One of the most difficult leadership tasks for companies during their early growth phase is addressing the simple fact that revenue grows faster than talent. As the founder of an Indian company said to me, “We don’t have a growth problem; we have a sustainable growth problem.” His issue was how to grow and recruit the talent he needed to respond to the next stage of growth, and how to put in the right infrastructure and systems to support the talent without killing it with bureaucracy. We’ve covered a number of examples of how leaders scale their organizations, including the role of the founder, the need to be clear on the talent you require and the need to take a hard look at the original founding team, which might also be part of the talent problem.
In this blog, we explore one simple tool, which has proven to be very useful to DM100 members—the talent table.
The purpose of the talent table is to match your talent to your top issues, to increase the cadence of team switching, where appropriate, and to provide clarity on your external recruiting goals. There are five primary steps in developing the table:
- List the most important “swing value” jobs for the next x years in order of importance, linked to the “unit of experience” required: This is easier said than done. First, this is about creating value, not revenue or assets. A swing value job is not a job where someone is in charge of a big thing; it is a job where massive value can be created if the job is done well. And the reason we call it a swing value job instead of a value creation job is because it is also a job in which massive amounts of value can be destroyed if things go wrong. Also on this list should be your big capability bets: If there is something your company must do outstandingly well, make sure you have someone outstanding accountable for delivering it. Too often, these big capability jobs are left off the list. Finally, as you define the job, define the unit of experience required to do the job. This guides recruiting.
- List your talent in order of potential: High potential is always a balance between proven track record and trajectory, and trajectory is typically about energy (individuals who have a fire in the belly, are coachable and aren’t energy vampires) and values (individuals who understand Founder’s MentalitySM and the team). A key question in evaluating talent is how much to emphasize trajectory vs. track record—or, in other words, how much you bet on your high-potential “youngsters.” A common theme in the DM100 is that as a company grows and loses its Founder’s Mentality, the less likely the leadership is to make bets on the next generation of leaders. We had one CEO comment at a DM100 meeting, “The success of my company was driven by 26-year-olds, who did extraordinary things. They were the heroes. I don’t see them anymore. I wish I had invested in developing them and been tolerant of failure.“ If you give proper weight to trajectory as well as track record, the talent table helps ensure that you have the opportunity to place big bets on the future heroes, not simply the most senior people next up for the next job.
- Match internal talent to jobs and develop a transition roadmap: The next step is talent matching—that is, putting the best talent in the right jobs. In start-ups, talent matching happens daily or weekly. But as the company grows, systems take over and talent matching is seen as disruptive. Sandy Ogg, an operating partner at Blackstone, argues that talent matching is one of the top jobs of a leader. “It is not a one-off, or an every-five-years event,” he says. “It is constant. As the challenges of the business evolve and the capabilities of the business evolve, you should continuously rethink where the talent goes. This is fantastic for the talent, unsettling for the bureaucrats and downright disturbing to underperformers.” There are a couple of issues to watch out for here: First, don’t let the unit of experience required be so narrow you rule out great internal candidates. “She’s always met every challenge we’ve given her” is a great unit of experience and can produce far better results than “He’s not a star, but he has some experience in a gap we have.” Second, continually give business-building roles to your highest-potential talent. Make those roles the place to be instead of jobs administering big departments, large workforces or big budgets.
- Identify the gaps and the unit of experience required and set your recruitment roadmap: If you have ambition, you’ll have resource gaps. The key to filling them is recruiting for the right unit of experience to fill those roles. In almost all cases, this will be someone who built a system you needed, entered a market you had to penetrate or developed a capability that is critical to your future success. It is not someone who has administered the building efforts of others. And when recruiting, remember that big-name candidates from big incumbent companies are often very good at avoiding uncomfortable truths about their lack of true business building experience.
- Develop the talent table as one component of your repeatable model: The Repeatable Models® that will help your business grow with minimum complexity are activity systems. They are a set of decisions about how you will differentiate your company (for example, low costs, better commercial models) and investments that allow you to sustain your differentiation. In almost every instance, being good at running a talent table will be an important component of your repeatable model. There’s value to getting good at it sooner than later.
Let us know how this works for you and your company.