CHAPTER THREE

Surround Yourself
with Great People

“The best thing about giving of ourselves is that what
we get is always better than what we give. The
reaction is better than the action.”

—ORISON SWETT MARDEN

The greatest untapped natural resource and the most expensive in any organization is its people. Motivating people to make their full contribution to the organization is the fastest way that managers can multiply their personal effectiveness. It’s the only way to grow a great company.

This means that the greatest improvement in performance and in results can come from unlocking and unleashing the latent potential of the average person in the business.

The People Equation

Getting the people equation right is the hardest thing you will ever do in business. When discussing this subject with Mark, Charles Schwab leaned forward as if to confide a secret. “Your job as a leader is to find, attract, and develop other leaders. If you do that, your business will grow,” he whispered. “If you don’t, it won’t. It’s that simple.”

Chuck Schwab learned early in life to surround himself with people who not only shared his ambitions, but who were more gifted than he was in important parts of the business. If he wanted to make progress and get things done, he had to become a team leader.

Schwab discovered something entrepreneurs often realize when it’s too late: He had great talent in one area and not nearly enough skill in many other facets of his company. The only way to sustain his success was by finding, recruiting, and empowering others who had talents that he didn’t have. It is a skill that few entrepreneurs learn until they have a crisis that teaches it to them.

“Most entrepreneurs think that they’re brilliant at everything,” Schwab smiled wryly. “It’s never true. I thought I was a bright fellow,” he said (and he is!), but he admitted that he was “humiliated in subjects like literature and language.” The second time he flunked they nearly threw him out of college.

“When your name is on the door you are responsible, more than ever. But if you actually end up doing everything, then the business is in danger,” he said. If everything depends on you, the business can’t grow. If it’s all about you, you are just one traffic accident away from bankruptcy.

Until you can trust other people to carry the torch, your company can only get as big as your workweek. When you have found people you can groom to fill your shoes, “only then have you graduated from being an entrepreneur to a leader,” Schwab said.

Their Company Is Their Mission

Schwab’s company dodged the bullet that destroyed many banks and brokerage firms during the financial crisis because he already had a leadership team in place that shared his values. They didn’t fall in love with sexy investment schemes that were short lived and dangerous. In fact, Schwab gained market share with customers during the “great recession” because the company’s leadership team had stuck to its knitting. The company is one of the most profitable and fastest-growing financial services companies that consistently ranks among J. D. Power’s leaders in quality service.

“You need people who buy your vision as much as you do. And because they love it, they also have the ambition to take what you did to the next level,” Schwab insisted. “You want people with the energy to make things happen for their sake [not just yours]. They want to take your company on as their own mission and make it even better.”

The best thing you can have going for you in business is to hire a team of people knowing that each and every one of them can be leaders in their own way. Benjamin Zander, conductor of the Boston Philharmonic Orchestra, says that you need people “with shining eyes”—those who gleam with enthusiasm, who can “lead from the eleventh chair.” Great people do their job with pride from anywhere they happen to sit in the orchestra that particular day.

Why You Must Develop Bench Strength

As any venture capitalist will tell you, it’s really tough to attract investors and get a decent value for your company if the only asset in the business is you. If a company is limited by your time, your ideas, your energy, and your health, then investors and customers are at risk. This was a real problem for Apple when news of Steve Jobs’s health problems leaked out. The stock price swung with public opinion about his prognosis. It was not until his team could demonstrate growth in his absence that Apple proved to stockholders that the company’s genius wasn’t entirely dependent on one remarkable person.

As long as all key decisions on your team depend completely on you, the company can’t increase its scale as much as it deserves. And a company that can’t scale and grow won’t last as long or make you as rich as one that does.

Great People Defined: Five Key Success Factors

Before you can attract and keep great people throughout your business, you need a clear idea of how you define a “great person.” The critical measure of success in any business is the ability to get results, and therefore great employees are those who get the job done quickly and well, consistently and at high levels of quality.

1. Great people are good team players. Does your team work well together? Are they focused on doing whatever is necessary to make a meaningful contribution to team goals? You want and need people who treat each other with respect—despite what may make them different—because they share a common cause or goal. For that reason, they will help each other to perform well, giving support and guidance whenever necessary.

2. Great people are more concerned with what’s right rather than who’s right. When there is disagreement, it should be focused on the issues—achieving the goal—rather than blaming or making excuses. Do you regularly create a “safe” environment for staff meetings, where people can address difficult issues without making them personal, or do people have to avoid tough subjects for fear of reprisal? If team members are truly hungry to achieve the goal—and are allowed to be frank and even argue about how to get there—they will be much more effective than teams that attack each other or whose members don’t bring up important but challenging topics.

3. Great people are intensely results oriented. Your best players focus on contribution, on doing those things that make a real difference to your company. They set priorities and use their time well. They focus on key tasks.

4. Great people accept high levels of responsibility for the outcomes required of them. They don’t require close supervision because they feel personally accountable for results.

5. Great people consider the company a great place to work. They see themselves as a family. They treat the company as if it belonged to them personally, and they treat their jobs as important responsibilities. Work life becomes a part of their “identity,” and they socialize with their colleagues outside of work.

Building a Great Team

Ask any experienced executive or business owner about their biggest challenges and one item is always near the top of the list: selecting the right people. As a manager, you always have two choices. You can either do it yourself personally, or you can get someone else to do it. Your ability to choose the “someone else” is the true measure of your competence as a manager in the first place.

Peter Drucker said, “Fast people decisions are usually wrong people decisions.” Perhaps the smartest thing you can do is to hire slowly and carefully in the first place. This dramatically increases your likelihood of making good choices and decreases your likelihood of making expensive mistakes. Hire as much for attitude, personality, and character as for job skills.

Your job as the hiring manager is to find people who will be effective in the specific context of the job they will be doing. If you do not believe the person will be able to do that, don’t hire the person in the first place. Here are some critical tools that will help with this process.

The Art of Selection

The best executive recruiters engage in “behavioral interviewing.” The first thing they look at in the hiring process is how people have behaved in their prior jobs. The best predictor of future behavior is past performance.

Don’t ask people questions with “yes” or “no” answers. Ask them “how” and “why” questions. Invite them to describe a time when they had to handle a particularly difficult challenge. How did they work with difficult people? How did they solve problems and get results?

“I never hire someone who hasn’t made a very big and memorable mistake. I want to hear what happened, what it meant to them, who it hurt, and what they did about it,” said legendary banker Jamie Dimon, CEO of JPMorgan Chase. “If they’re a high performer, they’ve swung for the fences; and when you do that, you’re going to miss plenty of times. The key is to know how people behaved in the past. That will tell you how they’ll do in the future.”

The Law of Three: Test Drive Your Candidates

As Harvey Mackay said, “Hire slow, fire fast.” Take your time in hiring. One of the best ways to do this is to use the “law of three.”

Poor hiring decisions cost between three and five times the person’s annual salary. Mistakes are not only expensive in terms of money that is paid and lost, but poor hiring decisions are expensive in terms of the time you invest, the time other people invest, the time that is lost that could have been invested with a better candidate, and even the cost of demoralization that occurs in a company with high levels of turnover. This is why top companies with low turnover insist on interviewing many different candidates eight, ten, and even fifteen times, often by multiple interviewers, before making a final decision.

There are several applications of the law of three:

Always interview at least three people for a position. Even if you like the first person and feel that individual is suitable, discipline yourself to interview at least two others. Many large companies will not hire a person until they have interviewed ten or fifteen candidates for the spot. The more people you interview, the better sense you will have for the talent that is available. The more people you interview, the greater the selection of choices you will have, and the more likely it is that you will make the right choice.

Interview the candidate you like in three different places. It is amazing how the personality of a person can change when you move the interview setting from your office to a coffee shop across the street. One of the reasons you want to interview people three different times in three different places is that candidates will usually be at their very best in the first interview. After that, if they were pretending, the veneer will quickly come off in subsequent meetings.

There is another important reason to change venues for each meeting. That’s exactly what many employees need to be able to do to be successful in their jobs: They will have to work with many different types of people in many different locations.

Have the candidate interviewed by at least three different people. A practical method, one used in Brian’s business, is to invite the candidate to go around the office and meet the different staff members. Afterward, all of the staff members get together and vote. If even one person disagrees with hiring the candidate, the person is not hired and the file is closed. Brian explains:

When I was a young business owner and manager, I felt that I was smart enough to make all my hiring decisions by myself. I ended up spending half my time compensating for having hired the wrong people in the first place. As soon as I began involving my staff in hiring decisions, the quality of the decisions went up to about 90 percent. And there was an additional bonus. When you have your staff interview a prospective team member, and they all agree that this person would make a good choice, they all lock arms and go to work to help this person become a valuable and productive member of the staff. By being involved in the hiring process, your staff has a vested interest in this person becoming successful.

The SWAN Formula

One of the best methods you can use in interviewing is called the SWAN formula, named after John Swan, an executive recruiter. These letters also stand for Smart, Works hard, Ambitious, and Nice. This may sound Pollyannaish or even politically incorrect to some managers, but it’s a good, practical prescription for hiring. Here’s what we mean:

1. Successful people are smart, especially when it comes to the skills and competencies required for their specific job. This is what Jim Collins meant in his business classic, Good to Great, when he wrote about “getting the right people in the right seats on the bus.” People who have a gift for their particular job tend to work faster, make fewer mistakes, and are more productive.

And how do you tell if a person is “smart?” Simple. They ask a lot of questions. The questions should demonstrate a passion for your business and, depending on the job, the skills that are necessary to succeed in that role. The more questions a person asks about the company, the job, the future, the competition, and the opportunities for advancement, the more likely that person will be a valuable employee if she comes to work for you.

2. People who actually want to “work hard” are more successful at their jobs. The basic rule is that “people don’t change.” A person who is unaccustomed to hard work is not suddenly going to transform under your supervision.

“Chances are nowadays that you’re going to be working far more than forty hours a week. Most leaders spend fifty, sixty, seventy hours a week—weekends and holidays—in today’s competitive environment,” said Marshall Goldsmith, one of the world’s best executive coaches and New York Times best-selling author of What Got You Here Won’t Get You There. “You had better love what you’re doing when you’re committing so much of your life in the office.”

Great candidates are prepared to do whatever it takes to be successful at the job. Unsuccessful candidates will immediately begin hedging and talking about how the job is a “good transition” between careers or how much time off they need.

Balance in life and work is a constant challenge for all successful people. But the only real predictor of future performance is past performance. Ask references to talk about how the candidate handled a crisis or a failure. When you check references, always ask, “How would you characterize this person on a scale of one to ten as a hard worker?” If the previous employer is unable or unwilling to answer this question, find another who will.

3. Candidates should be “ambitious” and able to demonstrate to you why they want this particular job. “Don’t be a flame-chaser,” warns Steve Miles, vice chairman of Heidrick & Struggles, a top leadership advisory firm that provides executive search and leadership consulting. “Find people who are anxious to be effective and ambitious about this assignment, not some future promotion or benefit. They have to live for today in that job, not chase the flame of future possibilities.” You should ask, “Where do you see yourself in three to five years?” The more that the candidate looks upon the potential job as an opportunity to perform well and then move ahead, the better he will do the job from day one.

4. “Nice.” When we say “nice,” in this case, we mean people who are positive, cheerful, easy to get along with, and supportive of others. They fit within the culture of your organization. Their beliefs are in alignment with your values and the customers your organization serves.

To insiders, finding a nice fit for the job means you have found a person the team can trust and enjoys having around. Depending on the culture of the organization, that might mean someone who behaves with polite formality in a law office or who can snap a towel in the locker room.

When people-centric companies like Southwest Airlines famously insist that you must “hire for attitude,” what they are saying is that they screen for people who share their culture and are in alignment with that specific job and the people with whom they must be effective in that role. And that’s something that varies widely in successful companies around the world.

At Google, “We beat on each other hard during my interviews,” CEO Eric Schmidt remarked about his early conversations with founders Larry Page and Sergey Brin. “We tested each other’s intelligence, our ambitions, our beliefs, our integrity. They kicked my assumptions about everything! We took each other to the mat. And we respect each other more for having done that. Part of our culture is to continue to test each other’s commitment to making Google great every day.”

Alignment on Purpose

Warren Staley ran the world’s largest private company, Cargill, like a nice gentleman. He is a sweet, down-to-earth fellow when you meet him. “But I’d never invite outsiders to my executive meetings,” said the retired CEO. Those sessions were filled with table-pounding arguments among high-powered intellects and managers from all over the world. Staley would allow and even encourage the raised voices as long as the fight was over the issue at hand and they never resorted to name calling or personal attacks.

“If you were too quiet, you wouldn’t seem as engaged or authentic as your teammates needed you to be,” he observed. In his rough-and-tumble culture, that wasn’t nice. “We treasured diversity in the real sense of the word—it’s not how you look, it’s who you are, what you know and believe—all from a unique point of view that enabled us to be smart and win as a company.”

No Yes-Men

The point is that you need to find people who are in alignment with your organization’s purpose, not necessarily people who look or sound like you. As Cargill’s long-time CEO said, “What would be the point of adding overhead just to have a yes-man? Why pay to have one type of person who only agrees with me?”

Great teams are composed of diverse, impassioned people who may have only a few things in common: SWAN. They are smart and savvy, hardworking, ambitious, and nice in a constructive way that adds value for their coworkers and customers.

Cutting Your Losses

Building a great team is all about effective hiring. The flip side of the coin is firing. You must have the courage to get rid of negative or disruptive people. They can drag down the performance of the entire organization.

One of the biggest demotivators for your team is your unwillingness to deal quickly and courageously with people who should be fired. The rest of your team will not only respect you for doing that as a leader; they need you to do that as a leader for the sake of the team. Too often it is only in a crisis that leaders have the courage to do the right thing on behalf of everyone else who is impacted by a negative person.

Many times, the choice is made to try to “fix” the broken person, but it seldom works. The negative situation festers. The issue is not the right fix, but rather the right fit for the job. Letting the person go is really the best thing for everyone in almost every case.

Would You Hire That Person Again?

When you think about the members of your staff, continually ask yourself this question: “If I had not hired this person, knowing what I now know, would I hire him back again today?”

If your answer is “no,” then it is usually too late to try to save the person. The sooner you let the person go, the better it would be for all concerned. The worst thing you can do is to keep people in a job where they have no real future. The kindest thing you can do is to let them go so that they can find a job that is more appropriate to their skills and personality.

Here is another question you can ask: “If this person came to me today and said she was thinking of leaving, would I try to get her to stay?” If your answer is “no,” then you know what to do. As Jim Collins wrote in Good to Great: “Get the right people on the bus; get the wrong people off the bus; and then get the right people in the right seats on the bus.”

Give More Frequent Reviews

The problem for most managers is that they don’t provide frequent or frank enough reviews of performance so that they can promote or fire people when they should, without legal problems. Most managers and employees assiduously avoid honest reviews because they find them political and emotionally painful.

That’s why it is so important to create clear expectations and metrics to measure what it means to do a great job. If you expect the performance to change quickly, then make the measurement daily, weekly, or monthly. Annual reviews, while necessary in most companies, are a disaster if there is no other coaching provided for everyone on your team.

Without frequent feedback, you unwittingly underappreciate the best performers and promote the worst ones. The more objective the measures you can create to demonstrate good or bad performance—and the more frequent or visible those measures are to the individual and the organization—the less often you will suffer the ironic embarrassment of holding back (or losing) great people and keeping the ones who don’t perform. As a leader, you must tell people when the actions they’ve taken positively impact your organization’s objectives, but also be equally clear to them when their behaviors did not create real progress. Do it quickly and objectively on the spot, without anger or judgment; and don’t dwell on it. Marshall Goldsmith calls it “feed forward” when you advise people about what could be done better in the future. It takes some of the “sting” out of the critique if it’s given quickly and focused on what to do about it now or next time.

Communicate Clear Expectations

In the last fifty years, researchers studying the methods of motivating employees and building great teams have found that the single most important motivator turns out to be “clear expectations.” When employees are asked to describe the best jobs they ever had, they invariably say, “I always knew exactly what my boss expected.”

When researchers looked for the foremost demotivator in the world of work, they found that it was the flip side of the biggest motivator. It was “unclear expectations,” or employees “not knowing what was expected” of them.

People are inordinately influenced by the expectations of others, especially the expectations of others they respect. The higher up you are in an organization relative to another person, the more powerful your expectations will be in influencing the behavior of that person.

As the executive in charge, you must continually tell people that you believe in them and that you expect them to do well. Find stories of your own success and failure—and those of people you all admire—that demonstrate your empathy and support for your team. When you confidently expect people to succeed, to perform, to excel, to commit to getting the job done quickly and well, they almost invariably rise to the level of your expectations. They will often perform beyond their own expectations of themselves in order not to disappoint you.

The Environment Always Wins

Top managers are those who create an environment where peak performance takes place. They simultaneously put all the known motivators in place while removing the demotivators that inhibit performance. Decades of research into peak performance and motivation can be boiled down to one conclusion: Successful companies are those that create an environment where people feel terrific about themselves.

“Many leaders don’t realize that the environment in which you work—the office, the work unit, the people and culture of your team, the incentives, and the attitude of your boss—all of these things directly impact your performance,” said Jerry Porras, “Lane Professor” Emeritus of Organizational Behavior and Change at the Stanford University Graduate School of Business. Dr. Porras is also coauthor of the business classics Built to Last and Success Built to Last. The environment in which you work is a huge factor in determining whether you are successful. And the environment will outlast you, good or bad.

The Big Question: Are you providing a “winning” work environment for your team? If you asked someone whose business experience you trusted to parachute in to look at your business and listen in on what’s happening at any moment (without you being on your best behavior), what would that person think? Is your workplace motivating people to perform at their best? Is the culture helping people or holding them back?

Great managers develop the ability to bring out the very best in their people by learning and “understanding what makes them tick, and giving them power to feel as though they are working as advocates on behalf of customers, employees, and shareholders,” said Steve Miles of Heidrick & Struggles. “Without a great environment and clear support to feel they’re making progress in serving customers, most people work at a fraction of their capacity,” Miles said.

Your Relationship with Your Boss

The Gallup Organization has conducted research on tens of thousands of employees, and it found that perhaps the most profound issue driving employee engagement is their relationship with their boss. It impacts everything that you do as an employee; this relationship colors your feelings and affects your enthusiasm (or lack thereof) in your work.

The quality of the interaction between the employer and the employee is the key determinant of motivation and performance. Treat your staff members like partners, clients, essential parts of the enterprise, because they are.

People are inordinately influenced by the way that others treat them, especially their bosses and other important people in the organization. A look, a glance, a comment, or a compliment can cause a person to perform at higher levels all day long, and even longer. The quality of the relationship between the boss and the employee can be measured by how free the employee feels to express his thoughts, feelings, and concerns, and even voice disagreements to the boss, without fear of criticism or reprisal.

One way to achieve this feeling of well-being and happiness at work is to remove the fears of failure and rejection that inhibit maximum performance. As W. Edwards Deming said, “Drive out fear.” The executive who can create a positive, high-energy, high self-esteem workplace will have high performance, low absenteeism, low turnover, higher productivity, and fewer mistakes.

Drive Out Fear

One of the best ways to drive out fear is to stop creating it as a manager. When you are consistent in expressing your expectations and measure them objectively, you build confidence and reduce fear in an organization. When you have more fun in the office and maintain a sense of humor—as long as it’s at your expense and never your team’s—you can significantly reduce stress in the office. Even those businesses where life and death are at stake have embraced joy as a core cultural fixture in their companies. At Southwest Airlines, founder Herb Kelleher’s legendary affinity for humor was known to often energize his team and drive out fear because he was willing to be the butt of the joke.

“They pitied me, to tell you the truth; they realized how incompetent I was, and they said, ‘We can’t have Herb doing anything meaningful, but we like him,’” joked Kelleher when Mark spoke with him. “So what job are we going give him where he can’t really screw up the company badly? So they made me chairman, president, and CEO, where you have no power to accomplish anything!” he laughed.

Kelleher’s stand-up routine is funny, but it isn’t a joke. He’s making a real point about how he wants every flight attendant, every operations or administrative person, and every pilot to know they are more important to customers than the executives in the corner office.

Leadership is not an award or entitlement; it’s a responsibility to the people who make your organization great for customers.

“Your people come first, even before customers,” Kelleher said. Period. “Unless they’re happy and motivated, you won’t keep your customers coming back.”

The healthiest thing you can do as a leader is to take your team more seriously than yourself. Driving out fear is a core value of companies like Southwest Airlines, but humor doesn’t imply that Southwest is any less serious about safety, service, or success. It means that joy is central to the culture of service that makes this company tick. It’s how the company enables people to show their creativity at work and humanize their interactions with customers.

The Three R’s of Motivation

There are hundreds of books that talk about motivation, but ultimately no one can motivate you to do anything. At its core, all motivation comes from inside out—you feel an intrinsic incentive do something out of joy, fear, or other internal factors. To motivate the behaviors you want in yourself and others, there are three themes to remember.

1. Recognition. This is one of the most powerful motivating factors of all. When you recognize and celebrate achievements, large and small, people feel wonderful about themselves. They feel positive, happy, and valuable. They feel more competent and are eager to repeat the task or take on other tasks.

You can recognize people privately by telling them that they did a good job upon completion of a task. Even better, you can recognize them publicly by announcing to as many people as possible that they have done a great job. When you start a staff meeting by pointing out that someone on the team has successfully completed an important task, and you lead a round of applause for that person, you communicate to the entire team why this work is important. You dramatically increase your team’s motivation to perform at higher levels in the future.

2. Rewards. Recognition is one thing and rewards are something else. People need rewards of all kinds to maintain their motivation or else they will start to feel that the recognition is just a “show” with no substance behind it.

There are two types of rewards: tangible and intangible. A tangible reward is physical or monetary. Sometimes it can be a bonus, a promotion, or just a prize such as a pen or a briefcase. A tangible reward is visible and drives home the importance and value of the person who has achieved the goal.

Some companies hand out a lapel pin with the number “100” on it to every salesperson who achieved 100 percent of quota or more. This small, tangible sign of accomplishment is something that salespeople strive to earn so they then have something they can show off and wear with pride for the next twelve months. Everyone in the company recognizes the reward and knows what the person did to achieve it. The lapel pin may be small, but it is a symbol of achievement that is significant to the recipient and to everyone around them.

Intangible rewards are also powerful motivators. You can take people out to lunch after they have accomplished an important task, or give them time off with pay. Give a few days advance notice so that everyone knows that the person is being taken out to lunch by the boss because the person did something important for the company. This is a powerful motivator. You can give people increased responsibility, or send them to advanced training to enable them to do the job even better in the future. In this case, you get a two-for-one benefit. Not only does the person being trained feel more valuable and important, but the company gets back someone who is even more capable of getting better results in the future. Everyone benefits.

3. Reinforcement. Another powerful motivational tool is “continuous reinforcement.” This is when you continually comment on the employee’s performance, both privately and publicly. If it is a big job with several steps, or a process that takes place over several months, you should regularly praise and reinforce your people at each step of the process or for each mini-accomplishment, even if they have not yet achieved the final result.

For example, a large complex sale may have several stages and take several months to complete, from first contact through to signed contract. The job of the sales manager is to recognize and reinforce the work that the salesperson has accomplished at each step along the way to the final sale. This keeps morale high and motivates the salesperson to persist in the face of the inevitable setbacks and adversity he will experience.

Find Out What Your People Value

The key to increasing anyone’s intrinsic motivation is to align the rewards you give people with things they deeply value. This is not as obvious as it may seem, so do your research and ask people what they are passionate about. You may be surprised at the answers.

One of the dullest jobs anywhere is taking checks out of envelopes and scanning them by the thousands. Banks hire workers in vast centers to get this mind-numbing work done. Bank of America asked these employees what they cared about most. For many, it was going home.

But one clever manager decided that wasn’t bad news. She could increase productivity and profitability by awarding a prize to those people who could get more work done in a day, with greater accuracy and speed. The reward was simple: When you increased quality and throughput—in other words, when you accomplished more than you did yesterday—you could depart early. She was delighted, surprised, and a little embarrassed to see productivity soar and the office empty out nearly an hour earlier.

Replace Your Employee of the Month Program

To build a great company, with great people, performance must be the basis for any recognition and rewards program, or it may backfire on you. At Schwab, managers were surprised to discover that Employee of the Month programs were often counterproductive. One problem was that some managers felt obligated to honor all the employees, which made the program worthless. Other managers honored their favorite employee, which lead to resentment by everyone else.

Both approaches miss the point and hurt your company. Employees will compete to achieve a goal, and when they do, that achievement itself should be recognized first, then the person who accomplished it. Leaders should be rewarding behaviors and results. Then the employee, who must be measurably associated with those outcomes, becomes a good example of what other employees can do, too. Jealousy is the result of focusing on personality instead of productivity.

That’s why you should replace your Employee of the Month program with an Achievement of the Month prize. People hate the former and love the latter, as long as you make clear to everyone what level of performance it was that led to the recognition or reward.

The Four C’s of Happiness

Zappos founder Tony Hsieh shared with Mark one of his favorite frameworks for people who are happy and motivated in life and work when you hire them. We like to think of them as the four C’s of happiness:

1. Control—the feeling that you have freedom to choose your own outcomes; that you are the master of your destiny.

2. Connectedness—the satisfaction that you have many deep relationships that feed your need for connection to others.

3. Cause—the belief that you are part of something larger than yourself; something that will have impact and make a difference.

4. Continual progress—the certainty that you are moving ahead, achieving goals and milestones that make your time worth it.

Each person wants to feel like a “winner.” How do you get the feeling of being a winner? Simple. By winning or making tangible progress toward winning! By getting things done. By starting and finishing clearly defined tasks. And by being acknowledged for your contribution.

Making Progress Is Key

People love to feel they are making progress. Psychologically, task completion is a source of energy, enthusiasm, and increased self-esteem. When people complete a task, of any size, they feel like winners—as if they have just crossed a finish line.

The more important the task that the person completes, the greater the increase of self-esteem. This is why the kindest and most generous thing you can do as a boss is to help your staff members feel like winners. You do that by setting clear priorities for their tasks and then by organizing the work so that people can complete those tasks in an excellent fashion. To help your people feel more like winners, give them clear goals to aim at. Be specific when you delegate or assign a task. Set measurable performance standards for what constitutes successful completion of the task. Remember, what gets measured gets done.

How to Focus on What Needs to Get Done

Write down an explanation of exactly how to do the job so that others can read it and do the job as well. Create a recipe or formula for success for each important task. This simple act will save you a huge amount of time and effort when you hire the next person, because that new person will be able to quickly learn how the last person actually did that job. Then your new employees can learn how to be winners faster.

Here are recommended steps for getting people to focus on what needs to get done:

1. Set specific goals and deadlines for all assignments. Make it clear what you want and when it needs to be completed. People can’t hit a target that they can’t see. When people know exactly what is expected, how it will be measured, and when it is due, you are setting them up to win. You are setting a finish line that the individual can strive for.

2. Don’t Pull the Plug. “Competition doesn’t kill companies—most firms get in their own way,” says serial entrepreneur and venture capitalist Jack Jia. “We were running short of cash and working 24/7 on our software product in a rundown building. Someone went into the kitchen to use the microwave. The fuse popped and the lights went out,” he sighed. The computers went dead and much of their precious data was corrupted. Exhausted and frustrated, they lost focus and started fighting over meaningless details, draining scarce time and resources.

Just before they ran out of money, they called an all-hands meeting. “We laid all the problems on the table and invited each team member to contribute ideas and, most important, recommit to their individual role in our overall plan,” he said. “Ultimately, one person must be accountable for each specific project outcome. That not only reduces the chaos, it also is more motivating for people to know they own—and can take credit and responsibility for—their own results.”

Finally, a venture capitalist arrived to look at investing in their company. As the VC peered over an engineer’s shoulder to watch a software demo, he reached down to the electric socket and pulled the plug! The VC didn’t want to invest in software that was vulnerable to a crash. “Fortunately,” said Jia, “when we turned the machine back on, the software worked perfectly. If the VC had done that two weeks earlier, we would have failed his test and run out of cash. Execution is all about each player’s ownership of the plan!” Within three years, the company listed on Nasdaq and was worth over $7 billion.

3. Create standard operating procedures. The SOP should spell out the successful techniques, steps, and activities that made it possible for a job to be done well in the past. Standard operating procedures that document what has been done before, and what worked, make it easier for someone else to step in and do the job well in the future.

4. Align skills with capabilities and interest. Are you giving people jobs that they can perform successfully at their levels of experience? Are you enabling them to feel like winners? If you feel that you have assigned someone a job that is over his head, take it back and reassign the person to something that he can accomplish more effectively.

Sometimes a person who is doing poorly in one job will turn out to be outstanding in another job. This is why you must move people around and give them opportunities to try new things. One of the marks of winning sports teams is that they continually rotate players from one position to another position. One of the rules at work is that “a weakness is merely a strength inappropriately applied.”

Management by Objectives

Management by objectives (MBO) is a popular and powerful way to unlock the potential of your best people and motivate them to peak performance.

MBO is best used with competent staff members—people who have demonstrated a capability to get the job done in a timely fashion. One of the greatest desires for human beings is freedom. People love to feel that they are free to do what they want to do when they want to do it. When you use MBO, you give your best staff members the greatest possible latitude of freedom, automatically motivating them and inspiring them to perform at even higher levels.

The way that you use MBO is simple. First, you specify the desired outcome of the task, not the specific process to be followed. As a military officer would say, “Get to the top of that hill!” It would be the job of the soldier to find the very best way to get to the top of the hill, once the objective was clear.

Once you and the staff member are clear about the objective, and when you expect it to be accomplished, you leave the staff member free to determine the ideal method and approach. Only if a problem arises does the employee need to come to you for help or advice. This is often called management by exception. You can offer your own ideas about how employees should go about the task, but you let them decide based on their own knowledge and experience, and on the actual situation. Great people love the opportunity to “own” their work and have their work contribute to the mission of your company. When you enable them to create exciting new ways to do that, they will get things done faster, better, and more effectively than you could ever imagine.

The Three C’s of Trust

All of the elements of management we’ve discussed here contribute to the most important factor in a great place to work: trust. People trust you when you make them feel valued and supported for their contribution.

Consideration

You can build trust with the three C’s: consideration, caring, and courtesy. Consideration means that you continually remind yourself that people have rich personal lives aside from their jobs. You express consideration when you take an interest in your staff, in their thoughts and feelings, and in their families and friendships when they are not at work. The very fact that you demonstrate interest increases loyalty and commitment to doing the job well.

Do You Care About Me?

Caring is even more important. Whenever we feel someone cares about us, especially someone who is important to us, like our boss, we feel safer, more secure, and more valuable and important. You express caring by telling people how much you appreciate them and what they do.

Perhaps the very best quality for building great people is Golden Rule Management. This is where you treat the other person exactly the way you would like to be treated if the situation was reversed.

Somerset Maugham once wrote that “everything we do is to gain the respect of the people we respect, or at least not to lose their respect.” People are very sensitive to the respect of others, especially concerning the people above them, the people who control their positions and their paychecks. No matter how you might feel about a particular issue, always listen to others respectfully and attentively. Hear them out. Ask them about their opinions, even if you don’t act on them. Treat them as though they are intelligent, creative, resourceful people and that their thinking is valuable and important. This causes people to feel competent and valuable parts of the business and team.

“Hire your people as if they were your boss!” That’s what Jack Welch, legendary CEO of GE for two decades, demanded. He taught each GE manager to treat his subordinates as if he would one day be working under that subordinate. Because of rapid changes and promotions for performance within General Electric, this situation occurred quite often where a boss would find himself working for someone who had worked under him at an earlier time.

Treat Your Employees as Customers

Another way to show consideration and caring is to imagine your team members are important customers of your firm. If your staff members were customers who had the ability to buy (or not buy) large quantities of your product or service, how would you treat them differently?

Practice courtesy with every person. Thank people for their leadership and for handling difficult situations. Thank them for being on time for a meeting. You cannot say “thank you” too often, nor can you say “please” too many times. Just make sure that the compliments relate directly to constructive behavior rather than personality traits. Every time you thank someone is an opportunity to recognize and reinforce the behaviors and outcomes you want from them.

Between 65 percent and 85 percent of your costs of operation, less cost of goods sold, will be staff costs, people costs, personnel costs. Your job as a manager is to get the highest return on your company’s investment in human resources. You achieve this by unlocking the potential of each individual: You hire carefully, assign people clear tasks, manage them positively, motivate them continually, and practice the three C’s—consideration, caring, and courtesy—regularly.

When you do all of these things together, you will have a lot more fun and your company will become worth a lot more. The team will look forward to coming to work and hate to leave. They will tell each other, “This is a great place to work!” And, more important, they will actually mean it.