Hiring Matters

It has been said that the best software developers are capable of producing code in quality and quantity at rates that are ten times (10X) better than the average coder. This is a massive, separation of value. Angel investor and Silicon Valley legend, Naval Ravikant has gone further, tweeting “Forget 10X programmers, 1000X programmers really exist, we just don’t fully acknowledge it.” He supports his claim with a few names of developers he believes have delivered massive value. If this is true, finding good people in technology matters greatly. Could this be similar for any function? Can exceptional performers really outperform the average by 10X, or more? If they are 10X better than the average, how much better are they than underperformers? There’s plenty of room for debate as to what kind of value high performers offer relative to underperformers. However, there would seem to be little debate that there is some kind of material performance difference between workers in any role.

At the other end of the spectrum, an HBR article from 2016 detailed the results of a study on the impact of toxic employees. Toxic in the workplace refers to an absence of civility. Someone that just isn’t nice to be around or is generally rude is considered toxic. The downside of the behavior expands as it becomes contagious dragging down morale and customer service levels throughout the office. The study suggested that there was objective economic consequences for tolerating toxic behaviors. The study was summarized to suggest that one toxic employee wipes out the benefits offered by two superstars. That would seem to be a costly trade off. The cost was based on productivity and excluded other less quantifiable considerations like employee morale, offended customers, or litigation costs. The consequences of problematic people should lead our hiring focus to avoid getting things wrong over getting things right.

People impact profitability in many ways positively or negatively. It can be through their performance or their attitude. Putting the proper people in place in your business is important from not just a competence perspective but also in terms of commitment. It’s not just about technical skills but soft, people skills as well. The importance of hiring is even greater for businesses where Salaries and Wages represent a significant proportion of business expense. Insurance brokerages depend on people to operate. The single largest expense item is personnel expense. It isn’t even close. Salaries and Wages represent about 75% of the average insurance brokerage’s expenses. This equates to about 55% of brokerage revenues. More than half of the entire operation’s revenues are spent on staff. Wages are a brokerage’s greatest obligation by a long shot. Hiring decisions have financial consequences to a brokerage’s performance. Good decisions can lead to positive profitability. Poor decisions can be costly. Great employees produce value to the organization while reducing other administrative costs. Poor employees cause cascading troubles. They can infect others with morale issues. They can push customers away. They can create workflow disruption through carelessness. Higher turnover results in increased recruiting and training costs.

We may think the insurance industry is bland or cookie cut. We may believe that each brokerage is similar and that our roles don’t offer a great opportunity to distinguish ourselves. This couldn’t be further from the truth. Consider that there are many couriers and delivery drivers around. Options are plentiful for us. The rates are the rates. The objective is the same for each business. Get stuff from point A to point B. Speed, reliability, and customer service are the levers of differentiation. Does this sound at all like insurance? Even in, or especially in, a simple, straightforward business, good service providers and poor service providers stand out from the crowd.

Unfortunately, there may be more poor ones than we’d like. Our local Loomis driver offers an outstanding example here. If he seeks to deliver when no one is home, he leaves a notice on the door suggesting that he tried to deliver, he’ll try again on x day, if you want him to leave your package on the doorstep, just sign this notice and leave attached to the door. However, he never returns and keeps the package waiting for you to pick it up during his hours. Not so good. Why leave the note at all? Why not just communicate where the package will be and when? Why create an expectation that isn’t honored? If he can’t “find” an address, he simply assumes it’s not his problem and, again, leaves the package at his location awaiting the recipient finally hunting him down. Not so good either. Should you pick up your parcel from him in person, he’s rude and off-putting. You’re lucky if you get to experience his negativity because at least then he’s there. His shop hours aren’t reliably set. His behavior matches the description of toxic from the HBR article. Sure, he’s not quite as bad as the FedEx driver from this video that’s been shared many times, but poor service is pretty obvious. If you’re the employer of this guy, it may be worth noting that his presence reflects very, very badly on the business. There is no amount of advertising that can overcome the ill will and negative word of mouth that a poor employee can foster. Whatever this guy is paid, it is much too much. He costs his employer far more than he earns. We’ve seen less and less of this character and his truck over the past few months. In a industry that has surged, this provider has been purged.

However, Dave, our local Purolator driver, offers a counter example of service excellence. Dave is an Allstar, a Behemoth, a Champion, a Stud, Standout, and whatever other superlative we can spew forth. He is so far ahead of others at his profession that it’s just not fair to compare. What distinguishes Dave? He seeks to personalize his position. He’s not doing just what his boss has told him. He’s not seeking to satisfy solely his superiors. He is trying to connect with the people he strives to serve. He’s doing a number of small things which all add up to him being dramatically different than others. When he is making a delivery, he is always in good spirits. In spite of what pressure and burdens he may be under to continue on with his tight schedule, he makes time to say hello and makes some kind of gracious inquiry as to your day. He’s happy doing what he’s doing. He believes his role matters. He believes his efforts are contributing to making a positive difference to both his employer and his customers. Dave showcases his commitment by being Engaged.

He makes you feel like you are a “regular”, he seems to have a sense of how frequently and what he is delivering to you. He asks for your cell phone so that he can text you to let you know he has dropped a package off should you not be home so that you both know and can take action to ensure it can be brought inside. If he leaves something on your doorstep, he is taking care to place things gently, neatly, and in as protected a spot as possible. If you have multiple locations or addresses, he learns where you may be and brings all of your packages to the location you are at as opposed to dropping them off here and there. He does this after asking you if this is what you want even though the shipping addresses on parcels differ. If he needs a signature and you’re not around, he finds a way to get in touch and accommodates you meeting him somewhere to access the package. He wants you to get what you’re expecting as opposed to handing it off to a pick up location. He is outward focused on his customers. He’s coachable. He’s looking for ways he can adapt to meet customer needs. He looks for ways to make things easier for you, the customer. If he needs a signature, he’ll ring the door a few times. He gives you a chance to answer. He’s even able to accept a “verbal signature” from you. He has enough credibility that if he says he’s dropped off in person, that’s as good as a physical signature. He, unequivocally, makes a positive difference to his customer’s day. It seems like he enjoys what he does and receives positive sentiment from his customers. It feels good to be good. Each step of the way, Dave’s doing what others aren’t. He’s not doing it because he feels he has to, he’s choosing to do more. Dave exemplifies each C of our 3 Cs of Character: competence, commitment, and coachability.

Do I have a relationship with Purolator? No. Do I care about the company. Not really. Would I follow Dave off a cliff? Yes, absolutely. Purolator is our go to for shipping things solely because of Dave’s distinguished efforts.

Then we have the acceptably average, yet fully forgettable folk in between. In economic terms, we’d call them fungible. One could easily be exchanged for the other and we would not notice the difference to our experience of their services in any way. If they switched outfits and worked for a different company tomorrow relative today, we would likely not notice. They are neither pleasant nor unpleasant. They are compliantly capable. This is just fine, but not particularly satisfying for either themselves or their customers.

A way to test or measure how valuable someone may be is to consider whether they will be missed by someone should they leave. About a year ago, Dave moved to take on a different route closer to his home. While completely understanding his personal position and wishing him well, we were quite sad with the loss of our personalized service. In our case, was he missed? Absolutely, from the first day, his absence was felt. Service levels of the new driver, even though decent, were miles away from what Dave diligently delivered. Compared to the expectations we had developed from our experiences with Dave, the new guy had no chance. Dave’s customer base had been spoiled and we now had to adjust to just decent, satisfactory service. It hurt.

Thankfully, Dave is back. Dave had requested to return to the route in our area. His positive impact was felt instantly. Dave continues to distinguish himself throughout COVID. We’ve all seen the reliance we have both personally and professionally on deliveries as more and more purchases have moved online. This delivery industry has grown in recent months. Even with increased demands, Dave maintains his high service standards. In a commoditized offering like Courier services, Dave stands out head and shoulders above others demonstrating that the right person in any job makes a big difference. Hiring matters. Dave demonstrates that becoming an Anteambulo and clearing the path for customers is the path to distinction. He is setting himself apart by actively working to both understand his customer’s needs and take action to make their lives easier. His outward focus is seen, felt, and appreciated by customers endearing Dave and his services to them. Who do you work with that you would miss should they move on? Would your customers miss you if you left your current role? What can you consider doing differently to make the lives of your customers easier?