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How to succeed in the mobile game space by Lloyd Melnick

Tag: recruiting

Up-skillOR vs Up-skillEE

Up-skillOR vs Up-skillEE

There are several critical business decisions that are driven, often subconsciously, by arrogance; one of the most critical is around recruiting and hiring. I often write about Blue Ocean strategy but despite its proven higher ROI, companies still regularly pursue a Red Ocean approach driven by overconfidence that they are simply smarter than their competitors (your competitors also think they are smarter). Recruiting is another area where overconfidence and arrogance can not only lead to sub-optimal decisions but also inhibit growth.

The mistake is rooted in the belief that they can train someone to fill an open position so the person would out-perform a candidate with experience. Thinking you will do a better job of training the person than a previous employer is an example of arrogance, unless you have a proven and reputation as being the best of the best, it is unlikely you can actually train someone to be the best of the best. More importantly, you neglect a tremendous opportunity for your company.

Slide1

Up-skilling your company is more important

One of the biggest opportunities when recruiting is improving your company’s skillset. One of the very best people who ever worked for me, who has now gone on to achieve much bigger and better things, taught me never to hire someone who did not bring a new skill or attribute to the team. When he interviewed candidates, he not only ensured they had the skills for the target position, he would reject anyone (and it did make recruiting challenging often) who did not add something to the team. If we had a bunch of great producers, he would hire another producer who was not only fantastic at production management but might have design skills our team lacked. If he was hiring a designer, rather than take another strong artist, he would wait for an artist who was not only talented but may have come from a different industry that had a unique take on UI.

What his approach showed me (and the results were incredible) was that the real value in hiring is not filling a need but up-skilling everyone on your existing team and making them better. You can look at it mathematically:

  • Candidate A is brilliant. You can train her to be a great performer. She will deliver 100% value * X (where X is output) after you train him, thus the ultimate value to the company is X.
  • Candidate B is very good and but also brings a new skill (i.e. live operations management). She will be very good at her job (maybe a little weaker but I am not advocating accepting weaker candidates), so 90% * X. Other people on your team will also learn live ops management from her, making them all 10% better. Even if that is only 5 people, that adds 5 * X *.1; .5X. The total value to the company of this hire is 1.4X (so 0.5 better), not even considering the training costs avoided with candidate A.

Although this example is an over-simplification, it shows the leverage in hiring an experienced candidate and bringing their skills to your organization rather than focusing on developing a great employee from scratch.

You may not be ready to train to be the best

Unless you are truly the best in the world at something, you will not be able to train someone to be the best. At most, you will train them to be as good as you. If you are a Designer, you might believe you can train a designer who is coming straight out of university to be great. The reality is hiring a Designer who worked at Apple and was trained by Jony Ive is likely to yield a better designer than you could ever develop.

In effect, you are capping the new hire at the skillset of the person or people who will train them. Very few people are the best in the world, so assuming your company can do a better job training someone than anyone else could train them reflects arrogance rather than farsightedness.

You are missing a critical indicator of performance

Another problem with hiring with the intent to teach the candidate the job is your missing during the recruitment process the best indicator of how they will perform. While “past performance does not guarantee future success,” as anyone who has ever read an advertisement for a mutual fund knows, it is a damn good indicator with job candidates. As I previously wrote, interviews, personality tests, reference checks, etc., create an illusion of validity when evaluating candidates and are highly inaccurate. Conversely, work samples and experience are most predictive of success in a role. If you are hiring someone who has never had a similar role, with the plan to train them, you increase greatly the chance of a bad hire.

Experience is not an excuse for mediocrity

One important consideration when hiring someone is that experience should not be an excuse for accepting mediocrity. While there are benefits to bringing on someone with experience, it does negate the need to hire a great candidate. Someone with a mediocre track record probably has a low ceiling; they will be perpetually mediocre and not help your organization significantly.

You should also not equate a big name company on someone’s resume with great experience. There are both good and bad people at big (and even great) companies, it is actually often easier for these people to hide their weaknesses at a big company (their great colleagues can compensate for their weaknesses). You need to assess whether they did a great job at the position you are hiring for, not whether their company had great results.

Internship programs are great

This post should not be seen as a black and white blueprint for hiring, as there are many great opportunities to hire people with little or no experience, particularly creating an internship program. There are certain positions where experience is not needed or helpful. There are junior positions where it is quite easy to train people (though you still miss the opportunity to bring in people with different skills or experiences).

Finally, and most importantly, bringing in younger interns generates cognitive diversity. They will probably bring a fresh way of thinking to your team, challenge some conventional wisdom and potentially make everyone better.

Recruiting moving forward

The next time you are recruiting, particularly if it is for a somewhat senior position, look beyond the position and see how you can best help your organization. Realize you cannot train the person to be better than you. Understand the opportunity to bring new skills to your team. Hire the best, but make sure you know what best looks like for you.

Key takeaways

  1. Recruiting candidates with the expectation you will train (upskill) them to do the target job well shows an arrogance that you think you can train them better than anyone else has.
  2. Upskilling people ensures your team does not go to the next level, you set your current skillset as the ceiling.
  3. You also miss the opportunity to bring new skills and experiences to your team, where the new hire can make everyone else more valuable.

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Author Lloyd MelnickPosted on November 24, 2020November 23, 2020Categories General Social Games Business, General Tech BusinessTags hiring, recruiting, Up-skill1 Comment on Up-skillOR vs Up-skillEE

How to become successful CEO

How to become successful CEO

Many people write about how to be a great leader or CEO, but very few of them have actually achieved it. Ben Horowitz is one of the few whose credentials live up to his advice. He cofounded and was CEO of Opsware (formerly Loudcloud), which was acquired by Hewlett-Packard for $1.6 billion in 2007. Before Opsware, he was vice president and general manager of America Online’s (AOL) E-commerce Platform division and also ran several product divisions at Netscape. Even before joining Netscape in July 1995, he held various senior product marketing positions at Lotus Development Corporation (the father of the spreadsheet). Given this great track record, I put significant credence in Horowitz’s book, The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers.

hard thing hard things

Horowitz rightfully focuses on the difficult things that leaders need to do to succeed. CEOs and others who are leading business units (BU) are responsible not only for their fate but the fate of their company or BU, having to make potentially life or death decisions daily (either for the business or for the individuals involved). Based on his experience both running BUs and actively involved in growing others as a VC, Horowitz provides some key principles on how to be a great CEO.

What is The Struggle

The greatest challenge a CEO faces is reality. Horowitz refers to the challenges in leading a business as “The Struggle,” which occurs when dreams of success meet reality. It is also an inescapable element of leading a company, and it consists of the stress and seemingly impossible decisions that come with the territory. The stress and weight of The Struggle will probably affect the CEO’s entire life, from their mental and physical well being to their career choices and social relationships. The CEO is responsible for negotiating the challenges the company faces, and thus it is the leader who will get credit for successes or be let go for failures.

Meeting The Struggle

Horowitz suggests several strategies for leaders to manage The Struggle. Among the most important is not trying to face it alone but assembling a strong team to face each crisis. While the burden will fall primarily on the leader, you should not try to bear it alone. Instead, include as many people as possible to face a crisis. When Horowitz’s Opsware faced a crisis caused by the dot-com crash, he got the entire company together in an offsite meeting and told them honestly and directly that unless they overhauled entirely their product they would not survive. As mentioned earlier, he eventually sold Opsware to HP for over $1.5 billion, so it worked.

The second approach to dealing with the Struggle is to get creative. Rather than business as usual, think out of the box for potential solutions. When Horowitz was leading Loudcloud and they were missing their revenue targets, he decided to take the company public to raise the funds he needed.

Horowitz’s third approach to dealing with The Struggle is self-reflection. He points out that dealing with your own psychology is the hardest challenge any CEO faces and it is often lonely. To overcome this challenge, he uses the analogy of a racecar driver. Successful drivers concentrate on the road ahead not on the potential hazards and track walls. Leaders must emulate this approach and focus on the solutions ahead, not the problem.

Intellectual honesty is critical

Another key element for successful leadership is being honest about problems and bad news. He admits that nobody likes to give bad news. He explains, however, that when you are the CEO and your company is dealing with challenges, discussing them openly and directly with your team (not just leadership but entire team) is critical for success.

Horowitz points out that bad news spreads very quickly, whether or not you disclose it. Thus, there is no sense in trying to contain it. Moreover, secrecy can be very damaging because it makes the bad news unexpected when it does surface. Sometimes this secrecy comes from good intent, what Horowitz refers to as the “positivity delusion,” the idea that their employees cannot handle the truth but need to be coddled. The reality is the opposite; employees usually deal with bad news better than the leader, in part because they can blame the leader for the problem.

Instead of keeping quiet, the leader should preemptively head off the bad news by divulging it as soon as possible. This allows the company to focus on a solution and stops gossiping (I would actually say slows gossiping, as gossip never stops). By disclosing problems as soon as you can, a great leader or CEO helps put those problems in the hands of the people who can solve them as quickly as possible.

Take care of your people

Horowitz has learned while building multiple companies that to achieve greatness you need to take care of the people in your company by training them well and creating a good human resource structure. He suggests you ensure you have a dependable HR department as it can give you valuable insights into problems invisible to you.

Second, he shows it is vital to invest in training your people to fit better their roles. He points out that every company has its own procedures and tools and no outsider can pick them up without training. He also stresses the training should be functional, proving employees with the experience and skills they need to succeed in their job and hit their goals.

Hiring based on strengths

In Horowitz’s experience, leaders succeed by hiring people based on their strengths, not their weaknesses. When recruiting, a CEO’s first priority should be hiring people for their strengths, not rejecting based on weaknesses, as the strengths will determine if the person excels at their job.

The second key when hiring executives is to make sure their experience matches the size of the company. In large companies, executives tend to have a lot of incoming work, which makes them have to adjust and review existing projects. In small companies, executives create their own projects and design their own work. These discrepancies can result in mismatches in rhythm, meaning the expected working pace and skill set.

Get rid of politics

Horowitz writes that if you want to build a company where people want to work you have to dispense with politics. By politics, he largely means the maneuvering that some people employ to get an undeserved promotion. The best way to avoid such politics is to only hire people who are ambitious in terms of the entire company, not simply their careers.

Another tool to mitigate politics is the implementation of strict processes that mandate regularly spaced performance evaluations, compensation scales and promotion schedules. These fixed timelines and processes make it more difficult for anyone to get an undeserved promotion.

A final step to eliminate politics is to communicate to all employees what their work is and how their work is valued. Make sure that your hierarchy of titles means something and is understood throughout the organization. One caveat that Horowitz points out is the need to avoid the Law of Crappy People, which states that the most incompetent person who holds a given title determines the value of the title in general. This leads to other title holders feeling undervalued and demotivated.

How to deal with redundancies and layoffs

Horowitz points out that nobody wants to lay people off, but if necessary, it should be done quickly and fairly. When layoffs are needed, it is critical to act fast. Once the decision is made, CEOs should take action, as delaying the inevitable that everyone knows is coming is like letting a wound fester.

It is also important to treat outgoing employees fairly, which is often a challenge as layoffs are frequently the result of deteriorating business conditions. Thus, there is an incentive to support the business rather than the exiting employees. Instead, you need to give the outgoing people decent severance packages and good references. These actions not only help the morale of those who stay but also makes future recruiting easier, not to mention it being the right thing to do.

Finally, the leader needs to be transparent and honest when explaining why they are making the layoffs. Horowitz gives two reasons to take this approach

  1. An admission of failures helps to solidify trust between the remaining employees and the leader
  2. Everyone should understand that the company failed and must now find its way forward and move on.

Own having to replace an Executive

While a company may have to make redundancies when dealing with challenging times, CEOs and other leaders sometimes also must fire members of their leadership team. Horowitz explains that having to let go of a leader is more difficult and serious because there is much more at stake for the company both financially and culturally. Horowitz suggests the best way to approach replacing a leader

  • As the CEO or leader you are responsible for having hired the wrong person and you need to explain this either to the Board or your CEO. Figure out why you made this hiring mistake and how it can be avoided the next time.
  • Prepare thoroughly for the conversation with the executive you are letting go. Include thinking about the kind of language you will use and how you will formulate the severance package. You never want to humiliate the person. You also should not be discussing performance with the outgoing executive, it is not a coaching session but an ending.
  • Treat the outgoing executive fairly and respectfully. This will help morale and performance of the other executives, which will also help ensure smooth operations after the executive has left.

When letting go of an executive, Horowitz stresses that the primary issue is to maintain business continuity (both actual and perceived) despite the departure. The leader has to do what it takes to keep the affected part of the business running normally, including in the short term becoming a temporary replacement for the departed executive.

Set the direction

The key to leading a company or business unit is knowing what to do and getting the entire organization to do it. Horowitz points out that great leaders and CEOs find the right direction for the company to follow. Then they have to articulate that direction and get the rest of the company to follow them. There are thus three critical elements

  1. Articulating the vision.
  2. Being authentic and motivational.
  3. Getting the company to execute on your vision.

Both define the path and execute on it

While some leaders are excellent at defining a direction and others are very effective at execution and performance management, the truly great CEOs and leaders combine the characteristics of both. Some leaders focus on defining a path for their organization to follow rather than implementing it. These leaders have a compelling long-term vision for their company, like Bill Gates did at Microsoft. Sometimes companies led by this type of leader become disorganized and chaotic.

The other type of CEO prefers the execution and performance management aspect of leadership over research and planning. They do not like to make big decisions. With leaders such as these, it can slow down the company as important decisions are delayed or avoided.

Great CEOs and leaders combine characteristics of both. They are like the latter in that when it comes to overall corporate decisions, they like to focus on execution rather than planning the company’s path forward. Where they are different, however, is that when it comes to their own area of responsibility and expertise, they act as planners (the first category). The implication of Horowitz’s view is that no matter which type of leader you are, you should continue to work on skills outside your comfort zone to arrive at the ideal combination.

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Becoming great

Horowitz points out that becoming a great CEO will initially be uncomfortable. CEOs and leaders grow into the job (unlike the television stereotype of the Homelander-type CEO who comes into the job with superhuman skills) and must develop the right characteristics and abilities for that particular role. You should always strive to be authentic and true to your personality and style.

Horowitz explains another skill to master in becoming a great leader is knowing how to give good feedback. He refers to the shit sandwich where the most unpleasant topic is sandwiched between two positive comments (though even this approach, you do not want to appear rehearsed and insincere).

Most importantly, Horowitz says, great leaders must learn to be comfortable doing inherently uncomfortable things. Just as boxers train themselves for initially unnatural feeling footwork, great CEOs have to make their unnatural job feel natural.

Key takeaways

  • Being a great CEO or leader is very hard. CEOs and others leading business units are responsible not only for their fate but the fate of their company, having to make potentially life or death decisions.
  • To meet The Struggle of leading a company, you need to rely on teamwork, think outside the box for solutions and continuously self-reflect.
  • Great leaders must learn to be comfortable doing inherently uncomfortable things. Great CEOs have to make their unnatural job feel natural.

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Author Lloyd MelnickPosted on November 11, 2020October 11, 2020Categories General Social Games Business, General Tech Business, Lloyd's favorite postsTags communication, leadership, recruiting2 Comments on How to become successful CEO

People Analytics for Online Gaming

People Analytics for Online Gaming

Last month, I wrote about some applications online gaming companies can take from the world of operations analytics, which are primarily used by traditional and retail businesses, and a course on People Analytics from Wharton showed some ways this area of analytics could be used to improve our businesses. While people analytics is often the domain of HR professionals, there are valuable elements for managers across tech businesses (many of whom do not have robust HR teams). Below are some of the most important takeaways from the course.

Identifying the noise and improving performance evaluations

A critical role for any leader or manager is accurately evaluating performance of your employees. Accuracy is important to ensure you provide useful feedback that helps people improve, assists you in putting the right people in the correct roles and identifies the skills needed for success in specific functions.

The fundamental challenge in performance evaluation is that performance measures are very noisy. There is a range of outcomes possible outside of the employee’s control. The challenge is separating skill and effort from luck so that you understand true performance.

In the course, the instructors highlight how often people confuse skill with luck. They start with an example from sports, showing that professional American football teams ability to draft (select out of university) players is almost primarily luck. While some teams have had a string of success, success in one year has no predictive ability on success in future years. If skill were a key factor, then you would expect a team to repeat its success.

It also holds true with investment analysts. An analyst who has a great year is no more likely to have above market results the next year than one of the poorest performing analysts.

There are many reasons we confuse this luck with skill:

  • Interdependence. I have found a humbling amount of work depends on other people, if they are great we look great, if they are not, we look bad. You should not attribute individual performance to something that is at the group level. In these cases, performance should be evaluated as a group. Conversely, reliable individual evaluation requires seeing people on other teams (for example, Tom Brady’s play on the Buccaneers will help assess whether his performance was due to him or the environment).
  • Outcome bias. We tend to believe good things happen to those who work hard and judge by outcome, not by process.
  • Reverse causality. When we see two correlated factors, we tend to believe one caused the other. In reality, one there may be no causality or it may be in the other direction. This leads us to see things that do not exist and can prompt us to give people undeserved credit or blame. One example cited in the course was research that showed charisma did not impact whether a CEO was successful, but successful leaders were considered more charismatic.
  • Narrative seeking. We want to make sense of the world and tell a causal story.
  • Hindsight bias. Once we have seen something occur, it is hard to anticipate we did not see it coming. We rewrite the history in our minds the history of the process.
  • Context. We tend to neglect context when evaluating performance. We over attribute performance to personal skills and under attribute it to environmental factors such as the challenge of the problem the employee faced, quality of their team, etc. In psychology, this issue is referred to as the Fundamental Attribution Error, blaming or crediting personality traits to situational traits.
  • Self-fulfilling prophesies. People tend toward performing consistent with expectations. High expectations increase performance, low expectations decrease performance
  • Small samples. Small samples lead to greater variation, what we see in a small sample may not be representative of a large population.
  • Omitted variable bias. There could be an additional reason that is driving both what the performance and what we think is causing the performance. For example, we may think higher compensation is leading to better performance. The truth might be that extra effort is causing both higher compensation and superior performance, thus the key variable (effort) had been omitted.

When you are looking at evaluating performance, there are several tools to improve your accuracy. You need to focus on the process the employee (or potential employee) took rather than only the outcome; we normally omit almost 50 percent of the objectives that we later identify as relevant to success. Thus, you should look at a much broader set of objectives that impact the business. This process includes determining what increases the likelihood for superior performance, rather than traditional outcomes are there four or five things that may not be obvious but contribute to overall success. A few years ago, I wrote how one basketball player (Shane Battier) was much more valuable than many players who scored more points or otherwise had flashier statistics, the same holds true in traditional business.

You need to look carefully at the job and understand what drives success. Define success not only by outcomes but how well these factors predict other KPIs, attrition, rate of promotion, etc. In the course, they also point out what works for one role or company does not necessarily work for others. Google found that GPA was an awful predictor of performance, but for Goldman Sachs it is the gold standard of who will be successful.

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Additional ways to improve performance evaluation include:

  • Broaden the sample. Add additional opinions, more performance metrics, different projects and assignments. The key is to use diverse, uncorrelated signals.
  • Find and create exogenous variation. The only truly valid way to tease out causation is to control an employee’s environment. Have the employee change teams, direct report, projects, offices as the variation will provide a better sense of the employee’s ability.
  • Reward in proportion to the signal. Match the duration and complexity of rewards to the duration and complexity of past accomplishments. For short, noisy signals it is better to give bonuses and praise rather than raises and promotions.
  • The wisdom of crowds. Average of guesses is surprisingly good (even the exercises like guessing the number of jelly beans in a bowl), so get multiple experts to help with your assessment. Ensure, though, that their predictions are independent of each other (they are not talking to each other, they do not have the same background, etc).
  • Ensure statistical significance. A small sample (one project, one season, etc) is less likely to give you an accurate measure.
  • Use multivariate regression. This analysis will allow you to separate out the influence of different characteristics.

At the end of the day, you need to separate the signal from the noise to evaluate current performance and predict future success. Someone may have had a great performance or year but they may be a less valuable future employee than someone else because of luck or other environmental factors.

Recruiting the right people

Evaluating performance is not only important for your current team but also recruiting the best new hires. Hiring the wrong person can have huge consequences, including missed growth opportunities, damaging your culture and decreased output. Yet, most companies find consistently recruiting the right people difficult. This is often caused by the Illusion of Validity, that we think we know more about people than we actually do. We interview somebody and believe we can judge his or her suitability for a job. This Illusion is popped by research that shows the correlation of several hiring tools to subsequent performance (Ranked from most effective to worst:

  1. Work samples.
  2. Cognitive ability tests (these are general intelligence tests).
  3. Structured interviews.
  4. Job knowledge tests.
  5. Integrity tests.
  6. Unstructured interviews.
  7. Personality tests.
  8. Reference checks.

Several of the low scoring tools reinforce the Illusion of Validity. Unstructured interviews, where you meet someone and get a sense of their strengths and weaknesses, is often the paramount driver for whether we hire a candidate, but we are not good judges of character. I remember reading when President Bush first met Russian President Putin in 2001, he said “I looked the man in the eye. I found him to be very straight forward and trustworthy.” We see how well that worked out. As the above research also shows, reference checks are even more ineffective in the hiring process for similar reasons.

What does work is seeing examples of their previous relevant work, intelligence tests and structured interviews. Structured interviews are one designed to assess specific attributes of a candidate.

Use analysis for internal promotions

As well as improving the hiring process, People Analytics can help move the right people internally into the right roles. Often, people are promoted based on having done a great job in their current role. The course shows, though, that this approach often leads to negative outcomes (both for the employee and the company). The skills needed to succeed in the next job may not be the same skills that led to success in the current job. Performance in one job is not automatically a predictor of performance in a new role.

Just as it is important to understand the key predictors of success when recruiting, you need to do the same with internal promotion. Understand what leads to success in the new role and hire internally (or externally) those most likely to succeed. The good news is that research has shown that people promoted performed better overall than new hires into comparable roles.

Reducing employee churn

Attrition is one of the costliest problems company’s face and People Analytics can help combat this problem. The expense of losing an employee includes hiring a replacement, training costs, loss of critical knowledge and the impact on customer relationships. People analytics offers help in mitigating this problem. You should start by analyzing the percent turnover at specific milestones (3 months, 6 months, 1 year, etc.) and evolve into using multivariate regressions to predict who will reach each milestone. As you get more sophisticated you can build a survival model to understand over time what proportion will stay with your company. And then finally look at a survival/hazard rate model to test what factors accelerate the risk of exit.

During the course, they also provided some interesting data on why people leave. The decision to quit is most commonly driven by external factors, comparing the current job to a new opportunity. This understanding is critical as internal factors do play a role, internal issues still have a relatively small relationship to how likely people are to churn.

To reduce churn over time, the instructors of the course suggest an informed hiring strategy (where predicting churn is integrating into who is hired) and target interventions (reduce factors that accelerate risk of exit, address unmet needs, focus retention efforts, etc).

Using network analysis to improve collaboration

Another great takeaway from the course was how to use network analysis to understand, improve and incentive collaboration. Without getting too granular, network analysis involves looking at the informal links between employees, who gets information from who and what direction(s) that information is flowing. Once you draw that map, you can understand who are central to communications, who are outside the map, areas for improvement and people who should be rewarded for their role in collaboration.

network map

While there are many details to creating and analyzing a network, there are five key areas to focus on when looking at individuals (there are no right and wrong answers for each attribute, optimizing depends on the goal and environment):

  1. Network size. How many people are they connected to.
  2. Network strength. How important and often are the lines of communication.
  3. Network range. How many different groups are they connected to. Range would be small if you are connected to everyone on your team even if it is a big team, large if you are connected to one person at every other corporate function (i.e. marketing, accounting, analytics, etc.)
  4. Network density. Are the connections connected to different people or to each other.
  5. Network centrality. Is everyone equally central or are there some in the middle and others on the fringes.

Understand how your company’s network works will allow you to understand collaboration patterns. For example, by deconstructing performance, you can understand if collaboration patterns impact performance. If there is a positive causal relationship, you can work to replicate or improve these relationships. If there is no relationship, your team might be wasting time on unnecessary collaboration.

You can use this analysis to understand if collaboration is needed and where. Then you can strategically build ties and bridges between different parts of the organization. This result can be achieved with:

  • Cross-functional meetings.
  • Conference calls or video conferences
  • Job rotations
  • Site visits
  • Events

You should also identify where collaboration is unnecessary or overly burdensome and reduce demands on people. Match overloaded people with well-regarded employees who are under-utilized, who can relieve some of the burden. Also identify a small number of new connections that would have the biggest positive impact on team connectivity and shift responsibilities more evenly across members.

Tying performance evaluation with collaboration

People analytics can be particularly helpful connecting the performance evaluation methods discussed above with analysis of collaboration. As I wrote earlier, the key to good performance reviews is understanding what drives the outcomes you are looking for. If collaboration is one of those success drivers, you need to evaluate it thoroughly and incorporate into performance reviews and internal promotions (you do not want to promote someone weak at collaboration into a role where it is vital to success).

You should revise your evaluation systems to include collaboration. First, this will provide incentive to employees to build and use meaningful relationships. Second, it will recognize team members who help others win new clients or serve current customers, even if those direct results accrue to someone else (the basketball player who passes the ball rather than dunks).

To achieve this goal, you need to have the right measures. If you are assessing individual collaboration, you need to look at elements the individual controls. You then need to make sure there is reliability, which are the assessments will remain consistent over time and across raters. Third, the measures must have validity (accuracy). There also needs to be comparability, you need to be able to use the measures to look at all people who you are evaluating. Finally, it must be cost effective, it should not be too expensive to collect the information.

Key takeaways

  • You need to align performance evaluations with the underlying factors that create success; deconstruct what leads to the outcomes you want and then assess people on those factors.
  • Some common problems when evaluating people include context (attributing results to a person when the environment drove success or failure), interdependence (assessing on an individual level a result that was driven by a team), self-fulfilling prophecies (people perform consistent with expectations) and reverse causality (we attribute causality to correlation, even though the factors may not be related or may be in the other direction).
  • You should assess how your team or company works as a network, looking at the relationships, and then encourage and grow ones that lead to desired outcomes.

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Author Lloyd MelnickPosted on September 9, 2020June 17, 2020Categories Analytics, General Social Games Business, General Tech BusinessTags bias, collaboration, interdependence, network analysis, People Analytics, performance evaluation, recruiting2 Comments on People Analytics for Online Gaming

When you might lose some of your team

There was an interesting article in the Harvard Business Review, Why People Quit Their Jobs, that provides great analysis on when your team members are most likely to leave. I have written repeatedly on the importance of recruiting a great team, and the logical next step of retaining the great people you have recruited, and one key to retention is understanding when your people are most likely to leave.

Why people leave

Before looking at when people leave, it is important to recap why people leave. Traditionally there are three key reasons people will leave a job they have held for several years:

  1. They do not like their boss
  2. They do not see opportunities for promotion or growth
  3. They get a better opportunity (and often higher compensation

When people leaveslide1

Research cited in the article shows that there are certain events that trigger people to review their situation and thus exacerbates the above reasons people leave. The strongest of these events is work anniversaries, a natural time of reflection on whether joining the company turned out the way the person expected, when job-hunting activity increases 6-9 percent. These anniversaries are not only limited to joining the company but also starting a new role. Also, a formal review is likely to trigger a job search, especially if it does not include a promotion or clear promotion path.

The research also showed there are triggers outside of the company that also prompt heightened job search. Birthdays, particularly milestone birthdays (30, 40, 50, etc.) prompts employees to reflect on their life situation and whether they should pursue a move. School anniversaries serve a similar purpose, as they prompt employees to compare themselves against their classmates. The research shows a 16 percent increase in job-hunting activity after reunions. The key is that events outside of the workplace have a strong impact on whether an employee will be looking for another position.

Other clues to leavers

In addition to the extrinsic and intrinsic factors that trigger job search, there are other ways to identify employees (or teams) more likely to leave. Computer monitoring can identify higher usage of LinkedIn or other job search websites. Tracking employee badges can detect those leaving the office frequently, presumably to interview or speak with recruiters. There are even technology firms that can predict likelihood to leave based on who people are connecting with on LinkedIn.

What you should do

As I wrote, you should always be recruiting your own team to minimize their chance of leaving. Realistically, not everyone has the time or resources to do this so at a minimum you can use the above triggers and hints to focus on those employees when they are most likely to leave. Ensure that you have clear conversations with them their career path in the company, and if they do not have one you should work to create one. Also, encourage your HR team to recruit internal candidates who are likely to be job-hunting for other positions at the company, so if they are going to move they still stay within in the company. Research shows that pre-emptive intervention is much more effective that waiting for someone to get an offer and then making a counter-offer, as 50 percent of those you retain by counter-offer will still leave within twelve months.

Key takeaways

  • Retaining employees is important as recruiting them, and understanding when they are likely to start looking for other positions allows you to pre-empt a move
  • Employees generally leave because they dislike their boss, do not see opportunities for promotion or growth, or get a better opportunity
  • They are most likely to start or increase their job search during work related events (work anniversary, position anniversary, performance review) or life events (major birthday, class reunion, etc.).

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Author Lloyd MelnickPosted on February 22, 2017February 19, 2017Categories General Social Games Business, General Tech BusinessTags HR, recruiting, retention1 Comment on When you might lose some of your team

Recruiting, or why you want to Coach Team USA

Key takeaways

  1. A critical key to success is attracting the right talent to your team. This provides a competitive advantage over other companies.
  2. A key element to successful recruiting is for leadership to own and drive the process, rather than relying on HR (who are a critical component, however)
  3. The other key is proactively finding opportunities to raise your and your company’s profile to help your long-term recruiting capability, particularly speaking and writing openings.

This past summer, Duke head basketball coach Mike Krzyzewski (Coach K) led Team USA to its third consecutive gold medal under his leadership. Coach K took over Team USA in 2005 and while his accomplishments for Team USA are impressive, it points to a bigger story about the value of recruiting. In that time, Coach K has won two National Championships at Duke and coaching Duke is his primary job. Many of his fellow coaches are upset that the high profile nature of coaching Team USA helps him recruit (and succeed at Duke). Regardless of whether it is fair, it shows a clear path to success.

coach-k-team-2016

Recruiting is different in the US and Europe

Having worked in both the US and Europe, one clear advantage I see from US companies is their focus on recruiting. In the US, recruiting is seen as a responsibility of all management, and the more senior you are the more you are expected to bring great people into your team or company. Many American leaders are judged by the team they put together.

In Europe, although the company may actually have more employee-friendly policies, recruiting is left to the recruiting team or external placement firms, with it being a tertiary activity for leadership. While most leaders understand the value of hiring the best people, they do not see it as part of their job responsibilities.

What drives US recruiting

It is helpful to understand why recruiting is treated differently by US and European companies. There are two things that drive the US focus on recruiting:

    1. The sports ecosystem. In the US, collegiate (university) sports are as important if not more than professional sports. While professional sports teams (both in the US and Europe) can secure talent by paying more, in collegiate sports payment is not allowed (I can write multiple posts about the reality of the situation but not important for this point). Thus, the successful teams are primarily the ones who can attract the best players.
    2. Talent is very mobile.

As LinkedIn Founder Reid Hoffman once wrote, the US is a free agent economy. Employees often look at their job as a short-term opportunity and move on to better new opportunities frequently. This liquidity means for companies to succeed they need a constant stream of good talent with the right skillset.

Lessons from Coach K

As somebody who went to Duke and followed sports my whole life, the American philosophy on recruiting is embodied by Coach K. While you cannot have great results without being a capable floor coach, he has excelled by generating a steady and deep continuous flow of talented recruits.

There are two lessons that I learned from Coach K that can help anyone, including European business leaders, recruit more effectively.

First, recruiting must start at the top. While some university coaches rely on their assistants to attract talent, great coaches make recruiting their top priority. They show up for high school games, have dinner with recruits and their families and personally call and contact recruits. While their assistants do much of the work (breaking down film to prioritize candidates, coordinating schedules, answering questions),the great coaches take the lead in the process. In business, great leaders also do not rely on their HR team but work in concert with HR. They identify the talent, work with their coaches and players to build an environment attractive to the recruits and “close the sale,” they are not simply added to an interview list and done with it when they tell HR who they want to hire.

The second element and one that prompted this post is they use all opportunities to improve your odds of recruiting the best talent. Coach K could have spent his summers at the beach but instead he coached Team USA. What this effort did was raise his profile and give him a great unique selling point when sitting with a potential Duke recruit: do they want to be coached by the same person who is coaching LeBron James, Kobe Bryant and Kevin Durant. Additionally, every time Team USA played on television (which is effectively everytime it played), it was a long commercial for Coach K.

While in business there is no direct equivalent of Team USA, there are many comparable opportunities. At the top of the spectrum are shows like The Apprentice or Shark Tank, this exposure greatly helps the underlying business’ ability to recruit. Even if you cannot get a slot on television, speaking at conference or writing articles for trade press (or even blogging) generate exposure and a unique selling point when recruiting. The critical thing is to seek out these opportunities as part of your overall strategy to use recruiting as a competitive advantage.

The Key

The key is to use recruiting proactively, and put the necessary emphasis and focus on it, to gain a competitive advantage for your business. This effort requires that you lead the initiative, do not rely on others, and look at all opportunities as long-term ways to improve your recruiting effectiveness.

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Author Lloyd MelnickPosted on October 26, 2016October 9, 2016Categories General Social Games Business, General Tech BusinessTags Duke, HR, recruitingLeave a comment on Recruiting, or why you want to Coach Team USA

Don’t forget to recruit your own team

The value of a good team cannot be overstated, it is more important than strategy, technology and even cash available. I have written before on some of the principals for recruiting a great team and how you should never stop recruiting. It is ironic how much effort companies put to recruiting the best but do not put the same effort into their existing team members until it is too late.

While most companies acknowledge the importance of recruiting, they often neglect the complementary principle that you need to put as much effort in keeping your existing team satisfied. Just as increasing user acquisition costs intensifies the value of retaining existing players, the increasing difficulty in finding great employees intensifies the need to minimize employee churn. There are multiple costs of replacing a good employee

Losing an employee is more costly than you realize
Losing an employee is more costly than you realize
  • The hard costs of recruiting a new employee. This can be payments to a recruiter, referral fees to employees, travel costs to attend recruiting, travel costs to bring candidates in for interviews, etc.
  • The lost time spent evaluating candidates. The time you and your team spend reviewing resumes/CVs, interviewing candidates and discussing options. These days, almost all candidates go through multiple rounds of interviews before being offered a position. Each of those interviews takes 30 minutes or more of someone’s time, if you value that time based on the interviewer’s salary, you quickly get into the thousands of dollars (even more for a senior candidate who meets with leadership).
  • Training costs. These are both direct and indirect. You may have to send the new employee to various external training courses to prepare him for the job. More likely you will need to spend you time or your colleagues will training the new person on how the company works, practical issues (i.e. where the bathroom is), systems, interactions with other teams and what they need to perform their tasks optimally. Again, there is a cost for every minute that you and colleagues spend getting a new hire up to speed. When you break out salaries by how much the person earns per hour, this training cost often runs into the thousands of dollars.
  • The lost productivity in losing a high performer. You should never consider replacing an employee as an upgrade. If there are better people on the market, you need to recruit them proactively and replace weak team members. Assuming you adhere to this principle, if someone leaves voluntary, it means their replacement is not likely to be as good as the existing team member. The cost can range from minimal to huge in having somebody not as good performing a role on your team.
  • Less output. If you employ somebody, they should be providing a valuable service (or else you should proactively have eliminated the position). When you lose somebody, that task either does not get done until a replacement is in place or you must take other people off of their tasks (which again are worthwhile or you should not having them doing it). In either case, the overall output of your organization decreases.
  • Stronger competitors. When a good employee leaves, by definition they go somewhere else. That somewhere else is often a competitor, so not only are you losing their services but a competitor is likely improving. If Messi were to leave Barcelona for Real Madrid, the loss to Barcelona would be magnified by the improvement of their arch competitor.
  • Higher risk. Regardless of how rigorous your recruitment process, there is always risk that you make a bad hire. Many people interview above their actual competence, while others may just not be a good fit for your organization and processes. Thus, you have the risk that not only will the new hire be slightly weaker, they may prove incapable of doing the job and themselves have to be replaced. Then you have both an extended period of the job not getting done (or people being pulled off other tasks) and a repeat of the costs above.

Continue reading “Don’t forget to recruit your own team”

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Author Lloyd MelnickPosted on November 4, 2015January 4, 2016Categories General Social Games Business, General Tech Business, Lloyd's favorite postsTags employee retention, HR, productivity, recruiting, retention, training1 Comment on Don’t forget to recruit your own team

Success = Vision + Process + Output

Possibly the best book I have read in the past year (not just in 2015) is The Success Matrix by Gerry Langeler. Langeler is a highly successful venture capitalist and entrepreneur who credits this concept to his success. The Success Matrix puts forth a very straightforward concept: Success needs a combination of vision, process and output. Langeler primarily uses this idea to suggest how to build and lead a successful team. Rather than trying to find people who excel at all three variables, since very few exist, great companies combine people so that the company can excel at all three elements.

Success Matrix

The three elements of success

  • Vision. Vision represents a broadly understood sense of direction that encompasses competitive leadership in your industry over time.
    You should ask whether you or your employee has the vision of where you need to go and what you need to do over time. This vision should be sensible, focused and well grounded with a sense of direction. As Langeler writes, “this is different than any specific task, product plans or targets. It means precisely what it says. If you are headed in a direction, you know roughly where you are going, even if you don’t know exactly where you’ll end up.”
  • Process. Process is the structures, methods and procedures to produce repeatedly timely, high-quality products or services, independent of changes in people. You can determine if you have strong process whether profitable products and services are
    being produced with predictable regularity.
  • Output. Langeler defines as output as profitable products and services are being produced with predictable regularity. “Profitable products and services” is the key driver for output. It identifies if costs are in line value is recognized in the marketplace. Any Output short of profitable is wasted effort. “Predictable” regularity speaks to whether the Output is both sustained and sustainable. Short bursts of excellence are not enough.

Evaluate your team

Very few people are strong at all three components (vision, process and output) of the success matrix. If you look at vision, process and output as binaries (people are either good at them or not), there are nine possible combinations to classify everyone (e.g., good at vision and output, not process; good at process and output, not vision). Langeler actually puts labels on each of the nine possible combinations but that is the one element of his work I do not like; I feel that the labels are loaded and create unnecessary value judgments. Continue reading “Success = Vision + Process + Output”

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Author Lloyd MelnickPosted on January 29, 2015March 19, 2015Categories General Social Games Business, General Tech Business, Lloyd's favorite postsTags gerry langeler, leadership, output, process, recruiting, Success matrix, team building, visionLeave a comment on Success = Vision + Process + Output

Using tours of duty to have a better company employee relationship

One of the best books I read this year is The Alliance: Managing Talent in the Networked Age by Reid Hoffman. The core concept in the book is that there is no longer employment for life but there is still a way to build a win-win relationship between employers and employees. Hoffman and his co-authors suggest a tour-of-duty type relationship, where employer and employee agree to a short or medium term engagement with a defined goal.

The Alliance by Reid Hoffman

The current reality

Hoffman begins by pointing out that in the at-will era (when employers can and do fire employees at their discretion), employees thus think of themselves as “free agents,” seeking out the best opportunities for growth and changing jobs whenever they get a better offers. He points to a 2012 study that found even though about half of employees wanted to stay with their current employer, most of them felt that they would have to take a job at a different company to advance their careers. Hoffman writes, “loyalty is scarce, long-term ties are scarcer, but there’s plenty of disillusionment to go around.”

Related to this point, employees’ trust of management is at an all-time low. One reason employees do not trust their employer is that the foundation of the relationship is built on dishonesty. When employees are courted, they are told about the fantastic long-term opportunities. When they answer interview question, they comment on how there goal is to spend their life contributing to the company. Both parties know this is nonsense but feel they must utter these phrases. It creates a relationship built on lies and a relationship without trust is a relationship without loyalty. A business without loyalty is a business without long-term thinking. A business without long-term thinking is a business that’s unable to invest in the future and thus one doomed to fail.

Tour of duty concept

A tour of duty is when the employer and employee mutually agree on a finite project, with goals for the employee’s contribution. It also includes how the tour of duty will benefit the employee. To create a fictitious example, say Uber wants to open the Las Vegas market to its service. When recruiting a VP, rather than pitching them on working for Uber for life, the hiring manager specifically lays out that the task will be a two-year project to penetrate Las Vegas. The employee will need to work with the legal team to counteract the local taxi companies and then recruit drivers. The candidate would learn how to lobby local governments and launch a location based tech product. Both agree that at the end of the two-year tour of duty, there may be another tour of duty at Uber that is mutually beneficial or the employee might use the skills he learned to help another company. For example, he may go over to Peapod to open the Austin market with the skills he learned at Uber. Uber benefits by having a successful launch in Las Vegas, and the employee is more valuable and has a great new opportunity. The important thing is both parties are honest with each other and they have built a mutually beneficial relationship. Continue reading “Using tours of duty to have a better company employee relationship”

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Author Lloyd MelnickPosted on October 23, 2014November 4, 2014Categories General Social Games Business, General Tech Business, Lloyd's favorite postsTags HR, recruiting, Reid Hoffman, The Alliance2 Comments on Using tours of duty to have a better company employee relationship

Look closely at track record, with the emphasis on closely

You often hear how important it is to look at a person or company’s history before hiring, investing, etc., and although it is crucial, it is also crucial to do more than look superficially. Conversely, just looking superficially can cause significant damage and lead you into a bad decision.

track

Using track record when hiring

Probably the most important factor when considering a candidate is what they have previously done in their career. While a weak candidate can shine for a day of interviews and a great candidate may not be good in an interview environment, what a person has done previously in their career is a strong indicator of what they can do for you.

The challenge is how to analyze a person’s track record. If you look on LinkedIn, 90 percent of people are all in the top 10 percent. In some cases (though I have found it rare among candidates for senior positions), people lie about their prior roles and achievements. This issue is easy to uncover; you just need to ensure you do your due diligence on background and reference checks. The one caveat is not to rely on the references that you are given, as almost anyone can find three or four people (often friends) that will say good things about them. You need to dig deeper, for key positions and achievements figure out who they reported to or worked with, then reach out directly to those people (I usually use LinkedIn) to get the real story.

The other key element of checking candidates’ track records is understanding their true roles on the major achievements they tout. Continue reading “Look closely at track record, with the emphasis on closely”

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Author Lloyd MelnickPosted on October 16, 2014October 21, 2014Categories General Social Games Business, General Tech BusinessTags hiring, investment, recruiting, track record, VCLeave a comment on Look closely at track record, with the emphasis on closely

How to find talented employees

Finding strong members for your team is one of the most important skills needed to succeed and a recent Harvard Business Review article, “21st Century Talent Spotting” by Claudio Fernandez-Araoz, provides some strong insights on how to optimize your talent search. With skills and competencies now the key to finding employees, rather than past experience, you must become skilled at judging potential. This situation is exacerbated by the rapidly changing nature of the tech and game spaces, what worked yesterday are not necessarily the skills you need today.
Slide1
In the last millennium, workers were selected for physical attributes which readily translated into higher success at physical labor, from building a canal to fighting a war. Business then evolved to judge candidates on intelligence, experience and past performance. Much work was standardized, so if you were looking for an engineer or an accountant or a CEO, you would find somebody who has already succeeded in such a role and there was a high likelihood they would replicate this success. Then hiring evolved to the competency model, which stipulated that managers (and other workers) be evaluated on specific characteristics and skills that would help predict outstanding performance in the roles for which they were being hired. Hiring managers would decompose jobs into competencies and look for candidates with the best combination of these skills. Continue reading “How to find talented employees”

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Author Lloyd MelnickPosted on August 27, 2014October 14, 2014Categories General Social Games BusinessTags Claudio Fernandez-Araoz, development, hiring, HR, Potential, recruiting, retention, stretch development, talent1 Comment on How to find talented employees

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