When in Doubt, Don't Hire

From Jim Collins, Good to Great: Why Some Companies Make the Leap… And Others Don’t (HarperBusiness, 2001), Chapter 3, “First Who…Then What,” p. 54. The line is Practical Discipline #1 in the section “How to Be Rigorous,” where Collins lays out three rules he found running through the staffing patterns of the good-to-great companies. The other two: when you know a personnel change has to happen, act on it; and put your best people on the biggest opportunities, not the biggest problems.

Collins anchors the first discipline in what he calls Packard’s Law, after HP co-founder David Packard: no company can grow revenues consistently faster than its ability to get the right people to implement that growth. Filling a seat with someone who almost meets the bar is, in this framing, not a partial win; it is borrowing against future growth. The Wells Fargo case that opens the chapter, well before Collins gets to the three disciplines, shows the same idea in practice. Starting in the early 1970s, CEO Dick Cooley hired outstanding people whenever he found them, often with no specific job in mind. When banking deregulation came, his successor Carl Reichardt credited the bank’s performance largely to the team he had inherited from Cooley.