Topgrading – Basic Definitions
- What exactly is Topgrading?
- What does Topgrading, Inc. do?
- What is the Topgrading Vision?
- How do you define success?
Mis-Hires and Mis-Promotions
12 Topgrading Hiring Steps
- Measure Hiring Success
- Create a Job Scorecard
- Recruit from Networks
- Screen with the Career History Form
- Conduct Telephone Screening Interviews
- Conduct One-Hour Competency Interviews
- Conduct Tandem Topgrading Interview
- Master Advanced Interview Techniques
- Analyze All Data, Write Draft Executive Summary
- Candidate Arranges Reference Calls
- Coach Your New Hire
- Measure Hiring Success Annually
Testing and Forced Ranking
- What is your opinion of the use of tests?
- Is Topgrading Forced Ranking?
- Wasn’t the Ford lawsuit about Topgrading?
How Topgrading Works
- How do CEOs, hiring managers, and human resource managers benefit from Topgrading?
- What is the evidence that Topgrading hiring methods truly are the best?
- What products and services does Topgrading, Inc. offer?
- Why do Topgrading hiring methods work so much better than any other methods?
- How good are hiring methods used by the most sophisticated companies in the world?
- Why is hiring for most companies so poor and how do Topgraders do so much better?
- Are Topgrading methods useful for small companies?
- What leading companies have embraced Topgrading?
- How can Topgrading methods be used for entry-level jobs?
- How do I get started Topgrading?
- What are common roadblocks to implementing Topgrading?
- How do you integrate the company’s core values into Topgrading?
- How are A Players different from B and C Players?
- How can you tell if someone is an A, B, or C Player?
- What is the #1 weakness of A Players?
- How can A Players fail?
Topgrading Return on Investment (ROI)
- What is the ROI of Topgrading?
- What is the ROI of Topgrading for sales reps?
- How does Topgrading improve managers’ interviewing techniques?
- Can I become a certified Topgrading Professional, Trainer, or Authorized Topgrading Agent?
Topgrading – Basic Definitions
Q: What exactly is Topgrading?
A: Topgrading is the practice of creating the highest quality workforce by ensuring that talent acquisition and talent management processes focus on identifying, hiring, promoting, and retaining high performers, A Players, in the organization at every salary level. We created the word Topgrading to encompass the world’s most proven, most effective hiring methods, but more: it’s also the best practices for promoting people, coaching, and retaining top talent.
Q: What does your company do?
A: We train managers at all levels to use the Topgrading methods … so they conduct Topgrading Interviews. But we’ve always been a professional services company, with Topgrading Professionals conducting “second opinion” interviews of candidates for hire or promotion – when the cost of a bad decision is astronomical. Topgrading Professionals also coach senior managers and our software integrates with ATSs.
Q: What is the Topgrading Vision?
A: Our vision is to Topgrade the World. Our goal is for Topgrading to be the accepted Best Practice for hiring and promoting people throughout the world. With Topgrading perhaps the world’s businesses and not-for-profit companies would perform better, grow more, hire more people, and contribute to stronger economies.
Part of that vision is to see you, assuming you are a hiring manager, improve your success picking talent so that your career, your organization, your balance in life, will all be better.
Q: How do you define success by hiring using Topgrading methods?
A: Hiring success means achieving 75% (preferably 90%) high performers in every job.
How Topgrading Works
Q: How do CEOs, hiring managers, and human resource managers benefit from Topgrading?
A: Let’s start with CEOs. The key benefit to CEOs is to improve performance of the company, to sales, profits, and market share. CEOs say that Topgrading is a major reason why their company as a whole is actually achieving more profits. As for hiring managers, the benefit of having almost all high performers reporting to them is their better performance, leading to faster promotions. Topgrading managers also enjoy a lot better balance in life. How? Because they can delegate to high performers. And Human Resources benefits by saving a LOT of time screening people and gains respect of their hiring managers who thank them for sending much better candidates to interview.
Q: What is the evidence that Topgrading hiring methods truly are the best?
A: The 3rd edition of Topgrading has dozens of case studies and the average improvement is from 26% to 85% high performers hired and promoted throughout the company. At www.TopgradingCaseStudies.com you can read the details of how companies Topgraded and the main advice from CEOs and heads of HR. Well-known CEOs had to personally verify the authenticity of the data on their Topgrading success — typically 25-30% hiring and promoting success improved to 85-90%. Topgrading case study CEOs say in their own words that Topgrading made their company more successful. No hiring methodology we know of can point to a fraction of Topgrading’s proven, documented success.
Q: What products and services does Topgrading, Inc. Offer?
A: We can interview finalist candidates for you for all jobs from CEO to first line supervisor (at varied fees, of course). We can also train you; tens of thousands of managers have more than tripled their success hiring after attending our public or on-site Topgrading Workshops. And we can set you up in an hour to use the best candidate screening tool on the planet – the Topgrading Snapshot; it takes you almost no time to send candidates a form they fill out and you get a multi-color picture (“snapshot”) showing you accurate ratings of their performance by bosses, their full salary history (when clients choose this option), and the real reasons they left jobs.
Q: Why do Topgrading hiring methods work so much better than any other methods?
A: Decades ago we discovered a “truth serum” that works, scaring off candidates who are low performers and those with fudged resumes. With only honest, high producers left in the candidate pool, the famous Topgrading Interview is conducted, revealing 100 times more than so-called behavioral or competency interviews. And finally, candidates arrange reference calls with former bosses and others, giving you “no phone tag” verification of what the candidate told you.
Q: How good are hiring methods used by the most sophisticated companies in the world?
A: Awful. Brad Smart met with just the #1 Human Resources professionals from just the 100 biggest companies in the world. The average for the group was a sad statistic; they said 80% of the people hired turn out to be “disappointments … or worse.” The Topgraders in the room averaged 80% high performers hired.
Q: Why is hiring for most companies so poor and how do Topgraders do so much better?
A: Their methods are plagued with the huge problems: dishonesty (40% of resumes contain deliberate falsehoods), shallow interviews (competency/behavioral interviews are easy to fake), and poor verification (reference checks are almost worthless). Topgrading replaces those characteristics with honesty, thoroughness, and solid verification.
Q: Are Topgrading methods useful for small companies?
A: Definitely. At www.TopgradingCaseStudies.com, the range is from huge (General Electric under Jack Welch) to small (40 employees at Mint.com). Topgrading is in a sense more important for small companies than large ones. Most startups fail in the first year, and one bad hire can kill a company. All the Topgrading methods work well or better in all size companies, in all industries.
Q: What leading companies have embraced Topgrading?
A: Hundreds, including General Electric (when it became the most valuable company in the world), Barclays, American Heart Association, Honeywell, Lincoln Financial, Maxion (largest wheels manufacturer in the world), Argo (global insurance), and more than a dozen leading private equity firms.
Q: How can Topgrading methods be used for entry-level jobs?
A: The methods are just simplified. Cashier candidates complete a shorter Career History Form, the Topgrading Interview might last 45 minutes, and there might be only two reference calls, lasting only five minutes each.
For a year, we worked with Roundy’s (now owned by Kroger), a Midwestern grocery chain, developing methods in anticipation of their opening Mariano’s Fresh Market, their new concept. Don Rosanova, EVP Operations, said, “Some of the most frequent comments we hear about the store are, ‘your people are great!’ Using the Topgrading process really made a difference on how and who we hired. My thanks to Topgrading, Inc. for pushing and guiding us in the right direction. It made the Mariano’s Fresh Market come alive.”
Mike Mellinger runs one of Home Instead’s 800 caregiver franchises, and worked with us to develop a Caregiver Scorecard, Caregiver Career History Form, and Caregiver Topgrading Interview Guide. Mike said, “We are doubling our hiring success!”
Q: How do I get started Topgrading?
A: Call us (847-244-5544) and we’ll discuss your needs and what is the best plan. Some companies try out our Topgrading Snapshot –free. Others want a Topgrading Professional to interview finalists for a key job. Others, who have read Topgrading(3rdedition) send 2 or 3 managers to one of our public Topgrading Workshops.
Q: What are common roadblocks to implementing Topgrading?
A: The single biggest impediment is a boss who lets people compromise on the high performer standard. Another roadblock is C Players, who will quietly try to undermine Topgrading. C Players who never exhibit much creativity on the job for some reason sense that Topgrading could be a threat to them and so they huddle together and find all sorts of creative ways interfere with the implementation of Topgrading. Of course, we have some ways that we recommend that you use in order to combat the C Players. Hint: train and get the solid support of opinion leaders, A Players, so peer pressure will quiet the nay sayers.
Q: How do you integrate the company’s core values into Topgrading?
A: Typically, employees who fail to embrace core values are given a chance to change and if they fail, they are replaced. And Topgrading assures new hires do embrace the values. As you create job scorecards, just include competencies representing your core values.
Q: How are A Players different from B and C Players?
A: An A Player is someone who is in the top 10% of talent available for the job – “available” meaning at a certain comp level, in that location, in that industry, and reporting to that manager. B Players are in the next 25%, and C Players are in the bottom 65%.
Another way to look at it is this: On a scale of Excellent, Very Good, Good, Only Fair, and Poor the A Players are Excellent and Very Good, high performers. Good ironically is not good enough – a disappointment if you wanted a high performer. If you interviewed someone who said they had 6 bosses in the past 15 years and not one of their managers would rate their performance Excellent and not one would rate it Very Good but … “All would rate me Good,” would this be a high performer? Hence, “good” is not good enough.
Q: How can you tell if someone is an A, B, or C Player?
A: Ultimately you have to follow Topgrading hiring methods so you interview and reference check finalists to be sure of how much talent is “available” and willing to take the job. Another indicator is a pattern in which the person has consistently received top performance ratings; the Topgrading Interview “nails” those patterns. A third indicator is if the person is tops on key competencies. For example, the following chart separates A, B, and C Players.
Q: What is the #1 weakness of A Players?
A: The #1 flaw, shortcoming of most leaders is mediocre listening. That’s the bad news. The good news is that improved listening is the single most powerful improvement most leaders can make, it is a learnable skill, and it’s an “uber-competency” which when improved, automatically improves other leadership skills.
How? When leaders progress from mediocre to very good listeners, their team considers them much improved as leaders overall, and specifically as motivators, team players, coaches, developers of talent, and yes — better Topgraders!
Let’s elaborate on listening. Most leaders need to improve at active listening. Listening is just grasping what the other person said. Active listening is playing back to the person what you heard, engaging in a dialog to really understand not just the words but what the person really meant to say, and the feelings, emotions, and passion underlying what is said.
Q: How can A Players fail?
A: A Players in a comparable job typically fail because they don’t fit with the culture in the new company. No process measures culture fit better than Topgrading. In Topgrading you learn why people left jobs, why they took the next job, what they like and disliked in every job, and how they have succeeded or failed. All of this information will tell you whether a candidate will fit with your company, in a specific role.
Mis-Hires and Mis-Promotions
Q: What is a mis-hire or a mis-promotion?
A: Topgraders have quite a high standard – a successful hire or promotion is someone who, after a year or so, is deemed to be an A Player, a high performer. If someone is just “okay,” that’s a mis-hire or mis-promotion. Typically, in companies that perform talent assessments, 80% of the people are considered “good enough” not to be replaced, but upon scrutiny they are B and or even C Players. When studied, many companies concluded that 75% of the people they’ve hired and promoted were mistakes – neither A Players nor exhibiting A potentials.
Q: With Topgrading, how are people fired?
A: Good question, because Topgrading should never be a transitive verb, something you “do” to chronic underperformers. Topgrading includes hiring and promoting with a Job Scorecard, with all the work accountabilities and minimum ratings expected on competencies, so if someone is falling short, normal feedback processes will assure that they know it. Then they should be given a chance to succeed. But if they fail most chronic low performers find another job before they are fired. The right language is this: With Topgrading, under-performers fire themselves.
12 Topgrading Hiring Steps
1. Measure Hiring Success
Q: Are companies good at measuring the quality of the people they hire?
A: No, they are terrible at it. Peter Drucker used to marvel at how companies are so good at measuring everything, how they say talent is their most important asset, how mis-hires are their biggest problem, and how they don’t measure quality of hire with any honesty. Most companies measure speed and cost to fill jobs, but that only means they mostly mis-hire people … but they do it fast and cheap. An American Productivity and Quality Center (APQC) two-year study of quality of hires found only one company (out of 20 in their sample) that did it well – Lincoln Financial, a Topgrading company.
Q: Why don’t companies measure quality of hire?
A: Honestly, the answer is they don’t want to admit that there is an elephant in the room. When they try to measure it, the results are so awful – typically 75% of people hired and promoted turn out to be disappointments. As mentioned above, Brad Smart met with just the #1 Human Resources executives of the largest 100 companies in the world, and they said only 20% of the managers they hire turn out to be the high performers they wanted, expected, and felt they paid for … and 80% were disappointments.
Q: What are ways to measure quality of hires and promotions?
A: There are two simple exercises that produce compelling “guestimates,” and there are objective, accurate ways. In workshops the average attendee concludes, “Wow, every time I hire someone, including bad hires and good hires, using Topgrading methods I’ll probably put an average of $250,000 on the bottom line and I’ll perform better and get faster promotions.” Here are the exercises that lead to that conclusion:
Exercise #1: Estimate the percent high performers hired in recent years. Ask yourself, “What percent of the people hired turned out to be high performers, A players — what was expected, with the only other category mis-hire?” Our research over the years shows the average rate of hiring high performers is 25%. Of course, if you include disappointing but adequate performers, the hiring “success” is probably closer to 80%. But Topgraders set the bar high, and if 75% of hires turn out to be disappointments or worse, you have a 25% success rate.
Exercise #2: Estimate the costs of a typical mis-hire. (The Topgrading Cost of Mis-Hire Form is available in the 3rd Edition of Topgrading. This is the most widely referenced cost-of- mis-hire form, and in only 15 or 20 minutes the high costs of mis-hires become clear. In our Topgrading books we show the costs to range, for various jobs, from 1Xcomp (clerk) to 5Xbase comp (sales rep) to 27Xbase comp (CEOs).
An objective way to measure quality of talent: A systematic, objective way to set a baseline before Topgrading, to really measure quality of hires (or promotions), go back three years, and study people hired three and two years ago – when they’ve been on the job at least one year. Assemble a quartet – boss, someone else at that level familiar with the person measured, and two HR people familiar with the person. Pull out all measures of job performance and demonstration of competencies (competency surveys, for example) and in an hour decide if the person is an A Player, A Potential, or Non-A (the Bs and Cs without A Potential).
2. Create a Job Scorecard
Q: What is the advantage of having a Job Scorecard over a job description?
A: Job descriptions are so vague neither candidates nor hiring managers are clear about what it will take to perform at the A level. Job Scorecards include both the measurable accountabilities and the minimum acceptable ratings on competencies in order for someone to be deemed an A player on the job.
For example, suppose the job is Vice President Sales with a different company than the previous example. The job description might be four pages long, but essentially says the job is to boost global and domestic sales, launch some new products, and achieve profitability goals. This is a vague job description, and the President really was most interested in boosting global sales because their #1 global competitor was declining, the VP of Manufacturing was most interested in keeping the domestic plants closer to full capacity, the VP of Marketing was hired because patents are running out and the company had no future without new product launches, and, of course, the VP of Finance wanted profitable sales.
A year later the new VP of Sales felt quite frustrated, having been jerked in many different directions and at best ended up satisfying one of the executives who had a real stake in the job.
A Job Scorecard would have nailed down measurable accountabilities such as boosting global sales 10%, boost domestic sales 15%, launch three new products on time/on budget and maintain profit margins of 7% … or whatever. And it would have stated the minimum ratings (in surveys) on key competencies (so, for example, someone cannot produce the numbers and destroy teamwork and be considered an A Player). But without measurable accountabilities, the executive team and the new hire were all confused as to what the job really was, and the chances of a costly mis-hire are very high!
3. Recruit From Networks
Q: Is there one best way to recruit A Players?
A: Yes – recruit from your networks. Using recruiters, posting jobs, using executive search firms, and running ads all have their place. Recruiting from your networks involves learning to build and maintain lists of about 20 A Players and 15 “connectors,” and that takes a bit of effort. But the advantage of recruiting from your networks is that it is faster, better, and cheaper than running ads or using recruiters.
Exactly what are the networks you should be tapping? Suppose you have a job opening for a software programmer; you pick up the phone and call three A Player software programmers you worked with at other companies, and you hire a terrific person in a couple of weeks. Perfect – that’s the essence of recruiting from your networks. So, one or your networks is A Players you’ve worked with in the past. This network can also include A Players you know through professional associations, your neighborhood, or other places, but these can be such casual associations that you really don’t know if they are A Players. If you really are confident someone is an A Player, you probably worked closely with them.
The other network is connectors — people who know a heck of a lot of A Players, and you trust your connectors’ judgment. So if you can’t hire an A Player you worked with in the past, next contact your connectors to see if they can produce A Player candidates. And if your networks don’t produce your A Player candidates, it’s time to hire a recruiter or advertise online.
To put recruitment in perspective: In my 65,000 oral case studies of total job experiences, I always ask about talent – “In that job, how many A, B, and C Players did you inherit, what did you end up with, and what happened in-between – training, coaching, hiring, firing, etc.?” The managers who said they ended up with mostly A Players almost all had recruited from their networks. Two dozen billionaires interviewed by Topgraders said this was their favorite and most successful way to recruit, too.
4. Screen with the Topgrading Career History Form, that Produces the Topgrading Snapshot.
Q: What are the best methods to pre-screen people before interviewing them in person?
A: We are confident we have the most powerful screening tools in the world – the Topgrading Career History Form, which produces the one-page picture of the candidate’s career, the Topgrading Snapshot. The Topgrading Career History Form becomes a company application form, requesting the usual information but also requesting all the information you want but resumes never contain our intellectual property – the “truth serum,” full salary history (if the client requires it), manager ratings of overall performance, the real reasons for leaving an employer, and a self-appraisal. All of this truthful information is shown in the Topgrading Snapshot.
The Mini Snapshot is a revolutionary candidates screening tool – an easy form that takes candidates a couple of minutes to fill out (so they will) yet provides a Snapshot of the most recent 2 jobs with the MOST important information – boss ratings and reasons for leaving jobs.
Screening at the resume stage: Companies that get a zillion resumes don’t mind asking candidates to take the time – even before they have talked with candidates – to complete a long Career History Form. Good for them!
All the other companies WANT the Topgrading information (boss ratings, reasons for leaving jobs, etc.) at the resume stage but know if they ask candidates to fill out a long form, most will drop out. A link producing the Mini Snapshot (information about the most recent 2 jobs) is truly revolutionary, saving HR and hiring managers a lot of time (screening resumes, 40% of which contain falsehoods).
5. Conduct Telephone Screening Interviews
Q: What is the best way to screen candidates on the phone?
A: Use the Mini Snapshot (above) which identifies the honest, high performing candidate, and then use Topgrading Phone Screen Guide, auto-populated with the information in the Snapshot, making the phone screen a powerful first interview.
6. Conduct One-Hour Competency Interviews
Q: Brad, you say competency (behavioral) interviews produce 75% mis-hires. Why do you suggest including them?
A: First of all, let’s define the term. What are competency interviews? They are interviews in which different interviewers spend one hour with a candidate, asking questions about one or more of the key competencies that were identified and listed in the Job Scorecard.
Why include competency interviews? A Player candidates have complained to a lot of companies that they had to push too hard to get to talk with as many people as they’d like and to get their questions answered. Topgrading methods are to create a competency interview guide and conduct the interview allowing 15 minutes for candidates to ask questions about the job, the organizational culture, how decisions are made, what the manager is like as a boss – whatever. Topgrading thoroughly vets candidates, and A Players expect to be thorough in their due diligence on the job. It’s a two-way street. Strong candidates demand to have their questions answered and we totally respect that. This is one step that helps meet that need.
7. Conduct Tandem Topgrading Interview
Q: What is a Topgrading Interview?
A: Formerly called the CIDS (Chronological In-Depth Structured Interview), the Topgrading Interview is a structured interview using the Topgrading Interview Guide. The process is a chronological interview starting with education years and then asking up to 16 questions about every full-time job, plus follow up questions, starting with the first full-time job and coming forward to the present job. Then there are questions about goals and a self-appraisal.
Interviewers conduct a two-hour Topgrading Interview for individual performers, or a four-hour interview for managers.
For management and professional jobs there are two interviewers, known as the “Tandem Topgrading Interview.” Why tandem? General Electric improved to 50% A Players hired; Jack Welch asked Brad Smart how to improve and Brad said, “Use 2 interviewers.” GE improved to over 80% A Players hired and became the most valuable company in the world.
Q: How important is the Topgrading Interview?
A: Whether you use it for an entry-level job in a one-hour interview, or use a Tandem Topgrading Interview for a manager, this is the one most important Topgrading step – the one that truly reveals what a candidate is like on as many as 50 different competencies.
Q: How does the Topgrading Interview reveal so much accurate information?
A: It starts with the Topgrading Career History Form with the truth serum, to assure total honesty. (No one hypes accomplishments in a job knowing they will have to arrange a reference call with that boss). Then during the Topgrading Interview the interviewer(s) see patterns of how the candidate evolved over the years. Every time a candidate shares a success, failure, or key decision the interviewers get deeper and deeper insights into what the person is like today. And finally, reference checks arranged by the candidate confirm the interviewer conclusions.
Q: Is the Topgrading Interview too time-consuming?
A: Most emphatically no! For each hire there is more time spent in Topgrading Interviews, but when success in hiring doubles and triples, the total time spent filling jobs with A Players is a fraction of what managers experienced when only 25% of their hires turned out to be high performers. Topgraders all say Topgrading saves them hundreds of hours of time each year (that otherwise would be spent preventing and correcting problems low performers cause).
8. Master Advanced Interviewing Techniques
Q: How does Topgrading improve managers’ interviewing techniques?
A: The answer might surprise you – Topgrading interviewers get coaching on their interviewing techniques from their tandem partner after every Topgrading Interview. The vast majority of interviewers have never taken an interviewing course, but Topgraders typically attend a two-day Topgrading Workshop, the second day of which they spend interviewing and getting feedback and coaching from Topgrading Professionals and their tandem interview partners, using the Topgrading Interviewer Feedback Form.
We’ve surveyed thousands of managers who say they think the vast majority of managers, including those who have taken a standard interviewing course, do a Poor or Very Poor job of interviewing, noting reasons like, “Poor preparation,” “No structure – just wander,” “Dumb questions like ‘tell me about yourself,” “No notes taken,” “Interviewers talk way too much,” “Interviewers arrive at conclusions in minutes, based on intuition and not data,” and…you get the picture. And when asked if they have ever given feedback or constructive suggestions to poor interviewers, the answer is no.
And finally, here is the Topgrading innovation: After every Topgrading Interview the tandem partners simply pull out the Topgrading Interviewer Feedback Form and give each other a couple of minutes of feedback and suggestions.
9. Analyze All Data; Write Draft Executive Summary
Q: Ugh! Do I really have to write reports on candidates?
A: Ugh, yes! But with Topgrading, you get such clear insights into candidates that reports write themselves! Simply put, you have a Job Scorecard with Competencies, and after each Topgrading step you write in pencil your best guess rating of the candidate. By the time you’ve done a Tandem Topgrading Interview and reference checks, it’s pretty easy to write the report.
10. Candidate Arranges Reference Calls with Former Managers and Others.
Q: How can reference checks be made useful?
A: Your question makes a lot of correct assumptions – that too often reference checks are worthless, because you don’t talk with bosses, companies prohibit managers from taking calls, and you end up talking with golfing buddies who exaggerate the candidate’s strengths and conceal weaker points. At each step in the hiring process candidates are told that to get a job offer they must arrange personal reference calls with former bosses. That’s the “truth serum.” After the Topgrading Interview the interviewer(s) pick which former managers and others they want to talk with (and others – peers, direct reports, etc.) and the candidate arranges the calls. There’s no telephone tag, bosses do take the calls, and the reference calls are honest, accurate, and helpful in confirming the quality of the candidate.
Q: What if a candidate refuses to let you talk with prior bosses?
A: The candidate has plenty to hide, so reject the candidate.
11. Coach Your New Hire
Q: In Topgrading hiring, when are newly hired people coached?
A: Within weeks of starting the job. Why wait, when A Players are eager for feedback, want to be productive as soon as possible, and want to develop themselves for promotion.
Q: What is the Topgrading coaching process?
A: It’s simple – the Topgrading Interviewers sit down and share all the notes and the new hire does the work of creating an Individual Development Plan, using a Topgrading template.
12. Measure Hiring Success Annually
Q: Why measure quality of hire or promotion annually?
A: What gets measured gets improved and this keeps the organization motivated to Topgrade. Without annual measurements there can’t be real accountability for quality of hires and promotions … and without accountability, even the best of best practices wither and die on the vine. So Step 12 is systematically measuring percent high performers hired and costs of mis-hires pre- and post-Topgrading. There are some skills to learn, but they are simple conceptually – how to make these calculations.
Companies performing these calculations hire better because everyone knows who is Topgrading and who isn’t, and the peer pressure to Topgrade mounts. Individual managers are held accountable to achieve at least 75% high performers on their team. Topgraders so obviously perform better, get promotions faster, and get bigger bonuses, so Topgrading becomes expected not as a program but as part of the DNA of the company.
The simplest way to perform this step is to identify the managers who fully used Topgrading methods … and the percent of their hires turned out to be A Players or not. And the other category is managers who did not fully use Topgrading methods, and the percent of their hires who turned out to be A Players … or not.
Q: What else should be measured?
A: Topgrading disciplines. When the disciplines slip, when managers cut corners, the percent high performers hired plummets. Just as sales reps report activities (emails, conversations, proposals, etc.) and there is a high correlation with the (right) activities and sales results, it’s the same with Topgrading.
Return on Investment (ROI) in Topgrading
Q: What is the ROI of Topgrading?
A: To get to a bottom line, in workshops the average attendee concludes, “Wow, every time I hire someone, including bad hires and good hires, using Topgrading methods I’ll probably put an average of $250,000 on the bottom line and I’ll perform better and get faster promotions.” Here are the exercises that lead to that conclusion.
Exercise #1: Estimate the percentage of high performers you’ve hired in recent years. This exercise takes less than a minute. Just think: What percent of the people I’ve hired turned out to be high performers, A Players, stars, what I expected, with the only other category is a mis-hire. Our research over the years shows the average rate of good hires to be 25%. Of course, if you include disappointing but adequate performers, your hiring “success” is probably closer to 80%. But Topgraders set the bar high, and if you are disappointed (or worse) with 75% of your hires, you’re typical, and you have a 25% success rate.
Exercise #2: Estimate the costs of a typical mis-hire. (The Topgrading Cost of Mis-Hire Form is available in the in the 3rd Edition of Topgrading and you can use a Cost-of-Mis-Hire calculator in Resources). This is the most widely referenced cost of mis-hire form, and in only 15 or 20 minutes your doubter will be amazed at the high cost of a typical mis-hire. In our Topgrading books we show the costs to range, for various jobs, from 1 to 27 times base salary. And your doubter will be amazed at how time consuming it is to sweep up after a typical mis-hire (200 hours, typically).
Q: What is the ROI of Topgrading for sales reps?
A: My co-author for Topgrading for Sales, Greg Alexander, put quite an elaborate ROI model together. Clients have plenty of data showing improved hiring, but Greg did such an elaborate analysis, we made it a separate appendix. Here’s one part of the analysis, edited a bit for brevity. Let’s take a hypothetical company’s income statement: A lot of companies are getting killed in the recession, but this article shows how Topgrading can produce record sales and profits even in a recession. The company happens to own restaurants, but the Topgrading principles apply to all industries.
Q: How does Topgrading improve managers’ interviewing techniques?
A: The answer might surprise you – Topgrading interviewers get coaching on their interviewing techniques from their tandem partner after every Topgrading Interview. The vast majority of interviewers have never even taken an interviewing course, but Topgraders typically attend a two-day Topgrading Workshop, the second day of which they spend interviewing and getting feedback and coaching from Topgrading Professionals and their tandem interview partners, using the Topgrading Interviewer Feedback Form.
We’ve surveyed thousands of managers who say they think the vast majority of managers, including those who have taken a standard interviewing course, do a Poor or Very Poor job of interviewing and they list reasons like, “Poor preparation,” “No structure – just wander,” “Dumb questions like ‘tell me about yourself,” “No notes taken,” “Interviewers talk way too much,” “Interviewers arrive at conclusions in minutes, based on intuition and not data,” and … you get the picture. And when asked if they have ever given feedback or constructive suggestions to poor interviewers the answer is no. And finally, here is the Topgrading innovation: After every Topgrading Interview the tandem partners simply pull out the Topgrading Interviewer Feedback Form and give each other a couple of minutes of feedback and suggestions.
Q: Can I become a certified Topgrading Professional (listed on our website), a Certified Topgrading Trainer (train-the-trainer within a company), or Authorized Topgrading Agent (you get commissions for opening the door for us to eventual clients)?
A: Yes! Call 847-244-5544 to talk with a Topgrading Professional about these opportunities.
Topgrading Not-for-Profit Organizations
Q: How can not-for-profit organizations Topgrade?
A: Not to be a wise guy, but they should do it exactly the way for-profit companies do it. It’s a shame that so many not-for-profits figure that because they don’t have big budgets; they have to hire mediocre people. But people who “believe in our mission,” like Cass Wheeler, former CEO of American Heart Association, destroy that view. He Topgraded AHA and said, “Topgrading saves lives!” In his great book, Have a Heart, Cass spells out how Topgrading and other best business practices can and must be used in not-for-profits.
These days people who give to charities are particularly keen to see that the money is used well. Cass Wheeler makes the point that you can pay business-level comp and hire one A Player, or pay lower comp and hire two or three B/C Players. You know what he recommends.
Testing and Forced Ranking
Q: What is your opinion of the use of tests?
A: Some companies want to be sure they hire brilliant people and some intelligence tests are useful to them. A lot of companies use tests like the Myers Briggs Type Indicator, not for selection, but for onboarding and for workshops to help people with different styles work more effectively together. Personality tests seem to have some value, but our recommendation is to not have a cutoff score that eliminates candidates. Instead use the profile as an additional piece of information.
Q: Is Topgrading forced ranking? Should I do what Jack Welch suggests – rank everyone and (fire) the bottom 10%?
A: No. In the 3rd edition of Topgrading, Bill Conaty, who was head of HR under Jack Welch and Jeffrey Immelt, says GE never fired the bottom 10%. He said careful assessments of managers would show who is underperforming and they would be given a year to achieve the goals. In any year maybe 5% were the repeat under-performers and they would go. But never 10%, because they never had 10% repeat low performers.
Q: Wasn’t the big Ford lawsuit about Topgrading?
A: Absolutely not! In Topgrading (2005 edition) in which there is a section entitled, How NOT to Topgrade. The short version is this: Ford’s head of HR several times contacted Brad Smart and asked him to consult with them, but they never met because calendars didn’t match. Brad never gave any advice. Ford implemented a forced ranking system that goes against everything Topgrading recommends.
Validity of Topgrading
Q: Is Topgrading valid?
A: Of course. In 2014 Michael S. Lorence completed his PH.D. dissertation at Georgia State University: The Impact of Systematically Hiring Top Talent: A Study of Topgrading as a Rigorous Employee Selection Bundle. He slices and dices 6 representative case studies and concludes that indeed the reported findings of Topgraders experiencing only a 10% mis-hire rate was much better than the 75% average mis-hire rate across the country. He notes that no hiring approach in the published literature, some 100,000+ studies of talent, show any approach nearly as good.
Q: Is Topgrading legally defensible?
A: Yes! In the 3rd edition of Topgrading, employment law firm Seyfarth Shaw updated the 55-page assessment of legal viability of Topgrading originally published in the 2005 edition. Bottom line – no problems! They have offered that opinion for the United States and for many countries (UK, France, China, Japan, Mexico, and Germany) relying on their partner firms in those countries. Partner Eugene Jacobs states: “Follow recommended U.S. Topgrading practices for hiring and you will operate legally in most other countries.”
In four decades of Topgrading methods being used by hundreds of companies in the US and elsewhere, I have not heard of a single legal challenge to any Topgrading method. Not one. Bottom line, all the laws on discrimination are supportive of what Topgrading is all about — clear Job Scorecards with measurable accountabilities and competencies spelled out, structured interviews with interview guides (and we have them for phone screens, competency interviews, the Topgrading Interview, and reference check interviews), note taking … and generally having everything job related. To repeat: I have not heard of any legal challenges.