Hiring top performers is important because a top performer at any given position is significantly more productive than an average performer. According to one study of management and professional workers, the “Superior” or “Top” producers generate 48% more than “Average” producers and 96% more than “Non-producers”. [ref]The validity and utility of selection methods in personnel psychology: Practical and theoretical implications of 85 years of research findings. Psychological Bulletin, September 1998, Vol. 124, No. 2, pp 262-274. [/ref] One well known organization, The Container Store (one of the Fortune “100 Best Places to Work” for 11 years straight and twice as number one), has taken this kind of finding to heart and has a simple 1=3 rule: One great employee can replace three good employees. [ref]Verne Harnish communication September 2, 2010. [/ref]
If we take The Container Store’s ratio as an example, it means that if you can hire a top performer for a given position at the rate of $50,000/year, anything you pay over $16,667/year for average performers is a financial burden on your organization. Even if you cut the ratio down to 1.5=1, anything you pay over $33,333/year is a burden. This is the financial reason for making hiring top performers a priority. There are also non-financial reasons to hire top performers: Improved culture and morale, decreased turnover, top performers (like top athletes) make everyone around them better, and the fact that top performers tend to hire other top performers meaning that over time, you’ll have top performers at all levels of your organization.
Despite the financial and non-financial incentives to hire only top performers, we hear three objections:
- Top performers are hard to identify,
- The people who are not top performers have been with the company since the early days and I don’t know what to do with them, and
- I’m not sure who is a top performer and who is not.
Our response to these objections is:
- Top performers are readily identifiable if you hire using a process designed to select for specific backgrounds, competencies and organizational “fit”.
- By determining position accountabilities and the metrics to assess performance, it’s possible to sort between top performers and average performers. This opens the door to developing those employees who have the potential to be top performers and to re-assigning or letting-go those who do not have the potential–often by mutual agreement.
- See 2 above.
Small and medium sized businesses cannot afford the financial burden of having less than top performers at all levels of the business. Investing in hiring top performers can pay handsome returns. It starts with knowing what top performance is and moves to only hiring those who can perform up to that level.
Please contact us if you have questions or would like to discuss this post further.