Chat With Successful Topgraders: Culligan International

January 9, 2014 Chat Transcript

Guests: Scott Clawson, President & Chief Executive Officer at Culligan International; and Kelley Mudgett, Director of Human Resources – North America at Culligan International

Moderator: Dr. Brad Smart, President & CEO, Topgrading, Inc.

Summary:  Scott and Kelley’s advice to would-be Topgraders:

  1. Topgrade the whole company.
  2. Require that all Topgrading methods be used; no cutting corners!
  3. Use the Topgrading Online Solutions’ forms and guides.
  4. Involve HR fully.
  5. Give every manager the 3rd Edition of Topgrading.
  6. Measure success hiring – the only way to improve.
  7. Start with the Job Scorecard; figure out measurable accountabilities.
  8. Let candidates know THEY will have to arrange reference calls with former managers.
  9. Even CEOs should conduct reference calls.
  10. Ask A Players to refer A Players they’ve worked with.
  11. Use a Topgrading Professional for “second opinions” for executive jobs.
  12. Know that Topgrading is legally defensible.

Brad Smart:  Let me now introduce Scott and Kelley. Scott Clawson was hired as CEO of Culligan in October 2012.  Scott immediately launched Topgrading, with managers trained in the online system – what we call TOLS – Topgrading Online Solutions.  Topgrading was implemented and – for positions reporting to Scott, Topgrading Professionals assessed candidates and assessed people inside the company and candidates for any replacements so that very early on – and again Scott can elaborate on this — it solidified Scott’s team and made sure it was an A team.

And Topgrading Europe is being planned, as well as helping some of the franchisees Topgrade, while in the meantime Topgrading is fully implemented in Culligan’s corporate office.  And with what results?  Scott now estimates about 79% of the people hired really look as though they’re turning out to be A Players.  And Scott and Kelley are shooting for 90% success.  Kelley calculated that 17 people who almost certainly would have been hired at Corporate prior to Topgrading would have surely failed – again this is just at the corporate office.

So now I’ll turn it over to Scott and Kelley and thank you so much again. Scott, why don’t you kick it off with your story?

Scott Clawson:  I will, thank you, Brad.  It’s a pleasure to be with everyone.  This is my third gig, if you will, as entering a company as CEO and President.  And one of the interesting things you’ll hear about today is how we’ve improved over time rolling out Topgrading and its effectiveness.

Previously, I was President and CEO at a company called GSI in a rural part of Illinois down near Decatur, Illinois. Topgrading and getting A Players on my team and the rest of the team were the main reason that company succeeded in the time I was there.  It was a financially owned company by private equity.  The stakes were high … you know, all the cards were on the table, if you will.  And we were very successful.  But Topgrading was the reason.  I took our executive staff to 90% A Players.  There were really only a couple when I started out of the nine people on my team.

And then we took Topgrading down to the rest of the company, too.  And that’s where you really create value is when the whole company has the spirit of Topgrading.  And four years later, we sold the company for almost four times the money and the company still is doing well today because of the players there.  And Topgrading was a huge success factor.

There were some interesting lessons learned from GSI where I was before I came to Culligan that I put in place here at Culligan that we’re going to talk about today that I think you all will find very interesting. A big mistake at GSI was not requiring that Topgrading methods be used.

And at GSI I didn’t embrace the Topgrading online hiring forms and guides, but I have at Culligan, and they are hugely effective and helpful and we really make sure we use those as well.

And another thing that I’ve found is a huge success factor for a CEO and organizations is to have someone like Kelley, who is not my highest level HR executive.  At GSI we rolled out Topgrading, and it was a huge differentiator, but I didn’t have all of HR engaged with owning it.  Here at Culligan, we rolled it out in a different way where it was HR leading it with my complete sponsorship and backing, and then with not the very, very top HR Executive, then the next highest HR Executive, Kelley.

But what I did is, before I even started, I hired an HR Executive.  He was able to start even before I was, because it took some time for me to transition out of my previous CEO role.  And we made everybody read the Topgrading book, understand what it means by at least reading it.  And then we trained everyone, brought in Topgrading Professionals to train, and then Kelley did a lot of Training the Trainers, which helped us be able to then be able to go out and train other people.

And then we did something that was important here — we started measuring it early on.  I really mandated that if you want to get a job filled, you have to follow the process.  And if you don’t have a Topgrading Job Scorecard, HR is not even going to start working on it.  You have to have a good Scorecard as an example.  So we really picked up momentum quicker.  And in a private equity-owned environment where you have a lot of improvements, it makes a huge, huge difference.

And Topgrading already is doing that here at Culligan.  So some of my lessons learned is while it can be moderately successful if you use some parts of the tools, it will be even be more successful to the organization if you use them all — and you really measure and track those.  So every month Kelley and my top HR executive come in and report on who’s in the process and what percentage of completion are we on the steps of the process in terms of the Career History Form.  Have they had a Tandem Interview, and that then highlights anybody on my staff who’s trying to get around the process.  And people try all the time to rush and hire somebody; but the great thing about here at Culligan that I didn’t do at GSI is HR is so onboard that they just won’t fill a job if they don’t do the right steps.  So with that, Kelley, why don’t you elaborate a little more?

Kelley Mudgett:  Sure.  Prior to Topgrading we did probably what most of you do — something of the sorts of a resume review or a basic application, and then brought candidates in for a competency round of interviews, and then we made a decision from there.

With the new process as Scott alluded, we now start with the Job Scorecard, which is not just the goals that are nice to have when we bring in someone, but actually what we are expecting them to accomplish, what their measurable accountabilities are, over the next 12 months that’s not in the job description.  The job description is a gimme.  But what are we expecting them to accomplish?  What results are expected?  It helps us both from the HR and the hiring manager perspective to know that about the candidate we’re seeking.

If we’re asking for sales to increase by 5% and the person sitting in front of us cannot show us an example from prior jobs that they’ve ever increased sales, they’re probably not our person, and we know that from the get-go.  So using that Scorecard — and that’s why Scott said it — really helps us vet out candidates both in HR. but also in the interviewing parties.

Then with that, we’re posting the jobs or we’re networking depending on the candidate level, but having them go through as Brad alluded earlier, a Career History Form process, which is not just a regular application or a resume.  It goes through a slew of different questions.  It asks what would their supervisor be ranking them, what are some of their challenges they’ve had, and so forth in this Career History Form.  So it does help give us some insight ahead of time, as well as, the Snapshot, to say whom do we actually want to bring in.

And then we do our Competency Interviews, and from there, we weed out candidates and we normally say, “Okay, let’s hire this person.”  From there we actually then bring them back in for a Tandem Interview, which lasts from an hour to four hours.  It depends on the level of the position what we review from the Interview Guide that is populated from TOLS, the Topgrading system.  The guide goes through a slew of questions such as, “What are your biggest accomplishments, what did you like most, what did you like least, what are your mistakes you’ve had,” and we review from when they get out of college to their present job.  And you see a pattern of whether or not this person has learned from their mistakes, or they continue to make the same mistake, and then we know if this is something we want to sign up for.  Is it a mistake that’s not that large for the job they’re going into, or that’s going to be a real big issue for us to move forward in the process?

And as Brad said, we inform them upfront in the application process that we’re going to want reference checks to talk to their past supervisors.  “We want to talk to them, and you’re going to give us permission to talk to them.”  And we reinforce that throughout this process.  After the Tandem Interview, if we feel that this is a good candidate, we then reaffirm with them that they need to arrange calls with prior supervisors.  And those that are leery about us talking to those supervisors, well, it’s a red flag for us, because if you’re an A Player most likely you either still keep in contact with your prior supervisor, you left on good terms, and you have no problem.  You want us to know how great you were, and want you to talk to their prior supervisors.  Those that actually had issues or didn’t perform well — that’s the last person they want you talking to.  So it is another way to vet out the candidates.

For us here, these last few steps I spoke about — the Tandem Interview, the more in-depth interview, and the reference checks — is where by adding these on top of the competencies we’ve actually avoided 17 mis-hires.

In the past, we would go to a competency interview and make a decision.  And we had 17 people that we decided to move forward in the process to the Tandem Interview; but after the Tandem Interview, we didn’t like the candidate so much.  There were red flags that came out from that detailed interview.  And so yes, it’s a commitment of a couple of hours, but at least we didn’t commit to the person long-term — and we would have absolutely hired this person after the competency because we liked them at that point and we were ready to go. But we said, “Let’s move forward in the interview process of Tandem Interview,” and we did not like them as new hires.  So we had 17 people that we feel good about that we moved on, but in actuality, when we then looked at other candidates, we found a better person that we ended up hiring through this process, and will have results as we circle through a full year.

Scott Clawson:  One point I want to make on these reference checks: Up until Culligan, I couldn’t even tell you how many times I’ve interviewed people in the final round or a lot of times as the CEO, spending 30 minutes, 45 minutes with them, and saying, “This is our person.” And I get in there and I start talking and I do a super-quick Topgrading Interview about what some of their bosses thought about them and what they thought about their bosses, and then I would say, “Well, we’re going to talk to a lot of your people, who are they, and can you set the calls up?”  And you get a lot of people, even in that part of the process through my own company, who would start squirming, and say, “No, I don’t keep in touch with him or her.”  And that is a red flag.  So I mandated it at GSI and here, it’s part of the process.

But as a CEO sometimes you just have to say this has to happen.  I say to people, “You have to check your own references.  Oh, yeah you have to.”  HR doesn’t, they can do one or two.  And it can’t be just one or two; we’re going to do five to eight if you’ve worked somewhere.  That really makes the difference.

And another lesson learned here at Culligan that has been very helpful is your network.  At GSI I had to hire a lot of people outside the network because of the location, and we really used the Topgrading Interview, as well as, I would have an outside Topgrading Professional do that interview with anybody reporting to me because I couldn’t miss.  It was a new job, a new company, a new area, and that helped me get A Players on my team.  Here at Culligan I have had to replace some people on my team.  They have all come from my network, which makes it even more promising for us.

Brad Smart:  All right, very good.  You guys you’re terrific at articulating what’s most important in Topgrading.  Okay, let’s answer some of the audience’s questions. First:  “Is Topgrading likely to work for small companies or just the biggest?”

I’ll answer to begin with.  The biggest companies in the world suck at hiring, forgive my language.  I met with just the number one human resources executives at just the 100 largest companies in the world and I asked them, “What percent of the people you’ve hired turn out to be the high performers you expected, if the only other category is a mis-hire?”  You know what they said?  Twenty percent, 20% success; 80% of the people in these largest companies in the world turn out to be disappointments.

Scott Clawson:  It works everywhere and regardless of the job.  It’s so important.  It’s just a matter of having a commitment and bandwidth to roll it out.  And very small companies – our deal is we’re going to roll out it out with our dealers and distributors because they have trouble hiring.  And some of them have a private owner and they have eight employees, but it means so much to them if they get the right employee.  It’s a matter of whether they grow their business or not.

Let me give you an example that’s near and dear to me.  I used to, in my own career, when I would go to a new job and hire an Executive Assistant, never would take them through the full Topgrading process.  And a lot of times, I was not real happy in the end.  When I started here at Culligan, I went through the process with the assistant … and you end up getting an A Player that’s unbelievably capable; you are not dealing with the issue just because you think, “Okay, that’s not an important enough Job Scorecard,” or they’re too far down in the organization.

Kelley Mudgett:  I would say the same.  When we were staffing for our warehouse manufacturing distribution centers, in the past we would have said, “Great, you can lift this much, your attendance record has been good, and have the experience,” so we’d hire them.  Now we do the Topgrading process with them, and through that process we’ve definitely hired better quality people where we were able to vet out those that had safety issues, or those that had issues with their supervisor, or with other employees — things of that nature.  Normally we wouldn’t have gone through that in-depth of an interview process.  But it saves us a lot of time and energy, as we know in the hourly workforce you deal with a lot of those employee relations aspects.  Topgrading definitely helped lower that quantity. You have a better person sitting there being more productive, and less employee relations or safety issues because of this process.  So you tweak it a little bit on the length of time you may spend with the person, but you still go through the same process.

Brad Smart: Next question: “Has Topgrading been tested for disparate impact?” In all the books, we use Seyfarth Shaw, one of the largest employment law firms in the U.S. with partners all over the world.  And every time they do their latest review, they give Topgrading a clean bill of health.

Someone asked, “Is there an abbreviated version of the guide?”  Yes, get the book, the 3rd Edition of Topgrading, and you’ll see a Starter Interview Guide. You can begin with that.

Jeremy asks, “What are the initial steps for use in hiring?”  I think we’ve talked about it.  It would be the Job Scorecard initially.  Then candidates might send their resumes, you post jobs wherever you typically post them, and they’re asked to complete the Topgrading Career History Form, which is like an application form, but, as Kelley mentioned, one that asks for boss ratings, full compensation history, reasons people left the job, was it their initiative or were they fired for cause.  And most companies actually convert this to their application form so it’s pixel perfect.  It’s their logo and branding.  And then what Kelley and others look at when candidates fill out the Career History Form is the Snapshot: In just a few seconds you can see if you want to continue with the person or not.  If so, the next step is a telephone screening, which is auto-populated with some of the information that the candidate provides in the Career History Form.

Brad Smart:  Someone asks, “Should C Players fire themselves?”

Scott Clawson:  Yes. They self-select out if you’re doing it right.  And Kelley made a change here at Culligan, Brad.  She changed the performance management system to include the Job Scorecard.  Not any of that fuzzy stuff, so they have to have a Scorecard as part of the management system.  It all ties together.

Brad Smart:  Great, one of our Topgraders in the audience has a suggestion:  “I recommend candidates be informed in advanced of the interview process, which would best prepare the candidate for the lengthy process they will undergo.”

Kelley Mudgett:  Yes, the candidates are informed of what the process is, and we keep them informed throughout because weak candidates are more likely to drop out as they realize how thorough Topgrading is.

Brad Smart:  Okay, another question.  “I know you guys are with a much larger organization.  There are a bunch of companies that are smaller, less than 50 employees.  So maybe you can help here.  How might a smaller organization with one person in HR rollout Topgrading?”  Any thoughts there, Kelley or Scott?

Kelley Mudgett:  Yeah, so we don’t have a large HR team either; but, it just really takes one person to believe in it and roll it out and stick with it consistency.  We train our managers to have the same process.  So yes, initially you might need to be the secondary person in the initial process until the manager gets the hang of it.  But otherwise, the process could be two managers or depending on the job, it could be cross-functional.  The interview doesn’t always have to be just HR, because the purpose of the secondary person is to catch on some of those nuances in the interview, not necessarily the technical aspect of the job.  So it definitely can work; we do have facilities that are smaller, and they have one HR person who involves people that are in the field for interviews, which makes it even more complicated to make this process work.  But you manage through it.  So, you just have to be a little bit more unique in how you go about it.

Brad Smart:  Very good.  One of the three myths that I had mentioned in my introduction to the most recent Topgrading book is that Topgrading is just for larger companies.  But most Topgraders are small companies, and small companies need Topgrading more than big companies in some respects.  For a lot of small/growth companies, one mis-hire could be a crucial mis-hire that makes the difference between success and failure.  Hence our Certified Topgrading Coaches:  We have a partnership with Gazelles, a company that serves small/growth companies, and we’re certifying their coaches who deal with strategy with small/mid-sized companies.  I’m one of you now, by the way, with 12 full-time employees.  My empathy and sympathy is definitely with you.

Here’s a very fair question:  “I’ve worked with a number of companies, and they’re companies that prohibit managers from taking reference calls.”  I have an answer for that, but what would you say, Kelley or Scott, if someone said, “Gee, for that company I can’t get my former boss to talk probably because there’s a company policy against managers disclosing information.”  Yes, you can always go to Human Resources and get verification of name, rank, salary numbers, but what else?

Kelley Mudgett:  Usually how we approach is we tell them this is a professional/personal reference, not a business reference, and that’s how we ask them to tee it up with their previous boss.  So it helps separate that disconnect that you’re representing completely Culligan, and it also allows that manager to feel more comfortable on the phone with us.  But typically, again, someone that is an A Player most likely still is in contact with their previous boss, and even if there is a rule per se that they’re not supposed to talk to someone, they usually do. Those that hide behind a black-and-white rule probably have some issue, and it should be a red flag than those that can make the arrangement with someone they’ve worked for in the past.

Scott Clawson: It’s usually an excuse given by the candidate so he doesn’t have to provide the name of the reference.

Kelley Mudgett:  Well, I think it does begin with the top.  With Scott, not only does he speak the Topgrading process, he actually does it.  And as he said, when he hired his admin here, Scott called some of the references himself.  I think when people say, “Well, as a manager, I don’t have time to go and call references,” my line is always, “If the CEO could find time to call references for an admin, I think you can.”  And then the room becomes silent at that point.  And I think that helps.  The other part is I think having passion around it, so whoever is rolling it out having passion when you’re rolling this out, being open to hearing what they’re saying, and then providing some suggestive ways.  We understand it’s not perfect.  It’s change; but if you keep at it, and once you start to have some successes and they start to see it work, I’ve had some people that completely were against this actually email me and say, “Okay, now I’m a believer,” because they saw things that came out during that Tandem Interview that swayed them completely the opposite way not to hire someone.  So it takes time and takes a couple of wins, but really, the leaders have to believe in it and be behind the process.

Brad Smart:  Thank you very much, Scott and Kelly!

Scott Clawson:  Thank you very much, pleasure.

Published February 4, 2014

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