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TOPGRADING WILL MAKE YOUR COMPANY MORE SUCCESSFUL

After decades of studying thousands of successful and failed careers, and hundreds of successful and failed companies, we at Smart & Associates have found that the one factor accounting most for individual and organizational failure is not flawed strategy, insufficient capital, lack of government protection or bailouts, bad luck, corruption, or technology. More important than all of these factors combined is a failure to embed sufficient talent in the organization.

The single most important driver of organizational performance and individual managerial success is human capital, or talent. The ability to actually do what every company and every manager wants to do—hire and promote the best people available at every salary level—is what distinguishes premier companies, large and small, from mediocre firms. And the ability to hire and promote the best talent available at every salary level accounts for why managers enjoy highly successful versus more ordinary careers.

Consider two examples: In the face of increasing international and domestic competition, two senior managers in similar companies vie to outperform the other. Both strive to improve their teams' performance because both have studied the latest management trends and have attempted some version of quality and process improvement—Six Sigma, lean manufacturing, or Toyota manufacturing methods. Using the latest technology, they have discovered and rediscovered their customer base, and both use social media to make their organizational culture more positive and attractive for recruitment. The companies are equivalent in financial and geographic resources. However, the companies differ in one respect. One manager has a team of 25% high performers, 50% "adequate" but mediocre performers, and 25% low performers. The other manager has a team of almost 90% high performers. Which manager would you bet on to win? It doesn't make much difference if the organizations are Global 100 companies, grocery stores, or high-tech start-ups, because the company with better talent is bound to win.

The trouble is, throughout the world most companies do 'not' have superior talent because they are poor at picking talent. They simply can't figure out how to solve three huge problems in hiring:

1. rampant dishonesty by weak candidates who easily get away with fudging their résumés and faking their interviews,

2. insufficient information, because most companies use superficial hiring methods that enable candidates to control and hide what they share about themselves,

3. lack of verifiability, as most reference checks are practically useless. Since most reference checks are fact checks with Human Resources, not done at all, or conducted with the candidates' buddies as references, even the weakest candidates can get away with problem #1, dishonesty.

As you look back at your career, what percent of your frustrations, mistakes, headaches, failures, and disappointments have been caused by your having too many mediocre and low performers? As you reflect on your painful and costly people mistakes, do you instinctively sense the whole hiring system is broken because weak candidates you hired got away with being dishonest, sharing insufficient information, and not permitting you to verify what they told you in reference calls with their former bosses?

While we're wallowing in the misery of talent headaches, here is some more evidence that you are not alone if you are frustrated with talent challenges:

* I've conducted 65,000 oral case studies with managers, covering all aspects of managers' job histories. In 95% of those case studies, the managers said the "least enjoyable" aspects of the job were problems caused by their mis-hires.