Winning (9 page)

These sessions were almost always contentious, and the opinions that came at me strong and varied. And yet, my best decisions arose from what I learned in these debates. Disagreement surfaced meaningful questions and forced us to challenge assumptions. Everyone came out of the experience more informed and better prepared to take on the next crisis.

A good leader has the courage to put together a team of people who sometimes make him look like the dumbest person in the room! I know that sounds counterintuitive. You want your leader to be the smartest person in the room—but if he acts as if he is, he won’t get half the pushback he must get to make the best decisions.

The fourth characteristic is heavy-duty resilience.
Every leader makes mistakes, every leader stumbles and falls. The question with a senior-level leader is, does she learn from her mistakes, regroup, and then get going again with renewed speed, conviction, and confidence?

The name for this trait is resilience, and it is so important that a leader must have it going into a job because if she doesn’t, a crisis time is too late to learn it. That is why, when I placed people in new leadership situations, I always looked for candidates who had one or two very tough experiences. I particularly liked the people who had had the wind knocked clear out of them but proved they could run even harder in the next race.

The global business world today is going to knock any leader off her horse more than once. She must know how to get back in the saddle again.

HIRING FAQS

Finally, let’s look at the six FAQs—frequently asked questions—I’ve received about hiring over the past several years. At the end of them, I will try (at last) to answer the insurance executive from San Diego about the one best question to ask in an interview. As I said earlier, I’ve been thinking about it for a long time now.
*

1. How do you actually interview somebody for a job?
My immediate answer to this question is: don’t ever rely entirely on one meeting!

No matter how pressed for time you are or how promising someone looks, make sure every candidate is interviewed by several people. Over time, you will find that there are some people in your organization who have a special gift for picking out stars and phonies. Rely on them. (Bill Conaty, my HR head, was a master at this. Whether it was with a handshake, a smile, or a way of talking about their family, job candidates were transparent to him.) And listen when a trusted colleague tells you that his or her gut is negatively responding to a candidate. That uh-oh feeling is usually a sign that the candidate is not what he seems.

At some point in the interview process, when it’s your turn, make sure you exaggerate the challenge of the open job; describe it on its worst day—hard, contentious, political, full of uncertainty. As you crank it up, see if the candidate keeps saying, “Yes, yes, yes!” If he does, you should worry that he has few other options, if any. You may even be his sole hope of employment.

Be impressed if the candidate starts peppering you back with hard questions like, “How soon do you expect the results to be achieved?” or “Do I have enough people to make this happen?” Be even more impressed if she asks you about the company’s values. The difficulty of a job will bring good candidates to the edge of their seats with curiosity and firm self-confidence, not overenthusiastic acquiescence.

Finally, after all the talking is done, don’t check just the references the candidate gives you. Call around—but you know that. When you do, don’t allow the conversation to be perfunctory. Stop yourself from doing something natural—just hearing the good news you want to hear. Force yourself to challenge anything that sounds like lawyer-speak. Use your chits. Promise you won’t repeat what you hear. Doing that, you’ll get what I did more times than I can count: “You’ve got to be kidding! We were happy to get rid of that guy!”

2. I just need to hire someone for technical expertise. Why do I need to bother with the four Es?
Obviously, hiring a person who is both a technical star and demonstrates the four Es would be very nice! But if you’re really just desperate for a person with a certain specialty—say, a computer programmer or a research scientist—then I’d be satisfied with energy and passion, along with a bucketful of raw intelligence, great prior experience, and, of course, integrity. You need that with any person you hire.

3. What if someone is missing one or two of the Es? Can training fill in the gaps?
Any candidate you hire in a managerial role must have the first two Es, positive energy and the ability to energize. Those are personality traits, and I don’t think they can be trained into someone. And frankly, I would encourage you not to hire any team member—manager or not—without a good dose of positive energy. People without it just enervate an organization.

Edge and execution, on the other hand, can be developed with experience and management training. Time after time, I’ve seen people learn how to make tough calls and deliver results.

The GE audit staff offers numerous examples. Every year, it brings on board about 120 people, primarily from GE’s financial management training program, but about a quarter from other functions, such as engineering and manufacturing. The typical new hire in auditing has about three years of experience with the company.

Their first year, these “new kids” travel to GE businesses around the world as members of three- to six-person audit teams. After twelve weeks of grueling analysis, they return to the headquarters of the business they’ve just audited to present their findings to the CFO and CEO. Often, they’ve got plenty to tell, some of it not so pretty.

Early on, these young auditors are tentative, holding their comments while the more senior members of the team run the show. But over time, usually three to five years, I’ve seen these auditors develop an edge that is razor sharp. It comes from observing their more experienced teammates, lots of coaching, and plenty of practice. They also develop an incredible knack for execution. After all, they are responsible for making sure their recommendations have been implemented. If they haven’t, all hell breaks loose—and that’s a good teacher.

The proof that edge and execution can be learned is clear: several CEOs of GE’s biggest businesses and a vice-chairman are veterans of the audit staff development process.

4. Can a person get ahead in business without the four Es or passion?
Absolutely yes.

A person can reach great heights just by being very smart. Or just by the sheer ability to get things done. We can all think of examples of these individuals. Many are the inventors and entrepreneurs of the world, and usually they run their own shows.

But within an organization, I just haven’t seen too many who have sustained success, especially as leaders, without the four Es and passion.

5. I’ve always tried to hire people who can hit the ground running. What do you think about that as a decisive factor?

When hiring, you have to make a trade-off. Do you hire someone to get a job done fast, or do you hire him based on his potential for growth? My advice is: try to pick the second option.
*

I didn’t always feel that way.

The first time I hired managers was when I was twenty-eight years old and I needed to build a functional team. I hired a PhD who was a peer of mine to be manager of R & D. For marketing, I hired a good fellow who was smart and was there, and for manufacturing manager, my selection was an experienced hand. I’d seen him in action in another part of the same division.

Although I didn’t think of it at the time, most of these people had no future beyond the jobs I had just put them in. Our business was growing rapidly, and they didn’t have the skills to grow with it. In fact, by the time the business was four years old, all of them were gone and we were filling the positions again.

With my first shot at hiring managers, I didn’t know any better. I just wanted to get the job done. But I eventually learned that it pays to go for the high-potentials who can grow with the business or are capable of moving up elsewhere in the organization. Hiring a highly skilled “blocker”—someone who will hit the ground running but has no future beyond the open position—is tempting because it solves an immediate need. But blockers soon become enervating. They get bored by the familiarity of the work or, as in my early case, swamped by its challenges. Their people get discouraged because they see their bosses going nowhere, which makes them wonder about their own opportunities.

A good rule of thumb, then, is not to hire someone into the last job of his or her career, unless it’s to be head of a function or CEO.

6. How long does it take to know if you’ve hired right?
Usually within a year—and certainly within two—it is pretty clear if someone is getting the results you’d hoped for.
*

It’s relatively easy to notice when a person lacks the energy and execution you anticipated. But the ability to energize and the capacity for edge sometimes take longer to show up in a new environment. People want to fit in before they start rousing the team to a cause or making the tough calls. But as I said, within two years at the most, if an employee is still falling short of your expectations, it is time to admit your mistake and start the process of moving the person out. If you have been doing your job and giving honest evaluations along the way, the employee shouldn’t be surprised, and an equitable severance package will likewise soften the blow.

Hiring right is hard. I’d say as a young manager, I picked the right people about 50 percent of the time. Thirty years later, I had improved to about 80 percent.

My point is: don’t beat yourself up if you get hiring wrong some of the time, especially when you’re starting out.

Situations change. People change. You change.

But just remember, every hiring mistake is yours. You have to fix it, not an HR person you call in to do your dirty work. Take responsibility and make sure the ending is candid and fair.

And now for our San Diego question.

What is the one thing you should ask in an interview to help you decide whom to hire?
If I had just one area to probe in an interview, it would be about why the candidate left his previous job, and the one before that.

Was it the environment? Was it the boss? Was it the team? What exactly made you leave? There is so much information in those answers. Keep digging and dig deep. Maybe the candidate just expects too much from a job or a company—he wants a boss who is entirely hands-off or teammates who always agree. Maybe he wants too much reward too fast. Or maybe she’s leaving her last job because she has just what you want: too much energy to be held back, so much ability to energize she wants to manage more people, too much edge for a namby-pamby employer, and such a strong ability to execute she needs more challenge.

The key is: Listen closely. Get in the candidate’s skin. Why a person has left a job or jobs tells you more about them than almost any other piece of data.

Your goal in hiring is to get the right players on the field.

Luckily, great people are everywhere. You just have to know how to pick them.

It’s so easy to just hire people you like. After all, you’ll be spending the majority of your waking hours with them. It’s also easy to hire people with relevant experience. They’ll get the job done.

But friendship and experience are never enough. Every person you hire has to have integrity, intelligence, and maturity. Once you’ve got those, look hard for people with the four Es and passion. Beyond that, at the senior level, look for authenticity, foresight, the willingness to draw on others for advice, and resilience.

Put it all together, and those are the people who win.

Y
OU
’
VE GOT THE RIGHT PLAYERS
on the field—that’s a great start. Now they need to work together, steadily improve their performance, be motivated, stay with the company, and grow as leaders.

In other words, they need to be managed.

There are libraries of books on people management, not to mention plenty of courses in business schools. There are training programs, magazines, and Web sites, many offering sound advice. And then there is experience.

That’s mainly what this chapter draws on. During my years at GE, once I was out of the laboratory at Plastics, managing people was really what I did. After all, I didn’t have the expertise to design jet engines, build CT scanners, or create a comedy program for NBC. Obviously, as CEO, I got involved in everything: strategy, new products, sales, M & A, and the like. But in that job, I always believed the people part was how I could help GE the most.

People management covers a wide range of activities, but it really comes down to six fundamental practices.

No person can undertake these activities alone—far from it—so let me phrase them as company-wide practices. To manage people well, companies should:

 

1. 1. Elevate HR to a position of power and primacy in the organization, and make sure HR people have the special qualities to help managers build leaders and careers. In fact, the best HR types are pastors and parents in the same package.
   
 

2. 2. Use a rigorous, nonbureaucratic evaluation system, monitored for integrity with the same intensity as Sarbanes-Oxley Act compliance.
   
 

3. 3. Create effective mechanisms—read: money, recognition, and training—to motivate and retain.
   
 

4. 4. Face straight into charged relationships—with unions, stars, sliders, and disrupters.
   
 

5. 5. Fight gravity, and instead of taking the middle 70 percent for granted, treat them like the heart and soul of the organization.
   
 

6. 6. Design the org chart to be as flat as possible, with blindingly clear reporting relationships and responsibilities.
   
 

 

After being on the road for several years, I realize that some people may read these practices and wonder how, if they adopt them, they’ll ever get any real work done.

I always thought they
were
real work! But many Q & A sessions have left me with the impression that at lots of companies, people management is what’s done when there’s time left over.

In the hope that that might change, here are the practices in more detail.

About three years ago I was in Mexico City, speaking at a convention of five thousand human resource executives. As usual, the event was set up as a Q & A session with two seats on the stage. In this case, the interviewer was Daniel Servitje, the thoughtful and engaging CEO of Grupo Bimbo, one of the country’s largest food companies.

Daniel and I spent the first forty-five minutes talking about strategy, budgets, global competition, and other business topics before the microphone went into the audience for their questions. The first person to speak identified herself as the head of personnel for a Brazilian manufacturer. With an urgent voice, she asked me about the role of HR in a company—what did I think it should be?

My answer was immediate, and to be honest with you, even though I have been making this point publicly for years, I thought it would get a round of applause, given the makeup of the audience.

“Without doubt, the head of HR should be the second most important person in any organization,” I said. “From the point ofview of the CEO, the director of HR should be at least equal to the CFO.”
*

There was a strange hush in the place. In fact, it was so quiet I thought my Boston accent had thrown off the translator.

“Isn’t that what happens in your companies?” I asked. “I mean, let’s get a show of hands. How many of you work at companies where the CEO treats the director of HR and the CFO with equal respect?”

Fifty hands went up—fifty out of five thousand people! No wonder no one had clapped! I had accidentally stepped on the toes of about 99 percent of the crowd.

Later, at a reception after the session, one person after another from the audience told me how HR was belittled and underutilized in their organizations. In all, about thirty people told me stories in the same vein.

Worse, their reports turned out not to be an exception. I have asked my stature-of-HR question at about seventy-five other speaking events since Mexico City. The results are always disturbingly similar.

It blows my mind. Even if your company is too small to have its own HR department,
somebody
has to be doing HR.

And HR has just got to be as important as any other function in a company.

In fact, why wouldn’t HR be as important as finance? After all, if you managed a baseball team, would you listen more closely to the team accountant or the director of player personnel? The input of the team accountant matters—he sure knows how much they can pay a player. But his input certainly doesn’t count
more
than input from the director of player personnel, who knows just how good each player is. Both belong, alongside the CEO, at the table where decisions are made.

Unfortunately, at a lot of companies, HR isn’t even in the same room.

The reasons, I think, are threefold. First, the impact of HR is hard to quantify. You can see how sales and R & D affect performance, and how finance tallies it up. But HR deals with “air”—people skills. Not only are people skills squishy-soft, most people assume they have them in spades. How many times have you heard someone say, “I’m a people person!”

Second, HR too often gets relegated or pushed into a benefits trap—administering insurance plans and overseeing scheduling issues like vacation and flextime. It also gets saddled with health and happiness activities—putting out the plant newspaper and organizing the summer picnic. Someone has to take care of these tasks, but if HR gets stuck doing them all the time, its stature will never be what it should.

Third, HR becomes twisted up in palace intrigue.

Back in the 1960s and early ’70s, GE went through a period like that. Its HR system ran on gossip, whispers, and tattling. A small and frankly terrifying group of HR executives held secretive opinions about every manager, and they could tar you for life if they wanted. On the other hand, they could also move you up very quickly. They thought of themselves as kingmakers.

The game changed completely when Reg Jones, the CEO at the time, appointed Ted LeVino to run HR. Ted threw open the shutters and let the light shine in. HR processes soon became transparent, and more importantly, they began to make sense. By the time Ted retired in 1985, HR was on its way to doing exactly what it should: listening to people vent, brokering internal differences, and helping managers develop leaders and build careers.

That’s why the best HR people are a kind of hybrid: one part pastor, who hears all sins and complaints without recrimination, and one part parent, who loves and nurtures, but gives it to you fast and straight when you’re off track.
*

I’ve found over the years that the best pastor-parent types have usually run something once in their careers—a factory, a product line, or another function. But I’ve also seen some come right up through HR. Either way, the best have stature beyond their rank and title. They
know
the business—its every detail. They understand the tensions between marketing and manufacturing, or between two executives who once went after the same job. They see the hidden hierarchies in people’s minds—the invisible org chart of political connections that exists in every company. They know the players and the history.

Along with stature, pastor-parent types have got integrity oozing out of them. That integrity comes from unrelenting candor and trustworthiness. Pastor-parents listen with uncommon care, tell the truth, and hold confidences tight.

They also know how to settle a disagreement.

We’d all like to believe that good companies don’t need referees. But they do. People get passed over for promotions. Interdivisional sales cause all kinds of who-gets-the-credit issues. Bonus pools are perceived to be unfairly distributed.

I was lucky enough to have a few pastor-parent types on my team at various points in my career, the last one being Bill Conaty, whom I’ve mentioned before in this book. Bill started out in GE’s manufacturing training program and eventually became the manager of the locomotive diesel engine plant in Grove City, Pennsylvania. He then jumped ship to the HR business. He was a natural. No matter with whom he was dealing—a senior executive or an hourly worker—he was as straight as could be with good news and bad. He was a great listener and so discrete that you couldn’t squeeze a secret out of him with a vise.

I came to appreciate Bill when he was head of HR for Aircraft Engines. The business had a huge crisis in ’89, when it was discovered that one of its employees had bribed an Israeli air force general to get a jet engine contract. What impressed me was how Bill dealt with the people involved in the mess, some of whom were his peers and friends. He had to make incredibly painful recommendations about letting people go, and he did it with the kind of candor, compassion, and diplomacy that is the ultimate hallmark of a pastor-parent.

If your HR is on track, pastor-parents are ready to handle frictions and crises—channeling anger, forging compromises, and if need be, negotiating dignified endings.

They are there to help managers manage people well.

Remember what happened when corporate scandals rocked the American economy? The government reacted quickly by passing the Sarbanes-Oxley Act, which mandates a fine or jail time or both for any CEO or CFO who wittingly signs off on bad numbers.

The Sarbanes-Oxley Act was necessary to get credibility in financial reporting and restore investor confidence.

I just wish that evaluation systems got the same kind of attention and rigor. After all, financial violations happen because of people.
*

Yet people evaluation systems are too often just exercises in paper pushing.

Earlier in this book, in the chapter on candor, I mentioned that I often ask audiences, “How many of you have received an honest, straight-between-the-eyes feedback session in the past year, where you came out knowing exactly what you have to do to improve and where you stand in the organization?”

To repeat: 20 percent of the audience raises its hand on a good day, but the average yes-response is about 10 percent.

If this unscientific research is anywhere near right, very few companies have meaningful evaluation systems in place.

That’s not just bad—it’s terrible!

You simply cannot manage people to better performance if you do not give candid, consistent feedback through a system that is loaded with integrity.

There is no one right way to evaluate people. Every company will devise different forms and different methodologies. But any good evaluation system should share some characteristics.

 

• It should be clear and simple, washed clean of time-consuming bureaucratic gobbledygook.
  If your evaluation system involves more than two pages of paperwork per person, something is wrong. I evaluated my twenty or so direct reports with frequent handwritten notes that included two pieces of information: what I thought the person did well, and how I thought they could improve.
  
 

• It should measure people on relevant, agreed-upon criteria that relate directly to an individual’s performance.
  The criteria should be quantitative, based on how people deliver on certain goals, and qualitative, based on how they deliver on desired behaviors.
  
 

• It should ensure that managers evaluate their people at least once a year, and preferably twice, in formal, face-to-face sessions.
  Informal appraisals should happen all the time. But when it comes to formal reviews, one of the face-to-face sessions should let people know where they stand in relation to others. If your company practices differentiation, a good evaluation system is where the rubber meets the road.
  
 

• Finally, a good evaluation system should include a professional development component. Managers should not only talk to their employees about next career steps, but should elicit from them the names of the two or three people who they think could replace them should they be promoted.
  
 

 

Even with all these characteristics, no evaluation system is first-rate unless it is constantly monitored for integrity. Someone has to have the responsibility—and the accountability—to ask if the evaluation system is capturing the truth, just as a good audit team does with the numbers.

Does the evaluation system really measure company values, or does it just measure financial results?

Does it really get implemented with sincerity, or do people blow it off as a waste of time?