance to excel. They might even up the ante by asking you what’s in it for them if they really crush it and exceed your expectations.
It turns out there’s an even better question you can ask candidates to help assess if they are true A players once you have them in for an interview. I learned about this magic question from Joel Trammell, the CEO of software company Khorus, who I wrote about in my book Great CEOs Are Lazy.
Joel believes that CEOs can’t delegate hiring decisions to someone else like HR. He perfected his hiring method by interviewing every single one of the hundreds of employees in his company.
Doing those interviews, Joel found that there was a single question that helped him assess whether a candidate understood the job being applied for and what he or she needed to do to excel in it.
“If I was to hire you, how would I know if you were doing a good job?”
This is a great question because it forces the candidate to put herself into the job and be thoughtful about how she might be measured by you, her boss. The answer you get will tell you a lot about the candidate’s maturity and comfort level with having her performance measured.
If you ask a C player this question, for instance, you might get some stammering followed by some noncritical metrics such as he will show up for work on time and not take extended lunch hours.
A players, on the other hand, will give you exactly what you’re looking for. Let’s say you are hiring a software engineer. When you ask an A player the magic question, he might respond by saying you will know whether he is doing a good job by using three metrics: the total volume of software code he produces on a weekly or monthly basis; the quality of the code based on a limited number of bugs; and his on-time delivery rate in which he hits the targets he said he would.
This would be a great answer because each of the metrics is measurable and quantifiable. You know if you had a group of engineers who were all willing to be measured on those metrics, you’d have a high-performing team.
Similarly, if you were hiring a salesperson, you might want to hear her answer the magic question by saying that you could tell she was doing a good job if she was exceeding her quota and selling profitable business, and her customer satisfaction rating was off the charts.
A key point here is that while you might know what you want to hear from a candidate, leave some wiggle room to be surprised and to learn something new about the position from an A player–someone who might think of a metric you’ve never considered.
The beauty of asking the magic question is also that, after the candidate gives you his answer, you pause for a second and say: “Let me write these down because, if I hire you, this is exactly how I will measure you after you start your new job.”
In other words, you can use the answer to the magic question as a great onboarding tool in which you have eliminated any chance that your new hire will be surprised about what is expected of him after he starts his new job.
How magical is that?
What do you do when someone who is unquestionably brilliant is also a jerk?
We all work with someone who is unquestionably brilliant. You know the type: the person who consistently comes up with great insights and ideas and who can cut to the quick far faster than anyone else in the organization. It’s hard not to step back and admire how the person’s brain works.
At the same time, such people can begin to think their gifts place them above everyone else in the organization. They tend to hog all the airtime at meetings by intimidating and maybe even ridiculing those who might have the audacity to offer their own take on a situation–thus suppressing collaboration and participation throughout the rest of the organization. They also follow their own rules and are evenabusive to the rest of the staff. They aren’t nice people to be around. In other words, these people are jerks–which creates real issues within your organization.
But since they are brilliant, what should you, as the leader of the organization, do about it?
Netflix CEO Reed Hastings has been very clear about what his organization does with its brilliant jerks: It gets rid of them. As he has said in the past about them: “Some companies tolerate them. For us, the cost to effective teamwork is too high.”
What Hastings came to realize is that regardless of how smart or even how productive such employees might be, they can actually begin to rip an organization apart from the inside if they don’t buy into the organization’s values and embrace working collaboratively.
In my upcoming book, Great CEOs Are Lazy, I call these folks “cultural terrorists” because of how destructive they can be to an organization. Certainly, your first option should potentially be to use coaching as a way to polish a brilliant jerk’s prickly edges. Obviously, you can’t make anyone a nicer person, but perhaps you can make the person aware of how damaging her behavior is to peers and see if she is willing to make changes accordingly.
If these folks are unable to change their behavior, however, then they leave you no choice but to exit them from the organization. By doing so, you’re making a powerful statement to the rest of your team about how important your culture is–what is tolerated and what is not. The longer you let them remain, the more damage they cause inside your culture and to your own reputation as a leader. People will lose trust in your abilities, which can undermine all the hard work you’ve done to build a strong team in the first place.
When you exit a cultural terrorist, it should be known within the organization that the person is no longer with you because of her behavior, not due to her performance on the job. This will set a tone about the kind of culture you want to build and the kinds of behaviors you’ll accept–and the kinds you won’t.
There are organizations where brilliant jerks are welcomed and where they thrive. For example, I know of several prominent consulting firms where individual contributions are valued more than teamwork. And that’s OK if that’s the kind of organization you’re trying to build.
But if you’re like Netflix and believe there is greater collaborative power through teamwork, then you need to act now when it comes to dealing with your brilliant jerks. You can’t afford to wait until after the damage has been done.
One of the most challenging tasks for any leader is figuring out what to do with an underperforming team member in your organization– a C player. The challenge is that your employee might be a good person, probably someone who has even bought into the values of your culture. The simple answer is to fire them and move on, but that isn’t the way to treat people. But they simply aren’t performing the way you need them to. So what do you do?
Step 1: Make Them Aware There’s An Issue
The first step in dealing with an underperforming employee is to make them aware that they are, in fact, underperforming. Simple, right? And you need to be as specific as possible about where they are falling short, which means it helps to bring data with you to prove your case. It’s also something you need to do as soon as you know it’s happening–regardless of whether they just joined the company three months ago or even if they just had their annual review. The point is that you can’t afford to wait until an end-of-year review to let them know that a problem exists; it needs to happen immediately.
Step 2: Offer Coaching for Improvement
Once you have let your employee know that they are underperforming, there are some things you can do to help coach them to improve their performance. Before you get there, though, you need that employee to “own” the fact that they are falling short in their performance. If you can’t break through to them at that level, then your conversation, and their time with the organization, will become very short.
But, if your employee does own their performance–and commits to improving it–then you can work together to put a plan in place to get their performance up to standard. If your employee works in sales, say, and is only closing five deals a month and they should be closing 15 or more, you can ask them what they will do differently to reach that new level. You can then begin a monitoring program where you see how that new plan of action is working. Where are they after 15 days? At 30? If they aren’t tracking toward their goal, then you know you have a problem on your hands and can begin planning your next move.
Step 3: Educate Them
It’s possible that your employee might actually lack the skills they need to perform their job well. That’s an opportunity to offer them the chance to learn those skills that will help elevate their performance. But remember, this is a short-term effort targeted specifically at helping them learn the skills to do their job better. It’s not about offering to pay someone to go get his or her MBA.
Step 4: Shrink Their Job
Sometimes, especially in the case of fast-growing companies, employees find that the company’s growth outpaces their own ability to keep up. You see that a lot with managers and executives who excel during the early years of a startup but begin to fall behind as the company continues to scale up. One of the options you can employ to help an underperformer is to break up the job as a way to make it more manageable.
Take a sales and marketing leader, as an example. Perhaps you could divide up the job into sales and marketing, leaving the incumbent in one of the roles and hiring the other. While this can often be effective, it also involves someone checking his or her ego at the door to make it work–which isn’t always possible.
Step 5: Change Their Position
If you have an employee who continues to underperform despite the help of coaching, training, and shrinking their job, your option of last resort might be to move them into a different position in the organization where they might be a better fit. Think about a salesperson who you might move into more of a product support role where they can worry more about helping other salespeople be successful rather than filling their own quota. Again, you might encounter ego issues with such a move. But it’s advisable to keep that person’s salary the same even after the shift as a way to mitigate that. They might not get any raises for a while, but it will help them keep a positive mindset as they attempt to scale up into the new position.
Step 6: Exit Time
If you’ve done everything possible to put your C player in a position to succeed without success, then it’s time to exit that person from the organization. If it comes down to this, you can give your employee the chance to take the soft road out, wherein you give them three months or so to find a new job as a way to avoid terminating them directly. This strategy is generally in place of a severance arrangement.
But, if that, too, doesn’t work out, you’ll eventually need to make the hard decision to terminate them with the hope that they’ll find a new job soon.
Obviously no one likes to terminate anyone. But it’s essential for you, as the leader, to remember that your organization can’t afford to rely on C players for its future success. Ultimately, the organization is looking at you to be the Head Coach and make changes on the team if needed. If you aren’t, they begin to wonder if you aren’t a C….