Tag Archives: objective evaluation

How to Try Before You Buy a Company

While lots of mergers fail, and if you had to pick one reason – it is companies rushing in without really vetting the potential match.

It seems there is news everyday about a proposed merger or acquisition between two companies. While buying another company is certainly a viable strategy for helping your company achieve your long-term vision, the statistics about the failure rate of acquisitions is certainly sobering. One KPMG study found, for example, that 83% of all M&A deals end in failure.talk to us

Continue reading How to Try Before You Buy a Company

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2 Questions You Need to Assess Your Talent

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Everyone might think they have the best people working for them, but sitting down and doing some objective evaluation on the kinds of players you really have inside is tough. Do you have the talent you need to keep growing your organization? Everyone might think they have the best people working for them, but sitting down and doing some objective evaluation on the kinds of players you really have inside is difficult. And frankly, most entrepreneurs don’t like to do it and aren’t very good at it.

Let’s get started by defining our terms.

A “B” player is someone who is successful and completes their job as indicated, on time, every day. They perform to a standard and, every once in a while, might even surprise you with a breakout performance of some kind. They’re good, steady workers who get the job done–and you need a ton of them to make your company run. At the same time, you know that you can hire another B player any time you need to at a market rate because there are lots of folks like this out there in the labor pool. B players are normal.

An “A” player, on the other hand, is someone who vastly over-performs in their job, tackling, say, three or four breakthrough projects every year. They just operate at a completely different level that B players do. Take, for example, a receptionist who was working for a client of ours. Only, this receptionist had a passion for websites. This guy took it upon himself to analyze the company’s website and come up with a list of recommendations about how to revamp it–something he presented to the president of the company, who gave him the go ahead to make those changes. That’s A player behavior. And, as you might have guessed, that fellow didn’t remain a receptionist for long!

The research shows that in order to recruit or retain A players in your organization, you need to pay them about 20% more than the going market rate. But, in return, A players perform at a rate 70% higher than the typical B player–which is a significant return on your investment. This is particularly true when it comes to certain roles in the organization, such as areas like computer programming or sales, but it pays to have A players spread throughout the organization.

Question 1–What if they wanted to leave?

Another way to think about the difference between A players and B players is to reflect on what happens if one of those employees decides to leave the organization. If an A player says he is leaving, you’ll do whatever you need to keep them such as giving them more money, more responsibility, whatever. With a B player, though, you’ll tell yourself, “I hate to lose them, but I know I can replace them.”

It’s worth noting that since A players are generally confident, high-performers, you can actually have too many of them on the team. It can become disruptive. That’s why, when you analyze most firms, you’ll find that you’ll have about 10% to 20% of the team composed of A players with another 60% to 80% made up of B players. That’s a healthy mix. Where you need to invest some time is correcting for the remaining 10% to 20% of the team: your C players.

A C player is someone who underperforms on the job. They’re stretched out in their role and they continuously miss deadlines and make mistakes. If they’re new to the role, maybe you give them a break because you see the potential for them to grow into a B player over time.

It comes down to answering the question of if that person were to leave the organization, could you easily replace them with someone else? If you can answer, “Absolutely!,” then you know you have a C player on your hands and you need to make a move to exit them out of the organization–which is something we’ll dig into more deeply in our next post.

Question 2- What if the company doubled?

So one tool to determine if you have an A, B or C player is the “What would you do if they left?” The other question is, “Would they be competent if the company doubled?” The answer for an A player would be clear and a B player would be “most likely”. When you ask the question of a C player–a responding “No way” would come back.

Ask yourself these tough questions–and see how your team stacks up for growth.