Hire the Top Ten by Topgrading Your Company

By Anne Stuart

It’s called “topgrading,” and the underlying idea sounds as simple as, well, A-B-C.

Topgrading—one of today’s hottest evaluation methods—involves identifying employees and candidates as “A,” “B” or “C” players. The goal: helping managers focus on hiring, retaining and helping A players realize their full potential, coaching and helping develop the B players, and reassigning or weeding out the Cs.

But there’s nothing simple about the process. While the exact steps may differ depending upon who’s overseeing the effort, topgrading typically involves in-depth research and personal interviews to categorize an individual as an A, B or C player for a particular role.

Because topgrading relies on quantifiable data gleaned from those efforts, it’s an increasingly popular method of assessing accounting and finance professionals for mid- and upper-level jobs. As a result, many hiring managers and executives are starting to use the method to evaluate current and potential employees.

A Players: The top of the heap

As you might think, the population of A players is limited. “Typically, they represent about 10 percent of the available performers in any sector or industry at any given time,” says Ted C. Bililies, managing director for the ghSMART & Co. management-assessment firm, which uses Topgrading® with many top corporate clients.  (Geoff Smart, the Chicago-based company’s CEO, is credited with “co-creating” the Topgrading® philosophy and is co-author, with Randy Street, of Who: The A Method of Hiring).

Bililies says the process starts with developing a management scorecard for each position. The scorecard includes seven to 10 outcomes—typically measurable goals that an employee would be expected to achieve in the first 12 to 18 months in that job.

“We create a profile for the role that’s driven by milestones and metrics,” Bililies says. “Once we’ve done that—and it’s not necessarily a small task—we can start the Topgrading interview®.”

For ghSMART, those interviews consist of a lengthy review of an individual’s career, from high school and college through the current or most recent job. Questions are designed to uncover philosophies and patterns that determine where the person fits on the alphabetical spectrum.

For instance, Bililies says, an interviewer might ask the subject to describe the goals, expectations, successes and disappointments for each previous position. That’s where the winnowing begins. “B and C players—especially C players—will say there were no low points, there were no failures,” Bililies says. In contrast, “most A players are open books. They’re proud about their accomplishments but also very open about what they could have done differently.”

Tallying up the scores

After the career review, interviewers match the information they’ve gathered—often 500 to 600 data points—against the scorecard for a specific job. The results indicate whether the individual is an A, B or C player for that position.

“We might say, ‘She’s an A player because she’s likely to execute successfully on 90 percent of the outcomes on the scorecard,’” Bililies explains. B players might be likely to achieve 75 percent of those desired outcomes—but struggle with the other 25 percent. The probable success-to-failure ratio of a C player will be even lower. 

Switch it up for the best fit

But that doesn’t mean B and C players are out of luck. “The idea is that now we have all the information and can make an eyes-open decision,” Bililies explains. That decision could involve changing the job requirements to make better use of unique skills and experience discovered during an individual’s career review.

“We reanalyze the data relative to that new scorecard, and that can change a B or C player to an A,” he says. Or someone identified as a B or C player for one job—say, something requiring strong team-building skills—might turn out to be an A player in another—for instance, a largely independent analytical role.  As Bililies points out: “We’re all A, B or C players in different things.”

Why topgrade?

No question about it: Topgrading is labor-intensive. Those career reviews take upwards of four hours; for higher-level jobs, the process may be even longer, involving additional interviews with current or past supervisors and colleagues. If outsourced, the effort can also get quite costly.

But the method’s fans say the results are worth the time and money spent to achieve them. Research indicates that the high-intensity approach goes a long way toward preventing the bad hires that researchers say can cost companies several times the employee’s salary in terms of both cost and loss of productivity. And while it’s tough to find verifiable data directly linking use of topgrading to, say, higher revenues or stock prices, companies do credit it as a factor in their financial success.

In a testimonial for ghSMART, two private equity firms, the Blackstone Group L.P. and Apollo Advisors LLP described using topgrading to hire a new CEO to turn around an underperforming portfolio company. The CEO, in turn, used the method to hire or promote 27 key managers; afterward, the company’s value increased by 56 percent over two years.

Bottom line, says Bililies: “If you always hire A players, you’re always going to benefit financially.”