My life changed when I landed a job at McKinsey & Company. I was a “non-target” student, or as I found out through many e-mail rejections to top companies: automated rejection. After working at McKinsey, my eyes were opened to the massive advantages of working at a company that had mastered the virtuous cycle of high performance and investment in people. This transformed my career, but I wasn’t anyone special. There were literally thousands of people like me — people that had early career ambition, had good grades in school and had just started their real-world learning journeys. They could have hired any one of those other people and still made the “right” decision.

Several years later and after becoming a more competent consultant, I connected with Justin, a junior undergraduate from my alma mater. This “non-target” student had similar dreams, but had a better plan than my scorched earth approach to apply to every consulting firm in the country. He wanted to build a student-run consulting club to work directly with clients on consulting projects.

Fast forward 12–18 months later, he had convinced other students to join him and had laid the groundwork of a highly successful group that went on to do projects for Presidents of Universities, CEOs and founders of tech startups — not to mention helping to land one of the first undergrad students from our university directly into a ”big 3″ strategy consulting firm. Much because of this Justin’s vision, his ability to stay humble and continually ask for feedback (even when it was not very good) and just keep putting in the work, day-in day-out.

Here’s the problem: If he were applying to this group today he would almost certainly not be accepted

In my work on talent strategy and organizational effectiveness, this fact and my personal experience breaking into consulting have lingered over me.

How much untapped potential is there in our workforce?

Are most organizations hiring sub-optimally?

I’ve worked closely with the undergraduate consulting group as it evolves. We’ve had enormous demand for the group on campus and have had to develop a recruiting program. I am proud of what the students have developed — it is really top notch. They’ve modeled the program off of top consulting firms, with a mix of behavioral elements as well as cases. However, I keep coming back to the question “would our current process reject the next Justin?”

I think it would.

After I started working with Justin, I gave him a mock interview. To say he did not do well was an understatement. But was I concerned? No. He had what mattered — resilience, humility, team-spirit and big goals. In our current recruiting process, I’m not sure we even know how to assess for those things.

Many organizations make these mistakes. As organizations get more successful, they become a victim of their own success. They start raising the bar-because they can and arguably should.

And here is the challenge. Success will come no matter what. What gets measured gets managed — you will gravitate to people that check the boxes of your new process. The manager responsible for hiring will get a pat on the back for recruiting candidates with higher and higher GPAs.

However, there will be a hidden cost and you will start making two different mistakes. First, there will be False positives. You will recruit people that excel at navigating interviewing and acquiring the appropriate credentials but do not add substantial value to your organization.

But the costliest mistakes are the false negatives. You will start rejecting the Justins— the people who’s potential you can’t easily predict, the people who are willing to make a fool of themselves to improve and achieve big goals and the people that may push your organization or culture in an uncomfortable but ultimately, positive direction.

41k+ Sold! (Top 1% Book) The Pathless Path is Paul's book about walking away from a "perfect" job with a promising future and starting over again. Through painstaking experiments, living in different countries, and a deep dive into the history of our work beliefs, Paul pieces together a set of ideas and principles that guide him from unfulfilled and burned out to what he calls "the pathless path" - a new story for thinking about work in our lives. Learn More & Buy The Book Here

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Google, however, was one company that took notice. O’Boyle and Aguinis found that in a number of different fields, human performance followed the power law distribution rather than a normal distribution. This means that in most corporations, there are a small amount of people contributing the bulk of the results rather than a larger band of people with slightly varying degrees of performance.

The conventional wisdom of the normal distribution coupled with conventional pay practices can lead companies to create a vicious talent cycle, especially at the lowest levels of the company.

Picture a highly talented new employee getting hired into a company. They complete 24 projects per year, while the average employee completes six. To reward the top talent, that person gets 10% higher compensation at year end. They are satisfied for now, but start to look towards next year and realize that even if they are much much more efficient and effective than their colleague they know there is not much upside to working so hard.

The choice becomes between mailing it in and putting it on cruise control or quitting. As I’ve seen over and over again, the talented employee ends up leaving. Even more, the average person, due to their tenure and the companies commitment to promotions on a time-based cycle gets promoted. The new top talent they hire is going to be even more frustrated than the last person.

The cycle repeats until the company is full of average people and the company hires a consultant to figure out why it is not successful anymore.

Companies need to take a step back and stop looking at metrics like attrition and ask themselves instead “are the right people staying?” and “are the right people leaving?”

41k+ Sold! (Top 1% Book) The Pathless Path is Paul's book about walking away from a "perfect" job with a promising future and starting over again. Through painstaking experiments, living in different countries, and a deep dive into the history of our work beliefs, Paul pieces together a set of ideas and principles that guide him from unfulfilled and burned out to what he calls "the pathless path" - a new story for thinking about work in our lives. Learn More & Buy The Book Here

The post The vicious talent cycle and its link to our flawed ideas of human performance appeared first on Boundless by Paul Millerd.

Yesterday I read about Naval Ravikant’s approach to hiring the right people — it has nothing to do with hiring and selecting the right people. It is about one thing — making sure you fire the wrong people fast.

Two great reads — Malcolm Gladwell’s The Talent Myth and a book, The Halo Effect — made me aware of how little we actually know about “talent.” For the most part, we look at people’s past work experience and the companies they have worked for. If they have worked for highly respected companies and have shown signs of continuous promotion, they are labeled “talented.”

It is incredibly hard to assess for most people in the knowledge economy. Is it the context people are in and the systems they are part of or are they actually talented on their own? We may never know the answer to this question.

Back to Naval —I like how he has some simple systems that help address some of the shortcomings in this talent problem. Here are some of his thoughts on getting the right people:

• Create a pipeline — Asking people the best people they know
• The mission: You need a clear mission to excite people
• Bringing them in: Having a talented in-house recruiter
• Quick decisions: Move fast with hiring AND firing
• Level Playing Field: Bring everyone in at the same level and have a true meriotocracy. Most companies use age as a heuristic for “experience” — he thinks this is a big mistake.

I love the simplicity of this. Most companies I have been part of spend months recruiting a single person. This is under the belief that the more time you spend the better at decision making you become. The best companies I have worked for — McKinsey & Company — did the thing Naval talks about really well: they fired the wrong people quickly, but did it in a compassionate way.

41k+ Sold! (Top 1% Book) The Pathless Path is Paul's book about walking away from a "perfect" job with a promising future and starting over again. Through painstaking experiments, living in different countries, and a deep dive into the history of our work beliefs, Paul pieces together a set of ideas and principles that guide him from unfulfilled and burned out to what he calls "the pathless path" - a new story for thinking about work in our lives. Learn More & Buy The Book Here

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