The Power of A Players to Make You a Market Leader

Can You Spot Your A Players?

Bill Gates once said, “Take our 20 best people away, and I will tell you that Microsoft would become an unimportant company. “At the time of the quote, Microsoft had over 400,000 employees across the globe and over thirty billion dollars in the bank to invest in future business opportunities. This company helped create several of the world’s wealthiest and most successful people.

Here’s the key question: How much leverage are you getting from your team? In my career, the reason I see many organizations fail is because they don’t understand and leverage their best people’s greatest strengths. How do you spot and develop your A players? Since many of you aren’t from the technology markets, I’d like to share several more statistics on A players from the bestselling book TopGrading by Brad Smart:

• Paper plants managed by A Players have a 94% higher profit than other paper plant plants
• Top talent in investment banking are twice as productive as those average in talent
• Return to shareholders for companies with top talent practices average 22% above industry means
• Top 3% of programmers produce 1,200% more lines of code than average. The top 20% produce 320% percent more than average
• The top 3% of salespeople produce up to 250% more than average; the top 20% produce up to 120% more revenue

Now that I have your attention, can you see why it might be critical to your organization to hire, develop, and retain the best people on your teams? According to research from 2004, the net average cost of hiring the wrong mid-level manager is about 15 times their base salary.  If their annual salary is $100,000, the cost is $1.5 million for a bad hire.  What’s included in that number?  Here are several factors to consider as you build your team. These also came from Brad Smart’s book TopGrading:

• Cost of hiring
• Cost of compensation
• Cost of maintaining a person in their role
• Severance package
• Cost of their mistakes, failure, and missed business opportunities and revenue
• Cost of disruption caused when individual leaves
• Time invested in managing the wrong individual
• Value of the contribution this person makes

These numbers can vary by role, but if you assign values to these different factors, you start to get a clearer picture of what might be happening inside your business.  If you’re a larger organization, you might be able to sustain these loses. If you’re in a middle market or smaller business, this failure could cost you your business in the worst case.  In the best case scenario, it could cost you much of the profits in your organization.

This is something I remind my clients of when they ask my opinion on a hiring decision. As we begin to see the war for talent continue to escalate, it is critical to understand the costs of your hires and why you might want to focus on adding A players to your team. If you only get one book on hiring A players, I suggest you make it TopGrading by Brad Smart.  Click here for more information on TopGrading.  Next week, we begin sharing how to spot, attract and develop  A players to your organization. I think you’ll see why hiring the right people can change your destiny. See you here next week.