Topgrading

Do you have difficulty figuring out whether someone in the company, or a candidate for selection, is an A, B, or C player?  If so, you’re in good company, for frankly only the companies with the most sophisticated human resources methods have it “nailed.”  But this article should help, since it shares the experience of Topgrading professionals who are constantly helping clients accurately put people in the right categories.

Actually, Topgraders have three slightly different categories – A Player, A Potential, and Non-A.  We define A player as someone in the top 10% of talent for the pay, in your location, in the industry, and reporting to you.

When companies are Topgrading and more than 75% of the people they hire turn out to be A players, they don’t care if someone is a B without A potential or a C without A potential, for both are not good enough.  The only good categories are those who are already the high performers, the A players, and those with the potential to become the high performers, within a reasonable amount of time.

Okay, but when people are just learning Topgrading, it’s easiest to use the A, B, and C categories, to show the dramatic differences.  Following are 5 of the best ways I know of to judge people in a fair, objective, legally defensible way:

1.  How A, B, and C players differ on key competencies. The following chart is a bit simplistic because not all A players are that great on all competencies and not all C players are that bad on all the competencies. Indeed, in real life C players usually are A players on some competencies.

2.  Look for patterns of success. The “magic” of Topgrading comes from understanding, bottom line, how successful a person was in job 1, job 2, job 3, etc., with the greatest weight given to the most recent jobs.

Last year I interviewed a smooth talking executive who had clearly been a superstar in the industry, but the guy had not worked hard for years.  He had peaked years ago, was on a decline and frankly the pattern showed he was “over the hill,” someone who had lost his energy, drive, resourcefulness, and passion.

3.  Recruit a replacement. This really is the best way to see if your employee is truly among the top 10% of talent available.

After you have argued with your employee, complained about unsatisfactory performance, and heard 1,000 excuses, the simplest way to see if there are better people is to actively recruit them.  This can be done secretly, but go through all the Topgrading hiring steps including talking with former bosses.

Over the years I’ve heard it hundreds of times: “It became very easy to replace my employee after going through the Topgrading hiring steps, because I became absolutely certain my excuse-making employee was a C player, and I had three A players very willing to join me at exactly the same salary as my C player.”

4.  Never stop building your recruitment networks. As a Topgrader, you know the best way to recruit is by staying in touch with 40 A players you’ve worked with and also stay in touch with 20 “connectors,” people who know a lot of A players.

But in addition to using your networks to recruit, staying in touch helps you figure out if your team consists of A, B, or C players. As you chat from time to time with A players you’ve worked with in the past you hear about their accomplishments, what they pay people, the standards they set, and when you share your frustrations with a certain employee, your network will give you feedback that your expectations are too high or too low.

5.  Assess employees using Topgrading methods. You might already know that my first consulting engagement with General Electric was to improve their success promoting people.  They improved from 25% to well over 90% success, and the internal assessment methods are almost identical to Topgrading hiring methods.  Two trained interviewers conduct the tandem Topgrading interview and instead of talking with outside references (for hiring) they talk with bosses, peers, and subordinates in the company.

Summary: Use all of these methods to, as Jack Welch calls it, “differentiate” among high and low performers.  Needless to say, when you have concluded you have one or more Non-As, it’s time to coach them to get into the A player category or find another job, and it’s time for you to use the 12 Topgrading hiring steps to replace them.

RECOMMENDED RESOURCE: The new Topgrading Workbook, the one used in all our workshops, is organized around the Topgrading Vision.  Each of the 12 steps is explained, the problem it solves is clarified, and then fun exercises teach the Topgrading skill.  You have to actually use it to get the favorable results!  For more information and to invest in the Topgrading Workbook, click here.

Note:  A (free) download comes with this article!

Here is the simplest, clearest outline of all 12 Topgrading hiring steps, including what problem they solve, what skill must be learned, and the results that are typically achieved with using each Topgrading tool.

Thirty (plus) years of experience have clearly demonstrated that each and every one of these 12 Topgrading hiring steps is not just desirable, but necessary, in order to achieve 90% hiring success.  Cut corners by ignoring any one of the steps and it’s been well documented that costly mis-hires go up, and up, and up!

The download, the Topgrading Vision document, came from, of all places, a request from Tony Robbins.  He’s asked me two years in a row to be the “hiring guru” at his Summit for entrepreneurs, and while preparing for it Tony asked for a template, dashboard, something to clearly show how, where, and why all the Topgrading hiring parts fit together.  Good idea, Tony, thanks for the suggestion.  Hundreds of beginning Topgraders have bookmarked the Topgrading Vision, so all the steps are clear.

Enough introduction.  Just click here and immediately download the Topgrading Vision!

RECOMMENDED RESOURCE: The new Topgrading Workbook, the one used in all our workshops, is organized around the Topgrading Vision.  Each of the 12 steps is explained, the problem it solves is clarified, and then fun exercises teach the Topgrading skill.  You have to actually use it to get the favorable results!  For more information and to invest in the Topgrading Workbook, click here.

What do you do if you figure out that a candidate doesn’t quite fit your organization’s culture…but has the skills and experience you happen to be looking for?

Consider the following situation. Let’s say that your organization culture is entrepreneurial, energetic, fast-paced, and team-oriented, and that you are responsible for finding a new Head of Marketing. After a thorough selection process, you realize that one of the finalist candidates spent her entire her career in large, resource-rich (money and people) organizations where she had to be an adept politician to achieve results. However, she is experienced in the exact areas your organization sorely lacks. Do you offer her a job?

Probably not. Though she may be an A player candidate for the top marketing position in many organizations, she is a risky candidate for your organization because she lacks the demonstrated ability to effectively deliver results in a less-bureaucratic environment. We have found that when a high performer from a large, public company transitions to a smaller, more entrepreneurial organization, they fail 50% of the time…if they lack the demonstrated ability to deliver results in that type of environment.

Our advice, put her on your virtual bench to track her career. Perhaps she will be one of the successful 50%, but let another organization take that first “chance” on her.

INTRODUCTION: This article helps you answer the very common question, “What is different about Topgrading?”

For years we’ve said, “Topgrading hiring is just common sense on steroids.”  That is supposed to be a cute way of saying that adopting Topgrading practices proven to hire 90% high performers is a lot easier than someone might think, and there is no magic – just applied common sense.  But lately some executives have advised, “Don’t oversimplify Topgrading hiring methods – Topgrading is revolutionary, and before embracing it, people want to know how Topgrading values, principles, and tools differ from what they are accustomed to.”

Okay, here’s what is different about Topgrading:

1.  Hire only high performers.

Companies dedicated to hiring exceptional performers tend to pay exceptional salaries, but that seems to miss the core value of Topgrading hiring: at every salary level there are high and low performers, and Topgrading strives to help you hire only the best performers – not just average candidates but the very best available.

This notion – packing teams with the “best of class” at every salary level – is highly offensive to two groups of people:  1. those devoted to equality of outcomes (“C players need jobs, too.”), and 2. C players (who realize their job will be in jeopardy with Topgrading).  Hand out an article on Topgrading and just watch these two groups coalesce to undercut Topgrading!

2.  “Topgrading” is a made-up word and concept.

In the mid-1990s, my son Geoff Smart (of ghSMART & Co.) and I collaborated on developing a more comprehensive approach to talent management than what existed at the time.  We felt it was important to come up with a word that captured the essence of the spirit and principles that make up this concept.  “Topgrading” was the name we picked.

After all, if you “upgrade” talent you might have a team of 10 C players and replace one with a B player.  Whoopee – you’ve upgraded talent and you have a poor team.  The word Topgrading struck me as capturing the essence – packing the team with all high performers, A players, stars.

“Upgrading” talent can be embraced by C players; Topgrading means no C players.

3.  (Chronological) Topgrading Interview

The idea of a thorough chronological interview, asking a few questions about every job, is not new; every executive search report is the product of such an interview.  But search reports tend to be light on disclosing mistakes, failures, and what bosses would say are weaker points.

What we call the Topgrading Interview has been fine tuned for decades and today there are 16 basic questions about every job, including every success, every failure, every mistake, every key decision, every key relationship, assessments of every boss, estimates of what bosses would say about a candidate’s strengths, weaker points, and overall performance … plus questions about leadership, talent, goals, self appraisal, etc. … plus follow up questions.  Phew!

The innovation in the Topgrading Interview is to not overlook anything.  To achieve 90%+ high performers hired, you need 1,000+ data points.

4.  Focus on 50 Competencies.

In order to achieve 90%+ hiring success, focusing on 4 or 6 “key” competencies, which is what most companies still do, is inadequate.  This partly explains why companies hire only 25% - 30% true high performers.

In hundreds of workshops we’ve trotted out our standard 50 management competencies and challenged the participants to cut the list by even one, with this criterion:  you have to keep it if you would reject a candidate who is Poor or Very Poor on that competency.  No one has been able to cut the list by even one.  Conclusion:  50+ competencies must be accurately appraised.

But isn’t it impossible for an interviewer to accurately judge 50 competencies?

Nope!  At the beginning of workshops almost all managers say they can’t possibly do it, but at the end of the workshop – they’ve done it!   They amaze themselves!

So the good news is that managers trained in Topgrading can objectively and validly rate managerial candidates on all 50 competencies.

5.  Threat of Reference Check (TORC) Technique, the “truth serum of hiring”

This technique is simple but it works, motivating candidates to be honest.  It’s this:  let candidates know at each step in the hiring process that in order to get a job offer THEY will eventually have to arrange for personal reference calls with bosses (and others).

C players drop out and A players are happy to tell the truth and to arrange those calls.

6.  Topgrading Career History Form

Problem:  Pre-screening from resumes produces a mixture of good and bad candidates, since resumes are too often incomplete and hyped.

At a glance the Topgrading Career History form looks like an application form, but it’s much more. It requests all the information NOT included in resumes or application forms but you wish you had – complete salary history, boss ratings, likes and dislikes in jobs, true reasons for leaving an employer, and the “truth serum” – the TORC Technique (#5 above).

The Topgrading Career History Form gets only the best candidates in for face-to-face interviews.

7.  Research Base for Topgrading

There are now about 40 Topgrading professionals who have conducted tens of thousands of in-depth Topgrading Interviews on pre-screened candidates for executive positions.  Literally hundreds of thousands of times we’ve asked interviewees the talent question – what did you inherit, what did you end up with, and what did you do in terms of hiring, coaching, firing?

The point:  we’ve heard about every hiring method under the sun and never stop improving Topgrading methods.

8.  The Most Credible Case Studies

My son’s company and mine publish unusual case studies in our books and articles:  CEOs of NAMED leading companies state that their companies as a whole are doing better because of Topgrading.

9.  Managers (like you if you are an A player) can achieve 90% high performers hired.

Thanks to Jack Welch (GE Chairman at the time) approving Topgrading methods including two interviewers, the Tandem Topgrading Interview, many companies wanted to copy GE.  It’s now proven – trained A player managers can achieve 80% - 90% HIGH performers hired.

10.  Important Measures of Hiring Success

The HR world has been measuring hiring success in questionable ways – “cost to hire” people and “time to fill” jobs.  Trouble is, hiring goals are achieved if there are poor performers who are hired quickly and cheaply. Topgraders systematically measure percent HIGH performers hired.

The Topgrading Cost of Mis-Hires document is an original tool to quickly measure those costs; in only 15 minutes hiring managers become aghast at the high costs of their mis-hire, and that motivates them to learn the best hiring practices.

11. Ongoing Refinement of Interviewer Skills

Topgrading interviewers go through the Topgrading Interviewer Feedback Form, a checklist of a couple dozen good interviewer techniques, and simply give each other brief feedback and a couple of suggestions for how to do better next time.

12.  Candidates Arrange Personal Reference Calls with Former Bosses.

This is the follow through part of the TORC Technique (#5 above), and it’s simple:  after the Tandem Topgrading Interview, if the candidate and the interviewers want to proceed, the interviewers ask the candidate to do the work of arranging calls with the people the interviewers choose to talk with – usually 4 bosses, 2 peers, and 2 subordinates.  Conducting these phone interviews assures that the “truth serum” worked.

13.  Coaching New Hires Right Away

Candidates are promised coaching soon after they join, “to smooth your onboarding, assure you are productive quickly, and to begin a long-term development process right away.”  Bingo – A players love it!

CONCLUSION: Topgrading is an organic set of hiring best practices, most of which destroy what had been common hiring myths.

RECOMMENDED RESOURCE: We’ve released a brand new Topgrading Workbook, the same workbook we use in our workshops.  It has a clear explanation of each of the 12 Topgrading hiring steps, the same exercises to teach each step, and lots of new tools and methods.  Click here for more information or to order.

FREE DOWNLOADS: 1) 50-page eBook, an overview of Topgrading – click here, 2) Cost of Mis-Hires Form – click here,  3) Topgrading Vision, listing the 12 problems Topgrading solves, the skills necessary to learn, and results – click here.

Topgrading Tips will continue to offer leadership tips, but more and more case studies are popping up – successful Topgraders willing to share their insights, failures, and best advice.  So, from time to time Topgrading Tips will be a mini case study.

This short case study is amazing, the title is not hyped, and the case study has some great lessons for all managers.

Meet Aaron Patzer, founder of Mint.com, and a 28-year old who just sold his company to Intuit for a cool $170 million.  I read that he attributed some of his success to using Topgrading methods.  So I called Aaron, and here’s a brief version of his story …

Aaron grew up in Indiana, got into computers at age six, paid for school by designing websites starting at age 16, graduated Duke in computer sciences and electrical engineering, dropped out of a Ph.D. program at Princeton, and received a MSEE instead.

He joined IBM, got three patents on Play Station and quit because IBM seemed to promote people on the basis of seniority and Aaron guessed he would not have a fun job for more than a decade.  He joined a start up, wrote code and soon he was interviewing candidates on the phone.

With about a 600 IQ, Aaron wasn’t satisfied with his interviewing skills, and he picked up my big, fat book, Topgrading:  How Companies Win by Hiring, Coaching, and Keeping the Best People.  I suspect he memorized the book and particularly the Topgrading Interview Guide.  He asked the questions about education years and then investigated a person’s career by asking about – for EVERY job – successes, failures, bosses (“I figured if a candidate’s last 3 bosses were jerks, I’d be one to hire him.”), boss appraisals, and reasons for leaving.  Aaron “got it,” the power of gleaning patterns and the importance of asking “why?” 1,000 times.  He used the TORC (Threat of Reference Check) Technique and asked finalists to arrange reference calls with past bosses.

Aaron says Topgrading is the best business book he’s read, although he says the first part included name dropping with famous Topgraders, and too much “selling” of Topgrading.  He instructs his managers to go to Chapter 11 for the practical advice (which today is available in a much more exciting tool, the Topgrading Workbook – click here for information).  And I suggested that his managers read Chapter 12, the legalities of hiring, written by the largest employment law firm in the US and written to keep managers out of a minimum security prison.

Back to his success story – at age 25, Aaron was working 75 hours per week and frustrated with the additional hours necessary to manage his personal finances using Money or Quicken.  The bolt of lightning struck – he’d create the best personal finance software.

So he did it, he launched Mint.com, with occasional self doubts.  After all, he was attacking Microsoft and Intuit with no business experience, no leadership experience, no knowledge of Java web services, and by the way – no money.   Ahh, but he already knew how to hire A players.

Google Mint.com to see details of his business, videos of how someone can enter a few super secure credit card and bank accounts in 6 minutes and immediately begin saving money and time.  And it’s free.

So, at 26 years of age Aaron started hiring people for Mint.com and now he has 40 employees.  When he sold Mint.com to Intuit, the company made him head of their personal finance division, so there will be a lot more opportunities to Topgrade.

How did he Topgrade Mint.com?  He used the Topgrading hiring methods, with a few tweaks to really, really zero in to be sure he wouldn’t make a mistake.  For example, he asks engineers general questions about their methods to determine if they are so customer service oriented that they sit with users and note any frustration.

And what is his track record?  Four mis-hires out of 40.  Not bad!  A couple of others quit for good reasons – a dad died and another one of Aaron’s employees returned to Asia to take over the family business.  Looks like a 90% success record, with successful hires not just “okay,” but true high performers.

Aaron Patzer makes assembling a team of outstanding performers look easy.  He didn’t happen to mention one small factor that actually does make Topgrading “easy” – he’s clearly an A player!

Recommended Resource: The “Cliff Notes” for Topgrading is the 176-page Topgrading Workbook, a bit shorter than my 650-page tome!  The Topgrading Workbook explains each of the crucial Topgrading steps, and then presents the fun, illuminating exercises that teach how to do it.  Those are the same exercises we use in our Topgrading workshops.  For more information or to purchase, click here.