Image credit: duchesssa CC license

Great interview and insights in an article from HBS Working Knowledge regarding gender differences in Wall Street stars. Even if you’re not a recognized star or that’s not your field I guarantee that the information will be useful.

Why? Because the things that make the difference between women’s success and male failure apply to all.

According to HBS professor Boris Groysberg, “Women tend to do better after a move for two reasons.

One is that they are more invested in external than in in-house relationships. There are four main reasons why star women maintain external focus: uneasy in-house relationships, poor mentorship, neglect by colleagues, and a vulnerable position in the labor market. External focus makes them more “portable” in terms of making a positive move, but can cause problems if they want to progress within their own organization, because you need a solid internal network and good political capital to get things done in organizations. Anyone who focuses mostly on external relationships will not have that.”

Think about it. Forgetting the star function, external focus is death on retention, guaranteeing low loyalty and high turnover.

And as to managers creating women-friendly environments, Groysberg says, “The consequence of that is when these managers leave, the female-friendly environments disappear.”

One way to make everyone a star is to encourage your people to build their external relationships while providing a culture that facilitates the in-house relationships that make people want to stay.

What do you do to give your people both?

There is a subject that makes me crazy whenever it comes up, as it did today in a meeting when the a senior manager started talking about “retaining stars.” To be honest, I get pretty hot, because I find not just the concept, but the way it’s so often done, offensive.

To start with, there’s the whole idea of “stars.” From the vantage point of my 25 years of headhunting I know that this is true: people work to the quality of their management. “Star” is a strictly subjective definition—one manager’s star is another manager’s pain in the behind.

In my experience the workforce breaks down into three segments.

• At the top you have the so-called stars, the 10% who succeed on their own no matter what;
• at the other end are the 3% I call destroyers—because that’s how they get their kicks.

Both these groups do their thing in spite of how they’re managed.

What of the rest?

• 87% are neither stars nor destroyers on their own, but can become either because of how they’re managed!

Aside from its being mathematically impossible to hire nothing but stars, would you really want to? Stars may be creative, but they also do it their own way. Because they’re leaders, they need constant advancement, if not in your company then in another. Don’t get me wrong, stars can be team players, but they play better if it’s their team. Sayings such as, “Too many cooks spoil that soup.” and “You can’t fight a war with nothing but generals.” have been around for decades because they are true.

What’s more, singling out a few people for special treatment turns off the rest of your organization. Let’s say you have a 30 person group out of which you identify seven stars. To retain them you create a program of special mentoring, training and development, and make sure that they have access to extra opportunities and they stay with the company for four years.

Around 30% of your other 27 people will spend six months to a year trying to gain entree to the program and will usually leave if they don’t. 10-12% will get angry over what they see as favoritism and start looking immediately. Over the next few years, the rest usually experience a drop in confidence, lower self-esteem, declining productivity, growing frustration and dissatisfaction culminating in a call from a headhunter or ex-colleague. By the end of the four years you still have your stars, but have experienced turnover in excess of 100%, since the same sequence of events will effect the replacements.

A far better approach, from CEO down, is to recognize that it’s your responsibility to provide the environment, opportunity, encouragement and support that inspires people to achieve all that they can and become a star in their own right.

It’s amazing to me, but looking back over more than a decade of writing I find posts that still impress, with information that is as useful now as when it was written.

Golden Oldies are a collection of what I consider some of the best posts during that time.

Money. Everyone’s favorite subject that no one wants to talk about. Especially when it comes to work, as in, “what were you making previously” and “what are you looking for now?”  

Tomorrow’s post focuses on a new law enacted in Philadelphia and New York City that has the potential to change that entire, unwanted conversation, forcing managers/companies to focus on the future, as opposed to history.

Read other Golden Oldies here.

In a post last week I asked for opinions on the ideas presented in a series of articles in Business Week on managing smarter but especially one that claims that “treating top performers the same as weaker ones is ‘strategic suicide’” and said I would add my thoughts in a future post.

Bob Foster left two interesting comments (well worth your time to click over and read). Regarding pay for performance he tells the story of a company where everybody from the CEO down all quit.

“Taking on the task to salvage the company, I hired new people that met unusual qualifications: they had to be qualified for the job they were applying for; they had to be unemployed and available immediately; they had to work at sub-standard wages; they had to work while knowing the company could close at any minute; and they had to work without supervision. The team that came together produced a highly successful company, and it was not because of high pay, or performance bonuses (there were none). The team stayed together, and performed, because of mutual respect, trust, appreciation, and consideration—people were ‘valued.’ To me, this is the truest form of ‘pay for performance.’”

I agree that trust was one of the key ingredients in what Bob accomplished, but it wasn’t the only one—or maybe I should say that it needs to be based on fairness and honesty.

Bob says the pay was ‘sub-standard’, but I assume that it was universally sub-standard relative to position and experience. If he had chosen to pay part of the team, say 10% more than their peers, the team wouldn’t have coalesced.

And that is exactly why I disagree with the idea of paying top performers, AKA stars, big sign-on bonuses or higher salaries than their peers.

• Based on my own experience, 98% of star performers become stars as a function of their management and the ecosystem in which they perform. Change the management, culture or any other parts that comprise that ecosystem and the star may not survive.

• Just as a chain is as strong as its weakest link there is no star in any sport, business, media, etc., who can win with a team that is subject to constant turnover and low morale.

Consider this common example.

Two people are hired at the same time with the same background, same GP0 and similar work experience, but with the one exception. One graduated from a ‘name’ school and the other from a community college. Starting salary is $50K, but the manager adds a 20% premium to the first candidate’s offer on the basis that she must be better to have gone to that school.

Neither candidate lived up to their potential because the manager made poor choices. In doing so he set both up to fail but for different reasons; one thought she had it made and the other that he was low value.

Merit bonuses fairly given for effort above and beyond acceptable performance levels make sense as long as they don’t come at the cost of developing new talent.

But one problem with ‘pay for performance’ is the pay often comes before the performance, but there are others and I’ll discuss them more Thursday. In the meantime, here are links to five posts from 2006 that give more detail on the trouble with stars.

Stars—they’re in your MAP

More about stars and MAP

Rejects or stars?

Star compensation

Retaining Stars

Image credit: sxc.hu

There were several interesting comments on the original post; check them out.

Monday we considered the idea that a team can have too much talent, i.e., stars.

Bosses claim they hire stars because they are the rocket that drives a team further, faster.

I think many do it because they are lazy.

As Wally Bock puts it, “We live in a world of microwavable answers and quick fixes” — and bosses see stars as quick fixes.

Which, if you will excuse the bluntness, is really stupid for two reasons.

• Stars are often a product of the culture and don’t necessarily transplant well.
• Stars can cost you the rest of the team.

The so-called slow fix takes more effort, but provides far greater ROI.

And you, personally, do much better, and have more fun, with fewer regrets, building your own team of stars — usually the only things lacking in this approach are egos, prima donnas and drama.

A slightly offbeat story illustrates the kind of stars that can result­­­.

Faculty from Bard College coach a debate team from the Eastern New York Correctional Facility, a maximum-security lockup.

They recently beat the national and world champion Harvard team. They have also beaten the University of Vermont and West Point teams.

They are home-grown stars, since it’s doubtful that a world-class team of debaters were all incarcerated at the same facility.

The point of all this is that if you want to be known as a great boss, then be the coach who builds an extraordinary team, as opposed to being the one who hires shooting stars.

Flickr image credit: Michael Pollack

You can learn a lot from the Chrysler turnaround and here’s one of the most important points.

Fixing the product isn’t enough.

Developing recruiting and retention of knowledge workers isn’t enough.

Fixing basic problems that affect lower-level workers is imperative.

It took five years, starting in 2009 and when Fiat CEO Sergio Marchionne finally owned Chrysler (free registration required) the situation in the manufacturing areas was worse than expected.

Marchionne is a smart guy; he knew that no matter how many billions were spent on design and other high-level needs Chrysler wouldn’t turn around without the full support of the blue-collar workforce.

Marchionne said the company also made sure to spend money on the parts of the plant that touched employees more personally — bathrooms, lunchrooms, parking lots and reception areas. Why?

“The state of disrepair, of neglect of the work environment that these people were offered to make a high-quality product that was supposed to compete internationally with the best of the best, right?” You can’t do that when you can’t walk into the bathroom at one of the plants because they’re just not presentable.” Along with retooling and good leadership decisions, he said, the success of Chrysler “was due to the unwavering commitment of a group of people who make up the blue-collar force of Chrysler.”

A lot of people believe that union employees don’t care. Therefore, because it’s hard to get rid of them it doesn’t matter how you treat them.

And it’s not just in unionized areas.

Wall Street is famous for treating its pink-collar and back room employees, including IT, poorly.

Tech companies do everything for so-called stars, while treating the rest as replaceable ciphers.

The bottom line is that bosses who treat any part of their team as replaceable is, at best, short-sighted and, at worst, plain stupid.
Flickr image credit: Monikah Wiseman

Yesterday we looked at insanely stupid hiring and I said we would explore the alternatives today.

Every time a manager tells me that staffing gets in the way of their “real work” it makes me crazy. For decades I’ve heard this same stupid statement from various managers, from CEO to team leaders, and none of them was stupid.

Insanely smart (or stupid) hiring starts with individual MAP (mindset, attitude, philosophy™).

Here is the basic attitude of insanely smart managers, voiced decades ago by Terry Dial, who eventually became vice chairman of Business Banking at Wells Fargo.

“People are 90% of our costs as well as the key to customer service and satisfaction. The only thing that should take priority over hiring a new employee is keeping a current one.”

Overview of insanely smart hiring

1. Hire people to be part of the team. In other words, people who share your values, will support your culture, are fascinated with your product and believe in your company.
2. Take time to define what you really need. In other words, the right person for the right job at the right time and for the right reasons.
3. What you see may not be what you get. In other words, commit the time needed to interview thoroughly.
4. Performance isn’t always portable. In other words, be sure you can supply the management and environment in which the candidate can flourish.

How to practice insanely smart hiring

• Insanely smart mangers know that no matter what else they have to do it is people, acquiring them, motivating them and retaining them, that is their “real work.”
• Insanely smart managers never lose sight of this basic law of managing—there is nothing a manager can do personally (to save their review) that will off-set the effect of their under or non-performing group.
• It is easier to be an insanely smart manager if you work for an insanely smart company, or at least manager, that understands there is no hiring gene and good staffing skills are learned, not born—but don’t count on it.
• Insanely smart hiring is real work that requires time, energy and commitment.
• Insanely smart mangers focus on ending up being the dumbest person in the group.
• Insanely smart managers never hire jerks, no matter how much pressure they are under.

Join me Monday when we consider how insanely smart hiring creates stars and boosts retention.

Image credit: http://www.flickr.com/photos/ideaconstructor/563596890

In an NYT interview Michael Lebowitz, founder and C.E.O. of design firm Big Spaceship, passes on some excellent information on hiring, building a team and culture.

Here are two of the points with the greatest impact,

One of my longest-standing clients, a very smart guy, says: “There’s two ways to manage. You can hire to be the smartest person in the room or you can hire to be the dumbest person in the room.”

He says he works at being the dumbest.

And

“Don’t hire jerks, no matter how talented.”

Lebowitz says that there is no place for rock stars and I agree totally, unless you are naïve enough to believe they can function alone, without the cooperation, support and backing of the team.

Hiring rock stars means turnover—not productivity.

I’ve seen many team members leave because their manager’s focus was so completely on taking care of his few stars that he had nothing left over for the rest.

One of the finest managers I know has had a team packed with stars everywhere he’s worked. Partly because his reputation is well known and talent flocks to work for him, but mainly because he passionately believes that most people have the ability to become stars, some brighter than others, and he manages them accordingly.

True, he works harder at managing than many and has been kidded by his peers about the lengths to which he goes, but he tells me he wouldn’t have it any other way.

I once asked him how he got to be that way and he said that he’d never done anything that he didn’t want from his own manager, so it wasn’t a big deal.

I couldn’t resist asking if he was managed the way he did manage.

His response was a smile and laugh and that just because he didn’t get it didn’t mean that he didn’t want it.

Image credit: http://www.flickr.com/photos/stampinmom/5371862260/

Office politics has many definitions, but one characteristic remains constant—your ‘voice’ is positional. In other words, your ability to be heard is based on your position in the pecking order. Ideas below X level are ignored, between X and Y are acknowledged, Y to Z are heard and sometimes implemented.

But to have a full voice you either need to be part of the C suite or a “star” (stars below the Y level are scarce as hen’s teeth). Some argue that star systems are merit-based, but that argument falls flat if only those at a certain level are heard.

Few people like office politics and its presence has always been responsible for a large percentage of turnover.

One way to substantially reduce office politics in your organization by making sure that everyone has a voice.

Even in highly political corporations individual managers can improve their team’s performance and retention by making sure ideas receive a fair hearing no matter who thinks of them.

It’s easier when you are a first line manager, because you have only yourself to blame if a pecking order establishes itself in your group. If it does happen have a candid talk with the mirror and decide what’s important to you and what you want your ‘management brand’ to be known for.

As you move up, with one or more layers of management below you, it becomes more difficult because you are working to propagate an attitude that may not be wholly shared by those who report to you.

Your success depends partly on how consistent your own actions are and partly on what procedures you create to reinforce the desired behavior.

One of the most successful approaches is to tie bonus compensation to measurable results for soliciting suggestions from all levels and let VSI do the rest.

Of course, as with health, it is better route to prevent office politics than it is to cure it once it gets a toe-hold.

Simply put, that means not hiring managers at any level whose past behavior reflects the wrong attitude. You have two methods to accomplishing this. Obviously, it is something to discuss when doing reference checks.

But more importantly, if you make it clear during interviews that part of the candidate’s compensation depends upon it. It’s amazing how quickly a candidate will withdraw when her pay depends on a behavior with which she doesn’t agree.

Image credit: Svadilfari on flickr

In a post last week I asked for opinions on the ideas presented in a series of articles in Business Week on managing smarter but especially one that claims that “treating top performers the same as weaker ones is ‘strategic suicide'” and said I would add my thoughts in a future post.

Bob Foster left two interesting comments (well worth your time to click over and read). Regarding pay for performance he tells the story of a company where everybody from the CEO down all quit.

“Taking on the task to salvage the company, I hired new people that met unusual qualifications: they had to be qualified for the job they were applying for; they had to be unemployed and available immediately; they had to work at sub-standard wages; they had to work while knowing the company could close at any minute; and they had to work without supervision. The team that came together produced a highly successful company, and it was not because of high pay, or performance bonuses (there were none). The team stayed together, and performed, because of mutual respect, trust, appreciation, and consideration—people were ‘valued.’ To me, this is the truest form of ‘pay for performance.'”

I agree that trust was one of the key ingredients in what Bob accomplished, but it wasn’t the only one—or maybe I should say that it needs to be based on fairness and honesty.

Bob says the pay was ‘sub-standard’, but I assume that it was universally sub-standard relative to position and experience. If he had chosen to pay part of the team, say 10% more than their peers, the team wouldn’t have coalesced.

And that is exactly why I disagree with the idea of paying top performers, AKA stars, big sign-on bonuses or higher salaries than their peers.

• Based on my own experience, 98% of star performers become stars as a function of their management and the ecosystem in which they perform. Change the management, culture or any other parts that comprise that ecosystem and the star may not survive.

• Just as a chain is as strong as its weakest link there is no star in any sport, business, media, etc., who can win with a team that is subject to constant turnover and low morale.

Consider this common example.

Two people are hired at the same time with the same background, same GP0 and similar work experience, but with the one exception. One graduated from a ‘name’ school and the other from a community college. Starting salary is $50K, but the manager adds a 20% premium to the first candidate’s offer on the basis that she must be better to have gone to that school.

Neither candidate lived up to their potential because the manager made poor choices. In doing so he set both up to fail but for different reasons; one thought she had it made and the other that he was low value.

Merit bonuses fairly given for effort above and beyond acceptable performance levels make sense as long as they don’t come at the cost of developing new talent.

But one problem with ‘pay for performance’ is the pay often comes before the performance, but there are others and I’ll discuss them more Thursday. In the meantime, here are links to five posts from 2006 that give more detail on the trouble with stars.

Stars—they’re in your MAP

More about stars and MAP

Rejects or stars?

Star compensation

Retaining Stars

Image credit: sxc.hu

Continuing from yesterday on compensation basics.

Q: What’s the best way to handle extra compensation for a few stars?

A: There isn’t one. I’m sure that other experts would disagree with me, but I really hate the idea that it’s only important to take care of your so-called star employees and everything will be fine (or that you should only hire stars). I keep telling my clients, do the math.

Let’s say that you have 50 people in your company and you consider five of them to be stars with compensation 10% higher than their peers. The result is two-fold. First, you can expect the peers to start looking and you can count on turning most if not all of them within the next 12 or so months. Second, as word gets around the company, the rest of your people will start wondering how fairly they are being/will be treated and you can count on turning another 10% or more. The total cost of replacing people is pegged at 1-4 times the person’s annual salary.

As I said, do the math and then decide what to spend on a star.

However, you can set up an incentive plan as long as it isn’t skewed to favor your stars (you might also be surprised at who actually wins it). The best incentives are paid for achieving company goals and somewhat dependent on the rest of the team.

For example, we structured a bonus for a project manager handling multiple projects, both short and long-term, based on projects completed the prior month. At her annual review the project manager had already agreed to a company goal of 90% of projects on time, in budget and in quality over the year. The bonus was 0.5% of the total value of projects meeting those same criteria. We also allocated $500 per quarter for completing all of her quarterly goals—pro-rated if fewer were completed. This assured her that there was at least $2000 in incentives that was completely under her control.

The PM understood that the majority of her bonus was dependent on the engineering team, but since achieving those goals were part of her job description it made sense to base her incentive on the teams performance.

Developing fair compensation practices isn’t rocket science, it just takes a bit of thought—as opposed to doing what’s easy or caving in for short-term peace. And you have a great yardstick to measure the fairness against—yourself. Would you have been happy if your compensation had been done in the same way when you were in a similar position at that point of your career?

No? Then don’t expect others to be happy now.