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?
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.
Thousands of hours have been wasted talking about mission statements that are, quite frankly, boring. The best mission statements, are both inspirational and to the point.
Mission statements are critically important to your organization because they drive alignment in your organization toward the vision of what you want to get done. That’s why it should be the inspiration that your organization rallies around. Unfortunately, many thousands of hours have been wasted talking about mission statements that are, quite frankly, BORING!
The best mission statements, on the other hand, are both inspirational and to the point.
Consider the example of Apple. When Steve Jobs started the now iconic company, his mission statement was: “To make a contribution to the world by making tools for the mind that advance humankind.” Wow; that’s something I would get out of bed in the morning for.
But as much as Apple has contributed to the advance of technology, the company has come under increasing criticism that it has lost its way since Jobs passed away in 2011.
One of the changes the company has made in the years since is to change that original mission statement, which now reads like this: “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App store, and is defining the future of mobile media and computing devices with iPad.”
Which mission statement do you prefer? While the newer version is very specific about what the company does, it certainly fails to meet the criteria I suggested earlier: it’s not inspiring and it’s certainly not brief and to the point.
Now compare Apple’s latest mission statement with some other major companies. For many years, Pepsi’s mission statement was: “Beat Coke.” That’s certainly simple and while it doesn’t get into the tactics of how they will fulfill that mission, it gives everyone in the organization a clear vision of what they need to accomplish.
Another great example comes from Medtronic, the medical device manufacturer, whose mission statement is: “To extend human life.” That’s an exciting mission and certainly something that is inspirational for anyone who works inside the business producing products like pacemakers and defibrillators.
But you don’t have to be a major corporation to have a great mission statement. I worked with a business that competed in the exciting field of humidity measurement. It’s not a big market, maybe $500 million in total, but this company established its mission as: “Global domination of the humidity measurement industry.” Not only is that clear and inspirational, it gives everyone plenty of scope for the business to aim at over the next several years.
What happens in situations like what we see with Apple is that you are trying to please everyone. You worry about offending someone, or leaving someone out. But by trying to be inclusive and non-offensive, you lose that focus and inspirational tone you need for your mission statement to be meaningful. That then leads you down the path of a favorite quote of mine from the movie RoboCop where executive Dick Jones says, “Good business is where you find it.” It basically means, “We will do anything for anybody, if we can make money”. That’s not too inspirational.
In other words, you chase every opportunity you can–which can be the worst thing for your organization to do. As I have written about before, your organization is actually defined by what you say no to.
Worse than trying to please everyone are mission statements designed by committees. Mission statements are also like strategy in that they are best done in smaller groups–preferably one using the seven plus or minus two rule. When you give the job of crafting your mission statement to a committee, you end up with boring, multi-syllabic paragraphs that say a lot about nothing, much like the one from Apple.
So take another look your company’s mission statement. If you start yawning when you read it, it’s time to make a change by making it shorter, tighter and more inspirational. Grab a small team – be bold, say no to lots of things and inspire your team!
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?
This article is excerpted from the book Great CEOs Are Lazy (Inc. Original Imprint, 2016)
A lot of the mediocre and hardworking CEOs we have run into over the years are exceptionally good at what we call “peanut buttering.” When it comes to allocating their time to the various tasks and stakeholders in their businesses—their boards, their supply chains, their investors, their communities, etc.—these CEOs do their best to spread their time as evenly as possible across all of them. The concern, of course, is to make sure everyone feels like they’re getting the CEO’s attention. In this effort, the CEO will work very hard, sometimes as much as eighty or more hours a week. The bad news is that this is the surest way possible to dilute the CEO’s impact on any one issue. Unfortunately, this concept of tending to every stakeholder is taught at many major business schools, which only perpetuates the error. This is done, in part, because CEOs aren’t certain what actions will drive the business forward; consequently, they work on all fronts, hoping one will yield results.
Lazy CEOs, on the other hand, play favorites with their time. Rather than allocating a uniform amount of time to everyone and everything, they give usually between 30 and 50 percent of their time specifically to the task of removing the constraint(s) in the business. Remember this: It’s only the work done at the point of the kink in the hose—the constraint—that will truly make a difference in your business. Whatever time is left gets distributed to the other stakeholders—some of whom may get zero CEO attention then, or perhaps forever. In an ideal world, smart CEOs would build a strong organization of individuals who would handle all of the work that is not at the point of constraint. That way, the only work our Lazy CEO would do would be to remove each constraint as it arose.
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.
Mission drift is an irresistible force. You need to build in measures to help you avoid suffering from this crisis of identity. If you don’t, you might end up running a company that is very different than the one you intended to build.
As every company gets older and matures, especially around its tenth anniversary and after, it can be become difficult to remember the reasons why it was founded in the first place. When you look to those organizations that have been around 30 to 50 years and older, it can be really hard to believe you’re talking about the same place.
For example, did you know that Harvard University’s founding purpose was to “prepare ministers of upright character”?
It would be tough to argue that Harvard still operates by that same purpose today even though it’s in the exact same place it was founded back in 1636. So what happened?
In short, mission drift.
This is something that threatens every organization out there and, unless you put some safeguards and preventative measures in place, you could find yourself running an organization you don’t even recognize anymore.
What makes this challenging is that mission drift isn’t something that happens all at once. Think of it more as being nibbled to death by ducks. It happens one little decision at a time, where you go astray by just a bit. Maybe it’s a decision about chasing revenue from a customer that doesn’t really fit with your mission. It doesn’t seem like a big deal at the time. But, when you add that decision up with all the others like it, you can’t believe how you got where you ended up.
Take another example, this time from the retail sector. Entrepreneur Dov Charney founded his company American Apparel back in 1997 because he was tired of seeing American manufacturing shop being shipped overseas. He started his company to create jobs by starting making clothes in the U.S. again.
But over time, the business experienced mission drift. Eventually, rather than focusing on creating American jobs, the company became known for its sexually charged ads. For his part, Charney became known as the Hugh Hefner of retail as the business continued to shift away from its original mission. More recently, the company declared bankruptcy, which should serve as a sobering reminder of what can happen when you lose touch with the values you began your business with.
So how do you avoid mission drift and keep your organization on the right path? Here are a few tips:
Your Board Tip one is to enlist a board that is fully in line with the organization’s mission. Make sure they buy into your purpose and then charge then helping make sure they say something if they think a decision is out of alignment with your values.
Your Executive Team The second tip is to hire executives and leaders who also buy into the mission, purpose and values of the organization. Then exit the people who don’t–regardless of how great a performer they are. While that might be a painful decision to make to your bottom line in the near term, it will pay off big time over the long run.
Embed Mission into Your Culture You can also use stories and symbols as ways to embed your mission and purpose into your organization DNA in such a way that everyone in the organization can make their own course corrections on a daily basis.
Similarly, everyone in the company should use the mission and purpose of the company as their North Star of sorts as they make their decisions. Everyone needs to be encouraged to act on the notion that if something requires him or her to act against those values, they quite simply shouldn’t do it.
Measure the Mission And finally, constantly measure how true you are acting when it comes to your mission. You need only look to the great retailer Nordstrom for inspiration in how to do this. Every day, Nordstrom posts a list of the top ten salespeople in the company: everyone knows who the rainmakers are. But just as importantly, the company also publishes the letters from customers who are saluting those employees who stood out in supporting the company’s mission, which is is to “provide outstanding service every day, one customer at a time.” Seeing those letters every day is a way to measure how well Nordstrom is tracking to its mission.
One day, for instance, the company posted the letter from a customer who couldn’t believe how, after she called a store to see if they had found a diamond that gotten loose from the customer’s engagement ring, the staff at the store scoured every inch of floor looking for it. More incredibly, they also went through every dirty vacuum bag until they found it. How’s that for supporting your mission?
The key again is that as your company gets going, you need to build in measures like these to help you avoid suffering mission drift. If you don’t, you might end up running a company that is very different than the one you intended to build.
Great CEOs accept that in order to innovate, then failure isn’t an option – it’s required and part of a healthy learning process. However, they make sure they are a “One Trial Learner.”
If you hang out with CEOs all the time like I do, you hear a lot of talk about some are worried about making mistakes. I’ve found that some CEOs spend a lot of time trying to avoid making them–then find themselves stuck in a loop of over-analysis.
Great CEOs, on the other hand, think very differently about mistakes. They have accepted that if they want to innovate by doing things better and more profitably, they will inevitably stumble at some point. They also make sure that they are a “One Trial Learner.”
What I mean by this is that great CEOs try a lot of different things–many of which don’t pan out. They make mistakes. But the goal is to use those errors as learning experiences that will help you avoid making those same mistakes again in the future. They are also careful to make sure that those mistakes are not below the water line–ones that can sink the business.
I remember one CEO sharing a great piece of insight with me when he said: “I will make a lot of mistakes, but my goal is to make none more than once.”
This is not only a great mantra for personal productivity, but also for organizational productivity. To be an innovative organization, you need to embrace the concept of being a One Trial Learner which means you as an organization need to be trying lots of things and making lots of mistakes along the way. The trick is to learn from the mistake and not make it again.
If you want to innovate, you need to be willing to make mistakes–only you shouldn’t be making the same one twice. It’s all about taking what you learned from the experience of making the mistake and integrating that into advancing your organizational thinking. This turns rapid failure into rapid learning.
Don’t Touch the Stove!
It’s like back when you were a kid and your mom told you not to touch the stove whenever it was on. But you did it anyway, right? But most likely, you did it only once because you learned from that mistake with a burnt finger. That’s what being a One Trial Learner is all about.
New Coke Died Quickly
The beverage giant Coca-Cola certainly acted like a One Trial Learner in the wake of its disastrous introduction of New Coke back in 1985. But with some hindsight we can understand why they made the decision to launch the new product, and ditch the “classic” version they had built the company around, because taste tests showed that consumers wanted a sweeter flavor comparable to what Coke’s rival, Pepsi, was offering.
Coke was trying to innovate and reinvent itself–which is actually a commendable strategy that too many firms don’t have the courage to undertake. Yet in this case, New Coke ended up becoming a gigantic mistake because the folks at Coke underestimated the brand loyalty they have developed among their customers for that original flavor. When they ditched that in favor of the new recipe, it quickly became a nightmare of epic proportions for the company.
But Coke quickly rebounded by bringing back the original recipe in less than three months, then called Coke Classic, and also ditched New Coke a few years later. While every business school professor out there uses this story as a lesson of what a company shouldn’t do, Coke did learn from its mistake because it has never messed with its flagship recipe ever again. They proved to be a One Trial Learner.
Ryanair Listens and Learns
Another example of a One Trial Learner in action involved the budget European airline Ryanair. The company’s business plan is all about offering a bare bones option: to keep their fares as low as possible, customers basically have to pay for just about everything, including food, beverages, and their baggage. But the airline apparently went one step too far when it talked about introducing a plan that would require customers to actually pay to use the lavatory on the plane. While it made sense on paper–that certainly would have become another profitable revenue line on each flight–it was simply too much for its customers: they basically revolted at the very notion of paying to go to the bathroom.
To their credit, Ryanair listened to their customers and ditched the pay-to-pee idea and began looking for other ways to both shave costs and make money. And they did it quickly.
The final point is to build a culture that embraces smart failure and quick learning. You cannot shoot the person that dares. Rather–they should be celebrated and the organization should seek to learn from the risk they took, and create something better. The only thing people should be castigated is taking stupid risks or worse, making the same exact mistake multiple times.
The point is that if you want to build an innovative organization capable of cutting-edge breakthroughs, you need to be willing to make mistakes and learn from them – that’s what being a One Trial Learner is all about.
You need information to take the risk out of decisions, but getting too much information has a real cost. Most normal business decisions can be made with 75 percent of the available information, focused on the right issues.
I have written before about people who have high information needs. You might call them “infomaniacs.” These are folks, or even organizational cultures, that prioritize making decisions using data, metrics, and plenty of analysis.
And don’t get me wrong, that’s often a good thing in the right situation. What you don’t want to do, however, is take that need for information to an extreme. That’s especially true when it comes to making normal business decisions.
You always want to have enough information to make the best possible decision you can. But how much is enough? And, just as importantly, how much is too much?
If you have 50 percent of the information you need, for instance, that’s probably not enough to make a sound decision. You’ll be guessing, which can make your decision quite risky. If it’s a choice that doesn’t have much impact, like where to have lunch, then 50 percent of the data is plenty.
But waiting until you have 99 percent of the information is also risky–and expensive in many ways. Accumulating that depth and breadth of data before you make your decision often:
A.) Costs a lot of money to acquire, and
B.) Takes a lot of time to gather.
Some people call this “analysis paralysis”
These are significant drawbacks, especially if you’re trying to run an agile organization that moves nimbly to stay ahead of the competition. The longer you wait to make a decision, the riskier it becomes, since you may be missing opportunities–allowing your competition to catch up or even pass you.
That’s why I’ve found that the solution is usually to make the decision when you have 75 percent of what you need to pull the trigger.
As an example, let’s consider that a potential customer is asking you to extend them a significant line of credit as part of signing on with your company. They are asking for enough money that it is significantly risky for your organization if the deal goes sour. So how much information do you need to make your decision?
To get 75 percent of what you need, you might need to establish that they are a reputable company with a solid history of being in business. You might also ask for a snapshot of their financials to help make sure they are solvent.
To get to 100 percent of the information, you might need to ask for their tax returns over the past two years and their profit and loss statements (P&Ls), while also setting up interviews with their CFO and their auditor and so on. If you do all that, you’ll have everything you need to know about this company and will make a clear and fully informed decision. But you will probably miss your chance to turn them into a customer.
Why? Because by pushing for 100 percent of the information, you may have opened up a window for one of your competitors to offer this company what they want without the hassle of providing all the information that you’re asking for.
Your company could also earn the dreaded label of “hard to do business with,” which can be difficult to overcome in a fast-moving market.
The point is that you have to balance the risk level and potential payoff of whatever decision you’re pondering with your need for enough information to make that decision. Is this something above or below the waterline, in that it could truly put your company in jeopardy? If you’re building a new oil refinery, for example, that might warrant taking the extra time and money to make sure you get everything you need to know.
The book Blink reveals that great decision makers aren’t those who process the most information or spend the most time deliberating, but those who have perfected the art of “thin-slicing”–filtering the very few factors that matter from an overwhelming number of variables.
But for most business decisions, I’ve found that 75 percent of the data, focused on the right issues, is, as Goldilocks might say, just about right.