Monthly Archives: July 2014

10 Signs Your Capital Investing Strategy May Be Upside Down

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Since the design of the first tool, men and machines have experienced a dynamic interplay characterized at various times by harmonious synergy and contentious strife.

The Middle Age craftsman was both owner and laborer and oversaw the manufacturing process from start to finish. The craftsman viewed the manufacturing process and the machines within that process from a holistic perspective. He decided to build or buy machines based on the impact to both the machine and his labor; not the machine or his labor. He also considered how any machine might better leverage his time and talent to improve the quality and/or quantity of his finished product (not just any particular step in the manufacturing process).

The Industrial Revolution severed the relationship between owner and labor and also introduced a new layer into the decision process, the professional manager. The Industrial Revolution also disaggregated the craftsman’s role across multiple individuals who only performed discrete steps of the entire manufacturing process. These narrowly constructed roles separated laborers from the output of their work with adverse consequences for everyone. Laborers felt stymied in their ability to contribute and stopped thinking (“just do what you’re told”). Unsurprisingly, managers began viewing laborers as low-value, interchangeable elements in the manufacturing process and used people only to perform work which they had not yet figured out how to automate. This disrespectful mental framework sank to such a depth that for much of the past few decades some industries chased cheap labor all over the world. I call this the Human Capital Paradigm.

In attempts to improve manufacturing some firms turned to an alphabet soup of new techniques and tools — 5S, TQM, TPM, PDCA, QIS, DMAIC, SPC, DOE, etc. Most of those efforts failed, because manufacturing leaders continued to apply those tools from the mental framework of the Human Capital Paradigm. What’s needed is a Human Capital Paradigm, which is best explained by comparison to its failed predecessor in the table below.

Financial Capital Paradigm Human Capital Paradigm
Improvements achieved by investing financial capital (money) Improvements achieved by balancing investments of human capital with financial capital
Discipline/repeatability for high quality sought through machines; managers do not believe people can be disciplined Discipline/repeatability for high quality achieved by people using reliable processes (as the late Bob Galvan of Motorola was fond of saying “People may make mistakes, but teams can be perfect.”)
Machines designed for high repeatability, but offered low flexibility (hard automation) Machines designed for flexibility (easily reconfigurable and capable of performing a range of tasks)
People perceived as highly flexible (able to perform a wide variety of tasks), but with low reliability People are highly disciplined without losing flexibility
Managers think; Laborers do Every team member expected to think and contribute toward continuous improvement

 

In the Human Capital Paradigm machines provide flexible discipline and people contribute disciplined flexibility. The challenge of building such a culture has implications that touch almost every aspect of designing, staffing and running an organization of any size. That challenge is too large for this post. However, I will close by sharing a sample list of attributes you might use to assess how your organization stacks up against the capital investment paradigm? While not an exhaustive list, these behavior-based markers can provide clues to your progress along this journey. I encourage you to use the list below to expand or jump start your own list of markers:

  1. Expectations and related consequences established by agreement, not edict
  2. Accountability for meeting expectations belongs to individuals, not managers
  3. A focus on what we want, not what we don’t want; managers focus on catching people doing things right and recognizing them for it; not discovering and punishing wrongdoing
  4. Team members measure themselves, rather than a manager or third-party
  5. Indicators of performance visible to everybody; most notably those performing the work
  6. Opportunities for improvement often identified by people doing the work not just engineers or managers
  7. Customer-driven variety, not changeover considerations predominately influence production scheduling
  8. Disciplined adherence to standard work procedures facilitates reliable outcomes
  9. Processes highlight abnormal process variations and trigger corrective action
  10. Repeatable processes used to test and verify the efficacy of ideas before widespread implementation

Stop Staring Out the Back of the Bus

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Why don’t they position the driver’s seat facing out the back of the bus? You can see the road. You can even tell whether the bus is between the lane markers. Of course, we all know that’s silly. Seeing the past does not allow us to anticipate or respond to what is coming down the road at us. Yet, that is what most managers do when they base a hiring decision on someone’s resume and inappropriate interview questions.

This post is the last in a three-part series on Hiring for Talent. The first post (“Too Many Corners on the Box“) exposed the fallacy of over constraining a hiring search by relying on long lists of experiences and skills. The second post (“I Hired Your Resume, But Unfortunately I Got You”) revealed the pitfalls of focusing on the past and made a case for concentrating more attention on forward-looking talents. This post discusses some methods for hiring talents.

You will never find what you have not first defined. As a first step we must identify the talents we are seeking to hire. Consider first company-specific talents. Since individuals frequently change jobs or roles within the same company the vision for the organization’s culture should overwhelmingly determine the talents you seek to hire. Yes, that means you must have first reduced your vision for the culture or company values to writing and, second, take that plaque, picture, or poster off the wall and really use it. Second, consider job-specific talents with your view out the front of the bus. Think in terms of the talents needed to tackle the challenges facing the person you hire.

But, that still leaves a question of how do we uncover a candidate’s talents? Resumes may provide clues, but almost never reveal answers. Poorly written resumes compound the problem by making isolated and unsupported claims of talent (usually in an overview section); such as Creative, Highly disciplined, Responsible, High integrity, Quick learner, High achiever, etc.

Here are three methods for uncovering and confirming a candidate’s talents:

  1. Trials. This method discovers talents from first-hand experiences during previous interactions. The most effective use of this method is when a manager hires someone they already know well from working together in a professional setting. However, this try-before-you-hire method is rarely suitable for hiring to fill most professional positions when the hiring manager and candidate do not know each other. Most candidates with exceptional talent will not assume the risk of a probationary hire.
  2. Testing. There exists a wide assortment of assessment tools; including instruments such as Myers-Briggs, DiSC, and Wonderlic to name a few. I have mixed opinions on assessment tools. These tools often reveal interesting and potentially helpful insights. However, they can get pricey and present logistic challenges to administer them. More importantly, the broad nature of many assessment tools can make it difficult to zero in on specific targeted talents. In my opinion, too many assessment tools attempt to provide a be all to end all solution and end up providing so much information that properly interpreting them requires a level of training and expertise that makes them impractical or unaffordable. Nonetheless, I know there are fans of various assessment methods…please feel free to share your views in the comments on assessments you’ve found effective.
  3. Talking. Not casual chatting about the candidate’s favorite food, team or vacation spot. Not surface-level conversation about where the candidate has worked and what they’ve done. Not a flag-waving recitation of the candidate’s amazing results. But rather, a structured and deep-level dialogue about what drives the candidate and fueled their accomplishments. It’s free; although it takes some work.

Using Interviews to Uncover Talents

A word of caution…Contrived or hypothetical scenarios shed less light on an individual’s talents and traits and may actually mislead the interviewer (in a hypothetical scenario I will always leave that last chocolate cookie on the plate). Google developed a reputation for off-beat interview questions, but has recently abandoned it (read more here). As a hiring manager I care little about what the candidate might do. I learn most from what they have done.

Since talents are innate or hardwired into our character as a toddler, the exercise of them rarely requires conscious thought or action. Consequently, our actions (human doing) indirectly reveal our talents (human being). In other words, a person’s behavior in real-life situations provides us a window to identify their talents. Consequently, we must use inference and pursue lines of indirect inquiry to uncover a person’s talents. Hopefully, you are now getting an appreciation for clearing understanding what you’re looking for in a new hire.

For illustration purposes, here are some behaviors for which you would listen if initiative were one of your target talents:

  • Identified a problem, trend or unexploited opportunity
  • Researched and presented potential solutions
  • Recruited an ad hoc team to pursue an opportunity
  • Got involved in a project outside their immediate work area
  • Volunteered time in nonprofit organization(s)
  • Founded a group or organization to address an unmet need in their local church, school or community

Finally, a few additional practical suggestions:

  • Use the same question set with each candidate to create a basis for meaningful comparison among the various candidates
  • The book “ Who” by Geoff Smart and Randy Street provides the best structured interview process guide I have ever used
  • Another great starting place is “The Most Important Interview Question of All Time” by Lou Adler

I Hired Your Resume, But Unfortunately I Got You*

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In the early days of moving pictures marketers quickly discovered the power of subliminal messaging. The human mind could subconsciously register a single image embedded within a movie projecting 24 frames per second. This advertising method gained favor among marketers, because it induced higher response rates among viewers than overt advertisements. The Federal Trade Commission deemed subliminal messaging deceptive advertising and outlawed it in the USA during the 1970s.

Repeated studies suggest that hiring managers are often heavily influenced by the subliminal power of first impressions. Too many of us will unconsciously make a go / no-go hiring decision in less time than it takes to watch a Super Bowl commercial. At that point, Confirmation Bias kicks into gear, and we spend the interview looking for things to affirm our initial subconscious impression.

Of course, you are smart enough to avoid that trap, or at least that’s what you tell yourself. However, unless you have a solid plan, you will end up looking at all the wrong things in all the wrong places when the time arrives to make your next hire.

Over the years I have often joked that a hiring interview is like a first date. We instinctively know that first impressions are important. We stand in front of the mirror to make sure we have the look just right. We apply extra diligence to observing social courtesies. We tell stories about our respective pasts with a focus on the positive. We talk about people we know, places we’ve been and events we’ve experienced. These fact-oriented discussions often do not tread into more sensitive topics; such as, why we act the way we do and what drives us.

Resumes reinforce this backward-looking, surface-level focus. In fact, the Latin root of resume means “to summarize” and “take back.” In other words, a resume summarizes the “what” of my past. When and where I worked. What I accomplished. A typical resume provides no sense of context; i.e. the external business environment, internal culture or surrounding talents and resources in which the candidate worked. The resume also gives no insights into the innate talents the candidate may have leveraged to deliver the results.

Granted, it’s important to understand the external/internal environments in which the candidate formerly worked, if for no other reason than establishing context for evaluating past accomplishments, but your environment is different to some extent than the candidate has previously experienced and changing all the time. However, the constant in this equation is the candidate’s talents. These raw abilities follow the candidate everywhere. When you hire a candidate you don’t get their past. Rather, you get their talents.

Unless you recognize this crucial distinction you may risk repeating the mistake of the hiring manager who lamented, “I hired your resume, but unfortunately what I got was you.”*

So, what talents are important? Most unique hiring factors are usually acquired skills (software coding) or related experiences (startups, R&D, finance, consumer goods, etc.). Talents typically have more universal applicability across projects, jobs and time. To illustrate the point, here’s a list of targeted talents I developed during my last startup:

1. Integrity. Managing becomes easy when I can count on people to say what they mean and follow through on their commitments. You don’t need lots of policies and rules if you hire people with integrity. You can trust them to do the right thing.

2. Intelligence. Experience is a weak substitute for raw intellectual horsepower. The business environment is constantly changing, and we wanted people with the smarts to solve the problems we don’t even know about yet.

3. Initiative. It is always easier to guide something in motion. Organizations waste tremendous amounts of energy just overcoming static inertia and moving into action. Besides, it is just plainly more fun to work with people who are willing to pitch in to solve problems.

4. Inquisitiveness. It is the best “I” word I identified to describe people who are curious about life and constantly looking for better ways to do things. Without people like this on the team, continuous improvement remains a theoretical concept.

In closing, here are some tips for integrating “hiring for talent” into your own culture:

  • Identifying the core talents and traits most important to your business culture takes time and careful thought; This may require researching the traits of successful people who have done similar work
  • Describe your target talents in writing–make your target hiring profile tangible; if not, we subject every hiring decision to the vague and subconscious biases of individual hiring managers
  • Develop methods for identifying and hiring people with your target talents…that’s the topic of the last blog post in this three-part “Hiring for Talent” series.
  • Talk about your target talents often; make them a visible part of your culture
  • Publicize and celebrate the linkage between those talents and the extraordinary results they produce
  • Align your reward system with your target talents

* Source, Jay Jordan in “Who” by Geoff Smart and Brad Street, pg 6

Too Many Corners on the Box

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Corners on a box define its outer limits and provide stability. However, if we continue adding “corners”, we eventually end up with a shape that approximates a soccer ball and which is both smaller than the original box and highly unstable. In the same manner, over constraining any problem-solving effort shrinks the potential solution set and yields unstable solutions prone to bouncing around from even the slightest external pressure.

I don’t have any empirical evidence to define a percentage effect, but my business experience informs me that once a manager has selected their team they have pretty well determined their fate. There is no other variable that comes remotely close to impacting performance as much as hiring the right team. Yet, there are few other management activities where the typical manager is less equipped to succeed.

The irregular nature of hiring means most managers practice this skill with insufficient frequency to remain sharp. Even managers (including me) who know some of the practices that will improve the odds of making an excellent hire are at times caught unprepared. Since we don’t have an existing funnel of candidates when an opening occurs without warning, we find ourselves in a reactive mode and compelled to publicly post a job description.

Since this Information Age vastly broadens the field of prospective candidates who learn of any job opening, any public job posting leads to a deluge of resume submittals. One common mechanized method for filtering this vast amount of input uses keyword search technology to winnow the stack of resumes to a more manageable size. Therefore, in order to feed the keyword search app, hiring managers develop a long shopping list of required skills and experiences. This check-the-box approach almost guarantees the hiring manager will receive a stack of resumes that tell him/her where a candidate has been (i.e. experiences) but will shed no light on the talents (core capabilities) that produced the results on that resume.

Candidates know the keyword game, too, and fill their resumes with buzz words. When you add our natural human tendency to assign failures to external causes and take excessive or even unwarranted credit for successes, you end up with experience statements on a resume that can mask a candidate’s contribution. An anecdotal example in the Atlanta market surrounds numerous claims by people supposedly involved in developing the Fridge Pack introduced by Coca-Cola around 2001. It’s important to understand whether someone got wet, because they made it rain or were merely around when it started raining.

If that’s not complicated enough, our dynamic marketplace guarantees that the challenges of today will change tomorrow. Consequently, the requirements for the job you fill today will change tomorrow. So when we hire on historical experiences alone we risk hiring built-in obsolescence. So, what’s a hiring manager to do?

A hiring manager must get beyond the numbers (results) to understand how the candidate achieved those results. A hiring manager must arm themselves to pierce the information fog by understanding the talents necessary to succeed in their market, firm and job and then make purposeful steps to discover candidates with those talents (sometimes called traits). Why concentrate on talents? The timeless nature of talents makes them applicable in changing circumstances. The portability of talents allows people to leverage them in any situation. Candidates who possess the desired attributes will bring them to the job just by walking in the door. Talents cannot be acquired via training. We must hire them.

In the next post, I’ll identify four inherent talents that I use to identify and hire exceptional people. The third post of this series will discuss how to discover talents undetectable using assessment tools.