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Nowadays everyone recognizes the role people and talent play in the success of an organization, but it wasn’t always so. In the early days of my career, I remember having some very challenging experiences in companies where people weren’t valued and HR really didn’t have any power.

When I came to GE, I had the great fortune to work for about eight years under the tutelage of chief human resources officer Bill Conaty. Thinking about some of the companies I’ve worked and consulted for since then, I have a renewed appreciation for the fabulous HR community at GE and the strength of its connection to people and leadership.

So I was excited to have a chance to interview Bill on a recent broadcast of my radio show, iLead: The Leadership Connection.

In his new book The Talent Masters: Why Smart Leaders Put People Before Numbers, co-authored with Ram Charon, Bill explores how world-class companies find and nurture leadership talent — and offers a tool kit for any-size company to do the same.

Seven principles of enlightened leadership

Talent mastery starts with an enlightened leadership team, and that team begins with the CEO, Bill told me. “If the CEO isn’t an advocate and a real pusher and driver of the talent agenda, then the rest of the organization is going to fake it, and it’s just not going to happen.”

Also critical for success is a meritocracy based on differentiating talent. “God may have created all people equal, but for some reason they don’t all perform equally,” Bill said. “So there’s got to be some kind of gradation there. Treating everyone the same drives mediocrity.”

Third, a company needs to have working values. “We use the term ‘working’ because every company has a set of values, but we want them to be more than a placard behind the receptionist’s desk. We want values that really come alive, that are the basis for how people are assessed, how they’re recognized, rewarded, or removed. A set of values that you live every day, that govern the behavior of the organization.”

The fourth principle is a culture of trust and candor. That’s easier said than done, Bill told me: “Initially you’re thinking, ‘Geez, if I reveal my warts or my soft spots here, that’s going to move me to the layoff list.’ But that isn’t what we were driving at. What we’re driving at is, ‘Hey, everyone can get better.’ Everybody has one or two development needs to work on. It probably took four or five years at GE before the trust really set in and you could be perfectly honest and candid in your own self-assessment.”

Next, you need a rigorous talent assessment system. At GE, Bill told me, they didn’t wait for annual performance reviews. “If someone was doing a great job, you’d tell them that day. You’d recognize and reward them. If they slipped up, you’d make sure they knew that that day. Some kind of talent assessment system that fits your culture, fits your business, is key.”

The sixth element is a true partnership with the human resource department. Again, Bill said, this starts with the CEO. “If the CEO is not a real advocate of human resources, is not pushing that agenda, then you’ll have a mediocre HR leader and you’ll have mediocre HR practices,” he said. “More CEOs need to recognize that a good HR leader can add tremendous value to the business as a whole, not just the HR side.”

And the final principle is continuous learning. “It’s critical to the whole process of individual development, team development, and business development,” Bill explained. At GE, “we were never satisfied that we’d seen it all. Been there, done that. The day you think you’re there is the day you might want to get out.”

How to do performance management the right way

Most people dislike performance evaluations, especially when they’re pages and pages long, the goals aren’t clear, and the purpose of the conversation is strictly to set compensation. I asked Bill for his take on the current discussion of throwing out performance management systems and creating something new.

“I don’t know what the something else is,” Bill said.

“To me, you don’t have a performance management system unless there’s consequences. Consequences, in my mind, means you have to readily be able to identify your best and brightest and recognize and reward them. Most companies do a very good job of that, because that’s the easy part.

“Simultaneously, you have to take a look at your less effective performers and make sure you’re giving them development feedback, giving them an opportunity to get back on the right track. If they can’t, there’s got to be consequences. They’ve got to shape up, or leave the company. If you don’t do those kinds of things — if you don’t differentiate — then you don’t have performance management and you definitely don’t have a meritocracy.

“I think that if somebody’s got a better play out there, great,” Bill said. “But people have to know what it’s going to take to win or succeed in your organization.”

Bill emphasized that each company needs to do what works best for its people, rather than impose some arbitrary ranking system. “How you differentiate is up to you,” he said. “You have to do what’s comfortable in your own company.”

At one time, GE used a framework that segmented people into percentiles: the top 10 percent of performers, the next 15, the middle 50, and so on. That didn’t work so well, Bill recalled. Everyone except for those in the top 10 was unhappy with their label.

“Don’t be so anal about percentages or rankings that you do dumb things to good people,” he cautioned.

Competency models that really work

Bill and I discussed some of the tools currently being used to assess management capability, including the widely used “nine-box,” which measures individuals on past performance and future potential, and a four-block grid used by GE, where the two axes are values and results.

“We used to say that making the numbers, getting the results, was a ticket of admission that kept you in the game,” Bill said. “Your values were what moved you up in the hierarchy of the organization. You needed both. You needed to get results, but your values were what we used as the governing force that decided who moved up into the bigger jobs.”

I recalled GE being one of the companies I knew that had the courage to get rid of people who didn’t demonstrate their values.

Bill agreed. “I think there was a time, at GE and at many companies, that if you made the numbers, you could be the biggest horse’s ass in the world. Then we decided, ‘Hey, look, we deserve both. You should be able to make the numbers and we should have people with strong values and great leadership skills who can mentor and engage and excite others.’ And that’s what we’ve got.

“I think competency models are fine as long as they’re totally locked into whatever set of values you have that guide how people are going to win or succeed in your organization.”

Advice for HR leaders

Bill feels strongly that HR organizations should be focused on talent development and not caught up in daily trivia. “For example, HR should not have payroll. Payroll should be a finance function,” he said. “You need to clear the decks so you can really make an impact on the talent agenda.”

His advice for HR people aspiring to be leaders in their field? “I’ve always said, do the job you’re on today better than anybody’s done it in the past. Act like it’s the last job you’re ever going to be on. If you do that, it won’t be.

“What a lot of people get hung up on is what I’m going to do next. They miss the only leverage point they have, and that’s the job you’re doing today.”

The other piece of advice Bill offered was: “You’ve got to be a problem-solver, not a problem-identifier. You’ve got to be a problem-identifier to be able to solve the problem, but too many HR people think it’s their job to identify the problem and then dump it off on their CEO or their boss.”

At GE, Bill considered it his job to take issues off the CEO’s desk, not to add to the pile. “I always said, ‘Look, here’s the issue. Here’s what I’m doing about it. I’m handling the issue. I just want you to be aware of it, so you’re not blindsided in case it comes up another channel.”

Good advice for everyone, not just HR.