HBR: If People Are Your Most Valuable Asset, Do You Show It?

The January/February 2012 issue of the Harvard Business Review includes an article on building a team in which author Kevin Ryan, CEO of Gilt Groupe, argues that businesses succeed not because of ideas, but because of its people:

Execution is what matters, and execution relies on human talent.  Every company thinks it’s doing a good job of managing its people.  They all say, “People are our most important asset.”  But most companies don’t act that way.  Here’s a simple test:  Ask the CEO if he or she spends more time on recruiting and managing people than on any other activity.  For me, the answer has always been yes.

He admits this situation can only apply to organizations with more than 50 people because in smaller organizations the CEO has to tackle lots of other important issues to succeed.  But Ryan does offer many other provocative approaches for finding and retaining great employees and you’ll want to read the article if you’re an executive director, manager, or boardmember.  Here are some highlights:

  1. Some managers prefer that executives check with them before talking with their people.  That’s not going to happen here.  I want to get to know our employees better and to assess their talent and potential.  I also want to know if they have difficulties with a manager.  I am evaluating talent all the time.
  2. Part of building a great team is learning to recognize when individuals aren’t working out and then letting them go.  In general, managers are not rigorous enough about this. That’s a problem, because often the only way to make room for better players is to get weaker players to leave the organization.
  3. I hold managers to the same standards when I ask them to build a team.  I’m going to be really disturbed if I see that people we wanted to keep have started leaving.  A poor manager can ruin morale and damage a company’s DNA. No matter how well you think you know your organization, if you suspect something’s wrong, it’s probably worse than you imagine.  You can’t let those situations continue.  They’re just too destructive.
  4. Most managers overvalue the resume and interview and undervalue the reference check.  Resumes are good for establish basic qualifications for the job but not for much else.  The primary problem with interviews is that it’s impossible to avoid being influenced by people who are well-spoken, present well, or are attractive.  When someone doesn’t succeed in a job, it’s generally not for a lack of the technical skills–it’s because of intangibles that don’t come up in an interview.  References are really the only way to learn these things.
  5. A-level people generally hire other A-level people, but B-level people hire C-level people.  B players hire C players not because they feel threatened by more-talented people but because most people don’t want to work for a mediocre boss.
  6. Of all the duties facing a CEO, obsessing over talent provides the biggest return.  Making sure that the environment is good, that people are learning, and that they know we’re investing in them every day.  If CEOs did absolutely nothing but act as chief talent officers, I believe, there’s a reasonable chance their companies would perform better.

For the full article, see “Building a Team of A Players” by Kevin Ryan in the Harvard Business Review (January/February 2012), pp. 43-46.