4
Find and Develop the “Difference Makers”
Everyone knows that great people—A-level talent—can make a difference to an organization’s performance. Not everyone understands just how much of a difference they make. Consider a few examples:
- The best fish butcher at Le Bernardin restaurant in New York can portion as much fish in an hour as the average prep cook can manage in three hours.
- The best developer at Apple writes nine times more usable code per day than the average software engineer in Silicon Valley.
- The best blackjack dealer at Caesars Palace in Las Vegas keeps his table playing at least five times as long as the average dealer on the Strip.
- The best sales associate at Nordstrom sells at least eight times as much as the average sales associate walking the floor at other department stores.
- The best transplant surgeon at Cleveland Clinic has a patient-survival rate at least six times longer than that of the average transplant surgeon.
Of course, there may be factors other than raw ability that help to explain these gaps. But talent alone makes a huge difference. Before he became chief justice of the US Supreme Court, John Roberts prevailed in twenty-five of the thirty-nine cases he argued before the Court. That “wins” record is more than six times better than the average record of other winning attorneys (other than solicitors general) who have argued before the Court since 1950.1
The size of the gap between the best and the rest depends on the nature of the job (see figure 4-1). In transactional and repetitive tasks, a multiple of between three and five is common. Container Store founder Kip Tindell, for example, believes that a star performer in his business is about three times as productive as an average employee.2 In tasks requiring more creative thinking and specialized skills, the gap may be orders of magnitude larger. Executives at Google, maybe indulging in a little hyperbole, estimate that their best engineers are three hundred times as valuable as the average. Steve Jobs once said, “I noticed that the dynamic range between what an average person could accomplish and what the best person could accomplish was 50 or 100 to 1.”3 Whatever the difference, it’s significant nearly everywhere. In the Bain–Economist Intelligence Unit study, we asked respondents to estimate the average productivity increase they get from top talent—the very best in an industry or field, not just in their own company—as compared to average talent. Respondents said that the best would be, on average, 50 percent more productive than the average employee in their own company.
All talent is not created equal
“The best” are often a lot better than “the rest”
Source: Bain & Company
No company, however, wants some abstract “best.” It doesn’t do any good to hire the best fish butcher in the world if your business is package delivery. What you want are people who can contribute to realizing your organization’s mission and delivering on its strategy better than anyone else. You want a particular kind of top talent: people who can make a difference in your company. And you want those difference makers in jobs where they can have the greatest impact.
That sounds like a simple goal, and it would be hard to find a CEO or chief human resources officer who would disagree with it. Unfortunately, the conventional people-management toolkit has proven time and again not to be up to the task in modern organizations. Hiring techniques, organizational hierarchies, job assignment philosophies, performance management systems, and leadership development and coaching programs all conspire to make it hard to find, develop, and deploy top talent effectively. When we asked senior leaders to estimate the percentage of their workforce that they would classify as top performers or A-level talent, the average response was slightly less than 15 percent. And that’s despite the fact that most companies have spent vast sums of money in the so-called war for talent. For years, they have chased the best people, promised them fancy titles, and offered them big pay packages, yet they have little to show for it.
The outliers—those companies that seem to have cracked the code of organizational productivity—go about things differently, both philosophically and practically, and this chapter will explain some of their lessons. It will help you identify the top talent you need, the difference makers who are right for your company. It will give you fresh ideas on how to track down and evaluate difference-making talent using more advanced techniques for measuring potential. It will help you to develop these individuals through better evaluation and coaching systems, and to ensure that they are in the right jobs for the right amount of time.
Does this sound like too much nitty-gritty detail? Chances are you already manage your financial capital every bit as carefully, paying close attention to every significant investment you make. It’s worth paying equal attention to your human capital, because that is what makes the real difference to a company’s performance in today’s world. Three critical steps can have an enormous effect on the impact of talent on workforce productivity and competitive performance.
1. Determine where your difference makers can make the biggest difference
Sounds obvious, doesn’t it? But many companies somehow overlook this basic point. Following conventional practice, they continue to build their overhead budgets—the source of most expenditure on white-collar talent—using last year’s as a starting point. They allocate budget increases democratically, treating each area of the business as more or less equal. They seek “functional excellence” regardless of how important a given function is to a company’s mission or strategy. As a result, they end up gold-plating areas where good-enough capabilities would do just fine, and they underinvest in capabilities that are critical to their business model. Ask yourself: do our investments in human capital reflect our strategy? When we pose that question to CEOs, the answer, too often, is “I’m not sure.”
So let’s begin at the beginning. A robust human capital plan starts with a sharp definition of the capabilities and talent you need to build competitive advantage, given your company’s strategy and business model. The process examines three issues:
- What drives value. What are our current and future sources of sustainable, profitable growth?
- What capabilities are most critical. Which capabilities and assets are essential to providing customers with products, services, and experiences different from—and better than—those provided by competitors? For these critical capabilities, where do we have gaps? Where will we gain further competitive advantage from improvement?
- Where we should double down. Are we sufficiently skewing our investment of scarce resources toward these critical capabilities and away from others, so that we can effectively fund our priorities?
When analyzing your capabilities, it’s essential to define and assess them at a granular level. You don’t have a robust capability unless it meets some key conditions. One, it should be predicated on a clear linkage to value. Two, it must be able to be delivered in a repeatable, high-quality manner with the appropriate people, processes, and technologies. Three, the company’s structure, accountabilities, decision-making processes, and ways of working must support effective execution of the capability. You can then map your operating expense budgets to this capability map, comparing the funds you are investing to your strategic ambitions and requirements to test for alignment or disconnects.
Placing difference makers in business-critical roles
Armed with an understanding of where your company needs differentiated capabilities, you can determine the roles within each capability that are critical to its success. These are the roles where you want your difference makers.
Many companies’ HR planning breaks down at this point. Leaders understand that no organization is made up entirely of A-level talent. They also understand that they must struggle to attract and pay for the A-level talent they require. And so they build elaborate systems for identifying, recruiting, developing, and placing these hard-to-find individuals. Where the systems go wrong, however, is that they fail to begin with the simple question: Given our strategy and our business model, where is it critical to have A-level players shape the outcomes of our business—and where, conversely, can we live with B-level players who are capable but more easily replaceable? They never ask themselves, in effect, “If I put an average person in this role, will it have a material impact on performance?” Putting an A-level player in a role where a B-level player will do well is a poor use of an incredibly scarce resource. And given that most executives believe they have no more than 15 percent A-level players, misplacing even a few of those individuals will significantly affect the company’s productive power.
Our research and experience support the power of this intentionally inegalitarian approach. The gap between the mix of A-level talent in the best-performing companies and the rest is not significant—16 percent versus 14 percent. What’s different is the way this talent is deployed (see figure 4-2). Most companies might be described as unintentionally egalitarian in their deployment of top talent. All roles, more or less, are made up of 14 percent A-level talent. The best companies, by contrast, are intentionally inegalitarian in their deployment of scarce talent. For the few roles that are business critical (say 5 percent of the total), leaders ensure that great people are in those jobs. If 95 percent or more of these roles are held by A-level talent—difference makers—then less than 12 percent of the remaining roles are held by A-level talent.
While the best and the rest have similar amounts of A-level talent, top companies focus that talent on business-critical roles
Source: Bain/EIU research (N = 308)
What are the business-critical roles? They do not necessarily correspond to an organization’s hierarchy. Nor are they usually apparent to anyone outside the company. Rather, identifying the roles typically requires assessments such as the following:
What are our key assets, and what do they require? In many cases, a company’s key assets—proprietary intellectual property, leading brands, low-cost production assets, unique routes to market, and the like—can influence where you need A-level talent. On the one hand, you want to make sure that these assets are both protected and fully utilized. On the other, an asset or a deep capability can sometimes create enough advantage that outcomes are likely to be more or less the same, regardless of who is sitting in the decision-making chair. In the latter case, the outcomes that a B-level player generates will not be materially different from the outcomes generated by an A-level player.
Where are our expert systems and processes insufficiently developed? Expert systems often cannot replicate the decision-making skills of a talented individual. The external environment may be so dynamic that the relevant knowledge can’t be captured for a long enough period of time. Or the decision maker may sit at the intersection of a complex process that cuts across functional boundaries, and an expert system would likely make too many costly mistakes. Consider the individuals involved in innovation, sales and operations planning, pricing, or long-term capacity planning in consumer packaged goods companies. The decisions they make can have a material impact on the company’s performance precisely because they require integrated expertise that cuts across sales, marketing, R&D, and operations. A-level talent in these roles can make a big difference to bottom-line results.
Where are our skills requirements changing as our industry and business model evolve? Many consumer-facing companies have plunged headlong into Big Data, advanced analytics, and all the digital tools that accompany them. This has had a dramatic effect on key marketing and merchandising roles. Positions and professions that were once more art than science are now more science than art. The roles of the chief merchant or chief digital officer—and the types of skills required in these roles—have changed accordingly.
Why—and where—the CEO has to be involved
Despite all the calls on a CEO’s time, he or she has to get involved in identifying, developing, and placing top talent. While CEOs and their chief human resource officers need a talent strategy for the entire organization, the CEO must differentially focus on the business-critical roles and the difference-making individuals who will fill them. In our experience, this will be between 100 and 150 people.
How did we reach this number? Take a company where the CEO has eight direct reports. If each direct report also has a span of control of eight, and so on, throughout the organization’s layers, by the time you reach three levels below the CEO, you have roughly six hundred employees. Though every individual may be important, not all of them are going to be difference makers. In fact, it’s likely that only two or three of the CEO’s direct reports are themselves difference makers. If that’s true in each layer and branch of the organization, then there are about 150 difference makers in the top three layers of the organization.
Interestingly, this number corresponds with Dunbar’s number, described by the British anthropologist Robin Dunbar.4 Based on his study of primates and primitive human organizations, Dunbar argues that humans can comfortably maintain only about 150 stable relationships. The premise seems to hold true in both ancient and modern forms of human organizations, including neolithic farming villages, army units in Roman times, and academic organizations within universities. Dunbar’s number applies to groups that are highly motivated to work together (typically for survival), and that work or live in close proximity to one another—all conditions that appear to apply to the leadership teams of modern corporations.
So ask yourself: Can you list the 100 to 150 most critical positions in your organization, given your business model, strategy, assets, and capabilities? Who are the 100 to 150 difference makers in your company? Are they in these roles?
2. Use better ways to find difference makers
At this point in our schema, you have defined your company’s critical capabilities and business-critical roles. Now the challenge is to improve your processes for finding and nurturing the top talent that will fill those roles. Most companies rely on two measures, performance and potential, in making hiring, promotion, and succession-planning decisions. They typically incorporate these two factors into the familiar nine-box matrix, with each measure given a high, medium, or low ranking. There’s nothing inherently wrong with this construct; it’s just that the inputs into the framework and the actions taken as a result lack objectivity, data-driven insight, and meaningful consequences. That renders the whole thing ineffective and a candidate for the scrap heap. Let’s look at the problems.
On the performance dimension, a company can make accurate assessments when objective, quantitative data—sales figures, say, or profitability—is readily available. In some cases, performance can’t easily be judged by such short-term indicators. However, the larger issue here is that companies may lack the discipline to build a robust, focused set of measurable objectives for employees. These companies instead default to subjective assessments or to objectives that are redefined when it comes time for evaluation. This approach often leads to a perverse kind of grade inflation. A few years ago, for example, we worked with a large state university, which had more than thirteen thousand administrative employees. Each of these employees was evaluated annually on a one-to-five scale, with one meaning “does not meet expectations,” three meaning “meets expectations,” and five meaning “consistently exceeds expectations.” Only seven employees in the previous year had been rated a one or two; more than ten thousand were rated a four or five. Yet leaders repeatedly (and rightly) complained about the university’s ability to attract high-quality people to administrative roles.
To avoid grade inflation, some companies implement a forced or stacked ranking system, often known as rank-and-yank. While these systems dampen grade inflation, they are often too restrictive. More troubling, they can also create an internally competitive work environment, undermining effective teamwork. Many of the more vocal adherents of stacked ranking systems, such as GE and Microsoft, have recently abandoned them.
Another common mistake is to incorporate 360-degree feedback into performance evaluations. This introduces subjectivity and potential gaming into the process—I’ll scratch your back if you scratch mine. It’s especially toxic when the 360-degree feedback is a factor in determining compensation. And it defeats the purpose of the feedback, which should be aimed at coaching people on future actions rather than evaluating past performance. So it not only corrupts performance measurements; it also weakens your coaching culture. We will have more to say on coaching later in the chapter.
Then there’s the “potential” dimension. Measuring potential is more important than measuring performance in hiring decisions. The two are equally important in promotion and career path management. But the task is so fraught with challenges that many organizations have abandoned the attempt, throwing out the nine-box grid in the process. According to a survey of more than a hundred companies by consultancy Talent Strategy Group LLC, managers accurately predict employee potential just over half of the time.5 Other research comes to similar conclusions, finding that nearly 40 percent of internal job moves made by people identified as high-potential employees end in failure.
Why so bad? One reason is that the assessment of a person’s potential is usually inferred, often without sufficient analytical backing. That makes it unnecessarily subjective and, thus, affected by personal biases. A second reason is that the assessment is usually based on the individual’s recent performance rather than on his or her longer-term trajectory. In companies that tend to promote rapidly, the results achieved by John and Joan may reflect their predecessors’ efforts more than their own, yet John’s or Joan’s potential is now assessed based on those results. A third reason, and perhaps the most important, relates to who is doing the assessing. Most companies rely on the layer above to assess the layer below. This is problematic if you have B-level players trying to assess A-level talent: they may not recognize it, or if they do, they may resent it.
If companies are so bad at measuring potential despite decades of investing in recruiting and performance evaluation systems, what are they to do about it? Our pragmatic solution comprises four related ideas: behavioral signature, learning agility, collaborative intelligence, and trajectory.
Behavioral signature
This concept rests on two premises.6 The first is that successful individuals in a company exhibit a distinct behavioral signature, a common way of working that enables them to deliver high performance where others turn in mediocre results. These are not the generic behaviors typically captured in most leadership models; rather, they are ways of acting that are likely to be highly specific to a company and to its strategy, culture, business context, and model. Our second premise is that assessing these behavioral signatures should not be subjective. Data is critical, and modern techniques for analyzing Big Data are useful.
Winning behavioral signatures vary significantly with a company’s strategy and culture. Consider the differences between a high-tech company such as Google, say, and an operations- and cost-focused company such as AB InBev, a publicly traded brewer originally backed by the Brazilian founders of 3G Capital, among others. Google defines the talent it wants as “smart creatives.” These individuals are “business savvy, data-driven, technically knowledgeable power-users, with creative energy and bias for a hands-on approach.” They need to be able to operate autonomously in what Laszlo Bock, chief human resources officer of Google, refers to as a “high freedom” environment. AB InBev uses a different paradigm. As described in the book Dream Big—a portrait of 3G and the partners who run it—the brewer wants to attract smart, data-driven, personally hungry, and frugal individuals. They should expect to be highly accountable, and they should be willing to work with constrained resources and proven business routines in an informal and highly demanding environment.7 Both companies believe in autonomy but achieve it in different ways. At Google, autonomy is a direct byproduct of agile processes and teams; at AB InBev, autonomy comes from the dramatic elimination of corporate bureaucracy and freedom within a clearly defined framework. So the person who excels at Google and the person who excels at AB InBev will most likely have a different behavioral signature, though they may well possess some similar values and leadership traits.
High-performing companies typically invest heavily in screening for their winning behavioral signature during the interviewing process. Brian Chesky, founder and CEO of Airbnb, personally interviewed the company’s first two hundred employees, until it became impractical for him to interview all new hires. In Airbnb’s process, job applicants are evaluated for functional and technical skills. Then they undergo two separate culture interviews, during which Airbnb representatives test for six core values. One of these values is “be a host”—that is, show a passion for hospitality and helping people. Airbnb has learned to test for the values and corresponding behaviors through behavioral interviewing techniques and close examination of candidates’ backgrounds.
A number of startups have created innovations in the field of developing behavioral signatures. London-based Sinequanon, for example, has developed well-tested techniques for helping companies define the required leadership behavioral signature (trademarked as Performance or Leadership Signature). The company, known as sqn, has also created robust assessment and coaching systems based on periodic feedback; the feedback draws on advanced analytics, proprietary machine learning–artificial intelligence modeling, and intelligent surveying techniques.
Building a leadership development program using sqn’s methodology is a three-step process. Step one is to translate your company’s strategy into a set of requirements defining the behaviors that make for success, given your company’s strategic and cultural context. Part art and part science, this step draws on data-mining techniques and sqn’s proprietary database. Step two is to launch a robust 360-degree feedback effort to create a gap assessment for each leader. Leaders are not expected to excel on every facet of the behavioral signature; rather, they are expected to spike in some areas and reach a given threshold in others. As a group, the leadership team should have different spikes but excel on the overall behavioral signature. Step three, finally, is to develop a coaching program, individual interventions, and organizationwide interventions to close the gaps. Only with the right set of interventions, delivered at the right frequency with appropriate reinforcements, will the behavioral change stick.
The experience of a European financial firm illustrates the process. This company, a subsidiary of a larger regional group, is the number-two player in its market, with two retail brands and more than three hundred branches. Though it had been a solid performer in the past, it was facing a rapidly changing market, and new leaders decided that they needed to upgrade their talent. With sqn’s help, the firm targeted four hundred leaders and twenty-five hundred total staff for behavioral evaluation and gap assessment.
Figure 4-3 shows the behavioral signature developed for this company. It includes four “energies” labeled “tough love,” “inspires,” “winner,” and “delivers.” These attributes were composed of fifteen discrete behaviors and mindsets. The process to develop the signature was critical: it combined senior leaders’ judgment, a deep understanding of the industry context, and sqn’s database, and it involved employees from the beginning to aid in buy-in. Labels and language were carefully chosen to resonate with the cultural context of the country where the company operated. With the behavioral signature in place, the company could complete the gap identification through an assessment process using sqn’s online behavior measurement platform. That data, filtered through an analytical engine, created predictive and actionable feedback. The company also developed tailored online dashboards, to be updated quarterly for each leader.
Case study of European financial services company
Big Data capability was applied to leadership and culture
Source: sqn
Rigorous implementation of this process can lead to impressive results. In the European firm’s case, productivity growth increased from approximately 5 percent to more than 20 percent. The company moved from bottom quartile to top quartile in terms of overall competitive performance. According to internal surveys, leadership effectiveness increased from 33 percent to 70 percent, while engagement grew from 50 percent to 75 percent.
Although we advocate identifying and screening for your company’s winning behavioral signature, we are strong adherents of diversity in all its meanings. Diversity creates the potential for differences in opinion, perspective, insight, and approach. Looking for people who exhibit a certain behavioral DNA should not impede seeking out these differences. Think about a marriage. It’s been said that a strong marriage requires enough “sameness” between the partners to allow for compatibility and enough “differentness” to spark passion. In business, sameness creates focus, speed, and alignment, while differentness generates the energy necessary for innovation and evolution. Also, it’s important not to confuse the concept of behavioral signatures with personality type. A company or team full of extroverts or alpha males and females is unlikely to be a consistently strong performer. We will touch again on this topic of building diverse, high-potential teams in the following chapter on teaming.
In discussions of human capabilities and behaviors, the debate about how much is shaped by nurture and how much by nature nearly always lurks in the background. We believe that companies can do many things to encourage the kinds of high-performance behaviors that deliver superior business outcomes. But we also believe that many of the actions people take and the behaviors they exhibit reflect deeply ingrained, highly personal beliefs stemming from their backgrounds and genetic makeup. It’s hard to make people think or act in a way that is fundamentally different from how they are naturally wired. This is why it’s so essential to have a clear view of the behavioral DNA you are in search of, and why it’s so important to ensure that difference makers in your organization—the people who will profoundly shape the culture and the outcomes of your business—have some strands of this DNA.
Learning agility
A significant body of empirical research suggests that many high performers are not high potentials, though most high potentials do turn out to be high performers.8 Whether they do or not depends greatly on their learning agility.
Learning agility in our lexicon refers to how quickly individuals adapt to new roles, assimilate new information, and change course or approach based on that new information. At the heart of learning agility are behaviors that allow one to remain open-minded and responsive to data. Another key ingredient is the ability to receive and react constructively to feedback and coaching. The late Chris Argyris, who was a professor at the Harvard Business School, wrote extensively on the challenges related to “teaching smart people how to learn.” His research describes the doom loop that intelligent individuals find themselves in if they cannot hear and react to constructive feedback. Argyris’s research was conducted decades ago. But the same doom loop is likely to apply to the millennial generation, which grew up in an era when all participants received a trophy and, as in the fictional Lake Wobegon, every child was seen as being above average.
Collaborative intelligence
The term “collaborative intelligence” traces its roots to concepts pioneered in artificial intelligence by thinkers such as Oliver Selfridge.9 In a business setting, it refers to individuals and groups working autonomously as part of a problem-solving network to create intelligent business outcomes. Success in business obviously requires some degree of collaboration; any organization that expects people to work across functional, geographic, and business-unit boundaries both within their company and as part of a broader business ecosystem depends on their ability to collaborate effectively. But not everyone is equally capable of collaboration, and few companies have explicit systems for helping people learn the skill. Nor do they typically recognize and reward the people who are the strongest collaborators.
Trajectory and hunger
Measuring people’s longer-term trajectory based on the distance they have traveled is a stronger indicator of future accomplishments than merely looking at their recent accomplishments. The usual rule is to evaluate someone’s performance today and then extrapolate that out into the future. But we think you will get more powerful insights about future performance by examining how much distance people have covered since they started. For instance, future hires who get expensive primary and secondary education and then attend the same Ivy League university as their mothers or fathers will have traveled much less distance than applicants who attended a mediocre public school and university and whose parents never went to college. Which group is likely to be hungrier? Which individuals are likely to achieve more over their lifetimes?
___________
All of these factors—behavioral signature, learning agility, collaborative intelligence, and trajectory and hunger—can be incorporated in quantitative and qualitative measurements of potential. Doing so can help companies dramatically improve their hiring, promotion, and development processes. There remain the questions of where you find candidates—and who should own the talent pipeline.
CEOs with whom we work rarely feel that their talent pipeline is sufficiently robust to consistently meet their companies’ future needs. Some believe that only their own company can create the next generation of top talent for business-critical roles. But as markets change and strategies shift, the people who hold key roles today may not be the right people for the future. Loyalty to star performers and contributors is an important part of a healthy culture, but leaving talented people in roles that they can’t successfully fill or grow into is a disservice both to them and to the company. Moreover, too great a reliance on internal talent or on past star performers can cause companies to become too insular. They will end up without the expertise, capabilities, and perspectives that can take the company to the next level of performance or challenge the internal conventional wisdom in the interest of business-model innovation. Of course, in other companies, we observe a different extreme. There, it’s often assumed that the talent they require will never be grown internally. These companies appear forever enamored of the outside star for hire. A balanced approach to internal talent development and external talent sourcing is key.
Who should take responsibility for the talent pipeline? For external talent, companies often look to HR or executive recruiters for the solution. Leading companies have found that this is almost always a bad idea, especially for the difference makers that they need for business-critical positions. While executive recruiters can sometimes be helpful, they will often find the best available candidate as opposed to the best person for the position, regardless of apparent availability. For example, a rapidly growing software company in Silicon Valley may need talented software engineers and engineering leaders to drive its strategy. These individuals are hard to find. While some of the talent in a headhunter’s Rolodex may be quite good, the vast majority are likely to be individuals who have been passed over by the likes of Google, Facebook, Apple, and Salesforce. So, senior executives at many top companies typically take greater ownership for nurturing talent pipelines. Several leading companies, including Bank of America, Pepsi, Dell, and Procter & Gamble, as well as those just mentioned, have built strong in-house recruiting teams. So has our own firm, Bain & Company.
Another useful idea is holding leaders accountable for developing internal difference makers and nurturing networks of external talent. Why not have leaders create personal “talent balance sheets,” with assets based on the number and caliber of leaders developed under their watch and liabilities measured by talent they lost or failed to fully develop? It’s a recurring theme of this book: human capital needs to be managed as carefully as financial capital. Leaders are responsible for growing human capital over time and so should be held accountable for creating or destroying it.
3. Help make the difference makers even more effective
If you have invested heavily to recruit potential difference makers into your company, you will naturally want to build processes that accelerate their development. This will mean revisiting most of your HR practices and procedures—training, job assignments, compensation, and so on—with that goal in mind. The details are beyond the scope of this book, but by way of illustration, we will give two examples of common practices that likely need to change.
Separate coaching from evaluation
The typical company relies heavily on the traditional annual or semiannual review as its primary coaching and feedback tool for employees. That’s a mistake, and many enlightened companies are abandoning these reviews as a primary method for providing employees feedback. Reviews are backward looking and usually fraught with emotion, especially when they are directly linked to compensation. Bosses may be reluctant to provide candid evaluations, given the potential impact on an employee’s earnings, and employees may find it difficult to hear the feedback when money is involved. Even more importantly, annual or semiannual reviews can never provide the real-time, in-the-moment coaching that helps individuals understand the context for the feedback. Yet coaching is critical to developing great talent: you want to create an environment in which individuals are challenged to learn and grow, and where they are helped to do so by more experienced people. That’s why many high-performing companies have completely separated their performance appraisal and coaching processes, often guided by a simple framework like that shown in figure 4-4. Most of these companies have also built coaching systems and trained managers to be effective coaches through more frequent feedback and real-time guidance.
Separating coaching from evaluation is critical
Source: Bain & Company
Accelerate talent development through smarter rotations
Nearly every large company tries to manage assignments and rotations as part of its career development process. But rotation can be tough to get right. For example, the conventional assignment is usually no more than two years long, and results may take more time than that to materialize. So individuals can be unfairly penalized or rewarded for results that stem largely from their predecessor’s actions. Not only does this make performance assessment challenging; it also has deleterious effects on an individual’s professional development. He or she doesn’t get the benefit of feedback to see what works, what doesn’t, and what corrective action might be necessary to return the company to the right course. We asked executives in our survey how often they thought their companies got talent rotations right. These managers believed that they got the assignment duration appropriate just a little over 50 percent of the time.
In our experience, the optimal assignment length runs closer to three years than two years. But you may want to tell people that they have a multiyear mission with well-defined milestones and measurable accomplishments, rather than set a fixed period. The job description can explicitly describe this multiyear objective, one of which must always be to identify a pool of successors. In ordinary circumstances, employees placed in business-critical roles under these conditions shouldn’t be considered for new assignments until they have successfully completed their multiyear missions.
LinkedIn illustrates many of these themes. The company—acquired by Microsoft in June 2016 for $26 billion—is a fast-growing organization with big talent requirements that just happens to be in the business of talent. In the words of founder Reid Hoffman, its mission is to help its millions of members “change their own economic curve by the strength of their alliances and connections with other people.” It’s also about helping people use their time more effectively and efficiently. “We used to say,” Hoffman commented, “that the difference in types of social [media] is this: is your point to waste time or to gain time? [Entertainment-focused] social networks are about spending time, and what makes you spend time? Well, it has to be entertaining. But we wanted to help people accomplish critical tasks in a shorter amount of time.”
How LinkedIn finds difference makers. Talent is LinkedIn’s top operating priority. The traits of people CEO Jeff Weiner says he most enjoys working with are similar to what LinkedIn looks for in new hires:
- The ability to dream big. Weiner wants people to have a vision that inspires others and that can push the company forward.
- The ability to execute (“get shit done,” in LinkedIn’s vernacular). People should be able to break down that vision into the parts required to get it done, overcoming objections through resourcefulness and, as Weiner puts it, “sheer force of will.”
- The ability to have fun. LinkedIn’s difference makers should help make the workplace fun. “Jerks” wouldn’t fit in even if they are visionary and can execute.
Weiner captures these elements in the Venn diagram shown in figure 4-5.
Weiner’s Venn diagram of people he most enjoys working with
Source: Jeff Weiner, CEO, LinkedIn, linkedin.com.
How LinkedIn keeps difference makers engaged and motivated. LinkedIn’s concept of a mutually beneficial employment agreement based on a “tour of duty” is one of the most powerful tools we have seen for talent development, retention, and engagement. Here’s how Hoffman and his coauthors define the concept in their book The Alliance:
When Reid first founded LinkedIn, for example, he offered an explicit deal to talented employees. If they signed up for a tour of duty of between two to four years and made an important contribution to some part of the business, Reid and the company would help advance their careers, preferably in the form of another tour of duty at LinkedIn. This approach worked: the company got an engaged employee who worked to achieve tangible results for LinkedIn and who could be an advocate and resource for the company if he chose to leave after one or more tours of duty.
The employee transformed his career by enhancing his portfolio of skills and experiences. By recasting careers at your company as a series of successive tours of duty, you can better attract and retain entrepreneurial employees. When recruiting top talent, offering a clear tour of duty with specific benefits and success outcomes beats vague promises like “you’ll get valuable experience.” Defining an attractive tour of duty lets you point to concrete ways that it will enhance the employee’s personal brand—while he’s at the company and if and when he works elsewhere—by integrating a specific mission, picking up real skills, building new relationships, and so on.10
Chances are your most talented employees already spend considerable time thinking about next steps to pursue their passions and develop their careers. Creating time-bounded missions focused on a defined set of outcomes is a powerful way not only to align interests but also to create a natural structure for re-recruiting talented people for their next mission—as opposed to simply reacting when another opportunity drops in their lap.
How LinkedIn helps difference makers become better. The company also invests in a broad range of initiatives to help its talented people grow and develop. The measures include the following:
- LinkedIn encourages employees to build their personal networks outside the company by allocating time and resources for this purpose. Perhaps it’s not surprising that an organization whose business is helping professionals build their networks would do the same for its employees, but the benefits accrue both to individuals and to the company. Employees increase their career value by enhancing their networks and exposing themselves to new ideas. In return, the company gets employees who feel trusted and inspired, and who can leverage their networks for the company’s benefit.
- Once a month, LinkedIn holds what it calls an Investment Day, or “InDay” for short. Employees worldwide set aside their regular work to explore new ideas for personal and professional development.
- LinkedIn also creates a culture that values “transformation.” Company executives talk regularly about transformation from three perspectives: transformation of self, transformation of company, and transformation of the world. The goal of transformation of self is to leave LinkedIn a better professional than when you started. The company facilitates this through programs such as a speaker series, wellness programs, and a sizable training budget. The goal of transformation of the company is to help LinkedIn realize its full potential; relevant actions include an initiative called Women in Tech, diversity programs, and biweekly all-hands meetings. The goal of transformation of world is to create economic opportunity for every member of the global workforce. That means digitally mapping the world economy and connecting talent with opportunity on a global scale; supporting LinkedIn for Good, which connects professionals with opportunities to work for change; and using InDays to volunteer for special causes. Transformation as a concept is critical for a company whose business is highly talent dependent and whose business model is centered on a dynamic, digitally enabled professional network. Building a culture of continuous transformation ensures that the organization’s internal environment is as dynamic as the external one.
LinkedIn’s value as a professional network is amplified in a world where lifetime employment is mostly a thing of the past, where talent is mobile, and where a company’s scarcest resources are time, talent, and energy. The founders put it this way:
Members come first. That’s our top value. Normally in a business, your customers are your top priority because they are the ones that are paying you money. Here, our members are the most important thing, even though only a small number are paying us money. That’s because we are building a lifelong relationship through which we are trying to help them change their career trajectories.
While LinkedIn aspires to retain top talent and engage these individuals in transformational missions, the company’s leaders realize that lifetime employment is no longer a realistic ambition. In this sense, the organization follows the same advice it gives to corporate clients, treating its alumni network as a key asset. That reinforces LinkedIn’s business model, employee value proposition, purpose, and culture. What’s more, it all seems to work. In a study of talent flows in the tech industry, the recruitment website Top Prospect found that LinkedIn is able to hire 7.5 people for every employee it loses to competitors—a number that compares favorably with Google (1.2) and is in the same ballpark as talent magnet Facebook (8.1).
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Finding and developing your A-level talent is an essential element in overcoming organizational drag. Interestingly, though, the top-quartile companies in our survey had only a little more top talent than the other companies. In short, there was little difference on this score between the best and the rest. What made the biggest difference on the talent front—and it was sizable—was where the top companies focused their difference makers and, as we’ll see, how they teamed and deployed their best talent. Let’s turn to that topic now.
THREE KEYS TO FINDING AND DEVELOPING MORE DIFFERENCE MAKERS
- Determine where difference makers can truly make a difference. Link your talent plan to your value-creation strategy; skew resources to the areas where you are trying to build competitive advantage. Define the 100 to 150 key positions, and fill them with difference makers. Never accept the premise that talent must dilute as you grow, especially for these roles.
- Upgrade your techniques for finding difference makers, and hold your leaders accountable for developing them. Translate your strategy and culture into a behavioral signature. Incorporate learning agility, collaborative intelligence, and trajectory and hunger into your measurements for leadership potential. Ultimately, senior leaders must own the talent plan, not HR and not executive recruiters.
- Help your difference makers become even better. Revisit your HR practices. Invest in data-driven coaching that helps talented individuals further develop these behavioral traits. Take a fresh look at your talent-rotation strategy and make sure to avoid the twin pitfalls of under- and over-rotation.