What the world's greatest managers do differently

Marcus Buckinghamand Curt Coffman
Publisher: New York : Simon & Schuster
ISBN: 0684852861

 

This is a synopsis only.  RESULTS.com recommends you buy the original book.

 

How do you measure and grow your human capital?

Financial statements do a poor job of measuring the true value of a company.  A great deal of your company value is tied up in your human capital – the hearts and minds of your people. 

The Gallup Q 12

Extensive research by Gallup has discovered 12 statements that are be the most powerful predictors of employee engagement.

The teams with highest engagement scores had:

• increased sales growth
• increased productivity
• increased customer satisfaction
• fewer accidents
• lower staff turnover
• less staff absenteeism

Each question is rated on a scale of 1 - 5

(1= strongly disagree, 2 = disagree, 3 = neutral / no opinion, 4 = agree, 5 = strongly agree)

1. I know what is expected of me at work.
2. I have the materials and equipment I need to do my work right.
3. At work, I have the opportunity to do what I do best every day.
4. In the last seven days, I have received recognition or praise for doing good work.
5. My supervisor, or someone at work, seems to care about me as a person.
6. There is someone at work who encourages my development.
7. At work, my opinions seem to count.
8. The mission/purpose of the company makes me feel my job is important.
9. My co-workers are committed to doing quality work.
10. I have a best friend at work.
11. In the last six months, someone at work has talked to me about my progress.
12. In the last year, I have had opportunities at work to learn and grow.

Research shows, it is the employee’s immediate manager who is the critical player in building an engaged, productive workplace – not pay, benefits, conditions, or even charismatic leadership

The best thing the business leader can do create a great company is to hold each line manager accountable for what their employees say to each of these 12 statements. 

 

The Difference between Leaders and Managers

The difference between managers and leaders is more profound than most people think

A leader is not a more advanced form of manager. Both roles are vitally important – they require 2 very different strengths. 

Great leaders look outward:

Key role = rally people to a better future

Great managers look inward:

Key role = find out what each individual’s strengths are and capitalise on them

CONVENTIONAL WISDOM	WHAT RESEARCH SHOWS
Management is not as important as leadership	Managers are the prime catalyst for superior employee performance
Management is a stepping stone to leadership	The core strengths of great leaders and great managers are very different
Hire staff based on experience, intelligence, and determination	Hire staff based on talents / strengths
Set expectations by defining the right steps	Set expectations by defining the right outcomes
Develop people through promotion – climbing the corporate ladder	Develop people by helping them find and specialise in roles that "fit" their core strengths
Provide more pay, perks and prestige the further one climbs the corporate ladder	Create heroes in every role. Provide more pay, perks and prestige for levels of achievement in each role
You can be anything you want if you work hard enough	You are naturally "wired" to be exceptional at certain things only. The key is to understand what your core strengths are
The key to success is to fix your weaknesses	The key to success is to play to your strengths
Treat people as you wish to be treated	Treat each person differently according to their needs
Spend time with struggling staff members	Invest most of your time with your most productive staff members
There is no "I" in team. Focus on team performance	Great teams are built around individual excellence and specialisation
Annual performance appraisal focused on "areas for improvement"	Performance appraisal every quarter focused on results and how best to leverage the employee’s strengths in the future
"Familiarity breeds contempt". Don’t get too close to your employees. Keep them at arms length	Managers must understand employees strengths, and be aware of the practicalities of their personal lives as they impact performance
Poor performance can be overcome with willpower and training	Tough love. Do not tolerate poor performance. Find them a role that matches their strengths or quickly terminate

 

The 4 Core Management Activities:

1. Select for Talent

Selecting for talent is the manager’s first and most important responsibility

Understand the 3 categories of talents / strengths:

1. Striving = the “why” of a person (what motivates them)
2. Thinking = the “how” of a person (how they make decisions)
3. Relating = the “who” of a person (how they relate to people)

• Study / interview your current top performers in each position - how they strive, think and relate
• For each role Identify at least 1 critical talent from each of the 3 talent categories
• Use this as the basis for recruiting and interviewing for each role
• Do not compromise on these talents – no matter how persuasive the candidate’s resume or personality  
• Talent trumps experience, intelligence & determination
• Ask questions that elicit past examples of specific behaviours
• Clues to talents / strengths = SIGN
  • S – Success – you are good at it
  • I – Instincts – you have the urge to do it
  • G – Growth – you love learning about it
  • N – Needs – it meets your needs - you feel a sense of fulfillment 
• Use profiling tools to provide objective measurement

2. Define the Right Outcomes

• Standardise the “ends” rather than the “means”
• Enforce only those steps that correlate with prescribed standards of performance
• The customer is the ultimate judge of what is a valuable outcome – ask them!
• Realise that employees will not do things exactly the way you would do them.
• Let employees leverage their own unique styles to meet measurable outcomes
• Select for talent / strengths in the 1st place and you will need fewer rules
• Create measures for all outcomes
• Hold people accountable for achieving measurable outcomes

 

3. Focus on Strengths

• Cultivate each individual’s strengths and manage around their weaknesses
• Manage around weaknesses by providing a support system, a complementary partnership, or change their role to match their strengths
• Don’t try to fix their weaknesses
• Everyone is different – and their strengths / talents are resistant to change
• Help them become more of who they already are
• Confront poor performance immediately
• Check - Is it a talent issue or a training issue?
• Check - Is the manager pushing the right buttons?
• Terminate the staff member early if you have made a hiring error

4. Find the Right Fit

• Help each person find roles that enable them to do more and more of what they are naturally wired to do
• Encourage world class performance in each role
• Promoting people can lead them to failure. Traditional career paths are traps
• Management / Leadership require specific core strengths
• Instead, create “heroes in every role” – i.e. alternative career paths
• Make every role, when performed excellently – a profession with associated prestige, pay and perks
• Create levels of achievement (ala lawyers – junior associate – associate – senior associate – junior partner – partner – senior partner)
• Broadband (overlapping) pay rates – i.e. senior salespeople earn more than junior sales managers
• Make specialization and excellence in a role more attractive in terms of pay, perks and prestige than seeking promotion 
• Celebrate individual successes

Customer Research – What customers really want:

The 4 Step Hierarchy to increase Customer Satisfaction

1. Accuracy 
   Did I get what I expected?
    
2. Availability
   Are you there when I need you?
    
3. Partnership
   Are you on my side?
    
4. Advice
   Can you help me to learn?

 

4 Keys for Effective Performance Appraisals

1. Simple   
2. Frequent
   • One on one manager meetings with direct reports
   • Minimum of 1 hour performance appraisal per employee per quarter 
   
    
3. Future focused
   • What “could be”, rather than focus on past mistakes 
    
    
4. Self Measurement  

• Staff track their own performance and learnings = self discovery
• Get them to prepare answers to the following questions prior to the meetingWhat results have you achieved? 
  • What have you learned?
  • What relationships have you built?
  • What do you think you are good at?  Why?
  • What parts of your current role do you enjoy?  Why?
  • What parts of your current role are you struggling with?  Why?
  • How can we manage around this?
  • What would be the perfect role for you?
  • What would you be doing?
  • Why would you like it so much?
  • What will be your main focus for the next 3 months?
  • What do you want to learn?
  • What relationships do you want to build? 
• During the appraisal, honestly tell them what you think about each of their answers to each question and add your comments to each of their answers.

Interviewing for Strengths:

• What made you want to apply for this role?
• What do you think you are good at?  Why?
• What parts of your current / previous role(s) do you enjoy?  Why?
• What parts of your current / previous role(s) do you struggle with?  Why?
• What would be the perfect role for you?
• What would you be doing?
• Why would you like it so much?
• How often do you like to meet with your manager to discuss progress?
• Do you tell people how you are feeling, or do they have to ask?
• What is the best praise you ever received?  What made it so good?
• Who was the best manager you’ve had & what made this relationship work well?
• Have you had any really productive work partnerships?
• What made these relationships work well for you?
• What are your future personal development goals?
• What skills would you like to learn
• What challenges would you like to experience?
• Is there anything else you want to talk about that might help us work well together?

 

Jim Collins Publisher: New York: HarperBusiness, 2001.ISBN: 0066620996

This is a synopsis only.  RESULTS.com recommends you buy the original book.

Good is the Enemy of Great

The companies in the study had to satisfy the following criteria:

• 15-year cumulative stock returns at or below the general stock market

• Punctuated by a transition point

• Then cumulative returns at least 3 times the market over the next 15 years

• This weeded out the ‘one-hit-wonders’ and the average tenure of CEOs, removing the possibility that the company would crumble without the same leader.

• 6,000 articles, 2,000 pages of interview transcripts and about 10 people years of effort.

Research Findings:

• Majority of good-to-great company leaders came from the inside.

• They were not outsiders hired in to ‘save’ the company.

• Good to great companies focus on “what not to do” and what they should “stop doing”.

• Technology has nothing to do with the transformation from good to great. 

• Mergers and acquisitions do not cause a transformation from good to great.

• Good to great companies paid little attention to managing change or motivating people.

• Good to great transformations did not need any new name, tagline, or launch program.

• The leap was in the performance results, not a revolutionary process.

Three Stages of Breakthrough

1.    Disciplined People

• Level 5 Leadership

• First Who, Then What

2. Disciplined Thought

• Confront the Brutal Facts

• Hedgehog Concept

3. Disciplined Action

• Culture of Discipline

• Technology Accelerators

Level 5 Leadership

Level 1 Highly Capable Individual

• Makes productive contributions through talent, knowledge, skills, and good work habits

Level 2 Contributing Team Member

• Contribute individual capabilities to the group objective, works well in a group setting

Level 3 Competent Manager

• Organizes people and resources toward efficient and effective pursuit of objectives

Level 4 Effective Leader

• Catalyst, vigorous pursuit of vision, stimulates higher performance standards

Level 5 Executive

• Paradoxical blend of personal humility + professional will

• Humble, modest, self-effacing and understated

• Concern for the company’s success rather than one’s own personal fortune.

• Think in terms of “We” not “I”

• Do not want to be larger-than-life icons or heroes

• Ordinary people quietly working and producing extraordinary results

• Results-oriented. Do not tolerate mediocrity.

• Never allow nepotism or seniority.

• Will fire non-performing family members and friends.

• Are insiders. Worked many years inside the company or are from the family owners

• They are not saviors hired in from the outside.

• They are not show horses – rather they are plow horses

• Choose good successors because of their concern for the future of the company

• They want to see it endure for generations.

The Window and The Mirror

Level 5 Leaders:

• Give credit to outside factors when things go well, (looking out the window)

• Take full responsibility when things go poorly, (looking at the mirror).

Poor leaders of mediocre companies:

• Blame outside factors when things go poorly

• Take credit the company’s successes themselves

• Gargantuan personal egos that contributed to the demise or continued mediocrity of the company.

• Larger-than-life celebrity leaders who ride in from the outside are negatively correlated with going from good to great.

One of the most damaging trends in recent history is the tendency (especially of boards of directors) to select dazzling, celebrity leaders and to de-select potential Level 5 leaders.

 

First Who, Then What

Disciplined People:

First get the right people on the bus – and the wrong people off the bus

Then figure out what direction to drive the company

The right people will do the right things – regardless of the incentive system

• Good-to-great companies build deeply committed, strong management teams.

• Good-to-great management teams consist of people who debate vigorously in search of the best answers, yet who unify behind decisions, regardless of parochial interests.

• Mediocre companies = “genius with a thousand helpers” model - which fails when genius departs.

• No link between executive compensation – and the process of going from good to great.

• It is not how you compensate; it’s which executives you compensate in the first place.

• The right executives will do everything in their power to build a great company, not because of what they will get in terms of incentives and compensation, but because they simply cannot imagine settling for anything less. Their moral code is “Excellence for its own sake”.

• People aren’t your most important asset, the right people are.

• Place greater weight on character – rather than education, skills, or experience

• You can teach skills - but character, intelligence, work ethic, and dedication are ingrained

• People who did not fit the mold eventually quit or were told to find opportunities elsewhere.

Hiring Disciplines

• When in doubt, don’t hire. Keep looking.

• A company should limit its growth based on its ability to attract enough of the right people.

• When you know you need to make a people change, act.

• First, make sure you simply don’t have someone in the wrong seat.

• Move people to different seats to see where they might blossom

• Put your best people on your biggest opportunities, not your biggest problems.

• If you sell off your problems, don’t sell off your best people.

• Letting the wrong people hang around is unfair to all the right people

• Ask yourself, would you hire that person again?

• If they came to you saying she was leaving to pursue a new and exciting opportunity, would you be greatly disappointed or secretly relieved?

Confront the Brutal Facts (Yet Never Lose Faith)

Disciplined Thought

• Disciplined thought = confront the facts.

• When the effort to determine the facts is made, decisions become self-evident.

• People filter the brutal facts from a charismatic leader.

• They worry about how the leader will react rather than speaking up for the good of the company.

• Create a climate where the truth is heard

• Lead with questions, not answers. In order to gain an understanding of the facts,

• Use questions to gain information, not as a way to manipulate or put down others.

• Hold non-agenda forums or informal meetings to let current realities bubble to the surface.

• Engage in dialogue and debate, not coercion.

• Conduct autopsies, without blame.

• Build ‘red flag’ mechanisms = anything that will warn you before you lose your customers.

• The key lies not in better information, but in designing information that simply cannot be ignored

• Catalytic mechanisms (e.g. Granite Rock – “You pay us what you think the invoice is worth”).

The Stockdale Paradox

• Named after Admiral Jim Stockdale, the highest-ranking US officer to be taken prisoner in Vietnam

• Face the harshness of your current reality, but never lose faith you will prevail in the end.

• What separates great people or companies from the mediocre is not the absence of difficulties

• It is how they deal with the inevitable difficulties of life.

• If you have the right people, they will be self-motivated.

• The key is not to de-motivate them by ignoring the brutal facts of reality.

 

The Hedgehog Concept (Simplicity Within the Three Circles)

The 3 Circles

1. What can you be the best in the world at?

2. What drives your economic engine?

3. What are you deeply passionate about?

To achieve greatness, the three circles need to intersect (= BHAG)

• Focus on one simple, unifying concept, everything else is irrelevant.

• The fox, despite his cunning, fails to make prey out of the hedgehog.

• When the fox comes along, the hedgehog simply rolls up into a spiked ball.

• Foxes pursue many ends at the same time, and see the world in all its complexity

• Foxes are scattered - rather than focused on one simple organizing idea or principle.

• Hedgehogs simplify a complex world into a single basic organizing principle

• Everything else outside this basic concept is irrelevant and not worth wasting energy on.

• The key is to simplify - hedgehogs see what is essential, and ignore the rest.

• Good-to-great companies are hedgehogs - mediocre companies behave like foxes

• Stick with what you understand, and let your abilities, not ego determine what to attempt.

• Just because something is your core business doesn’t mean you can be the best in the world at it.

• If you cannot be the best in the world, then your core business cannot be your hedgehog.

Mediocre companies never asked the right questions

• Their strategies were based on bravado - not deep understanding.

• A hedgehog concept is a process, not an event.

• It took good-to great companies many years to clarify their hedgehog concepts.

Leadership Council: 

• Formed to gain understanding about important issues facing the organization.

• Each member has the ability to argue and debate in search of understanding

• Not from the egotistic need to win a point or protect a parochial interest.

• Each member retains respect for every other member without exception.

• 5- 12 people. Members come from a wide range of perspectives

• Not limited to members of the management team, nor is every executive automatically a member.

• The council is a standing body, not an ad hoc committee assembled for a specific project

• Does not seek consensus. Consensus decisions are often at odds with intelligent decisions.

• The responsibility for the final decision rests with the leading executive.

• Informal body - not listed on any formal organization chart or document.

A Culture of Discipline

Disciplined Action

• Requires people who adhere to a consistent system, yet the freedom to act within that framework

• Avoid bureaucracy and hierarchy.

• Create a culture of discipline with an ethic of entrepreneurship.

• Hire self-disciplined people willing to go to extreme lengths to fulfill their responsibilities.

• Create a “Stop Doing” list as well as a “To-do” list.

• Unplug any extraneous activities. Have clear constraints.

• Hire people who don’t need to be managed, so you manage the system, not the people.

• Disciplined People 􀃆 Disciplined Thought 􀃆 Disciplined Action

Technology Accelerators

• If you think technology alone holds the key to success, then think of the Vietnam war. The Americans lost to the Vietnamese despite superior technology.

• Good-to-great companies react to new technology with calm, quiet, and deliberate steps in the right direction, sticking closely to their hedgehog concepts.

• Mediocre companies react in a frantic, fearful, Chicken Little manner.

• Great companies respond to technology with creative thinking as to how to create greater results, mediocre companies react to technology with fear of being left behind.

• Great organizations avoid technology fads and bandwagons, yet they become pioneers in the application of carefully selected technologies.

• Does the technology fit in with your Hedgehog concept? If yes, you need to pioneer in the application of that technology. If no, then you can ignore it entirely.

• Good-to-great companies use technology as an accelerator of momentum, not a creator of it.

• Use technology to accelerate momentum (of your hedgehog concept), not create momentum where there was none. Crawl – walk – run!

The Flywheel and the Doom Loop

The Flywheel:

• Like pushing a massive flywheel to acceleration is how good-to-great companies progress

• There was no defining action, innovation, launch event, clever tagline or miracle moment.

• The breakthrough came from an accumulation of consistent effort over time.

• An overnight success is usually the result of a decade of hard work

• People will naturally keep pushing the wheel in 1 direction when they see the tangible results

The Doom Loop:

• A new direction, new leader, new acquisition comes in

• Flywheel comes to a screeching, grinding halt.

• The company then changes direction, pushing it the other way.

• The results are disappointing, which leads to reaction without understanding what went wrong

• Then a new fad, leader or event appears to try save the company

• They push the wheel another way, and so forth.

• Mergers & Acquisitions – 2 mediocre companies joined together does not make 1 great company

• You cannot buy your way to greatness

From Good-to-Great to Built to Last

• Good-to-Great is not a sequel to Built to Last. It is actually a prequel.

• Discover your core values and purpose beyond just making money

• Combine this purpose with the dynamic of: preserving the core + stimulate progress,

• What is the difference between a good BHAG (big hairy audacious goal) and a bad BHAG?

• Great companies don’t exist merely to deliver returns to shareholders – they want to be GREAT!

• To aspire to greatness is to have the satisfaction that your time on earth was well spent

• If you have to ask “why should we make it great?” you are in the wrong line of work

• Clock building not time telling – great leaders build a company that can tick along without them, rather than being needed to tell the time.

 

John L. Nesheim
Publisher: Saratoga, CA: Electronic Trends Publications
ISBN: 0914405713

This is a synopsis only.  RESULTS.com recommends you buy the original book.

Business Plan:  

• Confidentiality of your Intellectual Property is a big concern

• Venture Capitalists won’t sign Non Disclosure Agreements yet they are a major source of leaks

• VC’s may be just interviewing you because they have invested in a competitor already

• Be careful of who you give business plan to and ask for its return (un-copied) 

Dealing with Venture Capitalists 

• Choose VC’s as carefully as you would top employees – you need to have complete faith in them

• Make sure they are experienced and focused in your area of business (not generalists) Check their references (vital) – talk to other startup CEO’s they have worked with to get a warts and all appraisal of their professionalism (don’t let yourself be fooled by their flattery or by the first one that shows you interest – reference check all firms you do business with – including investment bankers etc when preparing for IPO’s)

• Start looking for capital well before you need it!! (Don’t wait until you are under pressure to pay salaries)

• Get a personal introduction to VC’s if possible

• Visit them first – do not provide business plan until after 1^st meeting

• Query them for conflicts of interest – be suspicious

• Tell your story verbally only – you can control the information flow

• Keep handouts to a minimum

• Never leave any proprietary material

• Focus on the executive summary only

• Negotiate – don’t teach!  If they do not understand your concept straight away they will not fund it so don’t waste your time

• Treat every meeting as if it were a future negotiation for money and answer questions accordingly (ie if they get you to admit any weaknesses, they will use your admissions later as bargaining chips for a lower share price or greater ownership %)

• Make them think they are under pressure to act as you have hot interest from other VC’s (get as many as possible chasing you!)

• Never count the cash until you see it in your bank account – promises mean nothing!

• Expect a lot of “No’s” VC’s only fund 6/1000 plans they see

• 10% of startups that succeed make up for the 90% that fail in the VC’s portfolio. You are paying for their bad investments – hence why they are looking to highly dilute your ownership to maximise their gain

• They are looking for a Return On Investment of 20%+

• They get preferred shares (preferential tax treatment / first call on assets in bankruptcy) which are converted to common shares at IPO or sale of company

• If you suspect that they desperately need a winner (ie your company’s hot future prospects) then you have a better chance of retaining more of your company in the negotiations (thus reducing your cost of capital)

What Venture Capitalists are looking for: 

• A large, rapidly expanding market

• Competent management

• A revolutionary / unique idea or technology that can be commercialized

• Sustainable competitive advantage

• Reasonable purchase price per share
  

• They are looking for a complete, high calibre management team with proven track record or startup experience (they will do reference checks etc)

• They may aim to appoint their own CEO and want to get control of board of directors to manage their risk (You will need to fight for your own interests unless you agree it is in the company’s best interests. This can be difficult to let go of leadership when you are emotionally attached)

• The flip side is that they often have vast expertise and contacts to share that can make a positive difference, and can help you avoid mistakes – and they want the kudos of backing a winner

• When things are going great they are supportive and can expedite growth

• When times are tough they can be ruthless (“vulture” capitalists) and will do whatever it takes to protect their money (including replacing the founders)

• They will want to get you to IPO – or sell as fast as possible to get their money back (even though this may be a distraction, or not in its best interests of the business at that particular time)

• They will endeavour to exert control over the following:  salaries / employee share options / structures of deals with suppliers and customers / veto over & timing and pricing of additional capital rounds / choice of CEO & CFO / monthly cash burn rates / approval of budgets and operational plans

  
  

• Strategy – they will want to know:

  • Product Development

  • Positioning

  • Size of the market

  • Path to market

  • How you are going to get ahead

  • How you are going to stay ahead when large competitors enter the market

  • Product evolution / development pipeline 

  • 5 year financial projections

 

Presenting to Venture Capitalists  

• Be persistent – expect to have to call/email them 6 x before reply for appointment

• May have to present to 20 VC’s before you get real interest

• Don’t rely on one source – stimulate competition amongst several VC’s

• Brush up on your negotiation skills / get professional advisor to accompany you if necessary

• Do not present anything proprietary at the first meeting

• Present executive summary – 15-20 PowerPoint slides max

• Be able to discuss your presentation in detail and be able to back your financial projections

• Most sales estimates are overly optimistic and VC’s will grill you on these

• Most capital estimates and development times are grossly underestimated (VC’s will double your estimates in their valuation calculations)

• Expect them to ask a lot of negative sounding questions

• Be able to back your share price valuations but be willing to negotiate

• Rehearse and prepare your presentation and likely question responses prior to the real thing (don’t wing it – they are seeing great presentations every day)

• Ask for double the funding you want or think you are going to get

• Even if you get a refusal, ask for their feedback on how the business plan can be improved

• Get your business plan back!

The Core Team:  

• Pick the most outstanding talent that you can afford in sync with your company culture

• Talent attracts talent

• Try to get a “name” CEO

• Try to get “name” investors

• Team is usually built in the following order; Technical experts, CEO, Marketing, Sales (business development) , Operations, Finance

• Outsource key roles / contractors if necessary – consider using share options to keep costs down

Ownership / Dilution / Negotiation / Valuation: 

• Make sure your lawyer is very experienced in venture capital and can structure a deal today that will take into account likely scenarios tomorrow

  • What % of the company the founders will own at IPO time

  • What each share will be worth at IPO time

  • How many shares will be available to the public at IPO

  • (Ownership%) x (total # of shares outstanding) x ($/share) = $wealth

• Create classes / layers of jobs to determine share options allocations for new hires

• Founders on average own only 4% of their companies by the time they get to IPO (can be higher in companies with low capital requirements)

• Get agreement from founders how much they are willing to dilute their ownership prior to starting any funding negotiations

• Founders get greater % of ownership than those joining later (regardless of how much more experienced or capable the new hires may be), to compensate for the founders’ risk (personal funds invested / leaving employment before money is raised / creating business plan / convincing others to invest in or join their quest / staking their reputations on the business outcome)

• Ensure enough shares are set aside to attract talented employees later and tie them in to the success of the company with share options

• Get agreement on how much ownership you are willing to give up to VC’s in return for what level of investment

• The greater amount of capital to be raised = the lower the % of ownership retained by the founders

• VC’s typically own 60-70% of a company by IPO time (but negotiate your own terms)

• The quicker you can get to IPO, typically the less ownership is given away

• Each round of funding typically adds another VC investor to the board

• Be wary of any veto rights VC’s may insist on as they can be restrictive later on

• The founder/CEO should be responsible for securing (additional) funding. Do not count on lead VC’s to do it on your behalf, they have other interests

• Be honest - keep VC’s informed of slippage in terms of development times & budgets and payroll requirements to maintain your credibility with them

• It is dangerous (and bad form) to raise money prior to releasing hidden bad news – you expose yourself to legal action and investor resentment all round

• Aim to exist on low salaries until the company becomes profitable (keep lean and mean) 

Jim Collins,
Publisher: Jim Collins
ISBN: 0977326411 

This is a synopsis only.  RESULTS.com recommends you buy the original book.

Every institution, no matter how great, is vulnerable to decline.

There is no law of nature that the most powerful will remain at the top. Any company can fall and most eventually do.

Decline is largely self-inflicted, and the path to recovery lies largely within our own hands.  Whether you prevail or fail, endure or die, depends more on what you do to yourself than on what the world does to you.  

Some companies do indeed recover - in some cases coming back even stronger

Decline can be avoided.  Decline can be detected. Decline can be reversed.

By understanding the symptoms of these 5 stages of decline, leaders can use them as a diagnostic to take remedial actions to reduce their chances of falling to the bottom.

The 5 stages of decline:

Stage 1: Hubris Born of Success

Stage 2: Undisciplined Pursuit of More

Stage 3: Denial of Risk and Peril

Stage 4: Grasping for Salvation

Stage 5: Capitulation to Irrelevance or Death

Stage 1: Hubris Born of Success

Success, Entitlement, Arrogance

• Success is viewed as “deserved” rather than fortuitous, fleeting, or even hard earned in the face of daunting odds

• People believe that success will continue no matter what the organization decides to do, or not to do.

Neglect of a primary flywheel

• Company becomes distracted by extraneous threats and opportunities

• Neglects to focus on keeping a primary flywheel turning

“What” replaces “Why”

• Thinking, “We’re successful because we do these specific things”

  • When they should be thinking, “We’re successful because we understand why we do these specific things - and under what conditions they would no longer work”

Decline in learning orientation

• Leaders lose their inquisitiveness and learning orientation

  • Great leaders, no matter how successful they become, maintain a learning curve as steep as when they first began their careers.

Stage 2: Undisciplined Pursuit of More

Unsustainable quest for growth / confusing big with great

• Success creates expectations for more and more growth

• Puts strain on people, culture, and systems

• Firm is no longer able to deliver excellence consistently

Undisciplined, discontinuous leaps

• The firm makes dramatic moves that fail at least one of the following three tests:

1. Do they ignite passion and fit with the company’s core values?

2. Can the company be the best in the world at these activities?

3. Will these activities help drive the company’s economic or resource engine?

Declining proportion of right people in the right seats

• Losing the right people and/or

• Growing beyond the organization’s ability to get enough of the right people to execute with excellence

Easy cash erodes cost discipline

• The organization responds to increasing costs by trying to grow revenues rather than increasing its financial discipline.

Bureaucracy subverts discipline

• Bureaucratic rules subverts the ethic of “freedom and responsibility” that marks a culture of discipline

• People increasingly think in terms of “jobs” rather than responsibilities.

Problematic succession of power

• Leadership - transition difficulties

• Poor succession planning

• Failure to groom excellent leaders

Stage 3: Denial of Risk and Peril

Amplify the positive, discount the negative

• Tendency to discount or explain away negative data

• Failing to see that the data indicates something may be wrong with the company;

• Leaders highlight and amplify external praise and publicity.

Big bets and bold goals without empirical validation

• Leaders set audacious goals and/or make big bets that aren’t based on accumulated experience,

• Or worse, they make bets that fly in the face of the facts.

Incurring huge downside risk based on ambiguous data

• When faced with ambiguous data and decisions that can have a potentially severe or catastrophic downside, leaders take only a positive view of the data and ignore the downside risks

Erosion of healthy team dynamics

• Decline in the quality and amount of dialogue and debate

• Shift toward either consensus or dictatorial management

  • Rather than the ideal which is a process of argument and disagreement followed by unified commitment to execute decisions.

Externalizing blame

• Rather than accept full responsibility for setbacks and failures, leaders point to external factors or other people to affix blame.

Obsessive reorganizations

• Rather than confront the brutal realities, the firm chronically reorganizes

• People become preoccupied with internal politics rather than external conditions.

Stage 4: Grasping for Salvation

A series of silver bullets

• Tendency to make dramatic, big moves, such as:

  • a “game changing” acquisition

  • a discontinuous leap into a new strategy

  • an exciting innovation, in an attempt to quickly catalyze a breakthrough

  • lurching about from program to program, goal to goal, strategy to strategy, in a pattern of chronic inconsistency.

Grasping for a savior leaders

• The board responds to threats and setbacks by searching for a charismatic leader and/or outside savior.

Panic and haste

• Instead of being calm, deliberate, and disciplined - people exhibit hasty, reactive behavior, bordering on panic.

Radical change and “revolution” with fanfare

• The language of “revolution” and “radical” change characterizes the new era

• New programs! New cultures! New strategies!

• Leaders spending a lot of energy trying to align and “motivate” people, engaging in buzzwords and taglines.

Hype precedes results

• Instead of setting expectations low - underscoring the duration and difficulty of the turnaround - leaders hype up their new visions

• They “sell the future” to compensate for the lack of current results, initiating a pattern of overpromising and under delivering.

Initial upswing followed by disappointments

• There is an initial burst of positive results, but they do not last

• The organization achieves no buildup, no cumulative momentum.

Confusion and cynicism

• People cannot easily articulate what the organization stands for

• Core values have eroded to the point of irrelevance

• The organization has become “just another place to work” or get a paycheck

• People lose faith in their ability to triumph and prevail.

• People become distrustful, regarding the company visions and values as little more than PR and rhetoric.

Chronic restructuring and erosion of financial strength

• Each failed initiative drains resources

• Cash flow and financial liquidity begin to decline

• The organization undergoes multiple restructurings

• Options narrow & strategic decisions are increasingly dictated by circumstance.

Stage 5: Capitulation to irrelevance or death

-------------

APPENDIX 5: What Makes for the “Right People” in Key Seats?

The right people fit with the company’s core values

• Great companies build almost “cult-like” cultures

• Those who do not share the institution’s values find themselves surrounded by antibodies and are ejected like a virus

• People often ask, “How do we get people to share our core values?” The answer: you don’t.  You hire people who already have a predisposition to your core values, and hang on to them.

The right people don’t need to be tightly managed

• The moment you feel the need to tightly manage someone, you have made a hiring mistake.

• If you have the right people, you don’t need to spend a lot of time “motivating” or “managing” them.

• They’ll be productively neurotic, self-motivated and self-disciplined, compulsively driven to do the best they can because it’s simply part of their DNA.

The right people understand they do not have “jobs”; they have “responsibilities”

• They grasp the difference between their task list and their true responsibilities.

• The right people can complete the statement, “I am the one person ultimately responsible for…”

The right people fulfill their commitments

• A culture of discipline

• People view commitments as sacred - they do what they say they will do

• Equally, this means that they take great care in saying what they will do, careful to never over commit or to promise what they cannot deliver.

The right people are passionate about the company and its work

• Nothing great happens without passion, and the right people display remarkable intensity and passion.

The right people display “window and mirror” maturity

• When things go well, the right people point out the window, giving credit to factors other than themselves

• They shine a light on other people who contributed to the success and take little credit themselves

• Yet when things go wrong, they do not blame circumstances or other people for setbacks and failures; they point in the mirror and say, “I’m responsible.”

 

Ram Charan,
Publisher: McGraw-Hill
ISBN: 0071626166


This is a synopsis only. RESULTS.com recommends you buy the original book.

Chief Executive Officers

Leaders overestimate how well they will fare because that is what they want to believe. You need to prepare for the worst right now - or you will put your company at risk.

Your focus must shift from the income statement to the balance sheet. The most critical metric now is cash (working capital). Monitor cash, inventory, accounts receivables – every week at minimum - even daily! Lack of liquidity is lethal.

Revise your cash flow forecasts with pessimistic revenue assumptions. Will you still breakeven?

Focus on cash efficiency - not growth. Face the reality that you may need to shrink your company to survive.

Narrow your focus - Concentrate on the core. Simplify. Fewer customers, fewer products, fewer facilities, fewer people, fewer suppliers - and a stronger company. You will emerge smaller - but stronger, better, more flexible, and better positioned.

Do not short change the future though. You must still invest wisely in the right areas to ensure payoffs in the future.

Get real time, ground level intelligence from your front lines in order to make faster, better informed decisions. Get close to customers and suppliers. What are they seeing? How are they feeling?

Strategic planning and target setting should be revised more frequently. Make modifications as situations change. Annual planning and budgeting is far too long. Your current strategy may become quickly obsolete.

Instil courage in your team by being present, being authentic, confronting reality, telling the truth, and taking steps to address it decisively.

Leaders who were successful in good times may not be up to the challenges confronting them today (anyone can look good in a rising market) - and many became arrogant with the success they achieved by pursuing aggressive growth at all costs through leveraging and taking risks.

Now you need to be a real leader - to be able to lead your people through the storm and develop a credible plan to do that.

Be bold. Defensive cost cutting is not enough. You also need to make the right offensive moves - to grab market share - to acquire assets - to invest in core competencies.

Be hands on - working at the front lines with your team down in the trenches.

Reduce costs and headcount surgically. Across the board cuts are stupid.

Cut costs before your revenues decline. Get ahead of the curve.

Build close relationships with customers. How can you add extra value to your strong customers?

How can you reduce your ties to weak customers who may go belly up - or to those that cost you a lot of cash to service (make you hold a lot of inventory / are slow payers etc)?

Sales & Marketing

Salespeople who are order takers will not cut it in this environment. You must understand the customer's pain and provide customized solutions that enable you both to succeed (win – win).

Salespeople will need to become more analytical and understand the importance of both margins and cashflow.

Salespeople must provide their company with ground level intelligence of what is going on in the marketplace. This information must be documented and shared where all functions in the firm can be made aware of it.

Be wary of selling to firms who are likely to be bad payers. Sales goals and incentives will need to be re-thought (e.g. Salespeople might be better if they are incented for collecting cash). Some customers will need to be dropped.

You may need to revise your value proposition - but beware of losing your brand identity - or cheapening your brand.

Chief Financial Officers

CFO's will need to manage cash effectively and ensure debt obligations can be met

Show your people – using visual examples - the impact on the financial statements of:

• a drop in revenue

• a decrease in gross margins

• how reducing overhead expense items directly improves profit

• how an increase in inventories or accounts receivables ties up cash

Develop dashboards to keep the financial picture visible – and help people confront reality.

Revise budgets monthly if necessary to reflect the changing reality.

Budgeting should not be an annual exercise based on last year plus or minus certain % for each line item. Each line item must be recast based on new projected reality – every quarter or even every month if necessary.

Return on Investment (ROI) may not be the only measure of capital allocation now. The timing of cash flows may be a higher priority in terms of where you invest your money.

Some projects may need to be abandoned regardless of sunk costs or emotional attachments

Chief Operating Officers.

COO must understand the likely new break-even point – before falling revenues become a reality and be able to rapidly adjust capacity to suit the new lower level of demand.

Understand the long term implications (consequences) of any cost cutting measures - e.g.

• Can you quickly scale up again when demand improves?

• Will you lose key capabilities or relationships?

• If you reduce R&D, will your competitors gain an edge when things improve?

• If you reduce maintenance spending will it have costly consequences in the future?

Simplify and reduce product lines. Retain the core activities. Outsource everything else

Manage inventories - they are a huge cash trap. Adopt “Just In Time” inventory management - or even “Produce on demand”. Simplify and speed up your supply chain.

Maximize capacity utilization - and be able to quickly vary staffing levels according to demand.

Recognize & retain employees who have the highest engagement and customer satisfaction scores.



Zero based thinking – if you had to start this project again now – would you still do it? Analyze which projects are critical to the future and which need to be abandoned.

Your toughest decision as a leader will be where to make cuts - and where to focus and increase investment.

This can be a good time to get the right people in the right jobs. You will now see who the real players are - who to keep and who to let go. People who could do well in good times may not be tough enough, decisive enough, or fast enough to adjust and make the necessary changes to meet the challenges now.

Training should be maintained – but be specific to current issues.

Compensation needs to be revisited to make sense in light of this new reality.

New targets need to be set by the board of directors. It may not be about growth, rather how to survive and outperform other competitors in your industry. Many companies will become smaller in the next couple of years and many will disappear.

Beware of cutting things without taking into regard their future impact.

Plan for worst case scenarios – but then work to make things better.

The Effective Executive

Peter F. Drucker
Publisher: New York: HarperBusiness, 1993.
ISBN: 0887306128   

This is a synopsis only.  RESULTS.com recommends you buy the original book.

Efficiency is doing things right.  Effectiveness is doing the right things.

Management is largely by example.  If you cannot manage yourself for effectiveness, you cannot expect to manage others.

Effectiveness can be learned - and it has to be learned - it is not something that comes naturally. There is no such thing as an "effective personality".  Intelligence, knowledge, and hard work are not enough.  Effectiveness requires learning certain practices until they become habits.

The external environment is beyond the control of the executive.  The truly important events on the outside are not the just the trends, rather they are the changes in the trends.  Changes in trends and how you respond to them will determine your success or failure.  The most common cause of executive failure is the inability or unwillingness to change to respond to new trends.

Increasing effectiveness may be the only area where we can hope to significantly raise performance.

There is no such thing as an ideal leader.  Effective executives differ widely in their temperaments and abilities: Some are extroverts - others are introverts, some are eccentric - others are conformists, some are drinkers - others abstainers, some have charm - others do not, some are educated - others are not, some rely on logic - others rely on intuition, some are generous - others are selfish etc.

The only thing great leaders have in common is the ability to get the right things done.

The 5 practices of effective executives:

1. Carefully manage where and how you spend your time
    
2. Focus on what results need to be achieved - not what work needs to be done nor the techniques and tools involved
    
3. Build on strengths - not weaknesses. Build on your strengths and those of your colleagues. Focus on what you can do - not what you can't do
    
4. Concentrate on the few things that will produce the greatest results.  Force yourself to set priorities.  Do first things first - and second things not at all
    
5. Make decisions by seeking dissenting opinions - not seeking consensus.  Know that to make many decisions and fast decisions means to make the wrong decisions.  Better to make fewer decisions - but make the right fundamental decisions.  Focus on the right strategy rather than razzle dazzle tactics

Know thy time

Time is the scarcest resource - unless it is managed nothing else can be managed.   Keep a time log to record where and how you really do spend your time.  Manage your time by reducing unproductive demands on your time:

• Learn to say no. What would happen if this were not done at all?
• Which of these activities could be better done by someone else?
• What am I doing that wastes other people's time?

Beware accepting too many invitations.  Reduce interruptions.  Reduce the number of meetings and make them more effective (focused on results).  Be aware that the more people are together, the more time is taken by human interactions - and the less time will be available for work and results.

Consolidate chunks of uninterrupted continuous time in your calendar to focus solely on your key priorities.  Little bits of time - 15 minutes here and there spent on a project are not effective.  Even one quarter of the day - if consolidated into a large uninterrupted time unit - is usually enough time for you to get the important things done.   Spending 1 day a week working from home can be an effective way of consolidating time.  Likewise - getting up earlier and using uninterrupted time in the mornings is an effective way of consolidating uninterrupted time.

Ensure you have accurate timely information on hand in a form that people can understand with which to make right decisions. 

Recurring crises must be dealt with by an effective system to prevent the pattern repeating in future.

You can tell a great business by how calm and boring it is.  A dramatic business full of heroic endeavors is invariably poorly managed.

What can I contribute?

Focus on results not effort

• What justifies you being on the payroll?
• What do you contribute?
• What can you and no one else do, that if done well, would make the most important difference to the company?

Every company needs performance in 3 major areas;

• Direct results
• Core values
• Developing people for tomorrow

4 requirements for effective human relations

1. Communication
2. Teamwork
3. Self development
4. The development of others

1. Communication

• What is the best use of your knowledge and ability?
• What contributions should I hold you accountable for?
• What do you need from me in order for you to be able to contribute fully?

2. Teamwork

• Who has to use my output in order for it to become effective?

3. Self development

• What knowledge or skills do I need to acquire to make the contribution I should be making?
• What strengths do I have to put to work?
• What standards do I have to set myself?

4. Development of others

• Set standards for excellence of contribution in all roles  

First things first.

Effective executives do first things first, and second things not at all.  Effective executives do first things first, and they one thing at a time. 

Juggling many balls is a circus stunt.  Concentrate on one thing at a time and keep a steady pace.

Decide in the light of changing events what really matters for you to be doing right now, and commit to doing that one task.  When that task is complete, review the situation, and pick the next one task that now comes first.

Be the master of time and events, instead of their whipping boy.  There are always more things to do than there is time available.  Switch from being busy, to achieving results.   Allow more time than you need. Nothing ever goes as planned.

Abandon yesterday.  Ask - If we did not already do this, would we go into it now?

Do not invest any more resources into no longer productive past activities.  Put your best people to work on the opportunities of tomorrow, not fixing the past.  Prune ruthlessly.  Yesterday's successes always linger long beyond their productive life.  Cut out activities that have ceased to promise future results.

Ask - Is this still worth doing?

Get rid of everything else and focus on the few activities that if done with excellence, will really make a difference.  Get rid of the old activity before you start a new one.  "Organizational weight control" - stay lean and muscular.  Systematically getting rid of the old, is the one and only way to force the new.

Everyone is already too busy working on the tasks of yesterday.  Put all activities and people regularly "on trial for their lives" and get rid of those activities and people that cannot prove their productivity.

Outside the firm is the only area where results occur and is where leaders need to focus their attention.  But pressures always drag you back inside the firm. They drag you into what has happened, over what will happen in the future - the crisis over the opportunity - the urgent over the important. 

Setting priorities is easy.  Setting posteriorities (what to stop doing) is hard and usually unpleasant. It takes courage to:

• Pick the future over the past
• Focus on opportunity, not the problem
• Choose your own direction, rather than follow
• Aim high for something that will make a difference, rather than playing it safe

Achievement is more about courage than ability.

Decision making

Effective executives do not make many decisions.  They concentrate on making a few important ones.

Make the big strategic decisions, rather than try to solve lots of little problems.  The executive who makes many decisions is ineffective. 

Do not make fast decisions.  Make the right decisions that have the biggest impact

The hardest part of any decision is not making it, it is implementing it.  Until a decision has degenerated into hard work, it is not a decision, it is just an intention.

If it is a generic or recurring situation – one needs to create a rule or policy for dealing with it when it recurs.   If it is a unique situation, look for the true problem beneath the symptom.  The symptom clamors for attention, but you need to look at it from the highest possible conceptual level.

Be clear about what it is that you want to accomplish before you make a decision.  What are the boundary conditions that need to be satisfied? 

Focus on what is right, rather than who is right. 

Do not ask, “What is acceptable?”  You will always need to compromise in the end, so don’t start with compromising until you specify what is right first.  Do not worry about what is acceptable.  Many things you worry about never happen.

A decision is not made until action commitments are put in place that becomes someone’s work assignment.  Until then there are only good intentions.

• Who has to know of this decision?
• What action has to be taken? 
• Who is to carry it out? 
• What does the action have to be so that people CAN actually carry it out?

This last question is very important when you want to change people’s behaviours.  Responsibility for the action must be clearly assigned, and the person needs to be capable of carrying it out.

Standards and measures for accomplishment, and incentives need to be changed simultaneously or the person will be caught in a paralyzing conflict.  People do what they are rewarded for.

Build feedback into the decision to test to see how it fares against actual events.  Even the best decision has a high probability of being wrong.  Even the most effective decision eventually becomes obsolete.

Generals learned long ago that they need to “go see” whether their orders have been carried out.  Reports are not enough.  Never rely on what one is told by subordinates.  To see for oneself is the only reliable feedback.

All assumptions become obsolete sooner or later.  Reality does not stand still for long.  Check to see if the assumptions on which a decision was made are still valid, or whether the decision needs to be thought through again.

Failure to ‘go see’ is the typical reason for persisting in a course of action long after it has ceased to be appropriate.  Yes one needs reports and figures.  But make sure you expose yourself directly to the reality

Effective Decisions

A decision is a judgment.  It is rarely a choice between right and wrong.  It is more a choice between different courses of action.

Most books on decision making say to start with the facts, and get consensus on the facts.  This is incorrect.  Effective decisions grow out of the clash and conflict of different opinions and competing alternatives.   People don’t start with facts.  They start with opinions. There is nothing wrong with this.  If you ask people to start with facts, they usually look for facts to fit the opinion they already have.

The effective executive encourages opinions, but insists that people who voice them support them with an appropriate measurement that will assess their effectiveness. 

Effective executives create dissension and disagreement rather than promote consensus.  The first rule of decision making is - Do not make a decision unless there is disagreement first.   If everyone agrees at the outset, tell them to go away and come back with some counter viewpoints.  The right decision requires adequate disagreement first. 

Disagreement helps generate fallback alternatives.  Disagreement stimulates the imagination.

The effective decision maker does not start out assuming they know the right course of action, and that all others must be wrong. They start by stimulating disagreement and alternative opinions.  Start by wanting to understand all the alternatives, not by thinking what is right or wrong, or who is right or wrong.  Most executives are ineffective because they start by thinking that their opinion is the only way

No matter how high emotions run, no matter how much you think the other person is wrong, the effective executive forces themselves to welcome opposition as a means to better think through the alternatives

One final question to ask: Is a decision really necessary?  What will happen if we do nothing? 

Like a surgeon you need to weigh the benefits of surgery with the costs.  Act or do not act; but do not hedge or compromise.  The surgeon does not take out half the tonsils.  You either operate or you don’t.  Do not take half actions.

Do not focus on popularity.  Decisions require courage as much as good judgment.  The most effective medicine usually tastes terrible, but it is the right thing to take.  Effective executives are not paid to do things they like to do.  They are paid to make effective decisions and get the right things done.

Computers

Do not let computers make decisions for you.  It does what its logic is programmed to do.  This makes it fast and precise.  It also makes the computer a moron, for logic is essentially stupid.

Humans are not logical.  They are perceptual.  They are slow and sloppy, but they also have insights and inferences that no computer can have.

Computers can free executives from dealing with routine, generic events inside the organization so they can focus on the strategic outside, which is the only area where results lie.

Bradford D. Smart
Publisher: Paramus, NJ: Prentice Hall Press
ISBN: 0735200491

This is a synopsis only.  RESULTS.com recommends you buy the original book.

Top-grading = filling every role in your company with “A” Players

“A” players are the top 10% of the people available for the position

“The toughest decisions in organisations are people decisions – hiring, firing, promotion etc. These are the decisions that usually receive the least attention and are the hardest to unmake” (Peter Drucker)

“The ability to make good decisions regarding people represents one of the last reliable sources of competitive advantage, since very few organizations are good at it” (Peter Drucker)
 
“Nothing matters more in winning than getting the right people on the field.  All the clever strategies and advanced technologies in the world are not effective without great people to put them to work” (Jack Welch)
 
“I am convinced that nothing we do is more important than hiring and developing people. At the end of the day you bet on people, not on strategies” (Larry Bossidy)

The job no leader should delegate; having the right people in the right place (Larry Bossidy)
 
Research shows the difference in performance between top performers and average performers in salespeople is up to 250%, in knowledge workers it is 100%, in assembly line workers 20% (McKinsey)
 
What you pay for a role is not the prime consideration:

• You don’t save money by settling for low quality hiring and set pay scales
• Instead, focus on the value “A” Players can bring to your company in all roles
• Having a team of “A” Players makes your job easier and more fun
• Having a team of “A” Players helps your company succeed faster
• Consider the true cost of weak performance and having to replace a hiring failure
• The cost of a hiring failure is calculated at 15 x base salary (actual and opportunity cost)

Talent Review:

• Conduct a talent review and rank your current staff A / B / C
• Start with the company leadership team and get this right first
  • (cascade down through the organization later)
• Conduct a talent review and rank your current staff A / B / C
  • Have more than one person evaluate individual rankings to help reduce bias
    • People tend to rank people higher that:
      • They have personally hired
      • Are “like them” in appearance and behaviours
      • Are “on their team” (to make them look good as a manager)  
• Sub rankings
  • A1 – Senior Executive potential
  • A2 – Management potential – but only 1 or 2 levels above
  • A3 – “A” player but needs to stay in, and specialize in their current role
• Determine what actions you need to take to support and grow your “A” players
• Redeploy B and C players into other roles where they can become “A” players
• Low performers can consume most of your management time
• Instead you should be spending time with your “A” players
• You must have courage to remove low performers – fast
• Consider legal obligations and be humane with people

 

	Does not achieve performance standards	Achieves performance standards
Lives company values	“B” Player Train & support Change role to enable them to better play to their strengths Fire them (if you can’t raise performance within set timetable)	“A” player Recognise & reward Coach & develop Handcuff to business
Does not live company values	“C” player You have made a hiring error Fire as soon as possible	“B” Player Wrong “fit” Fire them Need to show you are serious about values behaviors It takes courage to build a great company

 
 

 "A" Players tend to hire other “A” Players:

• B’s hire C’s
• B’s tend to hire people who do not threaten them
• CEO needs to champion Top-grading in a company
• “A” players:
  • Make things work
  • Push for progress
  • Come up with solutions
  • Are magnets for other talent
  • Can exist at all roles / levels in the company
     
• B & C Players:
  • Impede organization performance
  • Resist change – encourage the status quo
  • Stifle creativity
  • Tend to hire people like themselves – further weakening the organization

Barriers to implementing top grading in a company:

• It takes time and discipline to implement top grading
• Managers take hiring short cuts to quickly fill a role with the first likely looking candidate
• Managers insecure in hiring people better than they are
• Managers think they can “fix” B & C players and spend too much time trying to do so
• Reluctant to get rid of B & C players because they are considered “loyal” to the company

Virtual Bench:

• Build your virtual bench of “A” Players to meet your future hiring needs
• Be on the lookout for “A” Players all the time – they are seldom unemployed
• Your “A” Players will likely know other “A” Players
• Build relationships and keep in touch

STEP 1 – Create Scorecards for each role / Design recruitment ads to attract “A” Players:

• Don’t use typical job descriptions
• Create scorecards which clearly describe accountabilities, KPI’s, and “fit” requirements
• Describe key accountabilities
• Quantify with numbers (KPI’s) what “A” Player performance looks like
• Clarify the strengths / talents that = a good “fit” with the position
• Clarify the values that = a good “fit” with the company
• Use these scorecards as the basis for your recruitment ads
• “A” Players want to know the score – they will be attracted to roles with accountability
• B & C players will deselect themselves from applying for roles described in this way

STEP 2 = Screening Interview:

• Get people to fill out a career history form first before you phone / or meet with them:
  • educational grades
  • employment for every year and month since they began working
  • compensation – base pay and bonuses for each role
  • name and title of each supervisor
  • what they liked most and least about each role
  • what they are good at and not so good at
  • what they are not interested in doing
  • what each boss would indicate they are good at and not so good at
• Clearly indicate that you will require full reference checks for the successful applicant
• Clearly indicate that you will choose the referees you wish to call
• Conduct 1 hour phone screening interviews to filter out B’s and C’s at the start
• Screening interview format:
  • What are your career goals?
  • What are you good at professionally
  • What are you not so good at professionally?
  • Tell me the names of your last 5 bosses. How would they rate your performance?
  • What questions do you have for me about the role?

STEP 3 = Top-grading Interviews

Conduct at least 2 interviews on separate occasions – 3 hours duration
Use different interviewers from your team (working in tandem) – one asking the questions – the other taking notes:

• Allow 3 hours for a top grading interview.  By 3 hours you start to get the truth.
• CIDS format:
  • Chronological
  • In
  • Depth
  • Structured
• For every job they have had in the past ask:
  • What were you hired to do?
  • What were your specific accomplishments?
  • What failures or mistakes were made and what did you learn from them?
  • What calibre of staff did you inherit?
  • What calibre of staff did you end up with?
  • What was your boss like and how would they rate you?
  • Why did you leave?
• Ask questions to elicit the desired competencies for the role as outlined on scorecard
  • Past performance is the best predictor of future performance
  • Ask for specific examples of where they exhibited the desired competencies in the past for their previous roles
• What do you want and need from your next job?
• What do you want 5 and 10 years from now?

Do not sell the position to the candidate at this point.  The purpose of the face to face interviews is to get enough data, and to compare the candidate’s answers the different interviewers obtained to see if candidate is a good fit.  After completing the 3rd interview - the “right fit” is your selling point to the candidate
 
STEP 4 = Reference Check Interview:  (TORC – Threat of Reference Check)

• You choose the references you want to check – not the ones the candidate supplies
• Ask candidate to make the reference interview phone appointments for you
• No references – no job offer!
• “A” Players will not be put off by this
• Ask the referees the same Top-grading questions you asked candidate to cross check
  • In what context did you work with this person?
  • What was their role and responsibilities?
  • What were their strengths in your opinion?
  • What were their areas for improvement?
    • (When I spoke to XX, they said you would mention YY as an area they need to improve.  Tell me more about that?)
  • How would you rate their overall performance?
  • (Outline your scorecard criteria for the position being applied for)
    • How well do you think they would fit these criteria?

Coach and keep your “A” Players:

• They are valuable and liable to be poached
• You need to keep them engaged
• Spend your time supporting and growing your “A” players
  • (not trying to “fix” B and C players)
• A players want attention, appreciation and to be surrounded by other “A” Players
• Keep in touch with how they are feeling regularly
• Assist them with their personal and professional development
• Help them play to their strengths and manage their weaknesses & blind spots

 
You need to market your company and its vision to potential employees with the same vigor you use to attract potential customers.  The best firms attract the best applicants.

 

Toughen Up: What I've Learned About Surviving Tough Times - Michael Hill

Michael Hill,
Publisher:  Random House New Zealand Ltd
ISBN: 1869790464

What really works
The 4+2 formula for sustained business success

William Joyce, Nitin Nohria, and Bruce Roberson
Publisher: New York: Harper Collins Publishers
ISBN: 0060512784  

This is a synopsis only.  RESULTS.com recommends you buy the original book.

“The Evergreen Project” provided the content for this book – researched 160 major companies in equivalent industries over a 10 year period and found there are 8 management practices directly correlated with superior performance (in terms of total shareholder returns).

Contrast with other well known research:

Tom Peters – In Search of Excellence: Studied successful companies (winners) only.  Doesn’t tell you whether losing companies also use similar methodologies, or what made them falter.

Jim Collins – Built to Last / Good to Great: Studied successful companies and compared them to a control group of average / loser companies. Did not differentiate between cause and effect e.g. – does attracting talented employees lead to superior performance, or did superior performance attract talented employees?

In contrast, “The Evergreen Project” not only looked at successful companies (winners), unsuccessful companies (losers), it also looked at those whose performance changed for better or worse over the 10 year period (climbers and tumblers) and identified the cause and effect of these changes – thus identifying which management practices really work

Here’s what really works:

The 4 Primary Practices: (excellence in all 4 required)

1.	Strategy		Make your strategy clear and narrowly focused
2.	Execution		Flawless execution
3.	Culture		Build a performance-based culture
4.	Structure		Make your organisation fast & flat

The 4 Secondary Practices: (excellence in 2 out of 4 required)

1.	Talent	Make talent stick around and develop more
2.	Leadership	Make your leaders committed to your business
3.	Innovation	Make industry-transforming innovations
4.	Mergers & Partnerships	Make growth happen with mergers and partnerships

The Primary Practices: (excellence in all 4 required))

1 Strategy:
Make your strategy clear and narrowly focused

• Stick to the core business (stick to the knitting)
• Growth focused
• Communicate strategy clearly – must be well understood by employees & investors
• A hallmark of winning companies is their ability to share their strategy with customers
• Must have a clear brand promise for the customer
• Match company capabilities with your target market segment needs
• Continually research customers, and monitor competitive environment
• Fine tune strategy to match changes in environment and customer behavior

2. Execution:
Flawless execution

• Consistent and disciplined
• Choose both growth and efficiency – not one or the other
• Consistently deliver brand promise – keep your promises to customers
• You must meet customer expectations – never disappoint them
• Empower front line staff with authority to respond to customer needs
• Convenience – be easy to deal with
• Improve productivity – eliminate waste

3. Culture:
Build a performance-based culture

• Clear company values – ensure your people know and live by these values
• Inspire people to do their best
• Challenging / fulfilling / fun work
• Fun (happiness) is useful but secondary to performance
• Reward based on achievements – keep raising the performance bar
• Courage to get rid of poor performers

4. Structure:
Make your organisation fast and flat

• There is no ideal one best structure
• Simple is best - fast and flat
• Reduce bureaucracy and complexity – Simplify!
• Promote cooperation & information exchange across whole company
• Eliminate internal parochialism, competition, and turf wars (them vs us)
• Regular meetings to bring department heads together and force cooperation
• Put your best people closest to the action (not stuck in the office)
• Keep your frontline stars in place (make it worth their while to stay at the coalface & specialise in their role)
• Eliminate the distinctions between leaders / managers and any other role – every role is equally valuable

The Secondary Practices (excellence in 2 out of 4 required)

1. Talent:
Make talent stick around and develop more

• Senior managers personally involved in finding and retaining talent
• Preference for developing talent from within (Hired guns are less loyal)
• Provide top of the line education and training for staff
• Retain talent by providing work that is meaningful and challenging for them
• Always have replacements for each role groomed from within the organisation

2. Leadership:
Make your leaders committed to your business

• The leader’s decision making style does not matter, nor do their personal characteristics – no particular leadership style was correlated with winning performance
• Leader must be fully committed to the business
• CEO accounts for 15% of a company’s performance for better or for worse
• On average 50% of executive pay was linked to performance in winning companies (loser company executives had less pay at risk)
• Miss your target – miss your bonus
• Leaders need to communicate their vision so convincingly that others will adopt it
• Leaders need integrity in their words and actions.  People must trust them
• Future focused – leaders need to see opportunities and spot problems early
• Leaders and managers need to build strong relationships with their people
• Board of Directors need to have a substantial financial stake in the business, thoroughly understand the business, and be passionately committed to its long-term success
• Board must not rubber stamp CEO decisions.  They must play an active strategic role 

3. Innovation:
Make industry-transforming innovations

• Introduce disruptive technologies and business models
• (Not just continuous improvement)
• Apply technology to enhance internal processes
• Anticipate rather than react to industry changes
• Cannibalise your existing products – continually create new products to make your existing products redundant (launch a new model, open another branch etc)

4. Mergers and partnerships:
Make growth happen with mergers and partnerships

• Merge for growth and synergy, not diversification
• Buy their customer base
• Or buy a business that complements your strengths
• Partner with companies to create synergies for both parties
• Small regular strategic deals rather than occasional mega-mergers
• Planned process for spotting and processing deals, not ad-hoc spur of the moment

What doesn’t work:

The Evergreen project found no correlation between the following and total shareholder returns

• Investment in information technology
• Corporate change programs
• Supply chain management programs
• Attracting high quality outside directors
• Learning organisations
• Team-based management
• Total Quality Management (TQM)
• Outsourcing execution
• Enterprise Resource Planning (ERP)
• Customer Relationship Management (CRM)
• Whether business is structured geographically, or by product
• Whether business units have profit and loss responsibility or not
• The quality of HR staff
• Fast track development programs
• Formal mentoring programs
• 360 degree performance appraisals
• CEO’s decision making style (winners can be independent or collaborative)
• CEO’s personal characteristics (winners can be patient or impatient, secure or insecure, big picture or detail oriented, quantitative or qualitative in their approach)
• Diversifying as a reason for mergers and acquisitions