Topgrading: The Only Way to Run a Start-Up, or Any Company for That Matter

If you are in charge of identifying, hiring, or managing resources for your business, allow me to introduce you to a revolutionary process that has transformed my approach to talent acquisition and retention at Factor Media, called Topgrading.

First, We Drink Our Own Juice

Factor Media has employed Topgrading since our inception, which has been integral in sustaining our fast-paced production environment and organizational growth. For those of you unfamiliar with Topgrading, it is a proven method for selecting on the very ‘best of the best’ when looking at candidates for your organization. This process was engineered and perfected by the Smart brothers (yes that is really their last name) and has been implemented in thousands of companies and organizations, including many of those across the Fortune 1000.

Second, It’s Ideal for Start-Ups

You do not need to be a big company to see the benefits of Topgrading, as referenced in this post by fellow Indy Haller and Founder of DowntoTheHire.com, Everett Reiss in his Review of Topgrading: How to Hire, Coach and Keep A Players, he hits on one of the key points of Topgrading which is to fill each level of the organization with the best person at that pay level. This idea is critical in truly understanding and adopting Topgrading – because B players can become A players, they may simply need to be re-deployed or re-engaged in a different position, with a different set of responsibilities.

The benefits of Topgrading can be seen almost immediately and include:

  • Clearer, more in-depth job descriptions – which means increased performance and tracking capabilities for you, the manager.
  • Screening candidates not from often deceptive resumes but from their actual career history, which includes a built-in “truth serum” that provides full compensation history, boss ratings and more – providing you with the transparency necessary to make a hiring decision.
  • A chronological interview process that scrutinizes the details of every previous job
  • Real and dependable character references – you have the candidates set up these reference checks with their previous employers, most A players will retain good working relationships or at least leave on amicable terms.

Which makes it a no-brainer for start-ups as they are usually running on a bootstrapped budget and really need the most from there people to grow beyond that first stage of operations.

Topgrading is Not for Everybody

Some people simply don’t have the stomach for it. You need to be prepared to put in the time, learn the system, and make decisions. Topgrading is not for you  if you have trouble holding people accountable, scoring the true performance of your employees, or firing non-performers. There are a number of approaches similar to Topgrading that zero in on tracking what matters most to a company, it’s people. If you are willing to practice and learn these processes, it will change your entire outlook on talent management and lead to continued growth and success.

But Can You Afford NOT to Topgrade?

Perhaps, but I wouldn’t recommend it. Consider that the cost to replace talent is roughly 15x base salary which means for an entry level position at a $40k base salary, making a poor hiring decision can cost you $600,000! Can you really afford to throw that much money in the trash? Even if  you can, would you really want to?

What it comes down to, in my opinion, is the real secret sauce of Topgrading, which is past performance is the best indicator of future performance. Don’t get it twisted, Topgrading is hard, it takes time, and it takes practice. The best way to implement Topgrading is from the Top down – start with the CEO. This person must be the organizations Topgrading champion, and take personal responsibility to make sure they hire A players, redeploy B players, and fire C players.

Nick Eubanks

Nick Eubanks is a Managing Partner at Factor Media, and is currently the VP of Digital Strategy at W.L. Snook & Associates. He blogs at SEO Nick and you can find him on twitter @nick_eubanks and Google+.

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13 thoughts on “Topgrading: The Only Way to Run a Start-Up, or Any Company for That Matter

  1. Pingback: Check Out My New Post on Topgrading | Nick Eubanks

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  5. Ryan Draving

    Just downloaded the intro to Topgrading – thanks for the tip, Nick. Great so far. Best quote: “Bad hiring is the big pile of elephant poop, stinking up results.” True. The $500k+ cost of a bad hire seems a bit high, but is much more realistic than “Oh, the cost is having to waste more time finding another hire.” It’s just the tip of the iceberg. Great post!

    Reply
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  9. Robert

    Topgrading is smoke and mirrors. It seems to give you insight into the candidate’s motivations for applying for a position. Face it, this tactic is used everywhere by anyone that wants a ‘quick fix’. The tough part of dealing with candidates is sitting down and discussing the RELEVANT topics for employment. Threats of ‘we will check’ or ‘you will make the call’ can easily be thwarted by simple communication with your old manager BEFORE you go in the door. Anyone that thinks it is a good idea to just toss out a name and not do a check yourself with that potential reference is really asking for it (IMHO).

    Take me for example:

    I have worked at probably every level of data processing, from a lowly application coder to owning my own IT consulting firm. There is really nothing that can ‘throw me’ as far as my profession goes. Many if not all of my previous employers would agree with that. So, BEFORE I go on an interview where I suspect these tactics my be used, I make dam sure I know EXACTLY what a reference might say about my performance in the old company.
    It is VERY much like the advertisements on TV for products that will double the speed of your PC, or, guarantee that you will NEVER get another virus. Those are just the easy way out that really don’t do much of anything good for your PC. The real IT professional relies on experience, diagnosis, and correct action to get rid of the problems.

    In the world of interviewing it is very much the same. The really good interviewers rely on EXPERIENCE, not some ‘method’ or published process to do their job. They know how to ‘diagnose’ this candidate as they are walking in the door. They can also spot the candidate that will never live up to expected potential. This comes from years of HR experience, not a goofy program. Anything LESS is just a cheap shot at getting the right person on-board. I would EXPECT a good interviewer to check my references, to call my old company, and do some verification checking. Anything else is just asking for it.

    Reply
    1. Webmaster

      Hey Robert –

      Thanks for your comment. I’m going to have to disagree, especially that this is used ‘everywhere for a quick fix.’ Implementing topgrading from the top-down is anything but quick. These interviews and analysis take 4-6 hours each at a minimum.

      The idea behind the turth serum is not to ‘threaten to call’ it’s to actually call, and have the candidates set up interviews with their previous bosses – all of them.

      I think you are also confusing the purpose of the process, it IS to pull out the specific experiences of the candidates and make sure they are going to fit both the culture and expectations of the company.

      Reply
  10. Webmaster

    Hey Robert –

    Thanks for your comment. I’m going to have to disagree, especially that this is used ‘everywhere for a quick fix.’ Implementing topgrading from the top-down is anything but quick. These interviews and analysis take 4-6 hours each at a minimum.

    The idea behind the turth serum is not to ‘threaten to call’ it’s to actually call, and have the candidates set up interviews with their previous bosses – all of them.

    I think you are also confusing the purpose of the process, it IS to pull out the specific experiences of the candidates and make sure they are going to fit both the culture and expectations of the company.

    Reply
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  12. Bobbie

    Your innovative social media company who focuses on providing accurate and timely information to our visitors to help us make better decisions.

    Reply

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