Rock Stars, Glory Seekers, and Unicorns

Are you frustrated in facing a really complex problem?  Have all your attempts to solve it failed?  That is precisely when you must resist the temptation to hire a “rock star” or savior – someone who can magically solve all your problems simultaneously.   I often see companies who want someone to come in, understand a complex situation, create a strategy to solve it, then execute the strategy singlehandedly, then when it succeeds, hire a team to build on that success.  One magical person who takes all the risk, possesses all the knowledge, has a wide range of incredibly diverse skills, and gets results without rocking the boat, causing trouble or needing much help from anyone else in the firm.  They want a unicorn - a mythical creature that lives only in their mind’s eye.

Brandon Watson wrote a wonderful post “Under No Circumstances Should You Believe That You Need to Hire “Rock Stars.”  His point?  “You don’t need to hire the best employees, just the right ones.”  Brandon puts it this way:

“Hiring rock stars …  is inviting trouble because they are likely to be glory seekers who are thinking about their own personal rewards, and less likely to be thinking about the team.” 

(By the way, for more perspective on the hidden downside of hiring “rock stars” read BusinessWeek’s “Why Jerks are Bad Decision Makers“ profiling ex-luminaries like Bernie Madoff, Lehman Brother’s Dick Fuld,  AIG’s Joe Cassano, and Bear Stearns’ Jimmy Cayne).

So, if you want to lower your risk and increase your ability to solve complex problems, instead of trying to hire a unicorn/rock star, instead build a team of top performers - make sure every single job in your company is filled with a top performer.   Do that, and no rock star (with their toadying entourage of mediocre performers) will ever be able to compete with you.  So this begs the question of what, exactly,  is a top performer?  

“A top performer is someone who is capable of, and interested in, driving the business results you need – someone who will take responsibility for getting results within the norms of your company culture.”

So, now let’s come back to how, instead of hiring a rock star, you might go about solving your frustratingly complex problem, using your team of top performers.  Working together, one person might provide the context and institutional knowledge of the problem, another might develop the strategy, another might play the skeptic – challenging assumptions and flawed reasoning, another might focus on execution, and another might work on hiring the team and providing the project management oversight needed.   In short it probably takes the talents of several people … and that is a good thing.  Because the future is only going to move faster and be more complex than anything we have seen so far – and whatever problems you are facing now will look easy compared to the problems that are yet to come.  So you’re going to need that team, trained,  primed, experienced,  and ready to tackle your next challenge, and the one after that.

When Good People Behave Badly

Today’s guest post is by Pat Nichols,  who does business as Transition Leadership International, LLC. He serves civic sector organizations facing major strategic transitions–start-ups, turnarounds, mergers etc., as interim CEO or as a consultant.

These are tumultuous time and good people often behave badly in times of turmoil.  Some engage in back stabbing, rationalizing that someone else is about to stab them.  Some exclude key people on important issues because those others “would only obstruct progress.”  Some conduct whispering campaigns.  Some use anger as a weapon.  Almost universally, they impute the worst possible motives to one another with the claim that only a villain would behave in the way those others do.

The brief reflections here are based upon 14 years of leading nonprofit/NGO turnarounds, primarily as interim CEO. 

When a leader takes responsibility for calming the roiled seas and charting a new course, it seems to me s/he will derive great advantage from several key attributes and behaviors:

Listening:  People have to tell their tales, in part to justify behavior that they know is less than exemplary.  They need to vent and, then, to create new, better stories.

Calm:  People will try to draw the leader’s anxiety to the level of their own, as a sort of emotional vindication.  By exuding calm the leader can do much to reduce the turmoil. 

Rule setting:  I find it useful to ask people to tell their stories in ways that don’t point fingers at others.  Most won’t be able to do it, but the request sets a tone and gives the leader a way of tamping things down when the rhetoric becomes too intense.

Selective affirmation:  This is right out of Psychology 101.  It seems to me the leader needs to affirm the emotions without affirming the conclusions [e.g., “That must have been very hurtful to you. I wonder how the other person perceived it.”] 

 Discouraging attribution of motives:  People often want to reinforce their positions by ascribing evil intent to their adversaries (e.g. “the only reason she would have done that was that she is after me.”  Once those motives take on an aura of truth any bad behavior on the speaker’s part becomes an act of virtue—because fighting evil is inherently virtuous.  So, I think it is important to directly, if gently, confront this.  (I try to use phrases like, “I understand why, seeing the facts as you do, you would come to that conclusion.  But, isn’t it possible that his motive was…). 

Trust:  It is important that the leader not jump to conclusions, that s/he assume that each person involved is both well meaning and reasonable. 

Mitigate risks:  That said, some people will prove that they don’t deserve the trust.  If most people think that Blackbeard is a cut throat there’s a pretty good chance he is.  So, though, both Blackbeard and the organization may benefit from trust, nonetheless, it would be wise to think about how cut throat behavior might damage the organization.  The leader can, then, be prepared in advance to deal with it.

Tie everything to mission and values:  Finally, and perhaps most importantly, people, in working, want to identify with a mission and a set of values.  In turmoil, lots of other values and emotions get in the way.  It seems to me the leader should be constantly puling conversations back to the mission and the core (or aspirational) values of the organization.  (e.g “I understand why you did that, but if we’re committed to a transparent and supportive workplace aren’t there other approaches available?”).

Almost everyone actually wants to behave honorably, in my experience.  However, in situations of turmoil the models and expectations often get distorted and doing the right thing actually comes to seem inconsistent with the organizational norms.  Thus, treating others well can seem too risky. Approaches like the ones above have been useful for me in trying to build a healthy organizational culture.

Cash for Clunkers

You’ve probably seen the ads on TV.  The government has a very popular new program which encourages people to trade in less efficient vehicles for more efficient vehicles, it’s called cash for clunkers.   Well, the government incentives unleashed a huge wave of pent-up demand for new cars and might burn through $1 billion in funding for the program in a week.  So why would I talk about that on a staffing blog?

Well, although I don’t expect to see a government program for it, many employers still seem to need an incentive to trade in their mediocre performers.  You see, despite all the downsizing that has occurred, most employers still have a few clunkers for employees.  People who were perhaps well suited to their jobs a few years ago, but who are not well suited to doing their jobs in the current environment.   Like a gas guzzling SUV,  they start (projects), run (meetings), and do pretty much what is expected of them, but not very efficiently.  They are not bad, they are just not well suited to the current fast paced, turbulent, less predictable, more entrepreneurial environment. 

Harvard Business Review recently ran an article entitled “What Are CEOs Talking About Now?”  The author was a bit surprised how much CEOs felt that “the layoffs and cost cutting are behind them.”   Instead the leaders were interested in seizing the opportunities “while staying prudent with day-to-day operations.”     Similarly, in my consulting work with small and midsize employers, I see where the easy cuts have been made, where firms have eliminated the lowest rung of underperforming employees, but now are stymied as they launch aggressive growth initiatives.  The really bad employees are gone, but the mediocre ones remain, and what is becoming increasingly clear is that these “less energy efficient” people are just not driving change initiatives very effectively.

I’ve written before about how many of us avoid confronting poor performance,  about company culture can stymie change, but the problem of underperforming leaders often remains. 

So here’s the deal, if you have a clunker, come to me.  I’ll trade-in your current employee, and find you a shiny new, more energy efficient model AND save you $4,500 off of a traditional search fee … and we won’t use a dime of government money to do it.  (Limited time offer, while supplies last, some restrictions apply, tax, title and license fees are extra, batteries not included, offer not available in all states, offer void where prohibited by law, limit of 6 per customer, not available in all stores)

Across-the-Board Decisions Are Often Company Killers

As executives continue to look for the smartest ways to cut costs and increase revenues, I’d like to offer a few suggestions.  Really one suggestion.  Manage performance.  Hard.  Set goals and hold people accountable to them.   Expect and demand performance.  Be fair, but drive out your low performers -  stop spending scarce payroll dollars on people who are not getting results in the current environment.  

And please stop with the across-the-board decisions.  Often those are not real decisions, they are just saying “We’ll keep doing whatever it was that got us into this mess, but now with less resources.”   Good people bolt when they see this kind of management behavior, but perhaps not for the reasons you think.   Auren Hoffman wrote an interesting post about “Why Hiring is Paradoxically Harder in a Downturn.”   He makes several excellent points, but here is the reason that across-the-board cost cutting can be such a company killer: 

When companies stop innovating, and just hunker down into survival/maintenance mode, the top performer feels stifled.  These people won’t trade boredom for a paycheck.   Top performers go where they can really develop their skills. Top performer’s NEED to innovate.

I have often said that top performers are MORE likely to leave faltering companies.  Studies show that their resignations are often due to a loss of confidence in their management – top performers often have the business acumen to “see the writing on the wall.” 

So how can you cut costs, and still retain your best people?   You need to put your scarce money into innovation, and unleash your top performers – innovate your way out of this recession.   You’ll challenge and keep your best people, and become more attractive to your future hires.  You’ll save money now and emerge from the downturn stronger and better prepared to compete later.

If you don’t have top performers you trust, that is a different problem  Now is a great time to trade-in poor performers for better people.   But sadly, even that may not be as easy as you think.  A recent Wall Street Journal article noted the complexity of hiring right now.

“…hiring in a downturn can be tricky. Job seekers are not only more numerous but more desperate, hiring managers say. Weeding through hundreds of resumes is time consuming, and mistakes can be costly. Some employers are trying to screen out applicants who are merely seeking a paycheck until the economy recovers.”

It seems that nothing in a recession comes easily.

Inspiration for Innovation

Alongside the steady drumbeat of bad news, there has also been renaissance of articles to inspire the leaders of small organizations.  Here are a few of the most relevant:   

Peter Bregman says small companies have a huge advantage in this economy.  Not just a competitive advantage, but an advantage in being able to fully engage their employees and build trust with their customers.

“We simply don’t trust companies anymore. We trust people. And in big companies, it’s hard to even find a person to trust as we scream “operator” into our telephones only to get transferred to another menu whose options have changed.”

 John Baldoni says you can Frame This Crisis to Your Advantage.

“Crises provoke disruption. Savvy executives can use them to their advantage to effect change within the organization. The challenge is to frame the crisis as an opportunity, not simply for the executive but for the organization as a whole. In fact, with the organization in flux now is the time for those in the middle, or even on the front lines, to rise up and prove their mettle. . . . Stasis is the enemy of progress. Since crises upset the status quo, there can be opportunities to develop newer and more resilient organizations. There is another benefit to crises as well — working toward change takes employees’ minds off the uncertain future.”

In another article, John Baldoni argued that GM CEO Rick Wagoner failed to lead in 3 key ways.  He did not shake up the go-along-get-along-status quo culture, he did not demand tough solutions, and he did not act with urgency.

Rosabeth Moss Kanter argues Why Rick Wagoner Had to Go.   He was an incrementalist, when GM need transformational leadership to survive.

“Even when executives who presided over a period of decline admit mistakes, it is nearly impossible for them to stir up the organizational energy needed for a turnaround. Those failed leaders symbolize the weight of past losses. People tend to interpret their actions as self-justifying, chosen to rewrite past history. After all, if the old CEO had wrong ideas in the past, why should people believe he or she has the right idea now? For GM’s Wagoner, as the problems got worse, the loss figures got bigger, and little else appeared to change, his credibility slipped into the negative zone too.”

With all this talk of innovation, how do you know if your leadership team is ready to innovate?

Failure Can be A Great Teacher … or Not

While many of my clients are thriving in this downturn, I frequently meet with companies who are only about two or three hiring mistakes from the ash heap.   In a small company, 2 or 3 key hires can often mean the difference between a turnaround or a disaster.  

So who do we look for in a high-stakes, bet-the-company, key hire?  We look for someone who thrives in a downturn.  Someone who is at their best when times are worst.  Someone who inspires others to do better, someone who can move forward when the path forward in unclear and the information is imperfect.  Someone willing to make big bets, rally the troops, and charge forward, admitting mistakes and adjusting course as new information emerges.  Someone willing to engage.  So what does their resume look like?  It does not necessarily look like a relentless march from success to success – some people “fail up” taking one easy assignment after another, never risking anything big, never failing outright.  I prefer people who have taken risks, and learned from their mistakes.

For leading in tough times, I think failure can be a better teacher than success.  In an article in Fortune,  search executive Les Berglass agrees, suggesting that you may not want to hire someone with an unblemished record of success at top firms.   In times like these, you want someone who struggled through turbulence and difficulty.  Here are a few choice quotes from the article:

By avoiding candidates at struggling companies, we eliminate those who possess the most valuable skill sets for today: The ability to navigate through corporate crises. 

Anyone who has led a company through a difficult period walks away with management lessons that a “winning” leader has yet to learn.

Important as persistent sales and cost management may be to a business, the seed of growth is innovation. Inevitably, the term “innovation” inspires images of Apple, which, despite this horrid economy, continues to sell iPhones like it’s a boom time. Lest we forget that Apple’s genius CEO and founder, Steve Jobs, was thrown out in 1985 when the company hit a sales slump.

I wholehearted agree with Les about innovation, but sadly, I think most people do not learn that much from failure.  Very few people can fail without blaming others, or blaming circumstances.   And when you blame, you cannot learn.

In fact, a recent article in the New York Times “Try Try Again, or Maybe Not”  pointed this out in painful and painstaking detail.  A team at Harvard Business School  looked at several thousand venture-capital-backed companies from 1986 – 2003. 

“The data are absolutely clear,” says professor Paul A. Gompers,  “Does failure breed new knowledge or experience that can be leveraged into performance the second time around?”  Umm, no.

“We found there is no benefit in terms of performance.”

Successful entrepreneurs were more likely to succeed in their second venture, while people who tried and failed were no more likely to succeed the second time around than they were in their first attempt. 

It seems that among thousands of venture-backed CEOs, only success was a teacher.  Those are pretty long odds for those trying to make the case that failure is a better teacher.  My opinion is that it’s really more about the student than the teacher.

So rather than ask whether failure or success is a better teacher, instead ask this question about the student:  Does someone “own” their mistakes and talk about lessons learned?  Does your bet-the-company key hire have the confidence, tempered with humility, to  drive results in a turbulent, uncertain market, when the odds are against them?  Have they succeeded in a difficult market like the one we are all in right now?  Can they admit mistakes and failure and adjust course?   Because when you are hiring someone, and their only experience was succeeding – but in a different environment than the one you have – you are taking a bigger risk than if you hired a rookie.  With a rookie at least you are not going to have to fight  their false confidence.

Small and Midsize Employers Lead Innovation, and the Recovery

The secret of great entrepreneurs is “Smarts Guts and Luck” according to a recent article by venture capitalist Tony Tjan.  As he puts it, his “central philosophy” is that “human capital trumps everything else . . .  it is all about the people, and we would take a B business plan with an A team over an A plan with a B team any day.”

In a recent survey by Intuit, 9 of 10 small business owners see opportunities for their business despite the recession.   In the “Future of Small Business Report” the authors note that “With no large corporate fortress separating them from the marketplace . . . small businesses rely on an almost instinctive muscle memory approach toward innovation to survive and thrive.”  As business guru Peter Drucker puts it:

“Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service.” 

The Boston Globe ran an article entitled “Innovation may fuel economic recovery.”   They quoted George Colony, the CEO of Forrester Research as saying “It’s obvious that the new economy – whatever we’re going to emerge into – is going to be built by the innovation that will emerge during this recession.” 

In a recent survey, the Boston Consulting Group ranked the US second among large large countries for manufacturing innovation (and 8th overall). 

Unfortunately I find that most small businesses are chronically underserved when it comes to recruiting people who can drive innovation and results.   For this reason, I’ve written extensively on the need for search firms to innovate.   In a post on “The Outlook for Recruiting” on  ERE, Raghave Singh reached a similar conclusion.

 ”…much of the growth in jobs is expected to occur in small and medium-size businesses that have no need or cannot support full-time recruiters. An increase in needs for sourcing, as opposed to full-service recruiting, will occur as employers seek to minimize costs.”

While I agree with many of Mr. Singh’s points, I disagree that growing enterprises will have to settle for less than “full service” recruiting.  I’m convinced that search firms will either learn how to meet client needs at a price they can afford, or they will cease to exist.   

One thing is certain about innovation -  after the recovery, the world will look different.   So what are you doing right now to make it different?

Rethinking Capitalism – Why Ideals are the New Business Models

In previous posts (Why Won’t Your People Step Up?) we’ve looked back at the failure of old-school management strategies to keep pace with the nature of work today.   We’ve also looked at what Jim Collins has to say about managing in a time of turbulence.  Now it’s time to look far forward, and for that we turn to Umar Haque, who provocatively suggests that Ideals are the New Business Models.

So what will replace the current management philosophies that mostly evolved during the industrial revolution?  What will put us back on the path to prosperity?  What organizing principle will usher in the next era of global growth?  What business models will create real, sustainable value in our interactive era?  

What organizing principles are Google, Apple, Nintendo, Wikipedia, Threadless, Etsy, and Fair Trade using?  What are the new ways of organizing people and work?  

Mr. Haque suggests that today’s radical innovators are not competing by industrial era rules.  Instead they are driven by ideals, and these ideals disrupt and reshape industries.  If you want a glimpse of the future, set aside some time to watch his presentation.   Most presentations bore me, but this one is worth it.   And while not perfect, his model suggests some principles we can all use to challenge our thinking.   He certainly offers some fresh insight into how we organize our work.  I applaud the effort. Umair Haque @ Daytona Sessions vol. 2 – Constructive Capitalism from Daytona Sessions on Vimeo.

No time to watch the video?  Then you can click the link below for a quick read about Omar’s four pillars for smart growth. 

How to Hire People Who Thrive in Downturns

Have you noticed that some of your employees are less productive, just when you need them most?  Some people are frozen in place from fear, while others are innovating, trying new things and challenging the status quo.  Harvard Business Review posted an article on the need for flexible, positive leadership, quoting futurist Alvin Toffler.   

 ”The illiterate of the twenty-first century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.” 

The path forward is not clear.  We need innovation to survive and thrive.  And innovation demands that we all develop our patience and persistence, while our leaders must demonstrate optimism and enthusiasm. This is the time to step up and take risks, making plenty of mistakes along the way. 

If your key people do not have the skills to thrive in this market, it might be trade-in time. In an earlier post, I mentioned how to hire for resilience - and patience, persistence, optimism and enthusiasm are essential to resilience.   I’ve heard it said that you can’t trust someone who has not failed at something, learned and bounced back.

Look around you, do you see resilience and indomitable spirit or just people trying to look good by avoiding mistakes and placing blame on external factors?

Hiring People with Resilience

I’m fascinated by a new show on TV called “Lie to Me.”  It’s about the world’s leading deception expert – a human lie detector.  The show is quite entertaining, but you won’t need to learn his techniques to improve your interview results. People reveal a great deal about themselves in an interview, but – like a lie detector – much of what you learn isn’t found directly in their answers.

Interviews are not simply a game of tennis, volleying questions and answers back and forth.  Some of the best information is found when you look beyond the individual answers into the patterns.  Every candidate tells a story, and it carries forward from job to job.  If a candidate was a “victim of circumstances” in several jobs, that pattern is likely to persist.  If the last 3 bosses were “unreasonable” then the next boss is likely to be perceived the same way within about 6 months.

To gauge psychological resilience, one candidate story I look for is this:  Who do they say is to blame for failures?  Was it always external factors (a sleazy competitor, or the bad economy) or was there always someone else to blame like a bad boss or “those idiots in marketing.”  Did the person ever humbly accept some of the portion of the blame for a failure?  I listen for how they perceive their role.  Did they see themselves as the person with the power to change things, or simply the victim of circumstance?  Do they say ”I knew it was a risk, and when it went off course I tried to do something to correct it, but ultimately I misjudged it.” 

Frankly, I love failure – it’s a wonderful teacher.  But not everyone learns from it, and many people fear it so much they never take necessary risks.  If the job seeker never takes responsibility for a failure, they can never learn from it, and they can never improve their performance.   If they have never failed, never picked themselves up, adapted their behavior to new circumstances, and gotten back in the game – they may not be resilient enough to drive results in a turbulent economy. 

As Winston Churchill once said “Sucess is nothing more than going from failure to failure with undiminished enthusiasm.”

The Recession Survival Guide – It’s “Trade-In” Time

Ok, we’re in a recession - it’s official.  So fear and panic are evident in decision-making and mostly we see people frozen in place.  Waiting to see what happens.  And not driving results.

Do you know who in your organization will get you through the downturn?  Look around.  Your top performers are still driving results, taking on new responsibilities, trying new things, improving your current processes, cutting expenses, suggesting new ideas, challenging outdated thinking, doing work on their own time, solving problems and accepting the reality of the current market without making excuses. Anybody not doing this is just wasting your salary budget.

Sadly, most performance review systems don’t really identify the people you need most, because what it took to succeed last year is not necessarily what it takes to succeed right now.   In these turbulent times, you might need more people in one department and less in another, or you might suddenly need people with very different skills.  There is nothing like a downturn to shine a bright light on your mediocre people.   So if you can’t tell who to keep and who to cut, you might be tempted to follow the herd and implement a hiring freeze, or just be sluggish in hiring (which has the same effect).   Except here is the problem.  A hiring freeze locks in place your mediocre performers and prevents any better people from getting in.    Big mistake.  

This is the time to freeze the budget, but not the people.  It’s “Trade-In Time” – when you can finally afford to replace your underperformers with winners. 

Thankfully, This is Not 1929…or 1982

These are uneasy times, but far from catastrophic.  Newsweek provides some valuable perspective on this.  In a recent article, they outline a few key points to keep in mind:

• Many economists expect this recession to end sometime in the summer of 2009, not go on for 43 months like the Great Depression. 
• National unemployment in this recession is likely to peak at about 7.6 percent, not even remotely close to the 25% of the Great Depression, and nowhere near the 11% from 1982.  

Unemployment in the DC suburbs is currently running about 3.5% right now (about 7% in DC, and just over 4% overall).  At the Annual President’s Forum of Metro-Washington, the keynote speaker, GMU economist Stephen Fuller, told me he expects unemployment in this region could still rise about another one percent – remaining the best job market in the country - and well within the range that most economists call “full employment.”   

A Time for Vigilence

It’s the Monday before Thanksgiving and as Washington begins its’ predictable slide into “let’s put that off until next year” it bears reminding that this is no ordinary year.  And it’s no time to coast, just putting things off for later.  Quite the opposite.

 

On the downside, how are you positioned for the downturn? Are you tracking performance?  Do you know exactly who you will cut and when you will take action if things get worse?  Do you have a layoff plan you can immediately put into action before things get really bad?

 

If everything stays the same, how are you staying close to your customers? Will you know right away when something significant is happening?  Do you have key positions filled with the right people?  Are you saying the right things and inspiring confidence in your key stakeholders?

 

On the upside, will you be positioned to take advantage of new opportunities, or will you be caught by surprise?  The firms who thrive in this economy are the ones who best understand their environments and react quickly to opportunity.  Same old, same old will not be enough.

 

Importing Talent

Derek Wilkinson, a Principal at Slayton Search Partners, spoke at The Staffing Alliance of Maryland Employers today. It was a lively conversation.

One topic we touched on is a favorite of mine – importing talent in a turbulent market. One thing that fascinates me is talent migration. I already see signs that the strong Washington job market is importing great people from the rest of the county. Similarly, Derek has been getting alot of interest in his timely thought-piece on who will be scooping up the most talented commercial bankers released from Wall Street. It’s a must read for corporate finance professionals, and you can download it here.

You Can’t Afford Mediocre People in a Recession, but Surprise! Now You Can Finally Afford Great Ones…

Employers should always demand top performance from their employees, but in good times you can get away with having a few mediocre people on your team. As long as they don’t break anything, they can come to work every day and enjoy the “rising tide” of increased opportunities. After all, a rising tide lifts even mediocre boats. In good times, like on a “T” ball team, everyone is a winner. Top performers actually drive most of the results, but everyone benefits from the success.

In tough times, though, mediocre people reduce your chances of survival. Customers demand more for their money, easy wins are few and far between, and nothing is easy. Mediocre people consume time, money and management attention and mostly just get in the way.