May 2, 2007

Bob Sutton on the War for Talent

It's back. (via David Maister)

And he puncture's one myth (or unquestioned assumption of recruiting) by saying:

The law of crappy people is probably a myth. I have read of several famous executives (e.g., Steve Jobs) and consulting firms (e.g., McKinsey) that have advocated the law or “rule of crappy people,” which is an assertion that great people will hire other great people, but mediocre people will hire even worse people because they are threatened by competent people. I spent many hours reviewing published research on employee selection, and could find no evidence that it was true. There is evidence that people like to hire people like themselves. And there is some evidence that the most competent people prefer people like themselves, and that less competent people are less picky. But I can’t find any evidence that “B players” or people of average skills and talent levels are afraid to hire people with the same or greater skills

As usual, people search for thumb rules when there is lack of hard data. That is because B players can mean anything, depending on how the firm defines players. My first boss was probably not a A player, but then he had no fear or insecurity, and he hired people who were more competent than him. On the other hand, a more flashy guy who took over his job, while he had the more recognised degrees and pedigree, was more insecure and hired lots of incompetent people. That was disastrous.

The law as Bob says, is not really a law at all. Which leads me to question, what about the other end - the Lake Woebegone that also a myth?

The other way he disagrees with conventional wisdom is:

Create smaller rather than larger pay differences between “star” employees and everyone else. Jack Welch doesn’t believe this; he wants you to give 80 percent of the bonus money to the top 20 percent of your people. And there are a lot of other experts out there who want you to throw most of your salary and bonus dollars to your stars. But Jeff Pfeffer and I have reviewed this literature very carefully and every article that we can find in a peer-reviewed journal--of top management teams, baseball teams, academic departments, manufacturing organizations--finds (controlling for the level of pay) that performance is better when there is smaller distance between the best-paid and worst-paid people. This isn’t an argument for socialism--there are still big differences between the best- and worst-paid people in even the baseball and top management teams with the most compressed pay. But it does suggest that the widening pay gaps between the “best” and “worst” may run contrary to the best evidence.

I think where we need to be sensitive is where the average guy will give up being motivated and become disgruntled. That would depend on the industry salaries as well as choices available to them.

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