As Community Association Managers, we are responsible for creating a community and a company culture. To achieve results, the association needs to move everyone in a positive direction and determine what the desired culture should be. Jim Collins, author of “Good to Great”, writes about disciplined people: it is all about the “Who” before the “What!”
Jim Collins premise and philosophies relate to Community Association Management. As the Manager, you are a bus driver. The bus, your association may be at a standstill, and it’s your job is to get it going. You have to decide where you’re going, how you’re going to get there, and who’s going with you.
Most people assume that as great bus drivers, you as the leader will immediately start the journey by announcing to the people on the bus where they’re going—by setting a new direction or by articulating a fresh approach and vision.
In fact, Jim states that leaders of companies that go from good to great start not with “where” but with “who.” They start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats.
When we began the research project, we expected to find that the first step in taking a company from good to great would be to set a new direction, a new vision and strategy for the company, and then to get people committed and aligned behind that new direction.
It takes discipline—first the people, then the direction—no matter how dire the circumstances. Jim Collins examined David Maxwell’s bus ride.
When he became CEO of Fannie Mae in 1981, the company was losing $1 million every business day, with $56 billion worth of mortgage loans underwater. The board inquired how David Maxwell was going to save the company.
Maxwell responded to the “what” question the same way that all good-to-great leaders do: He told them, “That’s the wrong first question. To decide where to drive the bus before you have the right people on the bus, and the wrong people off the bus, is absolutely the wrong approach”.
Maxwell stated to his team that there would only be seats on the bus for A-level people who were willing to put out A-plus effort. He interviewed every member of the team. He told them all the same thing: “It was going to be a tough ride, a very demanding trip”. If they didn’t want to go, he said, “Fine; just say so. Now’s the time to get off the bus”, he said. He clarified…no questions asked no blame. In all, 14 out of 26 executives got off the bus. They were replaced by some of the best, smartest, and hardest-working employees.
However, if people board the bus mainly because of all the other great people on the bus, as Manager, you will see much faster and smarter responses to changing conditions. Second, if you have the right people on your bus, you don’t need to worry about motivating them. Jim states, “The right people are self-motivated!” It is a great feeling to be part of a team that is expected to produce great results. And third, if you have the wrong people on the bus, nothing else matters. You may be headed in the right direction, but you still won’t achieve greatness. “Great vision with mediocre people still produces mediocre results.”
Jim Collins says that the one priority above all others is to acquire as many of the best people. The single biggest constraint on the success of an organization is the ability to obtain and retain enough of the right people. It’s important to have a system in place to recruit and hire the right people to carry out the duties required in operating an association.
With the right people on the bus, in the right seats, Maxwell then turned his full attention to the “what” question. He and his team took Fannie Mae from losing $1 million a day at the start of his tenure to earning $4 million a day at the end. Even after Maxwell left in 1991, his great team continued to succeed—and Fannie Mae became stronger in the general market from 1984 to 1999.
We found something quite the opposite.
The executives who ignited the transformations from good to great did not first figure out where to drive the bus and then get people to take it there. No, they first got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it. They said, in essence, “Look, I don’t really know where we should take this bus. But I know this much: If we get the right people on the bus, the right people in the right seats, and the wrong people off the bus, then we’ll figure out how to take it someplace great.”
The good-to-great leaders understood three simple truths. First, if you begin with “who,” rather than “what,” you can more easily adapt to a changing world. If people join the bus primarily because of where it is going, what happens if you get ten miles down the road and you need to change direction? You’ve got a problem. But if people are on the bus because of who else is on the bus, then it’s much easier to change direction: “Hey, I got on this bus because of who else is on it; if we need to change direction to be more successful, fine with me.” Second, if you have the right people on the bus, the problem of how to motivate and manage people largely goes away. The right people don’t need to be tightly managed or fired up; they will be self-motivated by the inner drive to produce the best results and to be part of creating something great. Third, if you have the wrong people, it doesn’t matter whether you discover the right direction; you still won’t have a great company. Great vision without great people is irrelevant.
Consider the case of Wells Fargo. Wells Fargo began its fifteen-year stint of spectacular performance in 1983, but the foundation for the shift dates back to the early 1970s when then-CEO Dick Cooley began building one of the most talented management teams in the industry (the best team, according to investor Warren Buffett). Cooley foresaw that the banking industry would eventually undergo wrenching change, but he did not pretend to know what form that change would take. So instead of mapping out a strategy for change, he and chairman Ernie Arbuckle focused on “injecting an endless stream of talent” directly into the veins of the company. They hired outstanding people whenever and wherever they found them, often without any specific job in mind. “That’s how you build the future,” he said. “If I’m not smart enough to see the changes that are coming, they will. And they’ll be flexible enough to deal with them.”
Cooley’s approach proved prescient. No one could predict all the changes that would be wrought by banking deregulation. Yet when these changes came, no bank handled those challenges better than Wells Fargo. At a time when its sector of the banking industry fell 59% behind the general stock market, Wells Fargo outperformed the market by over three times.
Carl Reichardt, who became CEO in 1983, attributed the bank’s success largely to the people around him, most of whom he inherited from Cooley. As he listed members of the Wells Fargo executive team that had joined the company during the Cooley-Reichardt era, we were stunned. Nearly every person had gone on to become CEO of a major company: Bill Aldinger became the CEO of Household Finance, Jack Grundhofer became CEO of U.S. Bancorp, Frank Newman became CEO of Bankers Trust, Richard Rosenberg became CEO of Bank of America, Bob Joss became CEO of Westpac Banking (one of the largest banks in Australia) and later became dean of the Graduate School of Business at Stanford University—not exactly your garden variety executive team! Arjay Miller, an active Wells Fargo board member for seventeen years, told us that the Wells Fargo team reminded him of the famed “Whiz Kids” recruited to Ford Motor Company in the late 1940s (of which Miller was a member, eventually becoming president of Ford). Wells Fargo’s approach was simple: you get the best people, you build them into the best managers in the industry, and you accept the fact that some of them will be recruited to become CEOs of other companies.
I believe instead of exercising command and control from the top down, the most effective leaders lead by directing from the center of their organizations. Modern leaders empower employees to develop the skills they need to move to the next level in their careers. In the process, they will move their organizations forward, as well.
If you think paying higher wages than your competition is the solution to hiring the best people, you would be wrong, according to Collins. The right employees for your organization must be driven not by money but by your organization’s mission, he says.
“The right people can often attract money, but money by itself can never attract the right people. Money is a commodity; talent is not,” Collins says.
Recruiting and developing talent contributes to an organization’s productivity and growth. Without talent, an organization can’t transform. Without transformation, an organization can’t grow.
“We believe that focusing on who the candidate is versus what the candidate has accomplished is more important in hiring the right person,” he says.
Hire Slow , Fire Fast
Likeable Media CEO Carrie Kerpen recently defended the old adage of “hire slow, fire fast.” She argued for measured decision-making when it comes to hiring and explained how her business suffered from bad hires.
“There was a bloodbath,” she writes. “A bloodbath of firings, lost clients, and the morale of the people who were still at the company just plummeted.”
But there are other CEOs who disagree with the notion that you should hire slow and fire fast. Some say they don’t have the luxury of time to wait for the perfect candidate.
1) Get the right people on the bus.
Leaders must be rigorous in the selection process for getting new people on the bus. Invest substantial time in evaluating each candidate and make systematic use of at least three evaluation devices (e.g., interviews, references, background, testing, etc.).
When in doubt, do not bring the person on the bus. Let a seat go unfilled—taking on extra work as needed—until you have found the right person. Ensure your company does an exceptional job of retaining the right people on the bus to perpetuate your good hiring decisions for a very long time.
2) Get the right people in the right seats.
Have 100% of the key seats on the bus filled with the right people. This doesn’t mean 100% of ALL seats have the right people, but 100% of the key seats. If you think there might be a “wrong who,” first give the person the benefit of the doubt that perhaps he or she is in the wrong seat. Whenever possible, give a person the chance to prove himself or herself in a different seat, before drawing the conclusion that he or she is a wrong person on the bus.
3) Get the wrong people off the bus.
Once you know you need to make a people change be rigorous in the decision, but not ruthless in the implementation. Instead, help people exit with dignity and grace so that, later, the vast majority of people who have left your bus have positive feelings about your organization. Autopsy hiring mistakes, applying the lessons systematically to future hiring decisions.
4) Put who before what.
When confronted with any problem or opportunity, shift the decision from a “what” question (“what should we do?”) into a “who” decision (“who would be the right person to take responsibility for this?”). Spend a significant portion of time on people decisions: get the right people on the bus, get the right people in the right seats, get the wrong people off the bus, develop people into bigger seats, plan for succession, etc. Develop a disciplined, systematic process for getting the right people on the bus. With each passing year, ensure the percentage of people decisions that turn out good versus bad continues to rise.
When in doubt, don’t hire – keep looking
Corollary: A company should limi t its growth based on its ability to attract enough of the right people.
“Packard’s Law” – 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.
Part of the reluctance to let people go is because it’s hard to find good people. Pointing back to Hewlett-Packard again, they reference “The Packard Law”:
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.
As difficult as hiring the right people can be, it’s much easier to wait until you find the right kind of person than it will be to hire the wrong person, then deal with getting them off the bus later.
Put your best people on your biggest opportunities, not your biggest problems
Corollary: If you sell off your problems (eg. a business unit gets shut down), don’t sell off your best people.
Managing problems can only make you good, whereas building your opportunities is the only way to become great.
Collins points to Phillip Morris’ decision to appoint his number one executive, George Weissman off his primary domestic business and put him in charge of international. Despite generating less than 1% of their revenues from overseas sales, Joe Cullman of Phillip Morris identified International markets as his single biggest opportunity. When Cullman perplexed over the best strategy for developing international operations, he came up with a brilliant answer. The answer wasn’t “what” rather it was “who.”
One of Weissman’s colleagues was quoted, “When Joe put George in charge of international, a lot of people wondered what George had done wrong.” Weissman himself offered, “I didn’t know whether I was being thrown sideways, downstairs or out the window. Here I was running 99% of the company and the next day I’d be running less than 1%.”
Forbes magazine recognized the move 20 years later as genius. Weissman built international into the largest and fastest-growing part of the company. Marlboro, Phillip Morris’ flagship brand became the best-selling cigarette in the world three years before it became the number one brand in the U.S.
Good to Great points out that Phillip Morris illustrated a common trait among Good to Great companies. Put your best people on your biggest opportunities, not your biggest problems. Comparison companies had a propensity for doing just the opposite. Managing your problems can only make you good. Building opportunities is the only way to become great!