MONDAY*

Issue #8 | November–December 2015

HOW TO IMPROVE YOUR BATTING AVERAGE WHEN IT COMES TO HIRING

EXECUTIVE
BRIEFING

“By and large, executives make poor promotion and staffing decisions,” Peter Drucker observed. “By all accounts, their batting average is no better than .333: At most one-third of such decisions turn out right; one-third are minimally effective; and one-third are outright failures. In no other area of management would we put up with such miserable performance.” Yet some companies seem to identify and attract great people consistently. What sets them apart? To find out, we asked winning executives from across all sectors—corporate, nonprofit and government—to provide tips based on how they themselves hire and promote. Their advice: Go really, really deep. Ditch the job description. Reward the self-aware. Climb inside your candidates’ heads. Root out your own biases. Look for those with grit. And remember to grow your own talent.

HOW TO IMPROVE YOUR BATTING AVERAGE WHEN IT COMES TO HIRING

This article exists because—let’s face it—a lot of executives are bad at hiring. OK, not you, perhaps. But the track record of most managers when it comes to placing the right person in a job is at best imperfect.

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“By and large, executives make poor promotion and staffing decisions,” Peter Drucker observed. “By all accounts, their batting average is no better than .333: At most one-third of such decisions turn out right; one-third are minimally effective; and one-third are outright failures. In no other area of management would we put up with such miserable performance.”

Yet some companies seem to identify and attract great people consistently. What sets them apart?

Many organizations swear by testing, among them the U.S. military. The Army Alpha and Beta tests, first created in 1917, have evolved into the Armed Services Vocational Aptitude Battery, and its predictive powers seem to be generally acknowledged. Similarly, Procter & Gamble gives employees a reasoning test to “measure skills and accomplishments that generally do not emerge from interviews.”

Today, a number of firms (such as ClearFit, which is featured in our “Frame Work” video) offer online surveys and algorithms to gain special insights into job candidates.

But if testing and surveying were enough, it would be plenty easy to slip the perfect person into an ideal role each and every time. Obviously, that’s not reality.

FRAME WORK

The Drucker Institute’s Phalana Tiller visits with ClearFit founder Ben Baldwin, who discusses how technology can aid the hiring process—as long as humans also remain part of the equation.

HELP WANTED

The former chief talent officer at Netflix, Patricia McCord, cautions that formal job descriptions are almost never accurate and can lead to filtering out great candidates just because they lack certain credentials.

With that in mind, we’ve gone out and solicited tips on hiring and promoting from top leaders of organizations across all sectors—corporate, nonprofit and government—that have met two criteria: They have outstanding records of performance and are well-regarded by their employees as places to work (according to Glassdoor and other job-rating sites).

In short, these are institutions that seem to know what they’re doing—and here’s what their executives have to say about making smart people decisions.

MAYO CLINIC: GO REALLY, REALLY DEEP

When John Noseworthy first interviewed for a neurology position at the Mayo Clinic in 1990, he was surprised at one thing: He was asked to lead hospital rounds—the daily patient examinations and updates conducted by a small team of doctors—for a couple of days.

On the first afternoon, he also had to deliver a lecture. “It was like a two-day examination,” he says.

And that was only the beginning. Every doctor hired at Rochester, Minn.-based Mayo is offered a three-year trial stint—with no guarantee of longer-term employment.

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Forget the 90-day probation period at many organizations; Mayo’s test lasts 1,095 days. After the initial 36-month assessment period, colleagues then vote on whether to extend a more permanent position.

Not only does this timetable prevent the wrong people from being hired permanently, Noseworthy says; it also attracts people who truly believe in the clinic’s mission and want to stay for the long haul. “We look for a fit in skill sets but also a fit in culture,” says Noseworthy, who is now Mayo’s president and CEO.

Still, the approach comes with challenges. People have egos, and a department chair of another hospital tends to bristle when offered a trial period instead of a firm, five-year contract.

“You have to have that initial conversation right off the bat,” Noseworthy points out. “We explain that this is how we’ve always done it. There are no written contracts, just guidelines and a handshake. But there’s a level of trust. We want lifers to come.”

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NETFLIX: DITCH THE JOB DESCRIPTION

Nowadays, Patricia McCord has her own consultancy, working with clients like Warby Parker and Etsy. But what made her famous was something Facebook’s Sheryl Sandberg has called “the most important document ever to come out of” Silicon Valley.

It was titled “The Netflix Culture: Freedom and Responsibility” and written by McCord and Reed Hastings, the CEO of Netflix, where McCord was chief talent officer from 1998 to 2012. (McCord says they drew heavily on input from Netflix employees.) Among its memorable maxims was “Adequate performance gets a generous severance package.”

Netflix operates in a particularly fast-paced environment, and its HR principles are not necessarily applicable to all organizations. But some are.

For instance, McCord says, forget about starting with a job description. It’s almost never accurate, in her view, and it can lead to filtering out great candidates just because they lack certain credentials that might be in the formal posting—such as experience with coding—but may actually be irrelevant to the task at hand.

Instead, McCord advises, figure out what you’re trying to accomplish and what a great team would look like to get you there. “You sell to those applicants the problem you want to solve,” she says. “That’s going to leave you open to a lot more possibilities.”

In the same vein, McCord says, think holistically about talent budgets. If landing a certain new hire would require paying twice as much as the people you already have but this person is likely three times as productive as any of them, consider shrinking your team and ponying up the necessary compensation.

Says McCord, “Divorce headcount from butt count.”

VOX BOX

HOW THEIR WHEELS TURN

Darin Atteberry, the city manager in Fort Collins, Colo., brings in an industrial psychologist to give potential hires a battery of tests, which are designed to ensure that the candidate’s personality is a good match. Photo: “Downtown Fort Collins Colorado.” Licensed under CC BY 3.0 via Wikipedia

GENENTECH: REWARD THE SELF-AWARE

When people are gunning for a job, they’re naturally inclined to talk about all the things they’re good at and all the things they know.

Genentech, the biotechnology giant with nearly 14,000 employees, is looking for something else: candidates who are also articulate about what they still need to learn and how they’d like to grow.

“Be wary if someone can’t come up with a list of development needs for him or herself,” says Nancy Vitale, the company’s vice president of human resources.

Finding people who know what they don’t know is especially important at Genentech, a unit of Roche, because the company doesn’t shy away from bringing in employees who are making a career change. “We often hire people from outside of the biotech industry,” Vitale notes. “I believe strongly that bringing in people with diverse experiences and perspectives will make our organization better, but I also know we need to accommodate the learning curve.”

Even for those who’ve been at the company for a while—and are hoping to climb the ladder—acknowledging gaps in knowledge and skills is crucial. So is having exhibited the initiative to fill them.

“It’s important to test for self-awareness and try to understand concrete steps the person has taken to address the development need,” Vitale says, “particularly if he or she is pursuing a leadership role.”

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FORT COLLINS, COLORADO: CLIMB INSIDE THEIR HEADS

Fort Collins, Colo., rarely makes the national news, and that’s a good sign. Life there is generally calm, at least according to livability.com, which ranks it as the nation’s 25th best city to live in.

The city manager in Fort Collins for the past 11 years has been Darin Atteberry, who oversees 2,300 workers. He says a key reason that the city runs so smoothly is that it’s tremendously careful about staffing. “Getting the right person on board is a critical part of what we do,” he says.

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To ensure the best chance of success, potential hires undergo multiphase interviews—first on the phone, then in person. They must pass muster with interview panelists and then, often, with staffers from other agencies.

For the most senior executives, Atteberry goes one step further: He enlists the services of an industrial psychologist to ferret out any undetected complications. “If you think about the costs of hiring and onboarding,” Atteberry says, “this minor investment is well worth it.”

The psychologist visits the candidate at home and puts him or her through a battery of tests.

The process has never revealed any candidate to be fatally flawed. “It has, though, given us pretty significant feedback about banana peels,” Atteberry says.

For instance, because the psychologist is well versed in Atteberry’s leadership style (he’s a big-picture, not a detail, guy), he can flag any personality traits that might make it a difficult match. Says Atteberry: “It’s good to have that candidate know what works for me and make sure this is also a good fit for them.”

NESTLÉ PURINA: ROOT OUT YOUR OWN BIASES

Like at many large organizations, those evaluating talent at Nestlé Purina spend a lot of time trying to assess the frame of mind of particular job candidates.

But they’re also careful to do something else: question their own frame of mind.

Each year, the top executives at the pet food maker spend a week evaluating a cross section of 200 executives at all levels, both senior people and up-and-comers, mulling their performance and their futures at the company.

To make sure the assessments are as unblinkered as possible, they systematically focus on possible sources of bias. Among them: “anchoring” (the tendency to trust the first piece of information most), “availability” (overestimating the importance of information that is available to you), “bandwagon” (groupthink), “confirmation” (hearing what you expect to hear and discounting the rest) and “recency” (prizing later information over what you learned previously).

There’s also “sunk-cost bias”: We’ve already poured so much money into developing this person, let’s stick him in the job no matter what.

In most cases, when you have a good process, it almost works like a science, and the right candidates rise to the top.

STEVE DEGNAN
Chief HR Officer, Nestlé Purina

SCHOOLED IN PICKING TALENT

At the national nonprofit Communities In Schools, one characteristic in particular is prized when evaluating job candidates: resilience. Research has suggested that this quality is a strong predictor of work performance.

“There are about a dozen of these that we go through to remind ourselves, both with humor and with sincerity, that we don’t want to be doing this stuff and we want to make the right decisions,” says Steve Degnan, Nestlé Purina’s chief HR officer.

The basic idea, says Degnan, is to make the system as genuinely objective as possible.

“In most cases, when you have a good process, it almost works like a science, and the right candidates rise to the top,” he says. “It’s rare that we get into conflicts on who is best.”

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COMMUNITIES IN SCHOOLS: LOOK FOR THOSE WITH GRIT

Since its founding in 1970, the nonprofit Communities In Schools has grown dramatically.

The organization, which is dedicated to preventing kids in kindergarten through 12th grade from dropping out of school by bringing in whatever resources they need, now has more than 160 affiliates nationwide who are supported by dozens of staffers at headquarters in Arlington, Va. Even more impressive, Communities In Schools has gained a reputation as one of the best nonprofit workplaces in the country.

Dan Cardinali, who has been president of the organization since 2004, says that many of his insights into hiring have come only over time. Today, he and the organization approach people decisions with care, rigor and strict analytics. Each hire can take months; they wait patiently until they find the right fit.

Communities In Schools looks for many qualities when it’s considering a job candidate, but there’s one that stands out: resilience.

“We’re dealing with at-risk kids, and they will test your boundaries, and sometimes it might seem like you’re going backwards,” Cardinali says. “Resilience means understanding that this can be part of the change process.”

In other words, Cardinali is looking for people who can get back up if they’ve been knocked down—and learn something valuable from the experience.

This trait is right in line with the research of University of Pennsylvania psychologist Angela Lee Duckworth, who has found that “passion and perseverance, especially for long-term goals,” is a strong predictor of school performance and, according to studies so far, work performance as well.

“Progress is never linear in our work,” Cardinali says. “We know we’ll experience setbacks, conflict or heat, but over time we’ve learned how to channel it, learn from it and grow.”

In today’s fast-changing world, that’s a perspective that almost any organization, no matter what field it’s in, would be wise to adopt.

FREMONT, CALIFORNIA: REMEMBER YOUR OWN

Fremont, Calif., is only a 45-minute drive from San Francisco. But it’s a world away in terms of having a huge talent pool to draw upon.

So, while Fremont City Manager Fred Diaz always casts a wide net when it comes to hiring, he also relies heavily on internal promotions. “You have to grow your own,” he says.

Doing so can require that a manager be willing to stretch his or her own thinking about someone’s capabilities. “Look at people with an open mind,” Diaz says. “Coach them, and get them the resources they need.” Sometimes, this means paying for them to attend an executive education course offsite.

Just recently, Diaz promoted three city employees into senior roles. It was a leap for each of them, he says, but the transition seems to be working out.

Still, going this route can be tough. When junior people take on ambitious new positions, they invariably require more coaching and mentoring than someone with a wealth of experience. “I’ve become a built-in management consultant,” Diaz says.

That in turn leaves less time for oversight of other things, and Diaz says he must delegate more heavily than he used to.

Anytime a relative newcomer fills a big role, of course, there is a risk involved. But Diaz believes that a willingness to take chances is one of the qualities that have helped Fremont—like Fort Collins—score well in various best-run-cities-in-America rankings.

“In our business, risk is not generally encouraged, but it makes for a more innovative culture,” Diaz says, adding that he could recall only one failed promotion among many more successes. He attributes that mistake to having consulted insufficiently with the person’s colleagues.

“If a hire doesn’t work, it’s not the end of the world,” he says. “There’ll be a hole that you have to plug. It’ll be time to start again.”*

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Monday Mandate*

What will you do on Monday that’s different?

CONSIDER WHAT BEFORE WHO

Look at any open position that you have and ask yourself, “Have I really thought through the assignment?” Is the incoming head of sales supposed to open up new markets—or train a growing staff to push an existing line? Those represent very different hiring needs.

BEWARE THE ‘WIDOW MAKER’

Assess whether you have any spot in your organization that is what Peter Drucker called a “widow maker”—a job that has defeated two or three otherwise good performers in a row. If so, abolish the position. Don’t try to hire for it again.

GET AN EXTRA DOSE OF DRUCKER

Have your management team master Peter Drucker’s principles for making good people decisions by taking an online course from the Drucker Institute. You can get your 50% discount coupon by clicking here.