As they say here in Arizona, “This isn’t my first rodeo.” In four decades we’ve seen many downturns. In all the down markets we have sat with CEOs and Human Resources as they criticized themselves for having lowered hiring standards in up markets, leaving them with too many low performers in a time when they need high performers to save the company. When the economy is down is the worst time to be “high-performer challenged.” You know why. Low performers:
- Fail to see opportunities
- Fail to anticipate problems
- Fail to fix problems
- Waste the time of high performers, who are less productive because they are spending their time preventing and fixing problems that weak performers cause
This blog suggests what to do if you have not packed your team with the A Players needed to survive a down economy, beat the competition, and flourish when the economy comes back.
First, let’s acknowledge that lowering hiring standards in good times is understandable… sort of.
When sales and profits are soaring and unemployment is low, expenses creep up; frugality slips, and it’s easy to “get away with” mediocre hires. They can be invisible; the costs of mis-hiring them are hidden in the overall profitability of the company. If a sales team of 9 people has 5 high performers and 4 mediocre performers, and if that mixed team beats the competition handily when business is good, the head of Sales is making maximum bonus and doesn’t care if the team could be better.
We at Topgrading do periodic “Hiring Check Ups,” and the pattern is very predictable. In good times, we see that hiring managers gradually tend to cut corners on the disciplines to hire almost all high performers. Instead of a clear Job Scorecard with numeric goals requiring high performance, vague job descriptions are used and the performance bar slips. Instead of thorough chronological interviews covering every job, shorter interviews “suffice.” Instead of 5 reference calls with candidates’ managers, arranged by the candidates, maybe one or two cursory reference calls are made. The result is a steady decline in success hiring high performers, but no one notices until business turns down and profits evaporate; only then does it become obvious that mediocre hiring methods produced mediocre hires who achieved mediocre performance.
How to Create an A Team When the Economy is Stumbling
- Let low performers go. Costs are slashed and there are layoffs, with lowest performers laid off first.
- Use Topgrading to hire. It is the most proven hiring method, with Job Scorecards, Topgrading Interviews, and candidate-arranged reference calls with managers. Hundreds of case studies show Topgrading improves hiring high performers from an average of 26% of the time to 85%. When there is a downturn, Topgraders may cut payroll, but they don’t let A Players go.
MarineMax CEO Bill McGill said:
There’s nothing that’s done more for our company than Topgrading. We began the process in 2002 and we’re convinced Topgrading has significantly improved our bottom line. We went from 25% to 75% high performing managers hired, and 25% to 90% high performing sales reps hired. When the great recession hit in 2008, our A teams rose to the occasion, and MarineMax flourished whereas some competitors went out of business. We are in the people business, and Topgrading is the heart of our culture.
Conclusion: Adopt rigorous hiring methods and maintain them through the good times so you will be prepared to survive and thrive through the bad times.