Topgrading

“If it’s important in business you have to measure it.”
“What is measured is what is improved.”
“Measure quality of hires?  Umm … nope, we don’t do it.”

Over the years we’ve sought to find some simple ways to measure talent, and this article describes amazingly simple, but powerful methods.

We can all buy books and books on the subject, but these books too often focus on issues such as how to set stretch goals and measure performance.  These are weighty and important subjects but they miss the mark.

Huh?  That’s right, and here’s why:  A McKinsey Quarterly article (click here) said essentially the “war for talent” had failed and that after 10 years of huge expenditures, CEOs were disgusted with the quality of talent.

HR typically measures speed to hire and cost to hire, but not quality of hire.  So, there are a lot of speedy mis-hires.  (Sounds like the old joke – “the food stinks but the service is poor.”)

For example, the head of HR at a Fortune 50 company that was struggling even before the economic mess told me, “Brad, we measure quality of hire by asking the hiring manager:

‘Does the person you hired 30 days ago have skills to do the job?’”

Huh?  Why not ask if the new hire has a pulse?  I asked, “What percent of management hires turn out to be the high performers you expected, and the only other category is mis-hire?”  He said, “Well, by that standard only 20% are good hires.”

You know Topgrading seeks a higher standard, like at least 75% high performers and for case studies, 90%.

In the past 2 weeks I’ve met with over 200 heads of companies, and in workshops I asked how many seriously measure quality of hires.  Only the Topgraders in the rooms raised their hand.

There are a thousand possible talent measurements, but Topgraders start with the most important basics – percent high performers hired, percent high performers hired with Topgrading vs. other methods, and costs of mis-hires.

1.  Percent High Performers Hired.  The first question for every manager is, “In the past several years, what percent of people you’ve hired actually turned out, a year later, to be the high performers you expected and figured you paid for?  The only other category is mis-hire, meaning you believe better candidates were available but your hiring methods just didn’t get them?”

I’ve asked that question over 60,000 times (really – it’s question 11 in the Topgrading Interview Guide, and I’ve interviewed over 6,000 candidates for executive positions, and they averaged 10 jobs each).  These high performers (by and large) inherited 25% high performers and ended up with 35% high performers, with about 50% “disappointing” and 15% being nudged out.

RECOMMENDATION:  ask that question of every manager and aggregate the results in Hiring Measurement Chart (click here).  It’s simple.  It asks,  “Were Topgrading methods used or not used, and did the people hired turn out to be high performers or not?”

Here’s what happens:  Topgraders get better and better at hiring, and the rest chug along with only about 25% hiring success.  These measurements motivate managers to Topgrade.

2.  Cost of Mis-Hires.  The Cost of Mis-Hires Form (click here) breaks down all sources of mis-hire costs, subtracts the value of contributions, and leaves a net cost, which is typically a lot higher than people expected.

RECOMMENDATION:  Use the Cost of Mis-Hires Form with your team, collectively estimating costs for an average mis-hire.  Then do it for every future mis-hire.

Here’s what happens:  Topgraders see their costs of mis-hires plummet, while non-Topgraders continue to suffer.

SUMMARY

Combine these simple talent measurements and the pain will motivate the team to find out what are the best hiring methods and try them.

RECOMMENDED RESOURCE

If you haven’t learned much about Topgrading methods and would like to learn more, you might consider the 1-hour hiring video, The Topgrading Advantage, available on-line or in DVD (click here).