Given the many things that
businesses can’t control, from the uncertain state of the economy to the
unpredictable actions of competitors, you’d think companies would pay careful
attention to the one thing they can control the quality of their people, especially
those in the leadership pool. An organization’s human beings are its most
reliable resource for generating excellent results year after year.
Their judgments, experiences,
and capabilities make the difference between success and failure. Yet the same
leaders who exclaim that “people are our most important asset” usually do not
think very hard about choosing the right people for the right jobs. They and
their organizations don’t have precise ideas about what the jobs require not
only today, but tomorrow and what kind of people they need to fill those jobs.
As a result, their companies don’t hire, promote, and develop the best
candidates for their leadership needs. Quite often, we notice, these leaders
don’t pay enough attention to people because they’re too busy thinking about
how to make their companies bigger or more global than those of their competitors.
What they’re overlooking is that the quality of their people is the best
competitive differentiator. The results probably won’ t show up as quickly as,
say, a big acquisition. But over time, choosing the right people is what creates
that elusive sustainable competitive advantage.
Dell ultimately out-competed
Compaq, a far bigger company, because Michael Dell took great pains to have the
right people in the right jobs people who understood how to execute his business
model superbly. Nokia, a minor player in the cell phone industry early in the 1990s,
became the global leader because of its people.
Under the leadership of
CEO Jorma Ollila, who had come from a bank to lead the struggling diversified
company, they adopted digital technology sooner than Motorola, then the
dominant company. They also saw that the cell phone was not a communications
device but also a fashion item, and built excitement in the marketplace for
their products with monthly introductions of new products.
If you look at any
business that’s consistently successful, you’ll find that its leaders focus
intensely and relentlessly on people selection. Whether you’re the head of a
multibillion-dollar corporation or in charge of your first profit center, you cannot
delegate the process for selecting and developing leaders. It’s a job you have
to love doing.
LARRY: The most
troubling problem I found when I joined AlliedSignal was the weakness of our
operating management team it wasn’t up to par with our competitors.
And we were unlikely to
produce future leaders, because we didn’t have any bench strength. When I retired
from Allied Signal in 1999, I considered the greatest sign of our strength to
be the extraordinary quality of our leadership pipeline. One measure of their quality
was that several of our outstanding people had been recruited to lead other
organizations, among them Paul Norris (who became CEO of W. R. Grace); Dan Burnham,
hired as Raytheon’s CEO; Gregory L. Summe (CEO of PerkinElmer); and Frederic M.
Poses (CEO of American Standard).
That level of excellence didn’t
happen by accident. I had devoted what some people considered an inordinate amount
of time and emotional energy to hiring, providing the right experiences for,
and developing leaders between
30 and 40 percent of my
day for the first two years and a good 20 percent later. That’s a huge amount
of time for a CEO to devote to any single task, but I’m convinced it accounts
in large part for AlliedSignal’s success.
One of the first things I
did was to visit the company’s plants, meet the managers, and get a feel for
their individual capabilities. I didn’t just talk to them; I talked to their
people as well, to see how they perceived their work environment and how they
behaved both of which reflect the kind of job a leader does. It was during those
visits that I came to see that the company’s inattention to leadership
development was a major problem.
While I was impressed with
my half-dozen direct reports, I was less impressed with the heads of our
operating units and the teams they had built. Some of the managers simply
needed seasoning in a few more assignments in different businesses. Too often,
though, they lacked a well-rounded business foundation, so they set priorities
from a functional standpoint. They didn’t
demonstrate basic skills
like understanding the competition or developing their people. I’m not saying
they weren’t smart or didn’ t work hard. They had good ideas and knew how to
present them, but they had not been prepared to execute. So we tried to give
them generous severance packages and help them land on their feet.
The next step was to vigorously
recruit more able people not only to run our businesses but also to ensure that
we could develop talented leaders in the future. Executive development needs to
be a core competency. At GE 85 percent of the executives are promoted from
within that’s how good the company is at developing leaders. And it got so good
because Jack Welch—and now his successor, Jeff Immelt made leadership
development a top priority and demanded that all of his executives do the same.
At AlliedSignal, by contrast, we had to go outside for nearly all our early
hires, mostly to companies that had people-development processes at the level
of GE and
Emerson Electric
Eventually we were able to
fill most jobs from within, which had always been my goal. But it didn’t happen
without a lot of my personal involvement in appraising and developing leaders.
I evaluated not only my
direct reports but also the direct reports of direct reports, and I sometimes
went even further down the organization. In my first three years at AlliedSignal,
I personally interviewed many of the three hundred new MBAs we hired, whom we
considered our future leaders.
I couldn’t interview
everybody, but I knew that the standard I set would be followed in the rest of
the organization: you hire a talented person, and they will hire a talented
person.
WHY THE RIGHT PEOPLE AREN’T IN THE RIGHT JOBS
Common sense tells us the
right people have to be in the right jobs. Yet so often they aren’t. What
accounts for the mismatches you see every day? The leaders may not know enough
about the people they’re appointing. They may pick people with whom they’re
comfortable, rather than others who have better skills for the job. They may
not have the courage to discriminate between strong and weak performers and take
the necessary actions. All of these reflect one absolutely fundamental
shortcoming: The leaders aren’t personally committed to the people process and
deeply engaged in it.
Lack of Knowledge
Leaders often rely on staff
appraisals that focus on the wrong criteria. Or they’ll take a fuzzy and
meaningless recommendation for someone a direct report likes. “Bob’s a great
leader,” the candidate’s advocate exclaims. “He’s a great motivator, a great
speaker. He gets along with people, and he’s smart as hell.” The leader doesn’t
ask about the specific qualities that make Bob right for the job.
Often, in fact, he doesn’t
have a good grasp of the job requirements themselves. He hasn’t defined the job
in terms of its three or four nonnegotiable criteria things the person must be able to
do in order to succeed.
RAM: In
November 2001 I was having lunch with the head of a consumer products company
and his vice chairman. The company had been losing market share, and the
discussion at the table identified the source of the problem: weak marketing
leadership at the top. The company clearly needed to hire a chief marketing
person it would be a make-or-break job for 2002. The CEO had someone in mind.
She had been recommended by Mark, the vice chairman, and the CEO sang her
praises, saying, “She’s great, fantastic.” “In what ways?” I asked. When he
answered in glittering generalities, I pressed and again asked why he
thought she was so wonderful. Remarkably, he couldn’t be specific, and his face
turned crimson. I asked the CEO and the vice chairman what the three nonnegotiable
criteria for the job were. After some discussion, they named the following: be
extremely good in selecting the right mix of promotion, advertising, and merchandising;
have a proven sense of what advertising is effective and how best to place this
advertising in TV, radio, and print; have the ability to execute the marketing program
in the right timing and sequence so that it is coordinated with the launch of
new products; and be
able to select the right people
to rebuild the marketing department.
After they articulated
these criteria for the job, I asked whether the candidate met them. There was a
long silence. Finally the leader answered honestly: “You know, now I realize
that I don’t really know her.”
Neither the CEO, the vice
chairman, nor anyone else in the organization had asked the right questions. To
consistently improve its leadership gene pool, every business needs a
discipline that is embedded in the people process,
with candid dialogues about
the matches between people and jobs, and follow-through that ensures people
take the appropriate actions.
Lack of Courage
Most people know someone
in their organization who doesn’t perform well, yet manages to keep his job
year after year. The usual reason, we find, is that he person’s leader doesn’t have the emotional
fortitude to confront him and take decisive action. Such failures can do
considerable damage to a business. If the nonperformer is high enough in the
organization, he can destroy it.
RAM: Several
years ago an industrial fine-components manufacturing company concluded that it
didn’t have enough bench strength in its succession plan, so it hired two CEO
candidates from the outside. The company was number one in its field globally,
with a long record of success. One candidate, Stan, was hired to lead its North
American operations, the crown jewel of the business that produced 80 percent
of the company’s profits. He’d come from a global electronics company in the
same general field, where he’d run a small business unit. He presented himself
well, connected with people quickly, was hardworking, and made dazzling
presentations.
But Stan didn’t do so well
as head of North American operations. He missed his first year’s financial
commitments. He lost market share, and the cost structure of his operation
became uncompetitive. The industry was suffering at the time from excess
capacity, but Stan did not close plants, cut costs, or focus on execution. The
company’s margins and cash flow declined, and its stock price dropped like a rock.
But the CEO took no action, feeling that Stan was still new and needed time to
get into the culture, and that his coaching would put him on the right track.
Then Stan missed the
second year’s targets. Cash flow declined again, and the stock price dropped
further. The board became very concerned. After Stan made his next quarterly
report to them, the board met in executive session with the CEO and essentially
told him to fire the man. But the move came too late to save the company. By this
time, the stock price had been cut in half. The company became an inviting
product for investment bankers and a target forn aggressive, acquisition-minded
companies.
Within six months, it was
taken over. The CEO was very bright, a man of high integrity, always willing to
give people the benefit of the doubt. He genuinely liked Stan. But he lacked
the courage to confront poor performers, or force plant closings and layoffs. He
failed to make the leader of his most important operation face the reality of
the industry’s situation, and failed to hold him accountable for his poor
performance.
The Psychological
Comfort Factor
Many jobs are filled with
the wrong people because the leaders who promote them are comfortable with
them. It’s natural for executives to develop a sense of loyalty to those
they’ve worked with over time, particularly if they’ve come to trust their
judgments. But it’s a serious problem when the loyalty is based on the wrong
factors.
For example, the leader may
be comfortable with a person because that person thinks like him and doesn’t
challenge him, or has developed the skill of insulating the boss from conflict.
Or the leader may favor people who are part of the same social network, built
up over years in the organization.
RAM: The newly
appointed CEO I’ll call him Howard of a $25 billion global company was
aggressive, ambitious, and enjoyed great press. Expectations were so high that
before he retired in a decade, Howard would take the company from number three
to number one in its fiercely competitive ten-player industry.
Howard asked all but three
of the eleven-person senior leadership team to retire early, and replaced them
with people loyal to him. Everything went well for the first two years, thanks
to the previous management’s efforts. In the third year, the business began to
fall apart. Success in this industry required frequent new product
introductions, and Howard’s team missed one deadline after another by six months
or more. The company lost share in its highest margin product lines to foreign
competitors who brought their products out on time, and the delays had a huge impact
on the brand images.
The delays also increased
launch costs by 15 percent, a serious financial penalty because the business is
highly capital intensive, with low margins. The company’s cash position
deteriorated rapidly, its debt rating was downgraded twice, and it cut its
dividend. Two of Howard’s hand-picked direct reports were responsible for the increased
costs and missed deadlines. A captive of his psychological comfort and blind
loyalty, Howard would not replace them. Before the year was over, the board removed
him and his team. The sharpest contrast I know of to this sort of behavior happened
at GE, when Reginald Jones picked Jack Welch to succeed him as chairman and
CEO. Jones, who was born in the U.K., was cerebral, well-spoken, and considered
one of the great business statesmen of his day.
Welch was irreverent, blunt,
worked from the gut, and loved to debate. On the surface he was the opposite of
Jones. But Jones recognized that GE had to change, and that Welch who was smart,
tenacious, and dedicated to excellence, as was Jones had the right kind of
intelligence and personality for the job ahead. Welch’s rowdy informality
masked a well-studied and incisive mind and an unparalleled desire to win.
Bottom Line: Lack of Personal Commitment
When the right people are
not in the right jobs, the problem is visible and transparent. Leaders know
intuitively that they have a problem and will often readily acknowledge it. But
an alarming number don’t do anything to fix the problem. You can’t will this
process to happen by issuing directives to find the best talent possible. As
noted earlier, leaders need to commit as much as 40 percent of their time and
emotional energy, in one form or another, to selecting, appraising, and
developing people. This immense personal commitment is time-consuming and fraught
with emotional wear and tear in giving feedback, conducting dialogues, and
exposing your judgment to others.
But the foundation of a
great company is the way it develops people providing the right experiences,
such as learning in different jobs, learning from other people, giving candid
feedback, and providing coaching, education, and training. If you spend the
same amount of time and energy developing people as you do on budgeting,
strategic planning, and financial monitoring, the payoff will come in
sustainable competitive advantage.
WHAT KIND OF PEOPLE ARE YOU LOOKING FOR?
As we’ve noted earlier, in
most companies people regard a good leader as one with vision, strategy, and
the ability to inspire others. They assume that if the leader can get the
vision and strategy right, and get his message across, the organization’s
people will follow. So boards of directors, CEOs, and senior executives are too
often seduced by the educational and intellectual qualities of the candidates they
interview: Is he conceptual and visionary? Is she articulate, a change agent,
and a good communicator, especially with external constituencies such as Wall Street?
They don’t ask the most
important question: How good is this person at getting things done? In our
experience, there’s very little correlation between those who talk a good game
and those who get things done come hell or high water. Too often the second
kind are given short shrift. But if you want to build a company that has
excellent discipline of execution, you have to select the doer.
LARRY: The
person who is a little less conceptual but is absolutely determined to succeed
will usually find the right people and get them together to achieve objectives.
I’m not knocking education or looking for dumb people.
But if you have to choose
between someone with a staggering IQ and an elite education who’s gliding
along, and someone with a lower IQ but who is absolutely determined to succeed,
you’ll always do better with the second
person. I didn’t always
understand that. I too was of the mind that the better the education and
pedigree, the smarter the person. But that’s not true. You’re searching for
people with an enormous drive for winning. These people get their satisfaction
from getting things done. The more they succeed in getting things done, the
more they increase their capacity.
You can easily spot the doers
by observing their working habits. They’re the ones who energize people, are
decisive on tough issues, get things done through others, and follow through as
second nature.
We see this problem
particularly when highly intellectual staff people or consultants want to move
into high-level line jobs. They frequently come from the best business schools,
from consulting firms and from internal jobs in finance, accounting, and strategic
planning. The trouble is, they have never been tested in mobilizing line people
to execute. They haven’t had the experience that develops business instinct.
For example, Joan was the
finance director of a high growth division of an industrial products company.
She wanted to go from her staff job, in which she had no chance to become CEO, to
a line position, which would make her a candidate for succession. She became
leader of the largest product line in the division, with full responsibility for
market share, profit and loss, and balance sheet items like receivables and inventory.
It became clear within twelve months to both the company CEO and the head of the
division that she lacked important people skills to revitalize and refocus her
direct reports, including replacing some people in key positions. She also did
not demonstrate the courage to hold prices when customers demanded huge discounts
in a recessionary economy.
We’re not saying that
staff people can never move into line jobs. In GE, for example, Jack Welch
recognized early in his tenure as CEO that he needed additional sources of leadership
talent. GE recruited from the best business schools and the top consulting
firms into its strategic planning and marketing consulting units. The rule was that
people who were successful would move into line jobs at levels below the business
unit manager. There they were tested and had the opportunity to demonstrate whether
they had the necessary people skills to become head of a unit. Jeff Immelt, the
current CEO of GE, was recruited through this channel. Other prominent leaders who
have moved from consulting firms or staff jobs include Louis Gerstner, chairman
and, until recently, CEO of IBM; Jim McNerny, CEO of 3M; and Art Collins, CEO of
Medtronics. Each had a chance to demonstrate his managerial skills.
They Energize People
LARRY: Some
leaders drain energy from people and others create it. Suppose you interview
someone who has great potential he’s got an elite education, good work experience,
and high marks for achievement. But he’s docile and reserved he just sits
there. Sometimes people like that just don’t interview well, and if he’s had
great success, I may have to take a lot more time looking at his record before
approving or disapproving him. But I’m wary about hiring him for an important
leadership job. He’s likely to pick people like himself, and you’ll have to ring
a bell to wake them up. I want people who arrive in the morning with a smile on
their faces, who are upbeat, ready to take on the tasks of the day or the month
or the year. They’re going to create energy, and energize the people they work
with and they’re going to hire people like that too.
We’re not talking about
inspiring people through rhetoric. Too many leaders think they can create
energy by giving pep talks, or painting an uplifting picture of where the business
can be in a few years if everybody just does their best. The leaders whose
visions come true build and sustain their people’s momentum. They bring it down
to earth, focusing on short-term accomplishments the adrenaline-pumping goals
that get scored on the way to winning the game.
Bob Nardelli, the current
chairman and CEO of the Home Depot, is an example of such an energizer. In his previous
job he headed GE Power Systems, which he transformed from a moribund business
into one of the company’s stellar divisions. He took over at Power Systems in
1995, after a successful stint at the Transportation Systems division (which Jack
Welch had used as a place to test executives who seemed to have potential to
rise higher). Earlier, Nardelli had also run one of GE’s consumer businesses.
Power Systems had half of the world market for large power generating equipment,
but the business was in a major slump utilities had cut back sharply on capital
investment, and no rebound was in sight. Nardelli had a vision for growing by
enlarging the business’s pond expanding its offerings to include smaller
generating equipment, moving into new industry segments, and providing not only
equipment but services to its customers. At first he ran into disbelief and
resistance from a bureaucratic culture whose managers were convinced there was
no way to reignite growth without resorting to price cutting.
In part, Nardelli won them
over and energized them with his personal style of leadership. Deeply involved
in all aspects of his business, he is curious and tireless the personification
of engagement. He never finishes a conversation without summarizing the actions
to be taken.
He also made his vision
credible by breaking it down into bite-size successes. He got previously aloof
managers to get together with the decision-makers at the utilities and other
customers to learn firsthand how they could enlarge
Power Systems’ share of the
customer’s wallet. He guided them into developing new value propositions,
customer by customer and account by account, and they came to see possibilities
they’d never previously imagined. Managers who used to dread meetings found
themselves looking forward to them, because meetings at Power Systems had become
forums for action and personal growth.
They’re Decisive on Tough Issues
Decisiveness is the ability
to make difficult decisions swiftly and well, and act on them. Organizations
are filled with people who dance around decisions without ever making them.
Some leaders simply do not have the emotional fortitude to confront the tough
ones. When they don’t, everybody in the business knows they are wavering, procrastinating,
and avoiding reality. Suppose, for example, somebody comes in for an appropriation
to build a new plant, in a business where you’re generally doing well. But the
economy is going into recession. You have to ask whether this is the right time
to build, or whether it makes more sense to outsource.
Choosing to outsource will
upset good managers and make you unpopular your people would much rather have
their own plant, and in this case they have good long-term justification for
it. But you know building at this time would be a mistake, so you have to make
the tough decision.
Or suppose someone you
really like isn’t cutting the mustard. Few tough issues are more challenging
for indecisive leaders than dealing with people they’ve promoted who are not
performing.
RAM: In
January 2002, a company I work with was wrestling painfully with problems
caused by indecisiveness at two different levels. As this book went to press,
the outcome was still uncertain.
Ralph, a twenty-year
veteran with the company, was promoted in January 2001 to president of the
division. In the minds of the board and the CEO, this job would be Ralph’s
penultimate step before becoming CEO in 2003. The performance of his division
was critical to the company’s profits and price-earnings ratio, and was
determined heavily by the energy and focus of its sales staff.
But things were not going
well. Critical sales territories were left uncovered because John, the
executive vice president for sales, was slow to fill empty slots. John got the job
because he was the CEO’s executive assistant for two years. He had been
identified as one of the company’s high-potential people, and the CEO had
promised him a key line job.
From the start, Ralph had
qualms about whether John could do the job, because he felt that the man was
indecisive and not an energizer. Each time Ralph talked to the CEO about his
concerns, he was urged to be patient and give John time to develop. With the
decision about John in limbo, the division’s performance was suffering and threatening
the company’s prospects. Competitors were gaining market share, and the
industry was consolidating. If the indecisiveness continued much longer, the
company would become a takeover candidate.
They Get Things Done Through Others
Getting things done
through others is a fundamental leadership skill. Indeed, if you can’t do it,
you’re not leading. Yet how many leaders do you see who cannot? Some smother
their people, blocking their initiative and creativity. They’re the micromanagers,
insecure leaders who can’t trust others to get it right because they don’t know
how to calibrate them and monitor their performance. They wind up making all of
the key decisions about details themselves, so they don’t have time to deal
with the larger issues they should be focusing on, or respond to the surprises that
inevitably come along. Others abandon their people. They believe wholeheartedly
in delegating: let people grow on their own, sink or swim, empower themselves.
They explain the challenge (sometimes at such a high level of abstraction that
it amounts to superficiality) and toss the ball entirely into their people’s court.
They don’t set milestones, and they don’t follow through. Then, when things don’t
get done as expected, they’re frustrated. Both types reduce the capabilities of
their organizations.
Some people are just
temperamentally unable to work well with others.
LARRY: I think
I’ve got a good record of hiring people, but I’ve made my mistakes. For
example, we hired a man I’ll call Jim as a vice president in a staff advisory
role. We were all extremely impressed with him. He was smart, articulate, and
extremely appealing in the way he worked with his superiors. After a year, we
put him in charge of a major business unit. But a year later the unit was in
trouble. He didn’t get new products launched in time, he was losing market
share, and productivity was dropping. When we appraised his performance, we
discovered that the people who worked for him couldn’t stand him. He was
abrasive “almost a drill sergeant,” in words of one executive who worked with
him. He didn’t include others in decision making. Over time a wide gap grew between
him and his people, to the point where he could no longer lead them. We had to
remove him, and it took his successor a year to get the unit back on track.
Leaders who can’t work
through others often end up putting in untold hours, and pushing everyone else
to do the same. They’re like Charlie, whom I mentioned in part 3. I’m
always asking such people, “What did you get done, and is everybody else in the
game?” In performance reviews, I’ve often had to tell some very smart eighty-hour-a-week
people that they need to change their work habits, and that the eighty-hour
week is actually a major weakness. People like this usually force their direct reports
to be in the office or the plant with them on Saturdays, Sundays, and holidays.
They run them ragged and drain the energy of everyone around them. I’ll tell them,
“You have to come in here less, but your performance can’t change it must be
just as good as it is now.
Learn how to get things done
through others. Because if you can’t get things done through others, ultimately
you’re going to sink or burn out.” If they promote others on the basis of very
long hours worked which they will, because that’s what impresses them those
people will have the same problem.
People who can’t work with
others reduce the capacities of their organizations. They don’t get the full
benefit of their people’s talents, and they waste everybody’s time, including their
own.
They Follow Through
Follow-through is the cornerstone
of execution, and every leader who’s good at executing follows through
religiously. Following through ensures that people are doing the things they
committed to do, according to the agreed timetable. It exposes any lack of
discipline and connection between ideas and actions, and forces the specificity
that is essential to synchronize the moving parts of an organization.
If people can’t execute
the plan because of changed circumstances, follow-through ensures they deal
swiftly and creatively with the new conditions. GE’s senior leaders, for
example, follow up every Session C after ninety Days before Session S begins
with a 45-minute teleconference among the people involved with projects that take
a long time to be completed.
Leaders can either follow
through one-on-one (for example, Dick Brown’s “after-school” sessions,
discussed in part 3) or in group settings as a feedback method.
In the group, everybody learns
something. The variety of viewpoints raised helps people see the criteria for
the decisions, the judgments that are exercised, and the tradeoffs being made.
This exposure calibrates people’s judgments and aligns the team.
Never finish a meeting
without clarifying what the follow-through will be, who will do it, when and
how they will do it, what resources they will use, and how and when the next
review will take place and with whom. And never launch an initiative unless
you’re personally committed to it and prepared to see it through until it’s embedded
in the DNA of an organization.
LARRY: Once I
embrace an initiative, I make sure it’s put into effect. If I let it wane after
six months, wasting money and people’s time, that’s going to reduce my
effectiveness in making future initiatives. People will think, “We’ll give this
three months, and ol’ Larry will be off on something else,” and their body
language will show that they’re skeptical. So I make a point of emphasizing
that I’m committed and that we’re going to do this. We may do it with or
without everybody’s support, but we’re going to do it. Then people get the
message quickly that this is not an experiment.
HOW TO GET THE RIGHT PEOPLE IN THE RIGHT JOBS
Traditional interviews
aren’t useful for spotting the qualities of leaders who execute. Too often they
focus on the chronology of an individual’s career development and the outline
of specific assignments she’s had. Interviewers don’t usually dig into the person’
s record to see how she actually performed in her previous jobs. How, for
example, did she set priorities? Did she include people in decision making? Can
she justifiably take credit for those good financial results, or was she just
moving from position to position one step ahead of calamity? There are far too
many examples of people who have chalked up an admirable record by the numbers
at the expense of people
and then left behind a weakened
organization. They jump ship at the right time, and their successors have to clean
up their mess. Even when interviewers check references, they often fail to get
to the heart of the matter. When you interview, you have to create a full
picture of the person in your mind based on things you can learn by probing
them. Then you need to find out about their past and present accomplishments, how
they think, and what drives their ambitions.
LARRY: Developing
leaders begins with interviewing and assessing candidates. I’m not talking
about overseeing the HR department and interviewing finalists; I’m talking
about hands-on hiring. Most interview processes are deeply flawed. Some people
interview well, and some people don’t. A person who doesn’t interview well may nonetheless
be the best choice for the job. That’s why it’s so important to probe deeply,
know what to listen for, and get supplemental data. It takes time and effort to
drill down further, but it’s always worth the trouble.
The first things I look
for are energy and enthusiasm for execution. Does the candidate get excited by
doing things, as opposed to talking about them? Has she brought that energy to
everything she’s done, starting with school? I don’t care if she went to
Princeton or to Podunk State; how well did she do there? Is her life full of
achievement and accomplishment?
What does this person want
to talk about? Does she talk about the thrill of getting things done, or does
she keep wandering back to strategy or philosophy? Does she detail the
obstacles that she had to overcome? Does she explain the roles played by the people
assigned to her? Does she seem to have the ability to persuade and enlist
others in a mission?
When I’m assessing an outside
candidate, I want to verify his past. It’s essential to talk directly to his
references. When I arrived at AlliedSignal, I personally checked references for
dozens of candidates. I remember fellow CEOs asking, “Why are you calling?”
I’d answer that it was a personal concern of mine. If I’m going to hire
someone, I don’t want only human resources people checking him out; I want to
check him out myself. And I don’t talk to just one reference and leave the rest
to HR; I try to talk with two or three, even if it takes a lot of time. You
can’t spend too much time on obtaining and developing the
best people.
Many CEOs have told me
that my reference calls were different from most because I focused so much on
the candidate’s energy, implementation, and accomplishments. I ask, “How does
he set priorities? What qualities is he known for? Does he include people in
decision making? What is his work ethic and his energy level?” Those types of
questions get at the person’s real potential.
When I make a call personally,
I know I’m more likely to get a candid response. If I know the reference, I’ll
feel confident that I’m not getting any filtering. If I can’t readily get a
reference from a person I know, I don’t want to hire the candidate. However, if
you dig a little, you can always find someone in the evaluation process with a
connection to the candidate.
I learned that lesson from
a painful mistake I made early on at AlliedSignal. I had to let a senior
marketing executive go not long after I’d hired him. He was a veritable windmill
who spent his time pontificating and not getting anything done. As part of my
follow-up after letting him go, I checked back with his references. One of them
someone I didn’ t know personally said,
“Well, he’s had that problem all along.” The reference hadn’ t told me about
this man’s problems before because he thought he had to fear potential
liability.
The bottom line is that
you have to be persistent in checking references and getting to the heart of
the matter.
THE
UNVARNISHED TRUTH
In most companies, assessing
internal candidates suffers from the same general problems as assessing
external candidates. The process is typically highly structured in some cases,
bureaucratic and mechanical. An executive
who is preparing to
evaluate a candidate gets guidance from binders prepared by staff people, which
set out leadership criteria.
In reviewing a person’s
record, you have to get to the essentials of what makes the person effective in
his or her job. What was his record of accomplishments, and how difficult were
they to achieve? How effective was she in galvanizing the efforts of others and
stimulating them to get things done?
One of the many things
mechanical evaluations miss is how candidates
performed in meeting their commitments whether they did so in ways that
strengthened their organizational and people capability as a whole or weakened
it. How leaders meet their commitments is at least as
important as whether they meet them and is often more important. Meeting
them the wrong way can do enormous damage to an organization.
In a mechanical evaluation,
it’s simple to determine whether a candidate met his commitments: here are the targets
he was assigned to meet, and here are the numbers that show whether he did or
didn’t. But what other circumstances affected his ability to meet them? Did he
do a superb job in the face of adversity, or put the future of his business at
risk in order to succeed in the short run? In meeting them, did he also
strengthen his organization, giving people assignments that developed their
leadership potential and gave them room for personal growth? Or did he leave
behind a burnt-out and dysfunctional team? You won’t find the answers to such
questions on a checklist.
Meeting commitments the
wrong way can sometimes have extreme consequences. Lucent and other
telecommunications suppliers got into trouble when executives trying to reach
ambitious revenue growth targets extended too much credit to one set of
customers and agreed to take back products if the customers couldn’t sell them.
But here’s a more typical
situation. Let’s say Dave and Mike made their numbers last year but Sue missed
hers. A mechanical some would say objective evaluation would indicate a bonus
for Dave and Mike and none for Sue. But if you look more closely at the
circumstances, you get a different outcome.
Dave coasted to success on
a stronger than expected market. If he’d
been doing his job well, he would have beaten the projections by 20 percent. At
Sue’s unit, however, profit plunged because a raw material shortage unexpectedly
increased costs by 20 percent. The results would have been considerably worse
if Sue hadn’t quickly accelerated some planned productivity improvements. Her
competitors in the industry missed their targets by even more.
As for Mike, he brought in
the earnings he’d promised even though his business got hit as hard as Sue’s.
But he did it by halting the development of two new products and forcing a lot
of product into the distribution
Pipeline a situation that
would harm the business by causing excess inventory in the next quarter. In
other words, he borrowed from the future to make his numbers today.
If anybody should get a
bonus, it’s actually Sue. Yet time and again people are evaluated strictly on
the numbers, or on what they think are objective criteria, and are rated
accordingly. When the wrong people get rewarded, the whole organization loses.
Problems don’t get fixed, nonperformers get ahead, and the good performers
start looking for jobs at places where their contributions will be recognized.
In a good evaluation, the
leader looks closely at how the people under review met their commitments.
Which people delivered consistently? Which ones were resourceful, enterprising,
and creative in the face of adversity?
Who had easy wins and didn’t
push for better results? And who met their commitments at the expense of the organization’s
morale and long-term performance?
Nowhere is candid dialogue
more important than in the people process. If people can’t speak forthrightly
in evaluating others, then the evaluation is worthless to the organization, and
to the person who needs the feedback. Most people we see, however, have never received
an honest appraisal. It takes courage and emotional fortitude for those doing
the appraisals to be forthright. More often a manager thinks, If I sit
down and tell this person she has a
behavioral problem, that’s a confrontational discussion, and I
don’t want to have that with her. Without guidance, practice, and
support, moreover, many managers don’t have enough confidence in their
objective judgments to be critical.
Don Redlinger was director
of HR at AlliedSignal until the merger with Honeywell, and then he returned to
the same job at Honeywell in 2001. At the pre-Bossidy AlliedSignal, he recalls,
“Performance appraisals were generally delightful experiences. I would sit down
with somebody who worked for me and said, ‘Gee, y’know Harry, you’re just
wonderful in these six things.’ And then evasively, I’d say , ‘Just think about
how you communicate with people,’ and ‘Wouldn’t it be nice if you could even improve
this wonderful capability.’ Everything was vague and positive, syrup but no
citrus. “What the evaluator should have been thinking is, I can make
this person a lot better if I tell her she’s got a problem, and she
fixes it. If you sit down with your boss and your boss hasn’t said something
to you about your weaknesses, go back! Because otherwise you’re not going to learn
anything.”
LARRY: I tell my
leaders they have to do the assessments in their everyday common language and
in their words not in human-resource-professional lingo. They can bounce ideas
off the HR person I do that myself. I’ll say, “Here’s my appraisal. You see
this person. Do you have a different view?” I’ll consider any good ideas they have
and make them part of my appraisal. But basically it is my responsibility. The
recipient needs to feel it is me, not someone else, who decides, and that I
care.
A good, candid assessment
talks about the things a candidate does well and the things he or she must do
better. It’s that simple. It doesn’ t use words that don’ t say anything. It’s
very straightforward. It’s specific. It’s to the point. It’s useful.
For example, if you are
doing an assessment, you may tell the person, “You’re ambitious, you’re
enthusiastic, and you work well with people. You’re conceptual, you’re
analytical, and you’re a team player. Now, what could you do better? One,
you’re not aggressive enough. You’re indecisive. Your standards aren’t high
enough. You don’t develop your organization the way we ask you to you didn’t
promote enough people last year.” You illustrate these points with specific
observations that you have made.
Assessments also have to
be done in the context of the person’s job. At Honeywell, for example, our
leaders have to constantly link people, operations, and strategy, so they look
at a person’s performance in each of these areas. If a man in operations is
weak on strategy, say, that gets noted down as one of the things he has to work
on.
The leader doing the assessment
has to also indicate how she may remedy the person’s shortcomings, if talking to
him isn’t enough: “We’re going to get this person a coach,” or “He needs another
assignment to work on this deficiency.” The leader commits herself to giving
this help. Then the leader sits down with the person and discusses the
appraisal. If I’m doing the appraisal, at the end I’ll say, “Now I’m going to
give you the last line. You’ve heard what I think—what would you like to add to
this?” He’ll reply, and then I’ll say, “Well then, we’ve agreed that these are
the issues you’ve got to work on. Now, some of the
problems may be in your DNA,
and you may not necessarily be able to change them. But you can modify them, improve
them.” Finally, the person being appraised initials the document, saying in
effect, “Okay, you’ve said some nice things about me. I appreciate it. I accept
the fact I have these learning needs and that I will participate in seeing if I
can overcome them in the days ahead.” Such assessments go on and on, with
thousands of people, throughout the whole Honeywell organization. When I go to
one of the businesses, I look at the evaluations of all the top leaders there
and their direct reports maybe fifty or seventy-five of them. I go through all
the high-potential people who were previously moved there because of their
progress and performance. I identify those who aren’t performing, and decide
what to do about them. I follow through with a five- or six-page memo to them
individually. Then I go back six months later and review to see that those
actions were taken. If that approach cascades down through your organization as
it’s supposed to, it will change your workforce.
People who are not
accustomed to giving candid appraisals will struggle with the process at first.
“They’ll resist,” says Redlinger. “How do you get them to understand it? When
we started, it was contentious and difficult.
Sometimes you’d take an extreme
position to get people’s attention. Somebody would say, ‘Old Harry’s done wonderful
things,’ and the reaction might be, ‘You’re crazy. He’s a bum. He’s never
delivered results. He’s full of hot air.’ We’d get into arguments about these
people, but in the end everyone knew more about the person being appraised.
“The candid appraisals
taught general managers to focus on the quality of their talent as a
fundamental, competitive advantage. As they upgraded their organizations over
time, it occurred to them that the businesses worked much better, they competed
much more effectively with super talent. And the character of the conversations
changed. Instead of debating the quality and performance of individuals, they
became more focused on how we can help so-and-so overcome this gap in knowledge
or experience or capability, or where should we move him.” There’s nothing
sophisticated about the process of getting the right people in the right jobs.
It’s a matter of being systematic and consistent in interviewing and appraising
people and developing them through useful feedback.
The three building blocks
we have described in part 2 are the foundation for the three core processes of
execution. If you have leaders with the right behavior, a culture that rewards
execution, and a consistent system for getting
the right people in the right
jobs, the foundation is in place for operating and managing each of the core processes
effectively.
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