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Sunday, 1 March 2015

Do You Hire on Performance or Potential? Better Find Someone to Deliver Both!

Some time ago one of my Vistage members told me that a long term and major member of his team had decided to leave and "seek new opportunities".

This left a significant hole in the domain knowledge within the business and he was concerned as to how and indeed who would now lead the implementation of the recently devised strategy.

I first of all made the point that while the day-to-day implementation should be and indeed was handled by members of the top team, he as leader was the champion of the project.

Accordingly while he should not in any way interfere, nevertheless it was his function to oversee implementation of the strategy and to make sure that the right people were in place and knew how and when to report progress.

Which brings us to the hole in the team. It was obvious that the individual had to be replaced but how and by whom was the question.

He decided that the way that the team was structured was appropriate so what was needed was someone to step into the breach and fill the hole as quickly as possible.

I asked the question that seemed relevant at the time; did he want to replace him with a like-for-like candidate or did he need someone who could help to drive the strategy forward?

The analogy was to ask whether he wanted an Elastoplast (or Band-Aid) solution just covering the hole or did he need the full dressings and stitches to make sure that the hole was properly treated?

I was reminded of that occasion this week during a bravura presentation to my Vistage Key Executive group by one of top speakers, Nigel Risner.

Nigel is an inveterate collector of little sayings, mantras and adages and one that he mentioned was

·  "Performance v. Potential"

It seemed to me that this encapsulates my member's issue; did he need someone to continue and replicate the work of the staff member who was leaving or did he really need to consider it an opportunity to take on a more talented and probably more expensive candidate who would have the potential to take the business towards the strategic objectives?

It's a tough decision that needs to be taken at the earliest stage of replacing someone in the top team. Ideally there will be sufficient talent in the business together with a formal succession plan to allow a seamless solution to the problem.

This implies that the potential successors have been identified as delivering great performance and also having the potential to grow themselves as well as the business.

Rating performance is relatively straightforward as performance is measurable while potential is far less tangible and more complex to identify.

A further question now arises.  What if the succession plan (if there is one) fails to identify a possible candidate for the vacancy and the only way forward is to recruit from outside?

There are brave and farsighted leaders who recruit on the basis of finding great people with talent almost irrespective of their experience and expertise and not to fill a particular vacancy.

Indeed this happened recently to one of my Vistage members who needed to replace a member of the administrative team. In the course of interviews a candidate appeared who not only had exactly the qualification and expertise required but also had great ideas that would take the business forward.

My member took the decision to appoint the candidate but not to the vacancy; he created a new management position for him so that his potential could be fully exploited.

It takes a deal of courage to take that bold step but courage and decisiveness are facets of great leadership.  Remember that we often hire on skills and experience but we fire because of attitude.

Always make sure then that everyone on the management ladder has the right attitude towards the function and the business.

Potential is more important than mere performance and great performance with potential is even more desirable.

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