After marketing your company successfully, it grows. The following business article is for our clients in the process of adding to their staff. Our friend, Bill Boyer, contributed the article for publication here (his contact info can be found at the end of the article).
Top grading is a concept that has been used by some of the larger well-run companies (for example, GE and Allied Signal) for many years, but it is probably unknown by most smaller company CEOâ€™s and owners.Â However, it may be more important to the small company, especially at the initiation or expansion of the company, than it is for any of the major corporations.Top Grading: How Leading Companies Win by Hiring, Coaching, and Keeping the Right People, written by Bradford D. Smart, describes the process in detail.Â Smart has been a guru of employment selection for over 35 years.Â In this book, he details an extensive process for selecting employees.Â This includes developing very specific performance objectives for each position, a detailed job description, and detailed interview processes.Â Reference checks and background checks are critical.Â In addition, he recommends giving a homework assignment to the finalists.Â The goal of this assignment is to determine if the individual is a self-starter, and whether they are willing to roll up their sleeves and work for the job.
Top Grading specifies building the organization by hiring only the top people.Â It will cost more to hire these top employees, but it will be worth it in the long run.Â Most employees can be classified as A, B, and C.Â A Top Grading company only hires A employees; Smart recommends that all companies start by hiring these people at the top positions.Â These employees bring more to the organization than just skill.Â They bring energy and passion.Â An A employee can be a trusted adviser, and will be a responsible, creative, confident, and competent performer who can be the difference between thriving and just surviving.Â In fact, it is even more important to have A employees during stressful times in your business.
Hiring these people at the top brings many benefits, especially since these managers generally will only hire other A employees and will gradually replace your B and C with more Aâ€™s.Â A strong CEO with other A managers can develop some Bâ€™s and Câ€™s to become Aâ€™s.
Hiring A employees may take more time, but it is worth the delay.Â Many owners believe that they cannot get good people to work for them, so they think they must lower their standards to find employees.Â The opposite is true:Â if you raise your standards, make it difficult to be hired, and be demanding of your employees, you will have people clamoring to jump on board.Â People will generally live up to the standards and beliefs you project to them.Â What you expect is what you get:Â the majority of your staff will live up to (or down to) your expectations.Â If you believe they are capable and transmit this belief to them, they will believe it as well and meet or exceed your standards.
The Container Store strongly adheres to Top Grading.Â The Container Store has been one of the top 100 companies to work for, as rated by Fortune magazine, for many years.Â Their principal philosophy is that one great person equals three good people.Â They pay about twice as much as other retailers and they heavily train their people.Â This fits with Jack Welchâ€™s concept which is â€œLess people, paid more, with a lower total wage costâ€.
This is also espoused by Jim Collins in his book, Good to Great.Â To achieve greatness, the good to great companies â€œâ€¦first get the right people on the bus, the wrong people off the bus, and the right people in the right seatâ€”and then they figure out where to drive it.â€Â Collinsâ€™ first principle in getting great people is â€œWhen in doubt, donâ€™t hireâ€”keep lookingâ€.
One of the immutable laws of management is â€œPackardâ€™s Lawâ€ from David Packard,
â€œNo company can grow consistently faster than its ability to get enough of the right people to implement that growth, and still become a great company.Â If your growth rate in revenues consistently out paces your growth rate in people, you simply will notâ€”indeed cannotâ€”build a great companyâ€.
There is an old adage that people are your most important asset.Â This is not completely true, because the right people are your most important asset.Â Hiring the best employees is the most important task you have in developing a strong company.
(Bill Boyer is the President of CEO Focus of the Tidewater, a coaching organization for small company CEOâ€™s/owners).