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May 31, 2007

4

Do not go gentle into that good night,
Old age should burn and rave at close of day;
Rage, rage against the dying of the light.

Though wise men at their end know dark is right,
Because their words had forked no lightning they
Do not go gentle into that good night.

Good men, the last wave by, crying how bright
Their frail deeds might have danced in a green bay,
Rage, rage against the dying of the light.

Wild men who caught and sang the sun in flight,
And learn, too late, they grieved it on its way,
Do not go gentle into that good night.

Grave men, near death, who see with blinding sight
Blind eyes could blaze like meteors and be gay,
Rage, rage against the dying of the light.

And you, my father, there on the sad height,
Curse, bless me now with your fierce tears, I pray.
Do not go gentle into that good night.
Rage, rage against the dying of the light.

(Thanks Dylan)

I have  given most of my life to building businesses. I love business. A value-for-value exchange in an open and transparent market between two knowledgeable, wise and responsible agents is one of the high points of human achievement. To paraphrase Churchill “Capitalism is the worst form of economics, except for all those other forms that been tried from time to time.” I believe passionately in “an economic system in which the means of production are privately owned and operated for profit, and in which investments, distribution, income, production and pricing of goods and services are determined through the operation of a free market.” (Wikipedia) But the context has changed: the means of production (our minds) are not privately owned, nor are they operated for profit, nor can we say that investment, distribution, income, production and pricing of the output of the means of production are determined through the operations of a free market. Our most critical resources are at the whim of a system that secretly covets waste and force as it talks enthusiastically about efficiency and output. And what is that critical resource? The minds of engaged and able people who aspire to maximize the value they can deliver to a fair and open market for their unique capabilities.

May 30, 2007

1999 or 1984?

From an email sent by the Aberdeen Group asking for participation in a survey on "The Global War for Talent":

The market for skilled labor is shifting at an alarming rate and the balance of power has shifted strongly in favor of job seekers.

Temporary trend (a la 1999) or long-term shift? Will talent finally start asking for more than "Can I bring my pet parrot to work and get an extra $10K?" Like control, participation in the profits, ability to select their own teams, pre-defined criteria for success, clarification on residual IP rights?

3

I know I am not getting through, that I am trying to unwind 140 years of corporate habit and that in a complex world people want simple answers to complex problems. So what? I genuinely believe that our future is at risk and that unexamined thinking, policies and structures in the western business world are at the very foundation of our failing schools, health care system, infotainment consumeristic society that can't seem to agree on anything except that evil people (definition: anyone who doesn't agree with me) are destroying us.  It is clear that the western corporate system is actively, though largely unconsciously, engaged in destroying civil society and the customer base that is formed by that society. Or, to put in the blunt language that executives claim they love: businesses are shooting themselves in the foot with a shotgun. CEO’s everywhere are anxiously looking at next quarter’s P&L while the very structure of their economic enterprise is coming apart at the seams. They are the modern day Nero’s, actively and productively fiddling while their corporate Romes are ablaze.

What Does “Good” Mean, Anyway?

I am a big  fan of Dr. Steve Hunt. One of the most fascinating and wide ranging discussions I ever had about the world of talent was with Steve as we traveled to a lunch together. Steve is very bright and a deep thinker about most things near and dear to my heart.

So I read Steve’s article this morning over at ERE with great interest. I generally agree with his basic assertion that “hiring the wrong person is worse than hiring no person at all” (depending on whether the position is efficiency or effectiveness focused). But I am still left with the most fundamental question: what does the wrong person mean?

As I have discussed before, “good” and “bad” are terms that reference quality. (If you have a spare moment, read Zen and the Art of Motorcycle Maintenance and then read the Wikipedia entry on quality for two different takes on this fascinating topic.) Quality is defined by the scope and frequency of variation to a specification. So I have to assume that when people talk about a “bad hire” they are saying “I hired against a specific description and the person ended up not meeting that specification.”

If you have worked in a company for any length of time you know that the truth is more often “we really didn’t know what we needed, so we hired the perfect person, but not for this job.” Most bad hiring decisions have little to do with candidate misrepresentation or salesmanship, nor do bad assessments generally lead to bad hires. The problem is almost always a bad specification. And that means that Steve should be saying “Not knowing what the hell you want is worse than making any hiring decision whatsoever, right or wrong.”

“Back that up!” you say in alarm. Love to.

The Corporate Leadership Council conducted an extensive study of the hiring of executives. Executive hiring is instructive because most companies will wait to hire the right executive rather than just fill the seat and hope the investors look the other way when it goes wrong. There can be little dispute that more time and effort goes into the average executive hire (either an outside or inside placement) than the average mid or junior level position.

The CLC survey covered member companies such as HP, First Data, Nestle, Pepsico and RBC Financial: all companies known to think more progressively about HR practices than your run-of-the-mill company. So how did companies such as those feel about executive hiring? 59% of the survey respondents said that “Failure of externally hired executives” was a “significant problem”, with another 17% saying it was a “moderate problem.” Only 24% of the respondents said it wasn’t a problem at all.

So much for external hiring. What about internal promotion as an alternative? 50% of the respondents said that “failure of internally promoted executives” was a “significant problem”, with another 25% saying it was a “moderate problem.”

Later in the same study there is a quote that drives it home. A VP of HR for a manufacturing firm, commenting on the efficacy of their internal high potential program says:

We select our high-potential employees based on performance out of practicality—it’s the only measure that our managers trust. But it’s not sufficient. The success rate of our HIPOs might be 50% at best. Managers are beginning to recognize that the link between performance and potential is incomplete, but until we find something with greater accuracy managers will continue to use it.”

In other words – pick anybody and flip a coin. You’re success rate will be roughly the same as wasting everyone’s time and a lot of money ensuring that you get the “right” candidate. We can’t seem to reliably pick external candidates even when the vetting process is exhaustive and we are willing to spend a lot of money to get the right person. We can’t seem to reliably pick internal candidates even after we have watched them work in the same culture, in the same company, as the new opportunity.

For all the process work and lean staffing and other initiatives which make valid claims to reduce waste in the talent supply-chain, the dirty little secret is that we have bad specifications. And given that our spec is wrong, talking about good and bad hires is largely an exercise in futility. We need better specifications.

(I hope that Steve will still let me buy him a drink when I see him in Boston in a couple of weeks.)

(Quote and data from “Realizing the Full Potential of Rising Talent (Volume 1): A Quantitative Analysis of the Identification and Development of High-Potential Employees” published by the Corporate Leadership Council in 2005)

May 29, 2007

2

What is Talentism? Thirty years of angst is a lot to bottle into a pithy sound bite, so I usually start my standard diatribe about western economies changing as capital becomes cheap and talent becomes expensive. I point out that hedge funds and venture firms are turning away investors at the same time that companies are jacking up the price of talent in order to find that next "iPod opportunity". I talk about all the reasons that companies waste shareholder value in the name of keeping shareholders happy, and how this is especially true in the area of human ingenuity and creativity, where companies become obsessed with crushing the unpredictable tendencies of people to create and learn at the most inconvenient moments, all in the name of keeping the stock price buoyant. And then I expound about the structural hypocrisy of the average corporate governance structure, which claims to advocate for the average mind-numbing hierarchical control system in the name of protecting shareholder value but that rarely accomplishes more than lining the pockets of insiders regardless of the results they achieve.

Be Forewarned - Talentism Paragraphs

Some (many?) of the people who read this blog (especially as an RSS or email feed) look for posts about recruiting.  So I wanted to forewarn everyone that the series that started last night will consist of one paragraph a business day about Talentism. Some of the paragraphs are about recruiting and HR, but there are just as many about Maslow, poetry, business history, economics and education (a lot about education). Since I have already created two month's worth of content, I feel pretty confident that this long sting of connected paragraphs will be what is published here for the next quarter or so. If that is not your cup of tea (and I certainly can't blame you if it is not) then please take this blog out of your reader or unsubscribe from the email.  The last thing I want to do is waste your time and inbox / reader space. Thanks!

May 28, 2007

1

When people ask “What is Talentism?” I should just say “A better way to do business” or “A way to fix what’s broken with a lot of western economies, but mostly with America.” Or maybe I should lay it on thick, put it all out there: "Talentism is a way to course correct from the managerial-centric corporate system that destroys shareholder value, encourages waste and immoral behavior and picks away at the very societies it needs to succeed." I should avoid devolving into lectures that have been developing in my head for almost 30 years. You would think I could learn by now that this is the business conversation version of “Isn’t the weather nice today?” Call me Quixote, but this is the windmill I have chosen, and I'll keep tilting at it until it really turns out to be a dragon or I die trying.

May 21, 2007

Why Nobody Describes the Elephant in the Room

(I would like to thank John Sumser for putting this back on my radar… I have wanted to write this piece for a while.)

The parable of the six blind men and the elephant has been recounted in many forums. While the original parable first originated in India and was passed as oral tradition through Hindu mystics, the English version of the parable was popularized by a early 19th century poet named John Godfrey Saxe. The full text of his poem is included at the end of this post.

The parable (and its representative poem) should be required reading for anybody who makes their living in the business world, regardless of whether you are an artist, engineer or accountant. In my 23+ years in business I have yet to see a critical business meeting that didn’t fail (to some degree) at this most fundamental level of understanding: we are each telling different stories about the same thing, each of us passionately committed to our version of the truth even though we don't have that much on which to base our opinion.

The last verse of the poem says it beautifully:

So oft in theologic wars,
The disputants, I ween,
Rail on in utter ignorance
Of what each other mean,
And prate about an Elephant
Not one of them has seen.

How many of us have seen this played out in meetings? More importantly, how much competitive advantage would a company create if it had someone at the meeting who could take the various impressions of the blind men and coordinate them into a description of the truth that everyone could “see”?

Who is that person? The coordinator of information must be someone who is willing to take the risk of reflecting back to everyone what they are saying. Sometimes that will be a person with a fancy title, but more often than not it will be someone who just raises their hand and says "Here is what I am hearing, and here is how I think it all fits".

But regardless of who the leader is, it is painfully clear that the “wise men” must be all of us. Each of us must be prepared to bring our version of the elephant to the table, as well as listen to everyone else's version of "the truth". And even more importantly, each of must be willing to ask that we have access to all the original stories of every other person at the table. We must demand transparency, and then show the wisdom and emotional intelligence to demonstrate that we are worthy of the trust and honor that transparency demands. For when a person who is perceived to have power starts the conversation, things often go painfully wrong. This lesson is best expressed by another parable based on elephants and wise people:

Six blind elephants were discussing what wise men were like (never having seen one).  Failing to agree, they decided to find one and determine what it was like by direct experience. The first blind elephant felt the wise man, and declared, “Wise men are flat.” After feeling the wise man, the other blind elephants agreed.

This parable shows the danger of having the powerful describe reality: they can literally flatten the data before it ever gets investigated by anyone else. I can think of many situations where this has happened in public policy (the Mexican American war, the Spanish American War, Vietnam… to name just a few). But it is every bit as common in business. Enron happened because Jeffrey Skilling flattened the original data such that everyone else in the company had to react to his version of the truth. Since the first person or group dealing with the data has the (either unintentional or intentional) ability to change the data by their reading of it, every participant thereafter must react to the changed data rather than original information. This is how groups so often go wrong: they are all reacting to the same story, and that story is just plain wrong.

So we not only need someone at the table to coordinate the stories of all the wise people, none of whom has ever seen the elephant but all of which have a strong opinion given their personal experience about just what the elephant is. We also need someone who is making sure that there is no one person who is defining the initial reality, who is getting to the data first and therefore changing it so that all the opinions that come thereafter are simply an affirmation of the first person’s ability to change the information by their force.

Most companies ignore these structural issues altogether. They assume that leadership, by its definition, is the role of describing reality to the followers. The ability to change data so that others have to respond to that world-view is often an assessed capability of what is considered leadership potential. But in a world where everything changes quickly and where the issues being confronted are so enormous that the best any single person can do is to feel some small part of a gargantuan beast, leadership now must be something much different. Leadership must be ensuring that we are all sharing our part of the story, and that no single story becomes dominant before the rest of the stories are in. Then, rather than telling us which story is right (since the leader is often as blind as everyone else who is feeling the situation), the leader must explain how the stories coordinate into something like a reality that all of us can embrace and react to.

It may seem trite or overly simplistic, but just getting your story straight may be the single greatest competitive advantage you can create.

The full poem follows. Enjoy...

Continue reading "Why Nobody Describes the Elephant in the Room" »

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