At Borders, you can buy a hardback version of the essay collection Classic Drucker for $24.95 or grab the paperback for 10 bucks less. Here's hoping that a few folks on the bookstore chain's board of directors had the good sense to pick up a copy and peruse Chapter 5 before selecting their new chief executive.
Had they done so, they would have gleaned a few insights into what may well be the most crucial call that any enterprise makes: hiring key employees.
Ask the Right Question
In "How to Make People Decisions," first printed in the Harvard Business Review in 1985, Peter Drucker laid out a handful of guidelines for making a good hire. Among them: look at three to five qualified candidates and make sure you perform adequate due diligence by checking out each with several former bosses and colleagues. "One executive's judgment alone is worthless," Drucker wrote. "Because all of us have first impressions, prejudices, likes and dislikes, we need to listen to what other people think."
But in many ways, the hardest principle to follow is Drucker's first: "Think through the assignment." Or, to put it another way, you can't answer "Who?" until you've first figured out, "For what?"
"When the task is to select a new regional sales manager," Drucker explained, "the responsible executive must first know what the heart of the assignment is: to recruit and train new salespeople because, say, the present sales force is nearing retirement age? Or is it to open up…new and growing markets? Or, since the bulk of sales still comes from products that are 25 years old, is it to establish a market presence for the company's new products? Each of these is a different assignment and requires a different kind of person."
Beware the Renaissance Man
Though most executives would surely agree with this logic, many violate it nonetheless. In their book, Who, Geoff Smart (who studied with Drucker) and Randy Street warn against falling into "one of the most common hiring traps": getting seduced by somebody who seems to be able to do almost everything exceptionally well, thus promising to be a star no matter the situation.
"There is a tendency to gravitate to the best all-around athlete; you know—tremendous skill set, rÃ©sumÃ© that is knock-your-socks-off," the authors quote Nicholas Chabraja, the chief executive officer of General Dynamics, as saying. Chabraja goes on to recall that he once hired someone like that—a man whose broad talents and creativity made him "a splendid business developer." But what the company really needed at that point was an executive with a knack for running operations who could shrink a bulging backlog.
The Right Person for the Right Job
"I made the mistake of putting in place a guy who went on to put more orders in the backlog," Chabraja says. "Operating margins actually went down. It took me a couple of years to address the mistake. The moral of the story was that I later got a guy whose skill set exactly matched the job at hand. He did gangbusters for us…The other guy went on elsewhere to a splendid career where his role matched his skill set."
Drucker could have easily guessed this would happen. The best business leaders, he wrote in his 1967 classic, The Effective Executive, "never talk of a 'good man' but always about a man who is 'good' for some one task."
Borders, in announcing this week that it had tapped Ron Marshall to be its new CEO, seems to have this very idea in mind. The beleaguered retailer, weighed down by a heavy debt load and trying to stave off bankruptcy, said it must move "more aggressively" to improve its cash flow. Marshall, who most recently served as the head of a private equity firm, has the kind of deep financial background that may well lend itself to the specific challenges Borders now faces. The CEO he replaces, George Jones, came into the job with more of a reputation as an innovator than as a money man.
Not everyone views the who-vs.-what dynamic exactly the same. Jim Collins, in Good to Great, is adamant that building "a superior executive team" should be the first order of business for any company aspiring to be world-class. "Get the right people on the bus…before you figure out where to drive it," he advises.
But Collins also points out that you must get "the right people in the right seats"—a matchmaking exercise that's impossible without assessing, at least on some level, the specific work that needs to get done.
If all of this sounds as if we're saying companies need people who are specialists, Drucker wouldn't disagree. This isn't to suggest that employees shouldn't possess strong general traits: a good work ethic, high standards, and the like. But today's knowledge worker is "usually a specialist," Drucker wrote. "In fact, he can, as a rule, be effective only if has learned to do one thing very well."
Given that, however, Drucker also believed it's essential for the specialist to understand how his or her job fits into the framework of the organization overall.
The goal of this "is not to breed generalists," Drucker said. "It is to enable the specialist to make himself and his specialty effective. This means that he must think through who is to use his output and what the user needs to know and to understand to be able to make productive the fragment the specialist produces."
All of which is to say: It's critical that every "who" grasp the "why," "when" and "how" behind his or her "what."