A growing number of great companies are dumping hiring managers altogether, and putting hiring in the hands of peer teams. It turns out eight to ten brains are better than one.
Harvard Business Review says 80 percent of employee turnover is due to bad hiring decisions, and that those decisions can cost more than five times the annual salary of the bad hire. The problem is largely with who is doing the hiring: managers.
Managerless Hiring Works Better
Managers may be the start of the process, but at a growing number of great companies, they not only don’t do the hiring, they no longer exist, having been replaced with self-managed teams. In many companies with very high retention, hiring is done by peers of the person who is being hired. W. L. Gore (10,000 Stakeholders), Semco (3,000), Barry Wehmiller (7,000), and hundreds more with some of the highest retention in the world, all push hiring to the peer team level.
At Semco, a manufacturing company, with 3,000 people—there isn’t a single manager in the whole place; all hiring is done by the 8-10 person team on which that new hire will work. How does it work to have peers do the hiring? Semco’s employee turnover for the last 20+ years has consistently hovered in the incredibly low 1-2% range.
Barry-Wehmiller, a $1.7billion company, never does a “head count” of retention, they count hearts. How does this culture help them? The data is dramatic. While 88% of employees in traditionally managed companies feel they work for an organization that doesn’t care for them, at Barry-Wehmiller, where peers do the hiring and managers don’t exist, it’s 180 degrees the other way—79 percent surveyed by an outside organization said they believe BW cares about them. Culture matters, and having peers hire peers is a core cultural distinction for BW.
Managerless Cultures See People Very Differently
It’s important to understand why this works. Gore, Semco, Wehmiller and other managerless cultures share a common, simple but very profound belief; that EVERYONE is smart and motivated. Because that belief is deeply held, they have all set up a company business culture where that can be a self-fulfilling prophecy. They attract and retain nothing but smart and motivated people who don’t need to be managed.
In contrast, companies who rely on managers to do the hiring have a culture that believes the manager is at least a little bit smarter and more motivated, more experienced, more committed, etc. And too often, the assumption is the manager is a lot more of all those things. That is also a cultural distinction, but a very negative one.
Such a common but insidious mindset is a self-fulfilling prophecy as well. Those companies have trouble finding or retaining good people. Why wouldn’t they? Who wants to work in an environment where it’s clear I’m not going to be allowed to be as smart and/or motivated as the people up the hierarchy from me?
Can You, Or Can’t You?
If your culture is set on believing people are smart and motivated, you can take managers out of the picture and put the hiring process in the hands of those most affected by the decision—the new hire’s peers. If you think only certain rare people have the skill, experience, smarts or motivation to hire, you’re communicating the worst possible message to those you are hiring, as well as those who are already there.
As Henry Ford said, “Whether you think you can, or you think you can’t, you’re right. Believe that everyone is smart and motivated, and wants to participate in the building of a great company. Don’t just hope it will work out, but intend for them to take the ball and run with it, because you get what you intend, not what you hope for.
Article as seen on Inc.com