Argo is more successful as a company because Topgrading has resulted in a higher percentage of A Players. For example, one business that we Topgraded is performing better because we didn’t need as many people. So now we’re remapping some of the workflows across the entire company because we’re finding that we can be substantially more efficient and get just as much work done with, say, 20% less people, if they are A Players. And that’s a material change that will make not just one division, but all of Argo Group more successful. – Mark Watson, CEO

Argo Group International Holdings, LTD.

ARGO GROUP INTERNATIONAL HOLDINGS, LTD. (1,300 EMPLOYEES, GLOBALLY)

Industry: Global Insurance

Highlights:

  • Improved from 51% to 96% A Players hired/promoted in management (AVP and above).
  • Fewer people, but almost all As, is most successful.
  • Train-the-Trainer for Topgrading Workshops.
  • Topgrading helps B/Cs transfer to jobs and become As.
  • Topgrading coaching helps some B/Cs become As in present job.

Company History: 
Argo Group International Holdings, Ltd., is an international underwriter of specialty insurance and reinsurance products in areas of the property and casualty markets. Argo Group has approximately 1,250 full-time employees worldwide.  A comprehensive line of products and services is offered, designed to meet the unique coverage and claims-handling needs of clients in four business segments: Excess and Surplus Lines, Commercial Specialty, Reinsurance and International Specialty, which includes our Lloyd’s syndicate.  Argo Group has a long-term track record of growth, both organic and through acquisitions. Currently, Argo Group has offices in six countries, including Brazil and the UAE, with 28 locations.

Topgrading History at Argo: 
In 2009, CEO Mark Watson attended a YPO conference in which Brad Smart made a presentation; he subsequently decided to utilize Topgrading as a method to increase the percentage of A Players hired.  Initially, the focus at Argo Group was the top 50 (VPs and above) executives.  SVP of Human Resources, Kevin Silva, contacted 12 organizations using the Topgrading methodology to check references regarding Brad Smart and the Topgrading methodology.

Under Mark’s direction, Argo Group began implementing Topgrading in 2009 with an Executive Offsite workshop for the two-day Topgrading Training.  This kickoff event was followed by four additional workshops presented by Topgrading Professionals.  In 2010, two Argo trainers completed a Train-the-Trainer program; they have presented additional workshops across the company in 2010 and 2011.  Since 2009, a total of 300 managers have been trained to implement Topgrading methodology throughout the organization in the initial two-day Topgrading Workshops.

Topgrading Results: Argo implemented the 12 Topgrading hiring steps as follows:

Step #1 – Measurement: Hiring improved from 51% A Players to 96% A Players, AVP and above.

Step #2 – Job Scorecard: Topgrading templates were merged with a Property Casualty Institute form to produce Job Scorecards that are precise in articulating measurable business accountabilities, and the relationship of those accountabilities to incentive/bonus packages.  The Talent Assessment Program currently in use results in individual ratings on 54 competencies (50 Topgrading plus 4 Argo-specific competencies).  Combined, the two processes are thorough; if a manager achieves all business goals and competency rating goals, the manager is sure to be rated an A Player.

Step #3. Recruit Through Networks:  Argo Group implemented an Employee Referral bonus program to reward those who bring additional A Players to Argo Group.  The program has proved successful to date:

Administrative Position:  up to $5,000

  • $1,000 at time of hire
  • $1,000 at second, third, and fourth anniversary date

Professional Position below Executive/VP:  up to $15,000

  • $3,000 at time of hire
  • $3,000 at second, third, and fourth anniversary date

Executive/Vice President Position:  up to $25,000

  • $5,000 at time of hire
  • $5,000 at second, third, and fourth anniversary date

Company policy states: ”Human Resources staff and the direct Hiring Manager (if it is their own position being filled) may not receive a referral bonus.  However, all other employees are eligible to receive a bonus.”

Step #4 – Screen with Career History Form/Topgrading Snapshot:  The Topgrading Career History Form, modified with the Argo logo and other Topgrading-approved changes, is now the Argo Group application form. All candidates complete this form prior to completing the interview process for hire.

Step #5 – Telephone Screen and Step #6 – Competency interviews:  Because of widespread global locations, video conferencing is frequently used for phone screens and competency interviews.

Step #7 –  Tandem Topgrading interview:  Tandem Topgrading Interviews are universally used for all levels of hiring within the organization.

Step #8 – Interviewer Feedback Form:  Argo Group HR Partners regularly serve as coaches to provide feedback to Tandem interviewers as they continue to hone their skills in identifying and hiring A Players. The process of feedback happens after most interviews involving the HR team.

Step #9 – Executive Summary:  Both oral and written Executive Summaries are utilized.  Many top executives ask for a one-paragraph summary from the hiring manager before approving hire of the final candidate.

Step #10 – Reference Checks With Bosses, Arranged by the Candidate:  Always completed as part of the due diligence process for hiring with a minimum of 3 references and preferably 5, or as seen necessary to confirm findings from the tandem interview process.

Step #11 – Coach New Hire:  Completed regularly, utilizing the initial Job Scorecard and notes from the Tandem Interview. As Argo Group has their own forms, new hires are shown those documents during orientation and prepared for our annual process.

Step #12 – Annual Measurement:  Our annual Talent Review process has grown organically into a very detailed annual process which not only involves HR, but multiple levels of senior leadership.  Discussions surround the performance of all direct report management staff throughout the organization — as well as A Players with leadership potential.

Challenges Faced with Topgrading:  Remote locations, limited HR staffing (manager covers several offices), training from a distance and only manual/paper data collection and archiving methods. “However,” says SVP HR Kevin Silva, “with certification of two internal HR professionals, we have been able to provide training for all Argo locations to ensure the Topgrading methods are utilized throughout the company.”

CHAT WITH TOPGRADER CALL WITH MARK WATSON 

Brad:  This quarterly chat with a Topgrader is with Mark Watson, President and CEO of Argo Group.  This is a company everyone interested in Topgrading can relate to, because just a few years ago Argo was a tiny insurance company based in San Antonio, and now it’s big and truly global.  Also on the call is Kevin Silva, SVP Human Resources.

Mark has experienced all the common growth pains, but has used Topgrading as his secret weapon to drive the A Player standard while Topgrading across the globe.  Not easy!

Mark, if you would, please give an overview of the company and what’s happened with Topgrading, where you are, and the challenges you faced.  What kind of results you’ve achieved, and any advice you have for the couple of hundred people on the call, ranging from tiny companies to mega companies.  I think the principles fit any company.

Mark:  It’s a pleasure to sit and talk today.  It’s something, as you know, Brad, that I’m pretty passionate about. Our company is a property casualty insurance company.  We also happen to have a reinsurance company as well.  We’re a very capital intensive company, but a lot of our capital is intellectual capital, our people, and so much of our success is really making sure we have the very best people that we can have.  We’ve been working hard at selecting the right people in the right roles for a number of years now – and, Brad, I think you mentioned in your remarks a minute ago – we’ve been growing, and not only have we been growing in the U.S., but we’ve been growing internationally — and that has its own set of challenges as well.  We began putting a more rigorous selection process in place many years ago, but we found that it was really kind of bogging us down; we weren’t getting to the right place, and we weren’t getting buy in because it was just taking too long.

I guess it was two years ago, maybe three, that you and I met, Brad.  I wanted to hear more about Topgrading, and I have to say, it’s really helped us a lot.  It hasn’t changed our motivation towards selection – it’s actually even made it more important.  We really do follow all of the steps in the Topgrading process beginning with getting the Career History Form.  I don’t know about you all, but I can tell you that we can really learn a lot from the candidate before we ever meet them by looking at the Career History Form.

First of all, if the candidate is an A Player and they’re really serious in the job, not only are they going to fill out the Career History Form, but they’re going to fill it out in such a way that you know they’re an A Player. Now, there are exceptions I suppose, where somebody, for a good reason, just doesn’t have time to get it right, or get it filled out.  But I have to tell you, that’s the exception. So starting the selection process with a good Career History Form we find is very helpful.  And it’s also helpful when you’re looking at candidates internally as well, for roles in your organization, because if you’ve got their Career History Form, even though you may know them in the company, you still have a really good base line to compare other candidates to.

The phone screen interview does save time as well and helps you comb through things.

And then the next thing we’re getting better at, but we’re not perfect at, is the Job Scorecard.  Whether you’re talking about an incumbent role in your company, a new role in the company, or somebody new to the role in the company, creating that Job Scorecard in advance really helps you figure out what the person really needs to do well to be successful in the role.  Those are the things that you can really key in on in the interview, whether it’s the competency interview or the Topgrading Interview.  We tend to focus a little bit more of that in the competency interview, but it’s hard for it not to come out in the Topgrading Interview.

We probably vary a little bit depending upon the breath of the role in the company as to how robust the Topgrading Interview would be.  In respect to the competency interview, we define all the competencies for the role in advance and we go through the ones that we think are relevant.  It’s pretty hard to imagine a management or more senior role where all 50 plus competencies aren’t important, so we do interview for all of them.

Then, in respect to the Topgrading Interview, we try and do it in a tandem method.  We do find it’s better for one person to ask questions and the other person to be taking notes.  If you really take it seriously, it’s amazing how fast time goes by, because it really does take awhile to go through a person’s Career History Form from beginning to end.  And certainly the longer they’ve been in the business, the more time you’re going to spend talking about that.

But I found that in our old process where we had a few more people involved and we had more interviews, we didn’t get to know the person any faster than we do by doing the Topgrading Interview and really drilling down. You know, it may seem like a bit of a crutch to use Brad’s Topgrading Interview Guides, but the first few times it really does get you into a routine.

Don’t be embarrassed to have that Interview Guide in the room when you’re asking questions, because you really do want to hear about the person’s point of view of the people they’ve worked for and how they think their boss would describe them.  And it may seem kind of silly to go back and ask someone where they went to school and the high and low points during those years, but it really does give you a pretty good idea who the person was back in their more formidable years.  And what we found is that when we can get a better view of a person “then,” at that moment in his life, he really hasn’t changed that much “now” unless something profound has happened to him.  So it kind of gives us a base line to track history.

We really do drive this down all the way into the organization.  It starts with me.  I’ve Topgrade Interviewed every single employee that reports to me directly — even incumbent employees on my management team.  I expect them to do the same with their subordinates and cascade it all the way down through the organization.

We have 1,300 employees in our company – Kevin, our head of our Human Resources, can correct me, but I believe that we now have Job Scorecards for 90% of the employees in our company.  Some of them may be more robust than others, but I think that as of 2011, the overwhelming majority of our employees have Job Scorecards that we mark quarterly.  I can tell you, all that really drives a lot of behavior in the company.

We probably use Topgrading more to drive behavior of our current employees than we do bringing new employees in to the organization.  We talk about that a lot, but the reality is both parts are important.  Once you get the person in to the company, you’ve got to make sure he is really in sync or in match with the job or the role you have for him.  We found that the Job Scorecard is a really good way to go about that.

Brad:  So Mark, the Job Scorecard identifies the measurable accountabilities, what the person is going to be held accountable for, and that becomes the basis for performance management.  So a performance review one year later or two years later will reflect back on the Scorecard.  If they were supposed to sell 750 policies or something, we’ll see what they did in relation to the Job Scorecard.  Is that right?

Mark:  Yes, that’s exactly right.  When we sit down every year and we think about what we need to get done for the next year, we really want to drive behavior, so we figure out what the goals of the company are and then we figure out who really ought to be responsible for those goals.  So it’s not like we go to our employees and say, “Hey, what are you working on this year.”  We think about what “we” as an organization need to accomplish and figure out who needs to own those goals.  So, you’re driving strategic behavior, you’re not just driving work, you’re driving strategic behavior.

Brad:  Mark, two people submitted in advance a question that I know Kevin has been working on to answer: Someone asks, “What sort of results have been achieved from a base line of percent high performers hired or promoted, what sort of results have you achieved?”

Kevin:  We’ve seen some very positive results, and I’ll tell them to you both quantitatively and qualitatively.  One of the most important things is to manage hard numbers, so we did look at three full years of Topgrading.  Three or four years before we did Topgrading to see what happened and roughly what we would say is during that time, a little over half or roughly half of the population we hired we would have called As and half we would have called Bs or Cs.  We have found that since we have done Topgrading, virtually all the individuals or about 96% of those since we started are A Players.

Brad does an exercise that we have done with our senior team and with others called The Cost of a Mis-Hire, where you apply a number against that and, of course, we did the same.  The process itself, in terms of hiring in those results, lets us reduce our costs of a mis-hire, lets us improve our retention, and lets us improve the quality of the people that we hire.

Brad:  And it’s the Assistant Vice Presidents and above who were really the basis of your data, is that right, Kevin?

Kevin:  That’s right, that’s where we focused, although we should note as Mark did earlier that the process is evolutionary.  We started this just with our top 50, and then we moved it to everyone that we consider an Assistant Vice President and above, a population of several hundred.  We continued to roll these processes down lower in the organization for the same results again.

Mark:  There’s another thing that’s not so much empirical as it is intuitive, and that is when you look at A Players – and Brad, you say this all the time – A Players attract A Players and B Players tend to attract B Players.  And now that we have many more A Players in the organization, guess what?  They’re attracting more A Players and more importantly, now that we’ve got more A Players, we don’t need as many people to get the work done as we did before because not only are they doing more themselves, they are working together better as a team.  Interdependent teams work better than a collection of individuals.

Brad:  That’s so profound.  I think maybe about a million companies have done something, whether it was with Topgrading or not, but since the down turning in 2008 they cut head count, kept their best people where they found out, wow, four A players can do the job of 10 with a mixture of A, B, and C Players.

Mark:  You see that in the economic data now.  Sure, there’s been technological innovation that’s improved productivity, but it’s mainly a function of guess what? — the C Players got called first and the A Players are still working.

Brad:  Something I know you’re going to get to, but Mark, has Topgrading contributed to the success of the company and if so, how can you tell when there’s such a lousy economy?

Mark:  There are certain parts of the company, particularly one business that we acquired a few years ago, where we really had to go in and work hard at figuring out where the A Players really were and building around them and then selecting more A Players. Two things happened.  One, the business is performing substantially better than before we went in and really started the Topgrading process for this particular subsidiary.  But also, a more interesting thing happened and that is, and you alluded to this a minute ago, we found out that really, once we had a number of very good people we didn’t need as many people.  And so now we’re trying to figure out how to remap some of the work flows because we’re finding that we can get just as much wealth and substantially more work done with, say, 20% less people.  And that’s a material change.

The other thing that isn’t so much empirical, but you see it when you walk in. is people working together with a smile on their faces, and that means they like working with one another and they like working in the place they’re in.  Everyone holds everyone accountable, but they’re doing it as a team.

Brad:  That’s wonderfully put. Barbara asks a question, “What’s the best way to train managers in Topgrading?”

Mark:  Your managers need practice; they have to start doing Topgrading Interviews and learning how to interview and take notes.  The other thing is, it’s not humanly possible to remember everything that you’re talking about in the interview, and so taking notes is important as well so you can go back and refresh your memory later, particularly when you’re comparing multiple candidates at one thing.

And that’s something I didn’t say earlier, which I think is really an important part of our process — making sure that when we’re going to put a new person in a role, whether it’s someone from outside the organization or a current employee, is making sure that we’ve got more than one qualified candidate so you’re not trying to rationalize why the person you just interviewed is the right person.

Then the last thing I would say is; we do a lot of training internally.  All of our human resource managers have been trained in Topgrading, and I think at this point if not all of our managers, a substantial majority of them were trained within the first six months to really focus on Topgrading a few years ago. And Kevin, correct me if I’m wrong, but several of your team are Topgrading certified trainers.

Kevin:  That’s correct; and I think you said it right, Mark:  We’ve trained the bulk of the existing managers.  This fall, we have a couple of training sessions for new managers so we hold everyone to the same standard.

Brad:  Someone asks how you hold onto A Players.

Mark:  My experience has been that you tend to not leave a job for money; you tend to leave a job because you’re not happy either with a culture or your boss or your colleagues.  So if you’re an A Player and you’re surrounded by B and C Players, to some extent it doesn’t matter how much money you make, you’re not going to be happy.  If you like who you’re working with and you like the culture of the company, then money tends not to be the first thing; if you surrounded your best people with other good people and you have a good culture, even if you’re not the top paying company, you tend to hang on to good people.

To retain smart people, challenge them intellectually. One of the competencies that we really focus on is a person’s intellectual curiosity.  We’re a very entrepreneurial organization; our intellectual capacity matters a lot to our company and so we really screen for that quite a bit.

Brad:  There is a question from Andres:  “What have been the greatest challenges in rolling out Topgrading?  How did you overcome them, or did you?”

Mark:  I’m not sure that you necessarily overcome all of them, because you get good at one thing and you realize you can improve at another.  I think that what matters the most – for us anyway – was recognizing that it was a strategic necessity.  Also, it started with me and worked our way down through the organization.

And I think that as my colleagues have recognized not only how serious I am about Topgrading, but also what success that they’re having with Topgrading.  They take it more seriously.  And as we start to make better hires, people are saying, “Oh wow, there really is something to this.”

It’s got to be strategic, it’s got to start from the top, and you have to just stay with it.  If you do those things, then everything else just falls into place.  I hope we get to the point where it just becomes instinctive to our company, that everything we do should be related to Topgrading in respect to people’s job performance and recruiting.  We’re not quite there yet, so we have to be very purposeful at it.  I think that’s another important thing — to remain purposeful at it.

Dealing with low performers is always a challenge.  It could be that a C Player is just not competent, meaning the job is just beyond their skill set; and in that case you want to try and really train them as hard as you can to help them be successful in their role, as long as they’re committed to the company.  But if they lack the commitment to the company, then the best thing you can do for everyone else in the company is to weed them out as quickly as you can.  And almost always, the minute you finally do that, everyone else comes to you and says. “Gosh, I thought you’d never get around to it.”

You realize after a while that you as a leader are losing credibility with your team, because you’re letting somebody stir things up that they’d like to have go away.

That brings me to one other point.  Just because somebody is a C Player – assuming they’re committed to the company – just because they’re a C Player in the role they’re in doesn’t mean that you can’t retool them into another role in the company where they would be an A Player. We use Topgrading methods to assess and coach a lot of people, and not only have we transferred some Bs and Cs into jobs where they became As, a few Bs and Cs were coached and became As in their current job.  We’ve done that very successfully in our company from literally direct reports working with me and for me at the executive level all the way through the organization.

So, when we find people that aren’t working out in the role they’re in and they’re committed to the company, we really try hard – I’m not saying we succeed all the time – but we do try hard to find other roles for them in the company where they can perform and do well.  The compensation level may change, but if we can get them in the right role,  then that’s a win/win for everybody.

Brad:  Someone asks, “How do you keep junior A Players focused and motivated when advancement is not always available because of the size of the company and with what the economy is doing right now?”

Mark:  That is always a challenge — showing people a path forward when it looks like things are going to get bottle-necked in front of them.  I use the word “forward” for a reason instead of saying “up,” and that is, when you move “up” in an organization, invariably each time your role becomes more about general management and less about what you were trained to be good at.  Our experience has been that just because someone is good at a particular skill – in our case it would be underwriting, it could be handling a claim, programming, a new computer system — doesn’t necessarily mean that you’re good at management.  And you could be good at management at a certain level, but as the span of control becomes larger and you’ve gotten to be more dependent on others and it becomes more strategic, that gets you farther away from your skill set and comfort zone that you honed for awhile.  So what we’ve tried to do is to get people – and again, I’m not saying we’re perfect at this – but we’re trying to develop career paths for people where they can continue developing their skills and take on more responsibility within the company without necessarily moving into management.

Brad:  Beautifully put.  Years ago (and I know the person who asked the question is from a small company but …) GE had 17 levels in the company and Jack Welch took it down to 7 and, wow!  People were concerned, saying, “Where’s my opportunity to be promoted?”  GE did exactly what you just related, Mark.  They created many more opportunities for cross training for people to continue to grow, grow, grow…and that was entirely satisfactory, and worked just fine.

Mark:  That’s what we’re trying to do.  I think we do it better in some parts of the company than others, but that’s really where our focus is right now because, of course, we’re flattening our organization as well.

Brad:  Someone asks what differences there are in rolling out Topgrading in different countries.

Mark:  Basically there are no major differences. But Topgrading is a little bit more commonplace in the U.S. today than in other countries, and so there is immediate resistance in other countries to doing it.  Not because of what it is, but because it’s new – which is my point of view: Once the managers understand it and see the benefits behind it, and the A Player managers have adopted it more quickly than the non-A Players managers, guess what?  They’ve got better people today.

Brad:  Someone asks, “What have been the legal charges against Topgrading?”  There are about 30 Topgrading Professionals in my son’s company and with mine, aggregated something like 10,000 years of experience with thousands of companies; as I just put in the Third Edition of Topgrading, not one charge, let alone a successful law suit, that we’re aware of.  There might have been something out there, but we just never have heard of it.  And that’s because all the Topgrading methodology is very consistent with what EEOC likes in our country.  You have Job Scorecards; they like Job Scorecards.  They have structured Interview Guides; we have the most structured Interview Guide, one that is very thorough.  And everything is verifiable.

Mark:  I would add one more thing to that and that’s being transparent about your process.

Brad:  Ah, good point.

Mark:  And, of course, employing people in the company making sure they understand the purpose behind the Job Scorecard and making sure they understand you really are going to hold them accountable for that.  I think transparency helps a lot, again.  I think we’re getting better at that, making sure people really do understand why and how we’re using Topgrading.

Brad:  Is there something you regret doing, or that you wished you had done differently?

Mark:  Well, you know speed is always an issue.  Let me give my answer and then I would ask Kevin to chime in as well.

I talk about transparency; I do think sometimes people will create their own definition of what Topgrading is in their own mind unless you can demystify it for them.  I worried about that in the beginning, but I think I actually averted a mistake there by saying, “Look, this is just all about selection, it’s just about putting the right people in the right roles and making them successful.”

I think that we didn’t roll out, we didn’t use, and we’re still getting better at using, the Job Scorecard at the beginning of the recruiting process instead of at the end when you hire the person.  As I keep reminding myself and all of my colleagues, look, at the end of the day when you hire the person you have to have the Job Scorecard, because you have to figure out if they’re meeting all the goals of the company or not so if you know you have to do it, do it at the beginning of the process not at the end of the process.

And when we have done it at the beginning – I think we do all the time now – we get a much better result than waiting until the end and then going, because the reason that is so much a mistake is you might select the wrong person but also the person may end up in a role different from what they thought they were interviewing for and all of a sudden they’re given their Job Scorecard.  So, I think that’s an important one.

Also, I think probably the biggest mistake is not doing the reference checking.  You think you get to know somebody, and during the interview process they explain to you why it’s really hard for you to get ahold of their references (or whatever); invariably that ends up being the biggest mistake.  I think I’ll end the answer to the question on that one.

Brad:  Lee has a question along those lines: “How do you handle it when a candidate says, ‘Hey, you came to me and I don’t want my current employer or my current boss to know I’m considering a job with you.’  How do you handle it with the current or present employer?”

Mark:  Well, I’ll agree that’s a sticky issue, but rarely that’s the only person the candidate has ever worked for.  And again, it’s not just talking to the current boss, it’s talking to the other bosses that the candidate had. And we also look for other references.  In the process of doing that reference checking, if possible we’ll ask those references to give us a name that we didn’t get from the candidate.  Sometimes that will give us more objective feedback.  But if you can’t get any references out of the person, forget it and move on to the next.

Brad:  And with a current employer you say, “Okay, so you don’t want your boss or employer to know, but someone must have left that company, someone at that higher level who’s familiar with your performance.  Connect us with someone.”

Mark:  In our industry – I won’t say everyone knows everyone – but it’s a fairly connected industry, and so I can do a lot of reference checking on candidates I want to hire without even using the reference list they give me.

Brad:  Okay, time is up.  Mark and Kevin, thank you so much for all the time, not just the call, but for preparing for it and your comments, insights, and suggestions are just so valuable.

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