"A" Players Unwelcome - Reevaluating the Role of B Players

From ERE TODAY: 8/29/2006 by Raghav Singh
Recently I attended a meeting of HR executives at the leadership development center of a big company based in Minneapolis. The subject of the meeting was recruiting challenges, particularly the difficulty in finding top talent–the A players. Appropriately enough, on one wall of the facility was a saying: "So easy to find an army, so hard to find a general." This was attributed to some ancient Chinese philosopher (apparently no one in China has had anything interesting to say in the last 2,000 years). Of course they might have just found it in a fortune cookie, but it sounds better if attributed to Sun Tzu. But deeper thought brought the realization that this statement was not exactly profound. Old man Sun was probably in a philosophical slump when he came up with this one. He was only stating the obvious: good leaders are hard to find. Few are called, even fewer are chosen.
But even finding a good army is hard. An army represents all the people the general depends on to get the job done. For every A player an organization has there needs to be lots of B players. And this is where recruiting needs to focus its energies. A players are hard to find but there aren't that many jobs that require A players either. Dave Lefkow recently wrote about recruiting B players and I couldn't agree more. So why do recruiters always strive to hire the "best"? Part of the reason is no organization likes to admit they accept anything but the best. But this creates unrealistic expectations and unnecessary pressure on recruiting. Hiring the best may be possible for an organization with an unlimited budget, but that doesn't apply to anyone I know. Leave aside the fact that an organization with all A players would likely implode under the weight of all those egos; one reason Enron turned out to be such a fiasco was because it was packed with hotshots. The B players, like whistleblower Sherron Watkins, were shunted aside.
The Need for B Players
An article in USA Today summed up the problem very well.
When employers aren't busy weeding out the bottom 10% of their workforce, they've been trying to steal the A players from the competition in a battle to lure the best. But some of those employers are coming around to the realization that failure and success might not lie among the weakest and strongest links, but in the solid middle, the B players, the 75% of workers who have been all but ignored. Companies have been trying to capture the "unicorns," but the focus is starting to shift to the horses, the B players.
Research by Harvard professor Tom DeLong has shown that while A players can make enormous contributions to performance, companies' long-term performance — even survival — depends far more on the unsung commitment and contributions of their B players. These capable, steady performers are the best supporting actors of the corporate world. They counterbalance the ambitions of the company's high-performing visionaries. Unfortunately, organizations rarely learn to value their B players in ways that are gratifying for either the company or these employees. DeLong also claims that his research shows that there is no evidence that A players are any smarter than B players — the difference is temperament.
That last part, the temperament, also highlights another problem with A players. They need to be continuously challenged and rewarded, else they will leave. A players are much higher risks for turnover than B players. For this reason a colleague of mine has coined a term that describes B players well: "competent stayables." These are the people who get the results (a point underscored by Lawrence Bossidy and Ram Charan in their bestseller Execution: The Discipline of Getting Things Done). A players have the vision, but B players are the ones who execute. And execution is ultimately what makes the difference between failure and success — the best ideas are worthless if not well-executed.
Recruiting B Players
So what do we need to do to get better at finding and hiring the competent stayables? The first thing is to get out of the mindset about only hiring the best. That was never true for even the best recruiters — it always meant the best of what was available. Start ignoring the drivel that relying on B players can only lead to failure. One prominent writer who ought to know better claims that hiring A players is the only way to build a great team: "A players hire A players; B players hire C players — meaning that great people hire great people. On the other hand, mediocre people hire candidates who are not as good as they are, so they can feel superior to them."
This kind of feel-good nonsense or seat-of-the-pants wisdom is precisely why so many are so fixated on hiring A players. Recruiting processes and the systems that support them are also designed to identify the best by screening out all others. This lengthens the time and adds to the cost of recruiting. Organizations need to change the focus of recruiting efforts to identifying those candidates looking for stability and longevity, but also challenging work. Hiring B players doesn't mean settling for people who are not interested in being challenged.
It also requires changing screening criteria to look for candidates with a track record of execution, not long lists of accomplishments. There may also be a need to consider compensation packages that are not heavily dependent on pay-for-performance. For all the good that pay-for-performance does, it is primarily best for motivating A players. B players that produce dependable performance will suffer if compensation is determined by meeting ever higher targets.
B players also want a life outside the office. These are not the workaholics interested in working 16-hour days. They want advancement, but not at any price. Look for evidence of that in identifying them. DeLong's research suggests that some of the best B players are former A players who have chosen different motivations than the ones they had in the past. These may be some of a company's best hires because they can fill in for A players when needed, having been there before.
Recruiters need to radically rethink how they approach recruiting, getting away from the ridiculous goal of hiring only A players. B players are the middle 60% to 70% of employees who consistently perform in their current role. They may not stand out like the As, but companies would be unable to function without them. Instead of chasing the fantasy of always hiring the best, recruiters would be better off and far more effective if they channeled their efforts to identifying and hiring B players. Forget Sun Tzu.

Tight gas market aids refiners, punishes consumers

By Nicole Gaudiano
GANNETT NEWS SERVICE
The oil-refining industry may have helped create a gasoline market that’s so tight, some industry experts and critics say any hurricane, pipeline break or other disruption is likely to cause price spikes.During unprofitable times in the 1990s, some refiners’ internal memos show that they wanted to reduce refining capacity to boost profits. The industry dismisses those memos’ significance — and the notion that it tightly controls supply — but ultimately, its investments in refining capacity haven’t kept pace with the growth in demand.Today, there are fewer refineries and fewer, but more profitable, refining companies.
Refiners also reduced the amount of gas they keep in reserve to use as a cushion during disruptions, and some companies limited production in the Midwest in 2000 for the sole purpose of maximizing profits.Those moves are legal and considered to be sound business practices. But they contribute to higher prices at the pump.Some members of Congress and consumer advocates say the oil industry has taken such practices to anti-competitive extremes that ultimately hurt consumers.“Gasoline is not Starbucks coffee,” said Tyson Slocum, director of Public Citizen’s energy program. “It is a critical commodity that should not be subject to the whims of the supplier.”The price of crude oil is the largest determinant of the price of gasoline, accounting for about half of the cost of a gallon and most of oil-producing companies’ profits.But crude must be refined into gasoline, and disruptions in that process can lead to sharp price increases. That’s especially the case today, as the demand for gas grows faster than U.S. refining capacity.
"It will not make a difference if Saudi Arabia ships an extra million or 2 million barrels of crude oil to the United States,” Crown Prince Abdullah’s foreign affairs adviser, Adel Al-Jubeir, said this spring. “If you cannot refine it, it will not turn into gasoline and that will not turn into lower prices.”There were dozens more refineries in the 1990s, but they weren’t as profitable. Environmental regulations on the products and facilities required expensive updates, and some refining companies “didn’t make the economic cut,” said Bob Slaughter, president of the National Petrochemical and Refiners Association.Even as smaller, inefficient refin-eries closed, some in the industry worried about having too much refining capacity to turn a profit, according to “highly confidential” internal documents exposed in a 2001 investigation by Sen. Ron Wyden, D-Ore.An internal 1995 Chevron memo relays the warning an energy analyst made at an American Petroleum Institute convention: “If the U.S. petroleum industry doesn’t reduce its refining capacity, it will never see any substantial increase in refining margins (earnings divided by operating revenue).”Similarly, a Texaco executive in 1996 complained of “surplus refining capacity” and wrote that “significant events need to occur to assist in reducing supplies and/or increasing the demand for gasoline.”API’s chief economist, John Felmy, called the statements “purely musings” and said it’s “utter nonsense to argue that we’re tightly controlling supply.”“We’ve expanded capacity over the past 10 years, the equivalent of a new refinery every year,” Felmy said. “But these radical groups will come up and say things that are fundamentally untrue.”Further, the industry projects capacity increases of 1.4 million to 2 million barrels a day in the next four years.The Federal Trade Commission, in its investigation of post-Katrina gas prices, found no evidence suggesting that companies refused to sufficiently invest in new refineries to tighten supply and raise prices in the long run. Instead, the agency said the evidence suggested that further investment would have been unprofitable.Indeed, refining capacity increased by 12 percent since 1987. But U.S. demand for gasoline increased by 28 percent. Refineries are using nearly all of their capacity, compared with 83 percent in 1987.The U.S. refining companies that stayed in the business — 55 in 2006, compared with 188 in 1980 — are seeing the rewards.ExxonMobil’s refining and marketing segment ended last year with a 40 percent profit increase. The top independent refiners and marketers collectively scored a 92 percent increase.“We have grown and we’ve been in the right business at the right time,” Rich Marcogliese, Valero’s executive vice president of refining operations, said in an interview. “It is a great time to be in refining because the supply/demand balance for refined products is tight with good margins.”Valero led the independents earning $3.6 billion in profits, a 99 percent increase over 2004. The company grew from one refinery in 1996 to 18 today, becoming one of the largest U.S. refining operations after acquiring Premcor Inc. last year.Valero was one part of the industry’s consolidation. There were more than 2,600 mergers in the U.S. petroleum industry — about 13 percent in the refining and marketing sector — since the 1990s.The industry’s consolidation, mostly in the refining segment, has generally led to wholesale price increases averaging 1 to 2 cents a gallon, a 2004 Government Accountability Office study found. The FTC disputed the study, but the GAO has stood by its results.“If you are observing higher wholesale prices, you probably can expect higher retail prices, all things being equal,” said Godwin M. Agbara, who led the study.Refiners keep some gasoline on reserve at U.S. refineries or terminals to protect against price spikes in case of a disruption. But inventories have declined from 40 days of average U.S. consumption in the early 1980s to 23 days in 2004, a GAO report stated.Their move to a just-in-time delivery system mirrors other industries, and it may reduce gas prices because of lower storage fees. But it also can increase price volatility.On Aug. 26, just before Hurricane Katrina hit, U.S. inventories for gasoline were 194 million barrels, fewer than three days’ supply before hitting the minimum operating level, a Congressional Research Service study found.An Arizona attorney general’s report on post-Katrina gas prices argues that, while the practice may work under ideal conditions, every disruption caused by natural disaster, refinery outage or broken pipeline affects the tight supply-demand balance.“Petroleum markets quickly tighten and prices skyrocket,” the April 2006 report said. “Thus, consumers pay a high price for the oil companies’ profit maximization strategies.”Low inventories exacerbated refinery production problems and failures of pipelines serving the Midwest during the spring 2000 switch to reformulated gas. Midwest refiners, along with others across the nation, had allowed their inventories to dwindle as they waited for the price of crude to drop, the Federal Trade Commission found in an investigation.As the national average reached $1.67 a gallon, gas in Chicago soared to $2.13 and in Milwaukee to $2.02 that spring.On one hand, that price spike helps illustrate a complaint of refiners: boutique fuels. Chicago and Milwaukee relied exclusively on ethanol as a pollution-reducing additive, and refiners couldn’t easily import a substitute to ease the shortage, the FTC’s investigation found.“All these different fuels around the country — that’s effectively using up refining capacity,” Peter J. Robertson, Chevron Corp. vice chairman, said in an interview. “By having one flavor for Atlanta and one flavor for California and one flavor for Chicago means you can’t balance the system.”But the FTC also found that three companies, left unidentified in its report, had previously decided independently to maximize their profits by curtailing production. At least one other company had excess supply but withheld it from the market to keep prices high.“An executive of this company made clear that he would rather sell less gasoline and earn a higher margin on each gallon sold than sell more gasoline and earn a lower margin,” the report said.Despite such findings, the FTC determined the industry did nothing illegal and issued a warning that seemed targeted more toward consumers than refiners: “Unless gasoline demand abates or refining capacity grows, price spikes are likely to occur in the future in the Midwest and other areas of the country.”