The biggest problems in business are not "what" problems, but "who" problems. "What" problems have to do with execution and tactics. These are important, but no business, no matter how well positioned, can succeed if it doesn't have the right people in the right roles doing the right things.
These are "who" problems.
Senior leaders want to create value for their businesses, and they want to have career and financial success. The No. 1 thing they can do to help both their companies and themselves is to solve their biggest people problems. Get the "who" right, and great things will happen.
Why should senior leaders act as talent-management champions? Here are the top five reasons:
1. "Who" mistakes are extremely costly.
One company we know hired five vice presidents of sales in the span of three years. The CEO believes his repeated hiring errors cost the company more than $100 million in top-line growth. Another company we know promoted the wrong person to lead their real-estate investment group. The gentlemen they put in charge promptly lost $80 million.
No matter how you slice it, people mistakes will cost your business. In fact, management guru Peter Drucker once estimated that 50 percent of all hiring decisions were mistakes. Half! To make matters worse, the average cost of a mis-hire is 15 times that person's base salary. Just think: Make a mistake on a single, $100,000-a-year employee and you will cost your business $1.5 million in opportunity costs, fire drills and wasted budget.
2. The "who" drives your business more than any other factor.
We conducted a survey of more than 80 successful business leaders, including more than 20 billionaires and 60 CEOs of companies ranging from entrepreneurial ventures to Global 100 companies. We asked them what drove the success of their businesses. They told us that management talent was more than half the equation (52 percent). Execution only drove 20 percent of success; strategy, 17 percent; and other factors, 11 percent. If it is important to them, we suspect it should be important to you.
3. The right "who" people are more productive.
Someone once asked George Buckley, CEO of 3M, how he felt about people. He replied, "I want you to pause for a moment and think about the very best person you have working for you. Now I want you to think about the second-best person you have working for you. Now I would like you to think about where your organization would be without them.
"You would be terrified if you lost them. And you would love to have 10 more like them. That is how I feel about the importance of hiring the right people."
In fact, studies show that so-called "A players" are three-to-five-times more productive than everybody else. Who wouldn't want to stack his or her team with people like this?
4. Enjoy your career more with the right "who."
Jack Welch used to say, "The hardest I ever worked was when I had the weakest team." We see this truth playing out all the time. Consider one COO we know who was completely burned out when we first met him. He was frustrated that the people who reported to him didn't seem to "get it."
It turned out, he was the one who didn't get it. After some coaching, he rebuilt his team and helped the CEO increase the stock price by more than 60 percent. Even better, when we asked how he was doing nine months later, he said, "You know what? I feel great! I have a fantastic team working with me now. For the first time in my career, I don't have to be the first person to arrive in the morning and the last one out at night. I'm sleeping better. I'm working out. I'm spending time with my wife. And it's all because I have a team of A players."
5. It's fun to have the right "who."
Let's face it. Who enjoys dealing with the problems and mistakes caused by weaker talent? We've evaluated and trained tens of thousands of executives and have never met an executive who enjoyed dealing with C players. Not a single one. But they universally love having A players on their team. We bet you do, too.
The single most important role of a senior leader is to ensure a team has the right "who" on board. That's what Pat Ryan, chairman and founder of Aon Insurance, believed. "I am not really smarter than the next guy," he told us. "There are lots of smart people in business. I guess the one thing that I have done over the years that is different from most people is that I am constantly on the hunt for talented people to bring into my company."
We hope you will do the same. As a result, you will have more career, financial, and personal success.
Randy Street is the co-author of the New York Times best-selling book Who: The A Method for Hiring. He is a partner with ghSMART, a leadership advisory firm specializing in management assessment, executive learning and coaching for CEOs and boards.