Fewer, Better People: Why more people won’t solve your problems

Episode #350 Fewer, Better People: Why more people won’t solve your problems

A CLEAR AND COMPELLING MANTRA

I had the opportunity to work with a great client when I was in Australia recently, Belle Property Group. A huge shout out to Nick Boyd and Peter Hanscomb.

When Nick opened the conference on the first morning, he quoted a mantra from Peter, which had become a rallying cry for the Bell Property team:

Fewer, better people.

What a great mantra. The meaning is crystal clear and what’s more, there’s absolutely ZERO fat on it. No corporate speak. No flowery adjectives. It’s one of those expressions that can apply to any business, in any industry, in any geography.

It sounds blindingly obvious as soon as you hear it, doesn’t it? But that’s what makes it so incredibly powerful. It’s clear and it’s obvious… and it’s incredibly difficult to achieve.

In this newsletter, I deconstruct these three simple words and explore why so few businesses can meet the standard of fewer, better people.

I start by looking at the physical and psychological constraints to having fewer people; I talk about the impediments that most leaders find to hiring better people; and I give you three things that you can do immediately to improve the quality of your gene pool.

THE BARRIERS TO HAVING FEWER PEOPLE

The value of having fewer people might seem obvious. Fewer people means:

• Lower cost overheads;
• Fewer touch points that need to be managed;
• Greater ease of assigning and tracking accountabilities;
• Less confusion as to who’s doing what; and
• Better line of sight to the work.

So, leaner is better, right!?

But on the other hand, you need people to pursue profitable growth. As a business grows its customer base, the number of people required to deliver its products effectively also increases.

If you were to take a snapshot of any business, at a given point in time, you could look at:

• Its current business model;
• The size and dispersion of its customer base;
• Its growth trajectory;
• The extent of the regulatory burden the industry has to endure; and
• About 10 other indicators.

With that information at hand, I reckon you could intuit the optimum number of people that it should take to run that business, at that particular stage of its existence.

But of course, no organization is static.

Sometimes a business is critically under-resourced… and sometimes it’s grossly over-resourced… because business conditions change much faster than our ability to shape the workforce in response to those changes.

Rule number one for any business is to err on the side of caution when building in indirect costs. Why? Because those functions don’t directly contribute to the delivery of the company’s products.

Direct resources are functions like sales, marketing, operations, procurement, and supply chain. But indirect resources work in areas like HR, risk, legal, and IT – important for the company to function well, but not critical to delivering the product to the customer.

To further complicate the issue, not every organisation treats its people overheads the same way.

For example, founder-led businesses tend to run very lean. That’s because the person making the resourcing decisions spends a lot of time in close proximity to the critical business equation:

Revenue – Costs = What I Get to Keep

Corporate leaders, on the other hand, love to build big teams. In the corporate world, size matters. The number of people you have working for you is a critical input to job sizing, and this can affect your job title, the money you get paid, and your status.

If you doubt this, talk to any executive search firm. They will pigeonhole you, based on your current salary, to work out if you’re a suitable candidate for any particular role.

Lots of people in large corporations build empires. Functional support areas, in particular, are going to grow out of control unless you keep a really close eye on them.

Looking beyond commercially competitive businesses, certain sectors are actually incentivised to hire more people. I’ve spoken before about government agencies and regulated monopoly businesses – they tend to have a lot more people than would be required in a commercial business, on a like-for-like basis. It’s not right or wrong, it’s just the nature of the beast.

Organisation structure also makes a difference to how easy or hard it is to achieve the goal of fewer people.

Companies that are structured on business unit lines tend to be leaner… but that’s often at the expense of synergies that come from things like:

• Consolidating purchasing to get better pricing from suppliers;
• Consistency in sharing of processes between business units; and
• Implementing best practice across the whole business.

Having a keen awareness of the environment you are operating in is critical because these obstacles need to be overcome, if you ever want to optimise your team’s size.

DON’T THROW MONEY AT PROBLEMS!

There are other factors that are a little deeper and harder to recognise, but nonetheless push us to have more people than we need.

When underperformance plays out to its natural, unsatisfactory conclusion, and failure is imminent, the instinctive reaction is to put more people onto the task to try to solve it with sheer brute force.

But throwing more resources at a problem is almost never the right answer.

It’s a knee-jerk response that only treats the symptoms of a much deeper problem. Be that as it may, it’s way easier for most leaders than addressing the root cause – the poor performance of the accountable people.

And even if you do have additional resources you can apply, it often doesn’t make sense for the outcome you’re trying to achieve.

I remember running a project in the early part of my career. The project delivery schedule had slipped due to a range of factors – none of which was an undersupply of people.

There was no shortage of project funding, which is quite rare. So, the project sponsor was quite happy to throw more money at the problem to try to solve it.

The accountable executive called a meeting to discuss the remedy, and I have to say, it was hilarious. The very first sentence out of her mouth was, “Marty, how quickly can we bring in more people?” The team in question was only small, consisting of maybe a dozen programmers, analysts, and software architects. She went on, “If I assign more people to the project, how much faster can you deliver it?“

I paused to consider my answer before I replied, because I knew how unpopular it was going to be. But even back then, I lived by the “respect before popularity” mantra, so I told her the inconvenient truth.

“If I have one more analyst, I can probably protect against the downside of further slippage. But I have to tell you – any more than that, and we’ll go backwards. If you give me five more people, the project’s going to be delayed further, probably by as much as two to three months.“

I can still see the look on her face now.

But as I went on to explain my logic, she began to see the folly in the “throw resources at it” approach:

• More people would mean more time in recruitment;
• It would mean more onboarding, which would inevitably draw on the time and focus of the people who are now trying to deliver;
• Then there’s the lag time that it takes for the new people to get up to speed with the project’s requirements, processes, and standards;
• Once that’s all sorted, the communication points become more opaque, and the line of sight to critical deliverables is diluted;
• And, even if you could execute on all of that flawlessly, there’s an even bigger problem – the project can’t be delivered any faster than the critical path allows… and none of the new resources could actually be applied to the critical path!

Like I said, bringing in more people is almost never the answer.

WHY DON’T WE JUST BRING IN BETTER PEOPLE?

Let’s talk about the “better” part of fewer, better people. Fewer people isn’t possible unless you lift the quality and performance of the people you have. And this ultimately comes down to leadership and culture.

If you’re in any way reluctant to deal with underperformance, at the individual level, it doesn’t matter who you hire – “better people” will always allude you.

More often than not, the reluctance to deal with an under-performer is a product of conflict aversion.

Are you the type of leader who avoids difficult conversations, until the performance becomes so bad that it can no longer be ignored? Well, if that’s you, you’re likely to want to reach for an easier remedy.

So, why not just hire someone who’s more capable, right!?

Then, you end up with more resources than you need, and the underperforming resources still drain the life out of your team – they suck up your time and energy… they demotivate those around them… and any outputs they produce require constant revision and rework.

Yep, when someone isn’t performing, it’s easier to throw more resources at the problem than it is to deal with the root cause.

On many occasions over the course of my executive career, I had direct reports coming to me to ask for more resources. My answer was always the same, and it went something like this:

“If you want to convince me that it’s a good idea to hire more people, then you need to be able to put your hand on your heart and promise me two things:

1. “That everything your team is currently working on is the highest possible value – that there’s no activity for its own sake, and
2. That every person who’s currently on your team is meeting the minimum standard of performance.”

I would tell them to go away and consider those two questions, and to come back to me if they still thought additional resources were justified.

And, guess what!? In 90% of cases, that was the last I heard of it.

BETTER HIRES CAN’T FIX A MEDIOCRE TEAM

If you genuinely want better people, then the first step is to lift the capability and performance of the people you have.

This is all about setting that minimum acceptable standard. This is the standard that everyone has to meet, irrespective of their role, their level of ambition, or their background and experience.

That standard has to be immutable – you have to protect it like it’s life or death. Why? Because, it is!

The quality of your team is not set by your strongest performer, it’s set by your weakest performer. That’s the benchmark that everyone else looks at to see what they can get away with and what they can’t.

When one of your people is wanting to have a lazy week, they know they can easily back off the accelerator without threatening that lower standard. Remember, weak leaders lower the standard to meet the performance – strong leaders lift the performance to meet the standard.

Next, of course, you have to hire better people. But hiring can be tough – it’s an imprecise science. The quality of people you can attract is going to depend very much on your industry, your location, your brand reputation, and your ability to pay.

I cover this in a lot more detail in Ep.343: Six Proven Hiring Tactics That Will Upgrade Your Entire Team. But there are a couple of psychological barriers to this as well.

The first is that, sometimes we’re reluctant to replace an individual because we’re afraid we won’t find anyone as good: “better the devil you know”, right!?

Well, no. No, that’s not right. It’s just a rationalisation. As humans, we tend to over-index the risk of doing something new, and under-index the risk of staying where we are.

The second barrier was articulated beautifully by Jeffrey J Fox in his classic book, How to Become a Great Boss. Fox explains one of my favorite concepts, the principle of “7s Hire 5s”.

Just think about your hiring managers – where do they rate on a scale from 1 to 10?

You’d better be careful who you let do the hiring in your company, because 7s hire 5s. Why on earth would they hire someone who’s not really that good? Well, it’s pretty easy to look behind the covers and find out:

• 5s are plentiful;
• They’re relatively cheap;
• They aren’t threatening to a 7;
• A 7 knows he can control a 5; and
• 7s also knows that 5s won’t outshine them.

But, it’s even worse than this… why? Because 5s Hire 3s!

You only want 9s and 10s to do your hiring because they only want to hire other 9s and 10s.

They aren’t threatened by them… they want to hire people who are better than themselves because they only want to work with other A-players.

So, whatever you do, don’t let weak leaders hire. They’re just going to replicate a weaker version of themselves… and your capability is going to nosedive really fast.

If you genuinely want to have better people on your team, you’ve got to be serious about the performance of the ones you have, and you’ve got to be really careful of who you bring in to supplement them.

Every hiring move you make is going to either strengthen or weaken your gene pool. And without consciously targeting better people in both your current and future talent, you will never succeed at having fewer people.

THREE SIMPLE MOVES TO MAKE… TODAY!

I want to finish with three simple things that you can do – starting right now – to move towards fewer, better people.

1. Know your talent. Who are your stars? Who would you replicate if you could? Who is consistently below the minimum acceptable standard? This is about knowing your team’s capability, being honest about where it is, and being deliberate about how you manage the people at the top and the bottom of the list. It’s not just about protecting the minimum standard, it’s also about identifying and liberating your stars. According to world-leading consulting firm McKinsey, and I quote, “High performers are an astounding 800% more productive than average performers.” I reckon that would be worth tapping into. 
2. Make the performance conversation front and centre for all your leaders. In your one-on-one conversations don’t just talk about tasks – talk about the people. I reckon that, during my executive career, at least 1/3 of my one-on-one time with my direct reports was spent talking about the capability and talent of the people below them. You’ve got to make it part of the culture. Bring visibility and urgency to the talent management discussion – make it ongoing on a daily and weekly basis. It’s important to demonstrate that you are really serious about driving better performance, and that you expect every leader to replicate that through the line with their own people. 
3. Assume that you already have too many people (and act accordingly). This means constantly doing the mental calculus to try to figure out who needs to be stretched, who needs to be reassigned to more important work, and who probably shouldn’t be there. Eventually, you’re going to develop a lean mindset that’s going to make it difficult for you to think about bringing on more people unless it’s absolutely necessary. And, when you feel constrained by having fewer people, the only way to sustain that is to lift the average capability of the people you have.

PEOPLE WATCH YOUR FEET, NOT YOUR LIPS!

If you adopt the mantra of fewer, better people, you’ll be way more likely to achieve genuine high performance.

But it can’t just be words – it takes a huge amount of effort to make it happen. The subtle signals that people see in your behavior is going to massively overshadow anything that you might happen to say to them.

So, think carefully about how you deal with performance issues, and the signal that sends. Think really carefully about how you respond to any requests for additional resources. 

Once you understand what’s likely to hold you back, only then can you start to experience the true joy of working with fewer, better people.