Organizations need someone dedicated to finding,

retaining quality personnel

BY RICH SCHMITT
Management specialist

Who is responsible for the talent in your company? When I ask that question during consulting assignments, I hear vague platitudes like: “We’re all responsible,”  “Our line managers are responsible,”  or “Our hr manager/team is responsible.” As I probe the situation with in-depth questions, very few companies have a person who is ultimately responsible for the talent in the company. It’s like the old saying, “When everyone is responsible, nobody is responsible.” 

Within most companies, there is almost always someone responsible for sales, finance, inventory management and so on. But seldom does the talent job have a named, responsible individual. Of course the president is ultimately responsible for everything, but often the talent responsibility is assumed, by the president, to be delegated to others in the company. Just like in football, when nobody takes the handoff the ball gets dropped.

Some of you might be thinking, “That’s HR’s job.” Most companies have a Human Resources manager or an HR department, but in many instances that person/group spends the vast majority of their time administering people. By “administering” I mean:

• Ensuring compliance with the ever-changing morass of legal and reporting requirements imposed by our local, state and federal government
• Dealing with people problems
• Keeping employee records
• Locating warm bodies for line-managers to interview when there are openings.

Typically, a small to miniscule amount of time and effort is dedicated to the critically important tasks of finding, developing and optimizing the company’s most important and valuable resource -- the team.  In some instances, the HR staff has not even spoken to a candidate, in person or by phone, before he or she is hired. After being hired, HR only talks with the new employee if he or she has benefits questions or gets into trouble. They are bystanders in many of the critical people-oriented activities of the company. I am not picking on HR since they are often doing exactly what they are directed to do by their superiors.

Wholesaling is talent intensive. Period. The highest-performing wholesalers have good people throughout, more than their fair share of great people at key positions and a group of high-potential people being groomed for additional responsibilities in the company. These high-performing wholesalers know that their growth is not limited by dollars, locations or inventory, but by their ability to find qualified people to staff and manage that growth. In talking with owners of high-performance companies, the lack of people to staff their growth is their number one limitation. They have the opportunities. They have the money. They have the product lines. They simply lack the right people to make it happen. Yet few of these high-performing companies have a person responsible for finding and grooming the team needed to grow.

Why does our industry have such a lack of focus on quality people when quality people are the key ingredient that is in the shortest supply? I think it boils down to two issues:

• Having a chief talent officer (CTO)
• Creating a specification for people and working to that spec

We’ll examine these two issues through the remainder of this column.

Benefits of having a CTO

A CTO is an individual within the company who is responsible for, measured on and compensated on the management of the talent in the company. In small companies, this is a functional hat worn by someone with other responsibilities. In large companies, this might be an individual supported by a department. For many organizations, the focus on finding good people has become diluted and delegated, with no single person tasked with finding, developing and optimizing the talent in the company. 

When most companies were young, the owner/founder wore all the big hats. He managed pricing, ordered product, wrote a lot of the orders, set all procedures and policies by example and was the human resources department involved in hiring, compensation, disciplining and firing people. He was the CEO, CFO, sales manager, purchasing manager and CTO in a neat package. While some tasks were delegated, he felt personally responsible for each of the roles along with a dozen others. He understood the pressing need for great people and personally hired the very best people he could find and afford. 

As the company grew, he carved off chunks of his job and gave them to other key people in the company. Typically, he broke off the administrative portion of the hr job and gave it to one of his administrative support or clerical people since the part of the job he hated most was the record keeping and compliance crud imposed by the government. He retained the hiring portion of the job but, over time, that too was delegated informally to others in the organization. Since most managers view hiring as the process of getting warm bodies into job openings, the passion for finding and hiring great people was diluted -- if not dropped altogether -- in the hand-off.

The CTO job really involves three distinct areas:

• Attracting, identifying and hiring the right people. This includes:

1. Creating specifications for each job that describe what the job entails and the skills required for top performance. You have to know what you are looking for.
2. An on-going focus on hiring. In high-performance companies, the hiring light is always, I repeat, always, on. When things are tight, only the very best people might be considered since the hire will require that one of the company’s poorer performers is let go. Just like in a sports team, even when the roster is full, they will consider trading up if the right talent becomes available. High-performance companies are sometimes hiring high-potential people even when they are going through a reduction in force. Just because you are reducing your workforce doesn’t mean that you have the talent you will need going forward. In fact, sometimes turnarounds will require both added talent and reduced fat in the company. (Of course, you must conduct yourself within the legal guidelines of your area.)

• Training, motivating, coaching and optimizing the effectiveness of the people you have

1. Our industry invests an embarrassingly small amount of money on real training. We use the “on-the-job training” approach that takes way too long and seldom matches the quality of formal training combined with good mentoring and coaching. You cannot assume that your line managers and branch managers will understand the need for formal training. So the CTO will be involved in tracking and measuring the training provided by the company. As an aside, at a recent meeting, Paul Martin of the ASA Education Foundation gave me a copy of his latest training manual from their Essentials series, Essentials of Profitable Inside Sales in Distribution. I have not reviewed it completely, but my quick scan on the airplane left me very impressed. I think every wholesaler should be reviewing this material for training their current and future inside sale people. HARDI also has training materials that you should consider.
2. Many of the talent management tasks should be accomplished through the line-managers of the company, so a significant amount of time should be spent developing and coaching the leadership team in the company. Typically, managers receive very little training with regard to management and leadership so part of the CTO’s job is to deploy programs to evolve and upgrade the management team’s skills.
3. The CTO will also identify and monitor high-potential employees who will be fast-tracked to accelerate their personal growth process. Not all of your team should be advanced at the same rate. The really great ones must be moved along at an accelerated rate. It helps them to contribute more to the company and it keeps them from getting bored and seeking employment elsewhere. These top performers should each have a development plan customized to their aptitude and developmental needs.

• Identifying the sub-standard performers and troublemakers and moving them out of the company

 

1. In the same way that inventory managers identify and reduce dead inventory, CTO’s work with line managers to identify and reduce the human deadwood within the company. Most wholesalers have big hearts or don’t want to hurt anyone, so they often take too long to identify poor performers and get them out of their organizations. 
2. I know this sounds tough-minded, but good CTOs always have an ordered list indicating who will be the first to go through who will be the last to go in a forced reduction.

The CTO role is critical, whether it is one of many hats worn by an individual or a full-time job. It is a tough and, many times, thankless job -- but the best CTOs are a tremendous asset to the company.

Creating a specification for employees and working to that spec

Most line managers and HR people don’t have a clear understanding of what a “good” person looks like, so hiring one or developing one is a process with roughly the same odds of success as the lottery. What are the characteristics of a good person for our industry? 

• Intellect -- As you know from previous columns, I think the single most important characteristic is intellect. Further, testing is the most reliable way to measure intellect. Intellect determines whether an individual can do a job.

Because many companies still don’t conduct consistent pre-employment testing, our industry’s track record in hiring intellect is substandard. In many cases, the process involves one or two interviews with the prospective employee, and is totally dependant upon the interviewer’s skill at evaluating people and sorting through the fluff.

I have been doing this for 35 years, and still get fooled by candidates who look good and are highly verbal, yet aren’t good enough to reliably pick orders in the warehouse. Testing has saved me and prevented a situation that would have been bad for both the wholesaler and the candidate.

• Attitude/energy -- Where intellect indicates that an individual can do a job, attitude indicates that an individual will do the job for you. Attitude cannot overcome inadequate intellect, but with adequate intellect, attitude is the next most important characteristic. 

It is critical that you don’t confuse intellect and attitude. They are different and while I don’t have statistics to back this up, my experience has been that good and bad attitudes are spread uniformly across the workforce and are not related to intellect. In other words, there are just as many lazy, good-for-nothing smart people as there are lazy, good-for-nothing dumb people. Further, there are just as many high-energy, go-getting smart people as there are high-energy, go-getting dumb people. (The problem with high-energy, go-getting dumb people is that they often are exerting that energy in the wrong direction.)

• Experience and proven performance -- Generally speaking, intellect and attitude are the horsepower and torque where experience is the measure of traction. I have seen many people with horsepower and torque who cannot get enough traction to do anything productive. Again with no statistics, I have personally found that people with the intellect and attitude have much better track records than people without intellect and attitude -- but you still need to look carefully at an individual’s accomplishments. Ideally, they will have successfully performed the function you need at another similar company.

It is important to remember that years on the job are not related to experience on the job. One person might be growing and learning while another might be treading water over the same length of time. As I have said before, one year of experience 10 times is not the same as 10 years of experience.

New or promoted individuals should either possess the needed skills or should be set on a developmental path that will provide the necessary training and will evaluate whether the individual has the right stuff.

• No substance abuse problems -- This is another area where pre-employment testing can help you avoid problems that may not be evident in an interview. Further, with all the legal issues that surround reference checking, it is unlikely that a previous employer will tell you that someone has a substance problem, even if they were terminated for substance abuse on the job. 

Take the time to hire good people. Remember, half the people in the workforce are below average with respect to any given measure. If you only want above average people, you will be rejecting half of the applicants for the job. If you want people in the upper quartile, you will be rejecting three of every four applicants. If you want the upper 10%, you will be selecting one out of 10 applicants. Hiring the very best takes time and energy -- but in the long term, it takes much less energy than trying to run a top-notch company with a lack-luster team. With someone who is clearly responsible and a clear vision of the talent that you need, you will greatly improve your odds in this gamble that we call wholesaling. 

One last thought: if you are the president/owner of a wholesaling company and you don’t have someone who is your designated CTO, like it or not, you’re it. 

For reprints on the topics of people and hiring, e-mail me at rich@go-spi.com. If you need help with hiring or with training your team, give me a call.

Rich Schmitt is president of Schmitt Consulting Group Inc., a management consulting firm focused on improving the profitability of distribution and manufacturing clients. Rich is also the co-owner of Schmitt ProfitTools Inc. (SPI), a business producing print, CD-ROM, web and palm-based catalogs as well as pricing management and analysis software for wholesalers.