Now is the time to acquire top talent and to get the right people in the right place.
In an interview following the burst of the dot-com bubble, Jim Collins said, “Today, we’ve got the greatest opportunity that we are going to have for decades to snag a boatload — not a busload, but a boatload — of great people. And great companies always start with who, not what. We can finally get to the right side of Packard’s Law. Packard’s Law is like a law of physics for great companies. It says that no company can become or remain great if it allows its growth rate in revenues to exceed its growth in getting the right people in a sustainable way. It’s one of those timeless truths that transcend technology and economics. Now, instead of trying to accumulate capital, we can accumulate people.” He continued by offering this advice, “If I were running a company today, I would have one priority above all others: to acquire as many of the best people as I could. I’d put off everything else if I could afford it — buildings, new projects, R&D — to fill my bus. Because things are going to come back. My flywheel is going to start to turn. And the single biggest constraint on growth and the success of my organization isn’t markets, isn’t technology, isn’t opportunity, isn’t the stock market. If you want to be a great company, the single biggest limitation on your ability to grow is the ability to get and hang on to enough of the right people.”
Amid the most severe economic crisis since the Great Depression, it is easy to brush aside this advice. In fact, history shows us that leaders do not adhere to this advice. In an economic downturn, the top actions leaders typically take are to lay off employees and cut back on recruiting, company events, bonuses, and individual (e.g., coaching) and functional (e.g., computer skills) training. Faced with systemic disruption, the need to adjust to a new way of working, short-term cash needs, and uncertainty about what lies ahead, acquiring as many people as possible may seem impossible, scary, or even irrational.
However, a 2008 survey of senior executives found that one of the most effective actions taken during the previous crisis and the action that strengthened employee commitment more than any other action taken is hiring high-performing employees from competitors. The survey also found that cutting back on company events, bonuses, and training is ineffective and negatively impacts strengthening employee commitment.
Another study analyzed the strategy selection and corporate performance of 4,700 public companies before, during, and after the past three global recessions. The study found that organizations that employed long-term thinking performed better than those that did not. These organizations did cut back but were extremely selective about when and where they did so. Most importantly, these organizations continued to make strategic investments.
Going back to Collins and Packard’s Law. Visionary leaders recognize they need to focus not only on the immediate needs of the organization but also on assessing their current situation, the changing competitive landscape, and the strengths and weaknesses of their organization. Without careful consideration of this larger set of factors, long-term strategic and operational opportunities may be missed. And above all, they recognize that getting the right people in the right place will enable an organization to navigate change and disruption and transform the organization.
In Good to Great, Collins writes, “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.’” More than ever, leaders need to get the right people in the right place to get to someplace great.
So, what can leaders do?
When identifying gaps, it is important to look both backward and ahead. Ask your team to identify what gaps have held the organization back and ask them to identify what gaps they anticipate going forward. While the future is uncertain, what is known is that the future of work will be different. What skills or roles will you need to move your organization forward and to operate in the new environment?
Take the opportunity to make changes
When times are good, mediocre talent is often tolerated or goes unnoticed. However, when things get tough, the cost of having underperformers or toxic employees in key positions becomes obvious. Now is the time to get the right people on the bus (and the wrong people off the bus).
Right now, organizations have the opportunity to hire people who may not have been available or who may not have considered making a career move prior to the COVID-pandemic and economic crisis; “Today, we’ve got the greatest opportunity that we are going to have for decades to snag a boatload — not a busload, but a boatload — of great people.”