It has become a common refrain amongst those of us in business that good leaders hire people better than themselves. On the contrary, weak leaders surround themselves with "yes people" — those incapable of challenging them — not too hot, not too cold, but “just right” for the position, as Goldilocks would say. So how do you avoid this trap and hire people with the potential to do your job even better than you one day?
Like running a marathon, I believe that leaders have to train their minds to overcome the default position — not running a marathon. The default, protecting their own position, is likely based on millions of years of evolution, and understanding and being aware of that is important to challenging it. Humans, it would seem, have been programmed by evolution to resist challengers and to build “moats” around their own means of survival (their job, in this case, but also their castles, farms and nations). In a capitalist, merit-based society, however, self-preservation consists of a smaller part "defense" and a much larger part "offense" — it is, in my opinion, always more important to out-compete and out-innovate competitors than it is to hunker down and prevent attacks on one’s own position.
As an entrepreneur and head of growth, I believe that understanding that it’s more important to build a machine that expands the pie for everyone and out-innovates competitors is the first step toward becoming a leader that instinctively seeks out those smarter than him or herself. What applies at the corporate and societal level also applies to the individuals on your team. Part of that involves building up talent from within, not recruiting from outside the organization.
This need is even more pronounced in the Bay Area.
The Bay Area GDP grew by 5.2% in 2016, according to a report by the Center for Continuing Study of the California Economy, a rate three times the national growth rate. That would explain why we see so many cranes on the horizon. Although it’s important everywhere in the world, building up talent from within your organization is even more critical in areas like the Bay Area.
The hiring decisions we make are crucial to developing internal talent.
The building block of developing talent from within is hiring for a candidate’s potential, not just the current position. If a manager looks for someone who is “just right” and who won’t challenge their own position, then I believe they risk — and are more likely to create — a stagnant organization without the talent to keep it competitive. On the contrary, if managers learn to hire for potential and develop leaders within their organizations, then I believe they will have faster growth, better morale, fewer recruitment headaches and. best of all, the satisfaction of mentorship.
The numbers seem to speak for themselves when it comes to internal promotion. According to a 2015 Harvard Business Review article, a Wharton School of Business study used data on over 11,000 internal Fortune 100 hires to determine that those internal hires performed better across the board, having "higher competency and contribution ratings (two different measures of performance) during their first year on the job" and a greater chance of being "considered top performers (rated in the Top 25% of the performance distribution of peers in similar jobs)."
If the numbers are so obviously in favor of this approach to people-development, then why do so many find it so hard? Similarly, if we all know it’s important, why don’t we do it?
One misconception prevents managers from hiring the best.
Amongst data like this and the folklore surrounding it, the reality is that managers are still afraid. Speaking with many first-time managers, I’ve come to realize that the single biggest barrier to implementing this hiring framework is a misconception about what it means.
Most new managers think that “hiring people smarter than you” means hiring people more senior than you. If you’re in a position of, say, vice president, and you feel like to achieve this ideal you have to hire people who are also vice presidents in their current roles, you will understandably feel threatened! Such horizontal hiring is more often done to replace someone than to build out their team, and doing so is a recipe for disaster. So when a new manager sees an application for someone with a title equal to theirs, they think they should interview this person if they are to be true leaders.
The opposite is true — this person is looking for your job now, and that is hopefully not the job you’re hiring for.
The truth about hiring people smarter than you is that they could grow into taking your job and, hopefully, do it better than you. They may have more intellectual horsepower, a better education or just have the drive that you know will lead them to figure it out. It’s this critical distinction — between what they are today and what their potential is — that makes it much easier to understand how to hire with this mindset.
Some of the greatest bodies of inspiring stories in the business world come from hearing about ordinary people accomplishing extraordinary things, like some of the early Microsoft employees that The New York Times reported (paywall) have become millionaires. In my own life, my grandfather started as an employee at a company in Western Canada. He went on to become president, then majority owner of that company. He grew it into the largest regional company in its industry. In my experience, these stories of extreme ownership and incredible value creation that make up the fabric of our economy, prosperity and folklore almost always involve leaders who hire for potential, not position. You can become one of those leaders.