“While we talked about an organization’s culture in the last section, its people are even more important because they can change the culture for better or for worse. A culture and its people are symbiotic – the culture attracts certain kinds of people and the people in turn either reinforce or evolve the culture based on their values and what they’re like. If you choose the right people with the right values and remain in sync with them, you will play beautiful jazz together. If you choose the wrong people, you will all go over the waterfall together. … Yet most organizations are bad at recruiting. It starts with interviewers picking people they like and who are like them instead of focusing on what people are really like and how well they will fit in their jobs and careers. … I  believe that the ability to objectively self-assess, including one’s own weaknesses, is the most influential factor in whether a person succeeds, and that a healthy organization is one in which people compete not so much against each other as against the ways in which their low-level selves get in the way. Your goal should be to hire people who understand this, equip them with the tools and the information they need to flourish in their jobs, and not micromanage them. – To Get the Right People, Chapter 7. Remember That the WHO Is More Important than the WHAT, Part III. Work Principles, PRINCIPLES (Ray Dalio 2017), p395-6

“Whether someone is the “right person” has more to do with character traits and innate capabilities than with specific knowledge, background, or skills.” – Summary, Chapter 3. First Who … Then What, GOOD TO GREAT (Jim Collins 2001), p64

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What Comes First in Deciding the Right People for Your Firm?

Let’s continue our discussion on ‘Who,’ especially on ‘the Right People,’ to explore a little bit further.

In the previous article([5] It’s Who! – People and Their Spirit!), we’ve discussed about what matters most in building a great company. It was the people – leaders and their leadership teams rigorously sought and selected on board. The quest to find the right people, however, doesn’t stop just at Good to Great cases of the late twentieth century.

As I’ve mentioned once in one of my previous articles, Dalio’s Principles demonstrates how and why Bridgewater is a typical example of the Good-to-Great company in our time. Apparently, his philosophy on ‘Who factor’ proves this.

Ray Dalio spares quite a lengthy portion about this people – the right people – factor under To Get the People Right section that comprises three chapters as below:

Chapter 7. Remember That the WHO Is More Important than the WHAT

Chapter 8. Hire Right, Because the Penalties for Hiring Wrong Are Huge

Chapter 9. Constantly Train, Test, Evaluate, and Sort People

Do these titles sound familiar? What he asserts and stresses are exactly what have been highlighted in Good to Great, the empirical studies of great companies.

So it’s clear that the ‘right people’ is of utmost importance both as a first step of the journey toward a great company and as a harmonious sustenance of a successful yet rigorous organization.

Definition of Values, Abilities and Skills

Then, what are the characteristics of the right people sought after by great leaders? Dalio shares some insight on this matter. He identifies three traits – values, abilities and skills – and emphasizes that values should be considered the most important. ¹

He defines ‘values’ as ‘the deep-seated beliefs that motivate behaviors and determine people’s compatibilities with each other.’ People will fight for their values, and they are likely to fight with people who don’t share them.

‘Abilities’ are ‘ways of thinking and behaving.’ Some people are great learners and fast processors; others possess the ability to see things at a higher level. Some focus more on the particulars; still others think creatively or logically or with supreme organization.

‘Skills’ are learned tools, such as being able to speak a foreign language or write computer code.

He states that while values and abilities are unlikely to change much, most skills can be acquired in a limited amount of time (e.g., software proficiency can be learned) and often change in worth (today’s most in-demand programming language is likely to be obsolete in a few years).

Values: The Three C’s (Character, Common Sense, Creativity)

Therefore, in selecting people for long-term relationships, he stresses that values are most important and, for this, characteristics such as character, common sense and creativity are most valued in his firm, Bridgewater.

“It is important for you to know what mix of qualities is important to fit each role and, more broadly, what values and abilities are required in people with whom you can have successful relationships. In picking people for long-term relationships, values are most important, abilities come next, and skills are the least important. Yet most people make the mistake of choosing skills and abilities first and overlooking values. We value people most who have what I call the three C’s: character, common sense, and creativity.” – a. Think through which values, abilities, and skills you are looking for(in that order), 8.1. Match the Person to the Design, Chapter 8. Hire Right, Because the Penalties for Hiring Wrong Are Huge, Part III. Work Principles, PRINCIPLES (Ray Dalio, 2017), p408

Sound familiar? Again? You may recall Collins’s discussion on character traits of the right people from my previous article. (Please refer [5] It’s Who!: People and Their Spirit!)

“In determining “the right people,” the good-to-great companies placed greater weight on character attributes than on specific educational background, practical skills, specialized knowledge, or work experience. Not that specific knowledge or skills are unimportant, but they viewed these traits as more teachable (or at least learnable), whereas they believed dimensions like character, work ethic, basic intelligence, dedication to fulfilling commitments, and values are more ingrained.”

– It’s Who You Pay, Not How You Pay Them, Chapter 3. First Who … , Then What, GOOD TO GREAT (Jim Collins 2001), p51

Closing: Why Do People Who Share Values Build a Great Company?

The question of ‘Skills or Abilities?’ or ‘Skills or Values?’ is not something new. Firms and hiring managers constantly deal with this subject.

In my opinion, as Dalio points out, the reason why we should treasure ‘people’ who share value bears significance in two occasions.

First, the right people who shares value is paramount especially when a firm has to constitute a leadership team in a contingent environment. Also, when your firm has a rigorous culture.

Steering your business into an unchartered territory requires ultimate trust among members that you are respected and safe in a warzone. You have to confront, debate, argue and come up to a decision effective and fast enough. Trust doesn’t build in a day. It takes time. The fact they share common value or mission reinforces their trust in the first place. It works as a glue or a stepping stone for people to get aligned – or get in sync, borrowing Dalio’s expression.

The right people, once their values align among themselves and with that of the company they work for, will fiercely march on, making sure that their own growth and that of the company will be achieved. As their character, so driven and capable, builds their arena into one of the very best in the world, they will do whatever it takes to make the company great likewise.

Second, the right people who share value – the definite purpose of making a great company – and who share mutual trust have a definite advantage on reaching faster and clear decision even if it requires a war-like antagonism. Why?

The people who know what they want reach decision promptly and definitely. They know and share what’s really important and they know where they are going. This I believe is the power of shared value. These leaders DECIDE quickly, and firmly. That is the major reason why they are leaders, according to Napoleon Hill.

“Those who reach DECISIONS promptly and definitely, know what they want, and generally get it. The leaders in every walk of life DECIDE quickly, and firmly. That is the major reason why they are leaders. The world has the habit of making room for the man whose words and actions show that he knows where he is going.” – Chapter 8. Decision: The Mastery of Procrastination, THINK AND GROW RICH (Napoleon Hill, 1937), p170

Not only from Napoleon Hill’s assertion, we have also observed this – knowing where they are going and firmly agreeing once decision is made – from the very example of good-to-great executives. (I have shared their dynamic cases in my previous article: Give Me Problems, Not Answers).

“Indeed, one of the crucial elements in taking a company from good to great is somewhat paradoxical. You need executives, on the one hand, who argue and debate – sometimes violently – in pursuit of the best answers, yet, on the other hand, who unify fully behind a decision, regardless of parochial interests.”

– Rigorous, Not Ruthless, Chapter 3. First Who … , Then What, GOOD TO GREAT (Jim Collins 2001), p60

“No matter how much they argued, said a Philip Morris executive, “they were always in search of the best answer. In the end, everybody stood behind the decision. All of the debates were for the common good of the company, not your own interests.”

– Rigorous, Not Ruthless, Chapter 3. First Who … , Then What, GOOD TO GREAT (Jim Collins 2001), p60

It is believed that Mr. Andrew Carnegie and his core staff of approximately fifty men he surrounded himself was the main driver of his business success because they shared the value and the DEFINITE PURPOSE of manufacturing and marketing steel. ²

And I assume similar examples abound throughout history let alone in our time.

There is an extra reason that I would like to elaborate on this subject of ‘Why People Matter over Anything Else,’ from a different angle. This I will discuss in the subsequent  article. I would like to say that the right group of people who shares value and the definite purpose are capable of moving mountains.

How important are people to your firm? What is the criteria of the right people for your firm?

Jay

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“If your people are bound by a sense of community and mission and they are capable, you will have an extraordinary organization.” ³

– Ray Dalio

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References:

GOOD TO GREAT (Jim Collins 2001)

PRINCIPLES (Ray Dalio 2017)

THINK AND GROW RICH (Napoleon Hill 1937)

Quotes:

1. (p407), Chapter 8. Hire Right, Because the Penalties for Hiring Wrong Are Huge, Part III. Work Principles, PRINCIPLES
2. (p195), Chapter 10. Power of the Master Mind: The Driving Force, THINK AND GROW RICH
3. (p408), Chapter 8. Hire Right, Because the Penalties for Hiring Wrong Are Huge, Part III. Work Principles, PRINCIPLES