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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.
“A leader is one who knows the way, goes the way, and shows the way” – John C Maxwell
Are You Paying Attention to People?
Quite often, 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.
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.
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 non-negotiable criteria—things the person must be able to do in order to succeed.”
Ram Charan Explained: “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 non-negotiable 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.”
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 the 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 Charan Explained: “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 for 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.
Way Ahead
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. 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.
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 a sustainable competitive advantage. (Excerpt is one of the best business books ‘Execution’ by Larry Bossidy and Ram Charan.)
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