Scaling Up: How a Few Companies Make It...and Why the Rest Don't (Rockefeller Habits 2.0)

by Verne Harnish

Another central element is the list of candidate competencies that align with your culture and strategy. As experienced leaders discover, it’s more important to hire for this kind of fit than for specific skills, so long as a person has the capacity to learn and grow (though it’s best if you can find someone who’s a match in both cultural values and skill set).

Change to Strange: Create a Great Organization by Building a Strange Workforce

“If your competitive advantage depends on your people creating something valuable and distinctive, then your workforce can’t be normal.” Therefore, if you want to have a differentiated strategy, you can’t hire, compensate, and have the same HR systems supporting the same people as your competition.

The best candidates are probably working somewhere else and need a reason to consider your organization. And because budgets are always tight in growing firms, you must find clever marketing approaches to attract the specific kind of “strange” talent you’re seeking.

And because budgets are always tight in growing firms, you must find clever marketing approaches to attract the specific kind of “strange” talent you’re seeking.

“One thing we learned while building Google is that it’s easier to find what you’re looking for if it comes looking for you. What we’re looking for are the best engineers in the world. And here you are.”

The ad, he notes, “is an example of how we give our company culture and value a high priority.”

book written by the CEO (something we strongly recommend); a regular column in the local biz journal; a popular blog; and/or regular LinkedIn Influencer posts are great recruiting (and marketing) tools and ways to grab attention in an industry.

The length of this interview offers several benefits: 1. A Players like a vigorous process and are leery of companies that make it too easy. 2. “Professional” interviewees can’t keep up the façade for hours. 3. Meanwhile, those who are not initially comfortable will have time to relax and open up. 4. Besides, what’s three to four hours now vs. thousands of hours of headaches if you hire the wrong person? NOTE: A three- to four-hour interview is appropriate for a middle or senior leader; one to two hours might be more suitable for entry-level or less experienced candidates with limited work history.

Nash believes that people who had to earn money for themselves as teenagers tend to be well-grounded, so the questions might include: “What did you spend money on as a teenager? How did you get that money?”

An interviewer might also ask questions like: “Do you discuss religion and politics with people? When was your last passionate debate? Who was it with? And what was it about? How did it turn out?” “If the answer to the last question was, ‘I’ll never respect that person again,’ we know the person isn’t open to different ideas,” says Nash.

The idea, writes Amazon CEO Jeff Bezos in his 2014 letter to shareholders, is “to encourage folks to take a moment and think about what they really want. In the long run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company.”

EXECUTIVE SUMMARY: Once you’ve hired your team members, it takes great managers to keep them happy and engaged. Failing to develop these managers throughout the organization can become a major growth barrier. We identify five critical activities that distinguish great managers and the routines they use to educate their people — and we suggest that the term “manager” be replaced with the word “coach,” which more accurately describes the role. We’ll also share hard evidence that investments in training and coaching (vs. R&D and capital expenditures) provide you with the best returns available to your business.

Failing to develop these managers throughout the organization can become a major growth barrier.

People join companies. They leave managers. Therefore, to keep your team happy and engaged, you need one thing above all else: great managers — not free lunches or yoga classes!

failure to develop sufficient leadership is one of the three biggest barriers to growth.

on-one coaching (rather than superior technical knowledge) ranked as the #1 key to being a successful leader.

From our experience, great managers must focus those coaching sessions with their “direct supports” (a better term than “direct reports”) on five topics representing the five main activities of successful managers. In reverse order of importance: 5. Hire fewer people, but pay them more. 4. Give recognition, and show appreciation. 3. Set clear expectations, and give employees a clear line of sight. 2. Don’t demotivate; “dehassle.” 1. Help people play to their strengths.

five topics representing the five main activities of successful managers. In reverse order of importance: 5. Hire fewer people, but pay them more. 4. Give recognition, and show appreciation. 3. Set clear expectations, and give employees a clear line of sight. 2....

Drive: The Surprising Truth About What Motivates Us,

The key to affording higher wages (we’re talking frontline employees, not senior leadership) is a lower total wage cost as a percent of revenue. You have to remain competitive, and the best companies know that one great person can replace three good ones. Through rigorous selection (i.e., Topgrading), they get the absolute best talent in the door, pay employees above-market rates, and then invest heavily in training and development to make them more productive.

You have to remain competitive, and the best companies know that one great person can replace three good ones.

“Do we want a whole bunch of low-paid dumb folk; or would we rather have a whole lot fewer, better-paid smart folk?”

Costco pays its employees roughly 70% more per hour than Sam’s Club, yet needs almost 40% fewer employees per dollar of revenue. And with a 6% employee turnover after one year vs. 21% for Sam’s, Costco saves a tremendous amount on recruiting, training, and development. In general, competing on low labor and training costs is a slippery road and usually not sustainable.

In general, competing on low labor and training costs is a slippery road and ...

Last, when it comes to the key people who absolutely drive performance, great managers simply do whatever it takes to keep them on board, including offering a customized compensation package. If one person wants less base and more incentive-based pay, so be it. If another wants more time off, let it happen. “Fairness” does not mean “sameness.” You need to be creative and flexible in order to keep your top talent happy, from a compensation-package perspective.

If one person wants less base and more incentive-based pay, so be it. If another wants more time off, let it happen. “Fairness” does not mean “sameness.” You need to be creative and flexible in order to keep your top talent happy, from a compensation-package perspective.

“The deepest principle of human nature is the craving to be appreciated,” wrote William James, the father of American psychology. It is impossible to be motivated and do great work if you don’t feel that somebody cares and appreciates what you do.

The way people want to receive recognition varies greatly: public vs. private, material vs. immaterial, from peers vs. from superiors, etc. Great managers test different approaches and observe reactions until they find the triggers that work best with each of their people.

Peak: How Great Companies Get Their Mojo from Maslow,

Can your employees explain how what they’re doing helps deliver on your company’s purpose, strategy, and Brand Promise?

Once people understand their role and contribution, great managers set clear and consistent expectations about the outcomes of their team’s work. By defining the what and not the how, great managers give employees the autonomy to find their own way of achieving these goals. Feeling the liberty to figure things out for themselves and apply their own style is very important for people, since autonomy is one of three main drivers of human motivation, as Dan Pink explains in Drive.

The #1 demotivator for talented people is having to put up with bozos, as Steve Jobs would call them. Nothing is more frustrating for A Players than having to work with B and C Players who slow them down and suck their energy. In that sense, “The best thing you can do for employees — a perk better than foosball or free sushi — is hire only ‘A’ players to work alongside them. Excellent colleagues trump everything else,”

Nothing is more frustrating for A Players than having to work with B and C Players who slow them down and suck their energy.

On the process side, do your people have the appropriate tools and resources they need to get the job accomplished? Are there lame policies and procedures frustrating your team? Do you need to bring in a Lean expert to help your people design new processes or streamline existing ones? Where might they be spinning their wheels because of unnecessary delays? Focus on ways to make your team’s job(s) easier — a great definition of an effective manager.

What ultimately sets great managers apart from the merely good ones is that they help their people play to their strengths.

A strength isn’t just something you’re good at; it’s only a strength if it literally gives you strength, gives you energy

In turn, a weakness, is something that, though you may be good at it, drains the life out of you.

To do this, Buckingham suggests taking a couple of weeks and documenting all those activities you either love or loathe. This is precisely what Melbourne has her programmers do regularly, noting all of the activities that drain their energy and keep these techies away from their primary strength: programming. She then eliminates those activities no one should have to do (they creep into every job) and then uses the remaining list to create a Job Scorecard for a new position — to be filled by a new chess piece that loves to do what others hate. Result: happier, more productive, and loyal programmers.

Scaling up a business requires both visionary leadership and great managers.

In order to keep your company competitive and your people loyal, you must grow them through education and coaching.

“Why don’t you throw people a party when they start, instead of when they leave?”

Onboarding needs to be a celebration, not paperwork. It should create emotional connections between the new recruit and a maximum number of team members.

Uncommon Service: How to Win by Putting Customers at the Core of Your Business,

All Growth Companies Are Training Companies

The only way to grow a company is to grow the people first.

the best growth firms are, first and foremost, training companies.

(we suggest 12 hours for the frontline; 25 hours for middle management; and 45 to 60 hours for senior leaders as a starting point).

Worried about spending all that money on training only to watch your people go elsewhere? The research definitively shows that training and development increases loyalty. Besides, what’s the alternative? Do you really want your people not to be the best-trained for the jobs they have to do?

And how much should you spend on training? It obviously depends, but 2% to 3% of your payroll is a good benchmark. Who should you spend it on? Senior leaders, middle managers, frontline employees? They all need training, but focus first on your middle management. In most growth companies, they have the hardest jobs and are...