Welcome to Chat With A Topgrader featuring World Emblem, Inc.
Brad Smart: About 30 of you are totally new to Topgrading and, again, you come from all sorts of different organizations. We have quite a few of you from various fields on the line today — technology, consulting, healthcare, various forms of manufacturing, travel, a church organization, government entities, banking, pharmaceuticals, staffing company, and education.
Before I introduce World Emblem, because so many of you are totally new to Topgrading and since when Randy and Jenny, the CEO and [former] Head of HR are talking they’ll be using some terminology, to make it a little bit easier I’ll just give you a three or four minute overview of Topgrading.
Okay, here’s Topgrading in three minutes. The world suffers from horrible hiring success, and hasn’t improved in 50 years. I met with the top Human Resources Executives of the largest 100 companies in the world and they estimated their success hiring to be 20%. That means 80% of the people they hire for professional and management jobs (when we got together, that’s all we were talking about, although Topgrading today is for all jobs) turn out to be disappointments.
It’s just awful. And the reason that it’s awful I’ll give you in a moment but you’ve probably heard – the reason you’re on the call is Topgrading again and again and again across thousands of companies, and we have now hundreds of case studies, routinely get over 75% success. They convert that 20 or 25% to at least tripling their success hiring. If you go to www.topgradingcasestudies.com and just click on Case Studies you’ll see a Master Chart where the biggest company is GE and then small companies and everything in between, the average improvement was from 26% hiring success to 85% hiring success.
And that’s fairly typical. Why? It is so incredibly common sense — and you Topgraders know all of this — but the reason the world, every continent except Antarctica, is experiencing the same horrible results is because companies screen resumes. The screening starts with screening resumes. Everybody on this call knows that low performers can fudge their resumes. And they get away with the fudged resume because reference checks are almost worthless; and because they know they can lie on their resume, they also lie in interviews. So there’s rampant dishonesty that drags down individual managers, their companies, and the gross national products of countries.
Follow that dishonesty with the standard best practice that has been for decades to put candidates for management jobs, through a series of short, 50-minute, competency or behavioral interviews which are incredibly easy for people to fake. For example, “Jenny, can you give me an example of a time you were well organized?” The joke is that Forest Gump could fake all those interviews. Then reference checking is non-existent or hardly worthwhile at all.
So you have dishonesty, shallowness; followed by very, very weak verification. Topgrading has essentially broken the code. We have a Truth Serum that works. I’ll explain that in just a moment. A Truth Serum that works followed by, because candidates are motivated to be totally honest, the Topgrading interview that is very thorough. It’s a long interview, but fun because the pre-screening works so well you’re only interviewing really sharp people. And you ask them about their whole career, chronologically — every job, every success, every failure, key decision, key relationship, what they think about their boss, what their boss will say about them in reference checks — and right through their entire career.
So you’ve got the Truth Serum, followed by honesty, and then a final step is for candidates to arrange reference calls with the people you want to talk with — the former bosses, maybe some people with their current employer, peers, subordinates, customers, whatever. So instead of dishonesty you have honesty; instead of shallowness you have thoroughness; instead of weak verification you have solid verification.
So what is this Truth Serum? You might hear Jenny or Randy talk about the TORC Technique, Threat of Reference Check. It’s not really a threat to A Players. Very simply, you will hire better in 2014 if you just do the following: Let candidates know at every step of the hiring process — and that hiring process includes Topgrading forms where this is repeated again and again and again — that a final step in hiring is for candidates to arrange reference calls with former managers and others. That’s stated in the instructions, it’s stated in information requests about every job. It really, really works. There’s no doubt about it. It’s worked for 40 years. Millions of people have been hired, and it makes hiring so much easier, so much more efficient, and so much more fun, frankly, to participate in the hiring process when you really only talk with people who are honest and who are successful.
So that is a huge, huge part of the Topgrading process — the Threat of Reference Check. And then, of course, at the end you do it. It’s not a bluff. You ask candidates to arrange reference calls with former bosses and others. A Players will do that. They’ll get back to you within two days and say, “Yes, all these people are willing to talk, here’s their cell numbers and their availability.”
Something else that you’ll hear about is TOLS. TOLS is an acronym for Topgrading Online Solutions. I came out of semi-retirement a couple of years ago because so many clients were asking for Topgrading Forms and Guides and so forth to but put online. They are online, but there’s something special you’ll hear Randy and Jenny talk about and that’s the Topgrading Snapshot. You can go to Topgrading.com and click on Snapshot and then click some more and see what it is. But essentially candidates complete the Career History Form that asks them about things you always wanted to know but typically don’t get, like their full compensation history, their boss ratings (and remember these are accurate boss ratings), how long they’ve been in jobs to see if they’re a job hopper or not, and why they left. Were they fired or did they leave at their own accord? A Players tend to leave at their own accord. And it’s a multi-colored picture: In five or ten seconds you can see if it’s someone you want to interview. So you’ll hear [Randy and Jenny] talking about that.
I think I went four minutes rather than three. So let me introduce Randy and Jenny. This is a very, very useful and interesting Case Study because so many of you are interested in how do you get started? World Emblem got into it starting in February of last year. So they’re newbies but they’ve figured they’ve progressed from about 35% to 79% success hiring in just this short period of time.
World Emblem makes emblems, logos for hat and shirts and coveralls and all that kind of good stuff. And they can tell you a little bit more about it; 700 employees in the company. In the announcement I think we had 10 locations. They’re actually in 11 countries now and they’re based in Miami. The CEO is Randy, Randy Carr, and I’ll be passing the baton to him in just a moment. Head of HR is Jenny Vargas who has been a key partner to Randy as they will explain.
So I’d like to now turn it over to you, Randy, and say a little bit more about the company and the results, and how you’ve gone about rolling out Topgrading. So thanks again, Randy and Jenny, for being on the call.
Jenny Vargas: Thank you.
Randy Carr: It’s my pleasure, Brad. So, Brad thanks for having us. Really appreciate it, really excited to be on the call today. Just a little bit about World Emblem. We are a 700 person company as Brad indicated. We bootstrapped the company from 1993 when we started it. It is a family business owned by my brother and me. We manufacture about 35 million labels a year in 11 different locations — Canada, Europe, Mexico and the U.S.
About 80% of our employees is manufacturing and intermediate management that works on the manufacturing process and the other 20% is administrative and sales labor. Our customers range from government entities to commercial laundries to basically anybody that wears a patch or a label on any type of garment.
And our sales volume is between about $40 to $60 million annually. As Brad said, we are based in Miami, Florida, though as we said earlier we have offices throughout the U.S. and the world. About four years ago we hired a new controller. And the new controller had come in here and mentioned to me that the business was dysfunctional and unhealthy, and he thought we needed to bring a consultant that he used at a different company in here to help us with our quarterly and annual planning.
And when the consultant came in, the first thing he said to us was you need to do something about your staff. And this was in December 2011 and he had mentioned Topgrading. So I looked into it, and immediately sent Jenny and my Administrative Assistant to the Topgrading Course in January 2012.
Before bringing Topgrading onboard, the interview was sort of a formality. We would take a pile of resumes, throw it on a desk. We would sort of pick out the A, B, and Cs, and when we looked at a resume, we’d look for certain things. Maybe job hoppers or specific things that were written in the resumes that we’d find interesting. And we’d make piles and then we’d start calling people in for interviews. So it was pretty simple as that, where we’d say we want five years of experience and maybe a military background. And we would look through resumes and we’d pick out five or six of those and we’d say, “Alright, this person looks good, let’s bring them in for an interview.” The interview would be a formality, a 30-minute interview, whether I liked the person or not, I’d go based on my gut on whether I’d hire somebody. It was sort of insane, really, when you start thinking about it after implementing Topgrading. It’s actually crazy what we used to do.
We would just fill seats. There was a fear of letting people go that were underperforming. It was very difficult to measure people’s successful performance and successful hires. We didn’t really have any kind of structure or process to bring people in to interview them and to assess them during the interview process. And even after we hired them we still wouldn’t know whether they were successful on the job or not. And actually when you start thinking back on it, again it’s only been 18 months, but looking back on it almost 18 months later I cannot believe that we ran the business the way we did without a process like Topgrading used for hiring and recruiting.
So we put Topgrading in and we started with our management top down. Jenny came back from the Topgrading Course and the first thing she said to me was we need to start putting these things called Career History Forms together.
Brad Smart: Job Scorecards.
Randy Carr: Job Scorecards, right. We need to start putting Job Scorecards together. And the Job Scorecard was just a document that really measured what the expectation was for any employee. But it was tangible measurements, things like, to make things easy Accounts Receivable has to be at 6% over 90 days; things like that.
But when you sat down and you really started thinking about what it is you wanted from these people, it really took a lot of work to consider five or six or seven or eight tangible, measurable results that you actually wanted from your employees that you’re going to bring onboard. And you’ve got to actually have to it ready before you bring the person onboard. So the idea would be to know exactly what’s expected from a person.
We put a lot of time into it. I think, as a matter of fact, we did three a quarter. And at the time I had about 10 people reporting to me. So we did three a quarter. It took about nine months to get done, but during that time I also replaced a few of my staff. I really realized how powerful the Topgrading process was when I sat through the first interview.
Jenny and I interviewed, I believe it was a new controller, and I sat through three or four interviews and they were five or six hours long. And Jenny just went – started at high school and went right through up until the current job, but very detailed, very meticulous. Jenny and I did the interview together so it was a tandem interview, which was nice. There were a lot of things that I enjoyed about the person that Jenny didn’t like that once you dug into it, uncovered certain things that I might not have uncovered myself. So I found that to be really interesting. And the other thing that was really nice was they had a – what’s called a Career History Form.
So before we would just take the person’s resume at face value; what the Career History Form does is it basically makes the person fill out an online form and the online form presents itself to us in the same way every time. So I’m looking at basically the same resume. And I think this comes from TOLS, if I’m not mistaken, am I right about that Brad?
Brad Smart: Yes.
Randy Carr: And I’m looking at the same document every time. It gives me a graph of the person’s career history, the length of time they were at the job, and basically an excerpt from each one of their resumes. But they have to retype it in. So I’m looking at the same thing every time. Your eyes get used to the same document rather than having to look at 20 or 30 different resumes. And it also makes the person do a little bit extra to apply for the job. So they didn’t just fax a resume to 70 people. They actually have to go online and fill the form out for you. And then the third thing that I thought was very interesting was the reference checks. So instead of me calling a job that they had before and saying, “Hey, did this person work there,” and they say is, “All I can tell you is they were employed from this time to this time.”
The actual opposite is true. So the person arranges a reference check with their prior boss or with their prior job. What we have found here is that people that have a poor work performance or a poor work history immediately get uncomfortable when they hear that they have to set up a reference check. So they shy away from it and they basically disappear. They almost don’t even show up for the interview or you never hear from them again. So we’ve found that to be really interesting. And I don’t think we’ve actually gotten to the point where we’re actually doing the reference check where they’ve come back bad. I think at that point people sort of know what’s coming.
Jenny Vargas: And with the reference check, even if the information that you get is not negative, it’s positive, it’s a lot of valuable information on how to manage that new hire that you’re going to bring onboard. So regardless of whether the information is good or bad you still get a lot of out the reference check.
Randy Carr: Yeah, so I think we’ve found that to be super interesting. So, that’s just like sort of the process that we’ve found to be really, really good. But I’ll tell you the benefit from our perspective: Before we put this process in, I found our turnover to be high; the business was stagnant and flat. We were just kind of sputtering along. We hit a certain revenue number, we couldn’t get past it. So this is 18 months later and we’ve turned our cash around $3.5 million.
And the one thing that I think that I have a lot of confidence in now is that I used to be sort of guilty of keeping people too long. So I would make excuses for underperformance — either something in the business was broken or the economy was bad. And I think that by using the Topgrading process itself and just the confidence of knowing that we can bring better people in here I’m much less reluctant to let people go knowing full well that it is possible to actually go out and recruit and hire better people.
So far, out of my management team — I had nine people reporting to me — we’ve replaced four of them or five actually, and all five have been exceptional hires. I would attribute 99% of that to Topgrading. And that’s not even including the people that report to my direct reports.
Brad Smart: Yeah, cool, Randy, so Jenny and your AA came back; and then how did you actually roll it out and communicate about Topgrading to people, get managers trained and so forth?
Jenny Vargas: Basically what we’ve done, and I always say this to everyone that I try to introduce Topgrading to, is the concept can’t be denied because you’re going to see results. And you’re going to see results quickly like within 90 days of your first hire.
I think we’ve been successful because we’re really stuck to the process and we’ve been very, very methodical about the way we handle it. So we went out and we attended the Topgrading Workshop like Randy said, both Barb whose Randy’s Executive Admin and myself, and then we came back and we assigned owners to the process. So basically we identified that Randy and I would own this process and push it across the organization. And we decided that we would also assign the change agents, which would be the entire executive team, our senior managers. And then Barb and I put together a training and we trained all of our hiring managers.
And I’m not going to really go into a lot of detail about how we put the training together, but if anyone has any questions regarding the training Brad will have all of this information. But we put a really strong training together. We conducted talent reviews so that we can create a baseline as to where we were at with our current staff.
So what happened was, and I’m not sure Brad if you mentioned anything about the talent reviews, but they’re a critical part of the process. We assigned each employee a letter. Are they A Players, A Potential, B or C Players, and so we developed a baseline for our talent reviews and we took it from there.
We also have asked everyone to create those Virtual Benches because ever since we implemented Topgrading, our culture has really turned into a culture where we’re continuously recruiting and re-recruiting — basically recruiting and rehiring internally and externally constantly — because we feel that there’s always someone who can do the job better. So we never stop; and we’ve pushed that across the organization and we expect all of our A Players to have a Virtual Bench built in for us so that we’re really proactive about the hiring process and not just trying to fill a requisition.
So that also is something that’s encouraged through Topgrading. We’ve just started adding additional complements to the whole process: We identified our turnover, what is was costing us, the percentage of turnover, and we kept going back and saying, “Okay, if we hire the right people, we’re going to save so much money.” And so we held all of our hiring managers accountable for the turnover rate. We go back and we expose that number every quarter. Then we just make sure that once you bring in those A Players you keep them engaged. So you have to make sure that you also implement a good on boarding and training and development process. Then you also want to go back and have stay interviews with those high performers or those high potentials.
These are also complements that have made our Topgrading process very, very successful, because if you’re going to invest in bringing in those A Players, you want to make sure that you keep them and that your company can sustain them. Basically, we’ve been very methodical about the process. So we followed every step.
For us, I feel, that TOLS has been an amazing tool. So you want to make sure that you attend the Topgrading Courses in Chicago and then you want to get your TOLS [license] activated so that you can have all of your materials available. You want to make sure you have your Job Scorecards, your Career History Forms; you want to make sure that you have the Snapshot. That just reduces the time it takes to hire someone because of the visibility. You have a Snapshot in front of you that tells you basically your candidate’s career history, whether they’ve had too many jobs, or not enough experience, or whether their salary has increased or declined. You just question certain things — were they terminated, how their bosses rated them — and it’s something that you have in front of your face. It just totally streamlines the selection process.
So we, again, we went back, we developed that baseline. We created Job Scorecards; like Randy said, we do not hire without a Job Scorecard. So if there’s a new position available or a replacement position that didn’t have an existing Job Scorecard we put those Job Scorecards together. We’ve gotten really good, I mean after like a year and a half, and we just continue improving the process of the Job Scorecard. Really, the Job Scorecard focuses on the results that you’re looking for from that hire or that position. So it becomes very simple.
Randy Carr: Jenny, you and I talked about this yesterday, and we talked a little bit about the call, and we said the Job Scorecard started with focusing on activities. So we started saying all right this person is supposed to do this and they’re supposed to do this and they’re supposed to do that. Now it’s starting to get to the situation where all we really do is talk about the results. Rather than a person making – an example would be a sales person that’s supposed to make 100 calls a week and 12 appointments, you know, we don’t care about that, we care that they’re closing this many deals and their pipeline has 25% more in it every week and their revenue looks like this. So with the evolution of the Job Scorecard we’ve really gone from looking at the activities to narrowing down the exact results that we want and then tying that to our budget. The whole process has just been exponentially easier.
Brad Smart: Yes, that’s cool, I think the terminology that people are familiar with is job description. As we’ve analyzed mis-hires over the years, just one of many factors, but a very important one is, in exit interviews when people say. “They never really told me what I was going to be held accountable for.” Job descriptions almost everywhere are vague, vague, vague.
Jenny Vargas: There’s so much ambiguity in the job description. The Job Scorecards are very clear: This is what you’re accountable for and this is the result we’re looking for. So you know right up front, the candidate knows right up front, or the new hire, what they’re in for and can they accomplish that.
So next we just turned into a culture of hiring and rehiring. We’re constantly hiring and rehiring internally and externally. So we enhanced our employee referral program, and we continue to push that recruitment mentality. We understand that there are circumstances where you might need an external recruiter, but we’ve avoided those external recruiters because we’ve asked everyone to build those Virtual Benches.
Brad Smart: Good for you, Jenny. We hadn’t talked about it in the past week when we prepared for this, but I just recorded an article for Topgrading Tips on recruitment and the bottom line was recruit like mad. You really want to pick the best of 50 candidates, not two, you know. But the one exception to that is when you recruit from your networks; and one of my favorite quotes in my most recent book is from Ann Drake who’s CEO of one of the largest privately held companies in Chicago who said, “We recruit all day, every day, with everyone we meet.”
It sounds though you guys at World Emblem have done a terrific job. You’re expecting your A Players to keep that network hot and heavy and build and add to it, and you reinforce it all the time. If you can hire people you worked with in the past who are A Players and the job is similar, that really increases the likelihood that someone is going to be successful. What kind of financial incentive do you offer people?
Jenny Vargas: We have different tiers depending on the position that they’re filling or that they’re referring for. Our highest financial incentive is $2,000 for executive management. And then for middle management it’s $1,500. Any IT positions that are so, so difficult to fill are also $1,500. Then we just go tiering it down and we also reduced the period of time the employee has to be with the organization. So we have a matrix for that reward. I’ll be more than happy to share it with you.
Brad Smart: There’s another incentive that you mentioned yesterday, Jenny, and managers are expected to Topgrade aren’t they?
Jenny Vargas: Yes.
Brad Smart: So how important is it that they Topgrade?
Jenny Vargas: Well for us if they don’t Topgrade they just can’t be a part of our organization.
Brad Smart: Okay …
Jenny Vargas: And that has happened. I mean it’s very simple for us. It really is, you’re either onboard, or you’re not going to be with us anymore. And we’ve had that happen with a couple of managers that had been with us in the past and they just decided that they weren’t going to be onboard; they had their own agenda and they realized that really wasn’t going to work out for them. They’re no longer with us.
Brad Smart: That provides an additional incentive. If I don’t Topgrade – if I don’t achieve 90% of my team being A Player or A Potential within a year — I could be out of a job. That’s another incentive for me to think now who have I worked with; those A Players, stay in touch with them.
Jenny Vargas: And just the incentive that you’re going to be working with another A Player is enough to want to bring A Players onboard because you’re going to be partnering up. That’s what I think about. So, yeah, it motivates. We’ve had employees who have said, “What we love about this company is that you guys don’t put up with anything. If someone is not doing their work you try to put them in a place where they can be successful, but they have to realize that they’re here to perform because we deserve that.” And we’ve made that message clear. We want to make sure that all of our employees understand that we hire A Players because they’re A Players and they deserve to work with other A Players.
Brad Smart: In a team that’s just beginning to Topgrade, Jenny, how much do the non-As drag down the A Players?
Jenny Vargas: What happens is your A Players are really engaged employees, so they’re always going to be engaged because it’s just in them. But what happens is they become frustrated with those B and C Players. I always like to mention this when I go out and facilitate training for our hiring managers, “Watch out for those B Players, because those are the ones that drag down the A Players most because they’re flying under the radar.” They get some stuff done, but they’re really costing us a lot of money and a lot of heartache. The C Players — you identify them right away and you’re like, “I want this guy or this girl out of here.” But those B Players that are flying under the radar — be careful with those guys because they are dangerous; very, very dangerous.
Brad Smart: Just a little bit of clarification for the 30 or so people who are new to Topgrading. An A Player is equivalent to a high performer, getting the high performer you expected. If you hire someone and they’re labeled a B Player, that means they’re a disappointment. They’re not living up to the expectations you had for the job. You might retain them, but you didn’t get what you’re paying for. They do not have the potential to be an A Player.
So what Jenny and Randy have been talking about is that there are only two good categories — A Player equals high performer and A Potential. Okay, maybe it will take them six months or a year to get up to that high performance standard. But what we’ve generally found over the years, and you’ve just reinforced, Jenny, is in a typical team across the world if you took a team of 12 people there are three A Players. And they are carrying the whole group. There’s six B Players and they do drag down those A Players, and the three C Players are dealt with and eventually replaced. But if your success – you said it or Randy said it — when you have the confidence you can replace a lower performer with an A Player, you hold them to that Job Scorecard. And if they don’t perform, as Jenny just said, they can move into a job in the company where they can perform at that high level or they leave.
But this is a huge difference and the vast majority of companies and teams, if your success rate is only 25%; one out of four, then what do you do with the B Player? You live with the B Player because there’s only one chance in four that if you replace that person it will be someone better; 50% chance the person is not better and, oh my gosh, one chance in four the replacement will be even worse. So there’s a really cool, exciting snowballing effect where A Players help recruit A Players. The team is more productive and those A Players aren’t dragged down by cleaning up the messes or trying to prevent the messes that the B and C Players create, unfortunately.
Jenny Vargas: Don’t ignore the issue. Don’t ignore those B and C Players, because you will lose your A Players. They will go work somewhere else because they will become so frustrated that they will decide to move elsewhere.
Brad Smart: I do have a couple of questions here [from the call participants]. When you roll out Topgrading, how do you communicate it and how do you deal with the people who really are not A Players?
Jenny Vargas: First of all you train your hiring managers, right. And you assign those change agents. And those change agents just start spreading the news across the organization. Once we do those talent reviews, we expect the hiring managers or the supervisors to address their B and C Players; to put some type of re-deployment plan in place.
So for your B Players, you want to put some type of individual development plan in place. Your C Players, you go back to your Job Scorecards and [ask] what are their strengths and can they be successful here. Because ultimately what you’re looking at is once they’re already in and even when you hire them, you just want to identify their strengths. You want to make sure that this person – what motivates them to stay doing the job that they’re doing and are they a good fit for us and are we a good fit for them? So do they fit our culture?
We’ve actually put together, Brad, a talent rating rubric where we have different sections that we target. And so when the hiring manager or the supervisor is doing the talent reviews they can identify this. So we expect all of our hiring managers and supervisors to put some type of career development plan in place, or if you’ve identified right off the bat that this is a C Player and there’s nowhere we can put them in the organization, you have to terminate them.
Brad Smart: Okay, if you would just go through the sequence – I didn’t even mention what a tandem interview is earlier …
Jenny Vargas: So I wanted to go through the process because I have to, again, advocate for TOLS. You should sign up for TOLS because it’s critical. But what we do is we go through the entire process and we’re very, very methodical about it. So we post a job opening and we start looking at our Virtual Bench. And then we go through our Snapshots, Career History Forms. So by the time we bring in the candidates we have like some very solid candidates that we start interviewing because they’ve gone through this whole process.
Then we do a tandem interview — super, super important. We love that. We were just talking about that, Randy and I, before the call, the value of the tandem interviews. So we do our tandem interviews.
Brad Smart: Okay, so a tandem interview is two interviewers. And let me just throw in here, at General Electric where a lot of these processes were fine-tuned, two hiring managers can participate and get huge results. You don’t have to just use Topgrading professionals for second opinions and so forth. Anyway, GE went from 25% to about 50% success, with Topgrading Professionals, way over 90%. Jack [Welch, CEO] said, “How can we get up into that range?” I said, “I don’t know that you can, but your hiring managers could if they would pair off with human resources people so there are two interviewers, they would do much better.” And the result was GE went over 90% success.
Because they were, at the time, the most respected company in the world, a lot of other companies tried it out and the only reason we’re all on this phone call today is that you can learn this. Jenny, Randy, hiring managers pair off, do the tandem interviews and ask the candidates to arrange reference calls, do the reference calls and I’m little embarrassed to admit this, but your results are about as good as what Topgrading Professionals get!
Jenny Vargas: We’ve gotten really, really good at it — and only because we don’t skip any steps. So before those tandem interviews, because we’ve put a lot of accountability on the hiring managers, we measure. We’re measuring constantly and we’re throwing those numbers out every quarter exposing everyone which is, I think, really important also.
Randy Carr: I think the other thing we do is really focus on it and we don’t deviate. So we stick to the process and we focus on it. And we don’t take our focus off of it. As a matter of fact, it’s on our priorities for the quarter and every quarter; recruiting, hiring, and retaining the best employees has become a major priority for the business and that’s led to better results. So I think that’s the other piece of it is — that we’re just completely focused on making sure that we’re doing it properly at all times and we don’t deviate from it at all.
Jenny Vargas: Definitely, so you want to make sure you follow all those steps. And those preliminary phone interviews, the hiring managers love them because when they decide they want to bring someone in for a tandem interview, which is an investment; we bring in the right people for the interviews. So we go through the interview, we focus on the Career History Form, which focuses on the candidate’s track record of strengths or weaknesses, accomplishments, their failures. There’s a lot of dialogue where you just try to make the candidate comfortable with the process, but stay focused, very focused on the career. Don’t deviate to anything else, because you really care about how they were successful, but you want to identify what their weaknesses were or how they failed or what their supervisors thought about them.
And at the end, if you feel that person has the right skill set and is inspired by the position and fits your culture, then you’ve found the candidate that’s right for you. But once we have those candidates in here and they leave, we hold debriefing sessions, which are like feedback sessions on the interview, where we can also identify some opportunities for improvement for the interviewers for the hiring managers. So don’t skip feedback, right Brad, as those feedback sessions are really important.
Brad Smart: Yeah, absolutely, let me just summarize if I can. You can correct me if I have it wrong. But Randy and Jenny have talked about the Job Scorecard as the most bureaucratic aspect of Topgrading. It’s so necessary, job descriptions are vague. Job Scorecards really communicates to the people involved in the hiring from the company standpoint and to candidates, “Here’s really what you will be doing, what you’re going to be held accountable for.” So you get that clarity and C Players, when they understand what the job is, they’ll just drop out because they know they can’t perform. So first the Job Scorecard, then you recruit hopefully through your network or sometimes called a Virtual Bench; network, network, network. Just encourage everybody, particularly A Players, to refer you to A Players they know and so forth; best way to recruit or you run ads, whatever.
Okay, suppose you do run ads and you get the resumes in, then you use TOLS, you send out the Career History Form, they fill it out. Suppose you get 40 people who complete the Career History Form; you don’t read those 25-page Career History Forms to begin with. You look at the Job Scorecard, it’s just one page, multi-color picture …
Jenny Vargas: The Snapshot …
Brad Smart: The Snapshot, exactly, and you can go through …
Jenny Vargas: They’re awesome.
Brad Smart: … Snapshots in how much time, Jenny?
Jenny Vargas: Oh, in an hour you can go through a ton of Snapshots.
Brad Smart: Okay, so you just saved a whole day of wading through resumes and so forth. So then for maybe the five people who look pretty good, yeah, you read their Career History Forms. And then Jenny said the next step, phone screen — and there is a TOLS form for that. … Then you bring the sharpest people in for the face-to-face interviews, the tandem Topgrading Interview. You push a button, the Topgrading Interview Guide is printed out with 100% of what was in the Career History Form; it makes it really smooth.
Then you ask candidates to arrange the reference calls and conduct them, hire a person and then after a candidate has gone through all of this, A Players will be eager for feedback, coaching. … There’s a ton of information, with all the interviews, and reference checks and so forth, smooth on boarding, get developmental planning going. That’s one of the ways you can help retain those A Players who are ambitious, want to get ahead. And then what Jenny has said and Randy would affirm this, measurement — measure your success hiring.
Just to connect a couple of dots here, suppose you have a manager, maybe a Head of Sales, who says, “No, I don’t need this Topgrading stuff. My intuition is pretty good.” But you’re measuring it. Everybody else has tripled their success hiring except the Head of Sales. Now, I’m just making this up, this is not true for World Emblem! But that VP of Sales has about a 25% success rate, 75% of the sales reps are under performers, and guess what, the company is going to go nowhere fast. There’s intense peer pressure then on that Head of Sales to Topgrade so we can make some numbers around here.
And what Jenny and Randy have said has been generally true for Topgraders: It becomes a requirement — embrace Topgrading, use the methodology. I guess theoretically, Randy and Jenny, if someone could intuitively hire people after four minutes, which is what a lot of hiring decisions are made in, just four minutes, and achieve 90% success, terrific. But that never, never, never has happened, and never, never, never will.
So you have the requirement that the managers, all the managers, Topgrade and consistent with that, they have to achieve 90% A Players or A Potentials reporting to them, typically within two years. So, of course, they’re going to Topgrade.
Jenny Vargas: And it just becomes a part of your culture. You have to make sure that when someone’s onboard during that interview process you grab your Job Scorecard and you look at the competencies and the competencies; when you’re reviewing the competencies during the interview process, you want to make sure you address those questions if you’re going to be hiring managers. It’s super important and for us; we hire already with that type of mentality in mind where we want to grow our internal staff.
So you want to make sure that when they’re onboard they’re aware of the fact that we Topgrade and it’s part of our business, and you can’t work here if you don’t Topgrade. Again, I just want to summarize the resources and make sure you use your Job Scorecards, make sure you sign up for TOLS, make sure you conduct those Executive Summaries and a solid, strong on boarding program. We’re currently working on enhancing that, because it’s true what Brad says, they want those 30-, 60-, 90-day feedback. So really, really important and make sure you continue your talent reviews.
Initially you should try to do your talent reviews quarterly when you just start Topgrading, then you can go into semi-annual and annual reviews depending on the departments. But I want to share so that we can answer questions, back to what Brad said, we’ve increased our hiring success by 55% … We’re now currently at 80% hiring success which is really, really important.
When we go back and we look at the Return on Investment and we think about just hiring executives and IT staff and sales and marketing and administrative staff and customer service — because we’re all about customer service — and I look at the dollar amount that we’ve invested in training — because we’ve trained about six of our employees, which are two of our HR Coordinators here in Atlanta and Mexico, Barb and myself — and then what we’ve invested in the TOLS Resource Center. But really what we’ve saved on the cost of mis-hires has been about $2.3 million in the past year and a half. And that sounds like a very crazy number, but I was super conservative about it, because you have to realize we’ve replaced a lot of our executive staff and there’s a huge impact there. So the Return on Investment thus far for us has been about $2.2 million, which is very, very significant.
Brad Smart: We generally say if you embrace Topgrading and avoid just one mis-hire … the cost of mis-hires are astronomical. You even mentioned one the other day, a sales rep mis-hire probably cost over a $1 million.
I have a question that came in: In the press this week we’ve had Yahoo and Microsoft tossing off what was said to be the GE method of ranking people and yanking the bottom 10%. I do want to take a minute to respond to that because Topgrading is frequently associated with GE, which has been a great client of mine and continues to use Topgrading methods for hiring.
It never occurred. Jack Welch had a response in The Wall Street Journal and the image was that GE would rank people and fire the bottom 10%, but it never happened. Jack Welch is still on TV a lot, and he talks about, “Yeah, performance. Rank your people and you probably should replace that bottom 10%.” But not necessarily! What if it’s a Topgraded group and they’re all A Players? That’s what we want, of course, and you’re not going to fire A Players.
So, in my 2012 book, which is a New York Times Bestseller by the way, I say there are three myths about Topgrading. One is it’s just for large companies. No, it’s more important for small companies than large companies, but it’s important for all. Another is this awful term “rank and yank people;” it’s brutal and it’s never, never occurred. I go into this, by the way; and the Head of Human Resources until he retired about a year ago, Bill Conaty, contributed three or four pages in the 2012 Edition of Topgrading explaining how to do it, how you connect Topgrading to performance management. Jenny has really said it, Randy, too, you have a Job Scorecard so people agree with what they’re held accountable for. If they achieve those accountabilities of course you don’t fire them, duh.
But if they fail to achieve their accountabilities, you know, get feedback and coaching and Jenny has talked about 30, 60, 90 days and the first year and so forth, and after year or sometimes two years, if they’ve really significantly fallen below and they’re not showing A Potential, then they’ll ask for another job in the company where they can perform at the A level or they’ll quietly leave on their own. Topgrading done properly is super for the organization culture and this image of “rank and yank” — it’s not there. If anyone has any more questions on that go ahead and email me.
Jenny, a question for you. …How do you handle millennials coming right out of school, if they are a recent college graduates? I don’t know if you experienced it that much.
Jenny Vargas: You know, we have, and the way we handle millennials really fits in with the whole concept now with Topgrading. Millennials just want projects. When they come in they want to make sure that the resources are in place, that you provide the right resources, that you give them the tools to succeed, and that you assign them to the right projects where they can be successful. And that’s what we’re trying to do. Every day we’re trying to work on improving that. That’s how we handle them. They come in, they want clear expectations. “Here’s the Job Scorecard, can you do this?” and they buy into it. And then you just give them the resources and the tools so you make it easy for them to succeed through those resources, not by doing their job.
They want to prove themselves and they want to continuously improve their resumes. That’s what they’re all about. So if you’re continuously rehiring internally and giving them an opportunity to improve their resume within your organization, then you’re golden with the millennials.
Brad Smart: Good, good response. We have about eight minutes more. I think there are eight or ten who are staffing or inside companies or external recruiters; how can recruiters use Topgrading whether they’re internal or external, Jenny or Randy?
Jenny Vargas: Usually you team up with a recruiter who believes in the process. And they’re trained to conduct Topgrading Interviews — and you have to be a part of those interviews. We’re not saying you shouldn’t use recruiters. There are going to be plenty of positions that you will need some support from recruiters, but as long as they’re onboard with the process and they’re conducting the interviews the way that you’re expecting them to, then there shouldn’t be an issue there.
Brad Smart: By the way, for executive levels for several decades now Topgraders have required executive search firms to embrace Topgrading. What that means is, you know, when it comes right down to it that the Chronological Interview – executive search firms always have done but usually it’s the whitewash. In my 2012 book I say that I surveyed 200 CEOs and they said 19% of the time they’re satisfied with the executive search firm. Here’s how to be satisfied, have them read the book and say for your reports for every job I want to see not only successes, but failures. I want to see not only what the boss would say are the personal strengths, but weaker points. If we conduct our own Topgrading Interviews and we disclose negatives that you didn’t find or you didn’t disclose we’re not going to use you. It’s that simple.
Here’s a question for HR: Suppose a whole company is not Topgrading … What can we do to kind of get it started even if the rest of the organization isn’t doing it? … We do the telephone screens, I assume not the final interviews. Can we use some aspects of Topgrading in the telephone screen?
Jenny Vargas: Yes, definitely. The telephone screen is like a short Topgrading Interview. You’re going to go through the same process where you’re going to ask about their strengths, weaknesses, how they contributed to the success of the business, their challenges, what they liked the most, what they liked the least, their supervisor’s feedback, what they thought were their weaker points, what they their strengths were. And you’re just going to address their two most recent jobs during the phone interview.
Again, we’re very methodical about it. And then if you want to use that when you bring them in face-to-face, you just expand it to the rest of their career for at least the last 10 years in their career.
Brad Smart: Yeah, good, I’m thinking that HR people are saying that they can use TOLS, they don’t need permission from a CEO or anything just to try TOLS. So when …
Jenny Vargas: Oh they should try it, they should try it.
Brad Smart: … to use it for the phone screen and then they hand the Snapshot to the hiring managers who become really fascinated with it. We have a question from Barry whose is with an executive coaching company. We have a partnership with the company, it’s Gazelles Systems, and Gazelles is known worldwide; Verne Harnish started a young executive organization — now an executive organization— and they have a couple hundred executive coaches. So Barry’s one, and he just had a question but I’m sure you’re aware that we now have a formal partnership and starting last week Gazelles coaches are being trained several at a time to become Certified Topgrading Coaches. You all always have been advocating Topgrading to the small and mid-sized companies that you serve, now we’re formalizing that. We’ll kind of roll it out a bit.
Question: How far down in the organization do you go because we have a question about whether to do it for entry-level employees.
Jenny Vargas: We Topgrade our machine operators. We go front-line. I mean we Topgrade everyone. We use the resources, again, in TOLS, to Topgrade our front-line personnel. We use the basic Career History Form for that. But we make sure that we conduct those reference checks.
Randy Carr: We had to re-staff our whole plant in Atlanta because we moved, I mean not everybody, but probably half, because we moved from one facility to another. And we used Topgrading and I think it helped a great deal. Again, it was a process and we just implemented the process and we worked through it for a couple months and we were able to staff probably 50 people in Atlanta last summer. Right, Jenny, isn’t that about the number?
Jenny Vargas: Yeah, about 50 people; it was last summer and I thought it was very successful.
Brad Smart: There’s a question from Ed about a stripped-down version that gets good results and the general guidelines. See if this is consistent for you guys at World Emblem, we’re talking about entry-level, maybe even a part-timer. Yes, there’s an entry-level Career History Form, the Topgrading Interview is not necessarily tandem. If you read all those Case Studies you’ll see some use it; for example, a service manager in a grocery store interviewing over 1,000 people a year and probably doing a 45-minute Topgrading Interview. It’s actually a chronological interview, 45 minutes to an hour. So instead of four hours it’s 45 minutes, it’s a stripped-down Career History Form just looking at part-time jobs mostly, and then two reference calls rather than six.
Here’s a question you, Jenny, could answer. How do you describe Topgrading to a potential candidate?
Jenny Vargas: How do we describe Topgrading to a potential candidate? So basically when we bring someone onboard – are you referring to the selection process?
Brad Smart: Yes, do you tell them in advance about what they’re going to …?
Jenny Vargas: Yes, we do. This is something that we feel strongly about — informing the candidate of the selection process, the tools that we use, step-by-step — so when we identify someone they get a clear picture of what’s going to happen in the selection process. And we put closure to every candidate that we touch base with. Not every resume that we review, this needs clarity, not every resume we review, but every candidate that we tap into, we put closure to that process. So it’s very detailed. They understand the purpose of all the tools that we use to hire, but predominantly the importance of the Career History Form. We do not consider candidates who don’t take the time to fill out the Career History Form.
Brad Smart: Okay, just a couple more. Denise asks, how does Topgrading differ from behavioral interviewing?
In a sense it’s the best behavioral interview. The way behavioral interviews or competency interviews in Global 100 companies and they all do them. And we say if you want to keep them, keep them. It’s a matter of asking what I started I think about an hour ago saying, “Can you give me an example of a time you were passionate about a job? Can you give me an example of a time you were well-organized?” So a company has six competencies, say, and the behavioral interviews are asking people for examples of that which they can manipulate. That’s the Forest Gump scenario.
That’s what leads to 75% mis-hires. Keep it if you want, but please do the Topgrading Interview, which gets all the information, honest information, about every success and failure and decision and relationship, and you’ll see if you go to www.topgradingcasestudies.com, you know, a bunch of companies just scrapped the behavioral interviews. The reason we suggest keeping them mostly is so that A Player candidates will meet some more people and have 15 minutes in each of those interviews to ask questions about the culture …
Jenny Vargas: Exactly.
Brad Smart: … history and so forth.
Jenny Vargas: We give them an opportunity to interview us also.
Brad Smart: Yeah, A players want that, right?
Jenny Vargas: But back to that question. Topgrading Interviews, like you said, Brad, are behavioral interviews. They’re just not so structured where candidates are so prepared for it. You can see online, or even I have friends who have called me and said, “Jenny, I’m going to go for an interview. I haven’t interviewed in two years. What’s your recommendation? What questions do you think they’re going to ask? Help me prepare for the interview.”
And that’s what you want to avoid.
Brad Smart: Right.
Jenny Vargas: It’s refreshing when you bring a candidate in and they have not been exposed to a Topgrading interview in the past where all of a sudden this person just starts talking about their career and you can start identifying if this person really knows what they’re doing. Just give them an opportunity to talk, people want to talk about themselves. Just make sure that you stay focused. When they start talking about themselves, you don’t want to get personal, you want to stay focused, you want to make sure that they’re talking about their career and not themselves. You don’t want to get lost in that because that goes back to that likability factor that you want to avoid. You want to focus on competency, can they do the job.
Brad Smart: And from an EEOC standpoint, you want to stick to your knitting. You don’t want to permit candidates to take you off track and, by the way, there has never been any problem with the EEOC that we’re aware of, not even a challenge let alone a lawsuit.
We’ve gone over by a couple of minutes and there are three or four people that asked really good questions that would probably take a 10-minute response, so maybe next week I’ll ask one of the Topgrading Professionals to get back to you. This always goes by so fast! Thank you so much, Jenny and Randy, for your candid, revealing and frankly, I think some people will say, inspired account of how you’ve dramatically improved talent in your company using processes which sound kind of complex. You can go to www.topgrading.com, download the eBook and see there are 12 steps. I would think Jenny and Randy would say it’s kind of common sense. Why wouldn’t you want to measure, have a Job Scorecard, do a thorough interview, and ask a candidate to arrange reference checks? It’s just kind of common sense on steroids. Is that a good way to put it?
Jenny Vargas: Definitely, just focus on the benefits of it. The visibility, the reduced liability, it expedites the screening process, and at the end you’re just going to have some solid candidates for interviews. So if you stay focused on that you’ll definitely realize the value.
Brad Smart: Yes, save a lot of time, save a lot of money. Well, thank you so much … I hope you have learned something that will help you avoid at least a couple of mis-hires in the next year. Thanks again, Randy and Jenny.
Randy Carr: My pleasure Brad, thanks for having us.
Jenny Vargas: Same here, thanks Brad.
Published December 31, 2013