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People Not Your Most Important Asset – Practical Discipline #1

Posted by Douglas A Wick on Wed, Nov 3, 2010

What’s the ultimate throttle on growth?  describe the image

For any great company, it’s not markets, technology, competition, or products. The one thing above all others: the ability to get and keep enough of the right people.

If you’ve read Michael Gerber’s book The E-Myth Revisited, the emphasis on systems can lead you to believe people are not your most important asset.  As I noted in the White Paper, Was Michael Gerber Wrong, Gerber’s emphasis on systems is so intense it’s easy to lose sight of the importance of people in building your business equation.  In Good to Great, Jim Collins states, “The old adage ‘People are you most important asset’ turns out to be wrong.  People are not your most important asset.  The right people are.” 

Even Gerber subsequently recognized this and is quoted in the Forward to the book How to Hire A-Players, “It takes A-Players to conceive, design and build a world-class business system so C-Players can produce A-Player results. How To Hire A-Players tells you how to find the A-Players you need to grow your business.  Read it, or forever settle for less than you deserve.”

The hardest part of hiring is delaying a decision when you are not confident about the people you’ve interviewed for the position.  Whether you use Topgrading or not [We strongly urge our clients to] the cost of hiring the wrong person makes it prohibitive to move forward if you wish your business to grow.  Many business owners don’t feel they have the time to go through the Topgrading process.   A three-hour-plus interview, tandem interviews, reference checking, completing a job summary scorecard, etc., seems too time-consuming.   When you add up the cost of a wrong decision the compelling results tell you that to do otherwise is courting disaster and swallowing prohibitive expense.  So why do so many business owners continue to hire the wrong person?  They don’t have a system and they don’t see the hidden expenses of their mistakes.  Hiring estimates for mis-hire under $100K salary is 14 times.  Over $100K the cost shoots to 28 times.  Even if you discount either of these two numbers, the reality is whatever you pay the wrong person; you paid much more than you would have had you selected the right person.  Add in the frustration and cost time to repeat the process again.

Collins in Good to Great emphasized three practical disciplines for getting the right people on the bus.  His case for Strategic Discipline begins with Practical Discipline #1: When in doubt, don't hire- keep looking.  He refers to the immutable law of management physics, Packard’s Law named for the co-founder of HP.  No company can grow revenues consistently faster than its ability to get enough of the right people to implement that growth and still become a great company. If your growth rate in revenues consistently outpaces your growth rate in people, you simply will not-indeed cannot-build a great company.

How many times have you made the wrong decision on the people you hired?  How much has this cost you and how much will it cost you in the future?  Do you recognize how important making the right people decision are?  If you did why would you make the same mistake over and over?   

Open the throttle on Growth.  Hire and keep the right people on the bus.  

Topics: Good to Great, Topgrading

Challenges of Scaling Up a Business 







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The Strategic Discipline Blog focuses on midsize business owners with a ravenous appetite to improve his or her leadership skills and business results.

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