The Biggest Thing Wrong With Hiring Is the People Doing It

A growing number of great companies are dumping hiring managers altogether, and putting hiring in the hands of peer teams. It turns out eight to ten brains are better than one.Harvard Business Review says 80 percent of employee turnover is due to bad hiring decisions, and that those decisions can cost more than five times the annual salary of the bad hire. The problem is largely with who is doing the hiring: managers.

Easily the most broken part of the recruiting process is that hiring and ops managers are the ones doing it. That's an archaic Industrial Age factory system approach that was a bad idea back then, and a much worse idea in the Participation Age we're in today. When managers do the hiring, it's just one more thing that makes Dilbert funny, and Dilbert should no longer be funny.

Managerless Hiring Works Better

Managers may be the start of the process, but at a growing number of great companies, they not only don't do the hiring, they no longer exist, having been replaced with self-managed teams. In many companies with very high retention, hiring is done by peers of the person who is being hired. W. L. Gore (10,000 Stakeholders), Semco (3,000), Barry Wehmiller (7,000), and hundreds more with some of the highest retention in the world, all push hiring to the peer team level.

At Semco, a manufacturing company, with 3,000 people--there isn't a single manager in the whole place; all hiring is done by the 8-10 person team on which that new hire will work. How does it work to have peers do the hiring? Semco's employee turnover for the last 20+ years has consistently hovered in the incredibly low 1-2% range.

Barry-Wehmiller, a $1.7billion company, never does a "head count" of retention, they count hearts. How does this culture help them? The data is dramatic. While 88% of employees in traditionally managed companies feel they work for an organization that doesn't care for them, at Barry-Wehmiller, where peers do the hiring and managers don't exist, it's 180 degrees the other way--79 percent surveyed by an outside organization said they believe BW cares about them. Culture matters, and having peers hire peers is a core cultural distinction for BW.

Managerless Cultures See People Very Differently

It's important to understand why this works. Gore, Semco, Wehmiller and other managerless cultures share a common, simple but very profound belief; that EVERYONE is smart and motivated. Because that belief is deeply held, they have all set up a company business culture where that can be a self-fulfilling prophecy. They attract and retain nothing but smart and motivated people who don't need to be managed.

In contrast, companies who rely on managers to do the hiring have a culture that believes the manager is at least a little bit smarter and more motivated, more experienced, more committed, etc. And too often, the assumption is the manager is a lot more of all those things. That is also a cultural distinction, but a very negative one.

Such a common but insidious mindset is a self-fulfilling prophecy as well. Those companies have trouble finding or retaining good people. Why wouldn't they? Who wants to work in an environment where it's clear I'm not going to be allowed to be as smart and/or motivated as the people up the hierarchy from me?

Can You, Or Can't You?

If your culture is set on believing people are smart and motivated, you can take managers out of the picture and put the hiring process in the hands of those most affected by the decision--the new hire's peers. If you think only certain rare people have the skill, experience, smarts or motivation to hire, you're communicating the worst possible message to those you are hiring, as well as those who are already there.

As Henry Ford said, "Whether you think you can, or you think you can't, you're right. Believe that everyone is smart and motivated, and wants to participate in the building of a great company. Don't just hope it will work out, but intend for them to take the ball and run with it, because you get what you intend, not what you hope for.

Article as seen on Inc.com

Why Self-Managed Teams Are the Future of Business

Could you build a business around teams of people who have no manager and who report to no one up a "food chain"? If you want your business to thrive going forward, you just might want to

Self-Managed Teams Are Already A Proven Success

A recent Harvard Business Journal article was titled, "Are We Ready for Self-Management?" as if this is a new, experimental thing. The fact is that many large, highly successful companies like W. L. Gore, Semco, Barry Wehmiller and countless others have been structured this way for up to fifty years.

Command and control freaks still talk as if this is some kind of fringe thing. But self-managed teams are time-tested, proven and here to stay, and a tidal wave of companies are moving in that direction, because the data on why you should do it is irrefutable.

It's Not The Team, It's Ownership

The magic isn't in the concept, but in the principle behind it--ownership stemming from the power to make decisions. When people are encouraged to bring the whole, creative, messy person to work, and make important decisions, they take ownership in ways they never would before. That's important, because ownership is the most powerful motivator in business. A business that motivates everyone to take ownership has found the holy grail.

Responsibility, Not Tasks

The archaic Industrial Age system employed by most companies today would have you believe that a single manager is better at making decisions than the ten people who work under them. But in the emerging work world of the Participation Age, a company believes that the ten people most affected by the decision will be better at making it. The result of both mindsets are revealing. The Industrial Age manager takes the responsibility to make the decisions, and then doles out tasks for the team to complete. But the Participation Age company delegates responsibility to the team, for them to make those decisions. When you assign tasks ("put this nut on that bolt"), people feel used, but when you delegate decision-making responsibility ("make a great washing machine"), people take ownership. Of course this only works if you believe that one manager is not smarter than ten people who are closer to the problem. As Janice Klein of MIT found, a few companies attempted a form of this in the 1980s, but didn't dismantle the management structure that would have reduced their command and control. It's not a management tactic as they discovered, but a culture shift. If you're not totally convinced, don't attempt self-managed teams. You'll just get hives and make a mess of the whole thing.

More of Everything

Many companies have benefited for decades from giving people back their brains. These companies grow faster, are more productive and more profitable, have lower turnover, and have increased longevity. As more and more owners and investors see the numbers, they will demand that their companies move in this direction.

It's Simple, Just Not Easy

Are you motivated to enter the Participation Age with self-managed teams? It won't happen overnight. A century of "bosses" have taught people they are not quite as smart and motivated as managers. You have to reverse that notion, and it will take time for people to trust you really are doing it.

Here's how:

1) Form a team around anobjective(i.e. 4-12 people) 2) have them FIRST clearly define the desired result, 3) then the process(es) needed to get that result. 4) Then THEY set metrics for steps in the process and 5) for pay based on the result desired (quality, quantity, speed, etc.,) 6) finally THEY decide what happens if the metrics aren't met and how to move team members along if they are not contributing appropriately. 7) Leadership approves. 8) Run it.

Safeguarding Your Future 

In the Participation Age, people don't want jobs that just pay the bills, they want work that allows them to be fully human, make decisions and own their stuff. As more companies leave the Industrial Age management structures behind and invite people to decide, they are more likely to retain the great people they have. Giving people their brains back is becoming a necessity for keeping them. Self-managed teams is one great way to do that.

Marissa Mayer, The Old School Manager, vs. Ricardo Semler, The Participation Age Leader

Mayer manages to the Lowest Common Denominator. Semler leads to the Highest Common Denominator. The difference is dramatic. Last year, the CEO of Yahoo, Marissa Mayer, created shock waves throughout the tech world by dictating that “work from home” was no longer permitted. She summarily herded everyone back into the Office Day Care Center to be closely supervised like seven year olds. A few years earlier, a large multi-national company headquartered in Brazil named Semco, threw a party for their leader, Ricardo Semler, to commemorate his 10^th anniversary of not making a decision.

Managing to The Worst vs. Expecting the Best

LCD Management (lowest common denominator) asks, “What’s the most incompetent or laziest thing somebody could do?”, and then creates an environment to make it hard to get away with it. In contrast, HCD Leadership asks, “If given a clear vision, what is the best possible thing people could do without being managed?” HCD leaders then create the kind of environment that will attract self-motivated, self-managed achievers. Both of them are self-fulfilling prophecies.

LCD Managers create an environment where people will live down to our worst expectations of them. HCD leaders understand that the art of leadership is to know how few decisions the leader should make.

Ricardo Semler is perhaps the best, low-profile CEO leader in business today. Mayer is a high-profile CEO manager, using personal superpowers to hold everything together - for now. As a result, the futures of Yahoo and Semco are going in dramatically different directions.

Centralized Decision-making vs. Everyone is Capable

LCD managers assume they are the most motivated, qualified, committed, invested, and experienced. With all those superstar qualities, it would be foolish to have others making decisions. That’s why they are paid the big bucks. Mayer is infamous for regularly having a few dozen people waiting outside her office for hours, as she solves problems and makes decisions for them one at a time.

HCD Leadership believes most people are inherently motivated, qualified, committed, and invested, and that they make better decisions than someone in a hierarchy.  Semler doesn’t make decisions anymore because decisions are made where they will be lived out. Stakeholders throughout the company are responsible for Semco entering a variety of industries and growing dramatically year after year, from $4 million 29 years ago to $1billion+ today. As an HCD leader, instead of making decisions others can make, Semler is free to ask questions, cast vision, and work with others to build the future of the company.

Superpowers vs. Delegation

Mayer is a supermanager – which allows her to get away with a lot in the short term. But it is not sustainable. When she goes, the energy goes. She has entrenched herself in decision-making, making her nearly indispensable. While at Google, Mayer pulled 250 all-nighters in five years and held up to 70 meetings a week. She sleeps four hours a night. In contrast, Semler trained others to make decisions. There are now six co-CEOs who rotate leadership every six months, allowing Semler to function at the highest levels of leadership and not make decisions. As with any great leader, he has worked hard to get out of the way. He is fully dispensable, while nobody could replace Mayer.

The Results Are In

Semco gets hundreds of unsolicited resumes every month, and no one leaves. In the worst 10-year recession in Brazil’s history, revenues grew 600%, profits were up 500%, and productivity rose 700%. Innovative Stakeholders have taken them into profitable industries they could have never dreamed of entering, and they continue to grow exponentially. And unlike Yahoo, Semco hasn’t told people how or where to work for over three decades.

LCD management may get quick, short-term results, but Yahoo’s future will never look like Semco’s – it’s too reliant on a very high-profile, LCD superhuman manager. Very impressive in the short-term, but very old school.