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- [00:01]
Alison Beard
Asana is the number one AI work management platform. It's where work connects across every department, even in the most complex organizations. Try for free today@asana.com.
- [00:19]
Joel Peterson
You know there's another HBR podcast you might like. Coaching Real Leaders takes you inside real life leadership coaching sessions. Host Muriel Wilkins has advised CEOs for nearly 20 years. Listen in as she helps guests work through their hardest career challenges. Find new episodes of Coaching Real Leaders wherever you get your podcasts.
- [00:48]
Hannah Bates
Welcome to HBR on leadership case studies and conversations with the world's top business and management experts. Hand selected to help you unlock the best in those around you. Joel Peterson has spent a career leading teams, building businesses, and managing people at every level. Along the way, he's learned valuable lessons about the best ways to bring on new talent, as well as when and how to let people go. Peterson is the former chairman of JetBlue Airways, and he also teaches at the Stanford Graduate School of Business. In this episode, he shares his approach to hiring for top leadership positions and why it's so important to slow down and take plenty of time with interviews. He also explains how he coaches new hires who are struggling and how he knows when it's time to let someone go. You'll learn why Peterson says you shouldn't wait for a triggering event to fire someone who's not performing. And you'll learn why he never outsources that difficult conversation to HR. This episode originally aired on HBR IdeaCast in February 2020. Here it is.
- [02:09]
Alison Beard
Welcome to the HBR IdeaCast from Harvard Business Review. I'm Alison Beard. We're talking today about some of the most important decisions a leader makes. Hiring and firing. It can be the best news you'll ever deliver.
- [02:28]
Joel Peterson
I think if I had a catchphrase, it would be you're hired and you can work here as long as you want. I said to myself, go ahead, take a chance. Hire the smart fat girl. I just want to be a broom boy so bad. I like your attitude. You're hired. How about you, missy? You want to be a mop girl? Not really, no. I like your honesty. You're hired. And you two haven't said a word. I like that. You're hired. Woo hoo.
- [02:54]
Alison Beard
But letting someone go is a hard job.
- [02:57]
Joel Peterson
I hear what you're saying, but I don't think you're saying what you mean. Yeah, I don't think you hear what I'm saying. You're fired. Third prize is you're fired. Okay, kiddo, fire me. Ryan, listen. She's gonna be Doing this on a regular basis. Don't you wanna know if she can fire somebody? She just fired Ned. My dog can fire Ned. Fire me. You don't need to do this. No, it's okay. I got this.
- [03:15]
Alison Beard
Our guest has spent decades working as an executive and advisor to companies of all sizes in a variety of industries. And he's developed a few rules for hiring and firing. Well, he's had to do a lot of both and says that mastering these skills are key to managers success. He has advice for us on how to effectively evaluate candidates, promote employees, and get rid of poor performers. Joel Peterson is the chairman of JetBlue Airways and he teaches at the Stanford Graduate School of Business. He's the author of the book Entrepreneurial Leadership, the Art of Launching New Ventures, Inspiring Others and Running stuff. Joel, thanks so much for being on the show.
- [03:51]
Joel Peterson
My pleasure.
- [04:02]
Alison Beard
So hiring and firing are such important things for managers to get right, but most of us don't get formal training in them. How did you learn, first and foremost to become an effective talent spotter?
- [04:14]
Joel Peterson
Well, by making a lot of mistakes. So experience the school of hard knocks. You know, I made a lot of mistakes in hiring, even more in firing.
- [04:23]
Alison Beard
And judging someone in a first interview from a resume, even from reference checks, is also really hard, very hard. So what are the lessons that you've learned about how to do that?
- [04:33]
Joel Peterson
Well, so I've learned to spec the job, to think about what really is the job, how do we make the decision? So it's not just sort of technical expertise, but really why would we choose one person with the same characteristics as another? So then making sure that you have a bunch of candidates so that you're seeing a lot of people, having a whole team do the interviewing, meeting together as a team to share notes, doing reference checks and doing them yourself, not having somebody else do it. A lot of times people offload that. Then I think taking longer on the interviews. I've learned to spend a a fair amount of time on interviews for a really important position.
- [05:18]
Alison Beard
Like how much time?
- [05:20]
Joel Peterson
Often an hour or more. You know, a lot of the time These interviews are 20 minutes, 30 minutes. You can't make an important decision in that. So I'll often say it has to be at least an hour. I've worked with a fairly sophisticated group who spends four hours and they go all the way back to the beginning, you know, earliest memories, almost every change in your life, why you made the change. They do a really thoughtful analysis. So sometimes in an important position, I'll get outside help to do that and.
- [05:48]
Alison Beard
That yields better people.
- [05:51]
Joel Peterson
Better people and a better hit rate. I mean, they say that if you get it right 50% of the time. I had the former head of HR at Citibank say that we figure 50% is about our hit rate on getting somebody that's the right person for the job. I've heard people who are experienced managers say about 2/3 you can get. If you can get two thirds, these folks claim they get over 90% of the time they get it right.
- [06:15]
Alison Beard
Wow. You talk a lot in the book about the importance of character and values, both knowing your own and then surrounding yourself with people who are aligned with you. So how do you test for those things in an interview setting or with reference checks?
- [06:32]
Joel Peterson
So I think people's values are really where they spend their time, where they spend their money, and where their mind share is. People always love to claim virtues, but they aren't necessarily their values. So I think if you're really interviewing for values, you find out where people spend their time, money and mindshare. What have they read, what do they think about, what issues concern them, and then you really understand values. People's values don't really change very much. They bring with them their values. What they learned at their mother's knee is really kind of what drives them. And so I think you want to suss that out in an interview.
- [07:07]
Alison Beard
When you're hiring for values and character, is there a danger of just hiring people who are just like, you grew up the same way you did all of that. So how do you avoid that?
- [07:18]
Joel Peterson
Yeah, that's a really great point. I think that we're obviously more comfortable with people who have similar backgrounds and similar values. So values, really, if you think about them in terms of what a company does, it's really, how does it set its priorities? You want people who can get comfortable with the same set of priorities. So I think you want diversity, all kinds of diversity of thought, of optic or whatever, but you don't want people to have different priorities. So the example I always use of that is an orchestra. If you have an orchestra that's made up of bassoons, it would be miserable to listen to. There's no diversity. But if you have diversity of pieces of music, if everybody's playing a different piece of music, that's a kind of diversity too, which is a mess, right? So you want everybody playing the same piece of music. That means they share values, but you want them to have different optics, different experiences, different things that have happened to them growing up. So they see the world Through a different lens.
- [08:17]
Alison Beard
Yeah. So speaking of diversity, your book is called the Entrepreneurial Leader, and you're saying that's a good thing to be. And you make the distinction that it's not a manager, it's not someone who presides over already successful business, it's not an administrator, and it's not even a pure entrepreneur who's very good at starting things, but maybe not scaling them or overseeing a larger operation. Are you always trying to hire entrepreneurial leaders or do you want a mix?
- [08:47]
Joel Peterson
Well, you need all of those skills, and I actually think the best entrepreneurial leaders have all of those skills to some degree, but they are able to make durable change. They're able to lead organizations to places they would not otherwise go. And it sticks. And I think you can have specialists like you can on any team. I use the baseball theme, but you can have football or whatever where people play different positions. Wide receivers run fast and catch balls, running backs run through the line, offensive linemen block people. So. So you want people who can play different positions, but in terms of who leads the organization, you really want an entrepreneurial leader who can do all of those things. They can innovate, they can administer, they can manage, they can preside, they can act as politicians, they understand power.
- [09:37]
Alison Beard
And surely that's true for anyone you're hiring to lead a team or lead a function.
- [09:44]
Joel Peterson
Yeah. Anytime that you have somebody who's leading a group of people that has an objective that they're trying to get done and needs to coordinate with the outside market and everything, you want an entrepreneurial leader.
- [09:55]
Alison Beard
Yeah. So you have had exposure to so many different industries. You know, real estate, you're the chairman of a big airline, you work with lots of startups. Do these different types of companies need to approach hiring differently?
- [10:10]
Joel Peterson
Well, at one level they do. For example, the high tech companies that I work with out in Silicon Valley have a certain specific that they look for. On the other hand, if they're going to go to scale, it's actually a lot the same people are people, whether or not they're trained as engineers or doctors or lawyers or whatever, they have these human emotions. They work in certain ways. And I think if you can get good at that, because in the end, what you want to do is build a complimentary team that functions well, that trusts each other. It's so much faster, they're so much more flexible, their decisions are so much more durable. They're. But at the end, whatever they're doing, you need it to all come together.
- [10:49]
Alison Beard
That way, when You've hired a bunch of individual stars and individual entrepreneurial leaders. How do you get them to cohere as a team?
- [10:58]
Joel Peterson
I always make the distinction between stars and divas, and they're really difficult to tell the difference early on because they both work hard. They're incredible. You can't always tell the difference over time. Divas drive you nuts, and they destroy organizations, and you have to move them on. The stars you can typically get. So they're working together around a mission, which is one of the reasons that I say it's so vital to have a shared mission. If you can decide what peak you're climbing together, you know, people can help each other. They belay each other. They help each other through everything, and so stars can do that.
- [11:34]
Alison Beard
I do want to turn to firing in a second, but before that, let's talk a little bit about developing those people who seem like mistakes but could maybe grow. You've said that there are no perfect decisions. There are probably no perfect hires either. So how do you make sure to enhance people's strengths and then help them overcome their weaknesses so that you don't need to hire them?
- [11:56]
Joel Peterson
Yeah, I'm so glad you asked that, because I think a lot of times people overlook somebody isn't the perfect hire. Well, we need to move on. My experience is if their values are really good and if you give regular feedback, pull somebody aside in the moment when you see them do something and say, you know, that was really great. Or did you notice what happened when you did such and such? Or this last month's results didn't really work out. Why do you think the reasons are? And I think if you have that constant dialogue with somebody, you can actually make course corrections along the way. And you want to coach people to great ends.
- [12:31]
Alison Beard
Yeah. And how do you know when someone's ready for a promotion?
- [12:35]
Joel Peterson
Usually it's so obvious it can't be denied. You can't wait to get them in that position. You know, they're just totally ready and the organization needs it, and you're gonna lose them if you don't. And you'd like to have that problem all the time where the organization is just pushing you for more opportunity all the time and are ready for it.
- [12:53]
Alison Beard
So you're not an advocate of putting someone into a role that they're not quite ready for.
- [12:58]
Joel Peterson
I'm a believer in what they call deep selection. You know, where you're not afraid to get the 30 something with a big responsibility. I've had a lot of success with hiring when somebody on paper, doesn't look quite ready. But where, you know, they have the brains, the talent, the work ethic, the interpersonal skills, the soft skills necessary. I've had great success with that.
- [13:26]
Alison Beard
Asana is the number one AI work management platform. It's where work connects to goals so your entire organization can move forward faster. Asana is where AI is seamlessly intertwined with every project, team and goal. Try for free today@asana.com that's asana.com okay, so now let's turn to firing. This is something that all managers dread and most do not know how to do. Well, first, how do you know when it's time to let someone go?
- [14:02]
Joel Peterson
So typically, what I used to tell a manager was that if somebody darkens your door and you wish they'd go away or you'd like to slam the door, you probably have come to that point where you're ready to move on. Whereas if you say, oh, please come in and you look forward to him sitting down, tell me what's going on, et cetera, then you're probably still on an upward trajectory. And the only reason I say that is because people have a sense that things aren't quite going right. Many times they defer dealing with it. They don't say anything about it. They say, well, this would be awkward. My advice is to say right away, you know, something's not going right. Let's talk about how are you feeling about your job? How are things going for you? Because I'm feeling uncomfortable. As soon as you have those inklings, you should start talking about it.
- [14:49]
Alison Beard
And what about when you personally like the person? You know, you enjoy them coming to your door, you like having conversations with them and they're just, their results aren't up to par.
- [14:59]
Joel Peterson
Yeah. So my experience is that rarely happens because you're giving feedback and you're saying, this is what I need you to do. I need the following. But I think you have to say, you know, we're about results. In the end, we have to perform. Everybody has to deliver on promises. In a sense, that's how you build a high trust organization. You can't have trust if people are always falling short of what they say they're going to do. So I think you make that a rule going in is we are going to have a high trust relationship between the two of us and with the organization. And if there's ever a breach of that, we're going to deal with it immediately.
- [15:33]
Alison Beard
And in most cases, do you advocate that managers create a performance improvement plan, go through months of attempted development, of trying to right the ship before getting to that, we're gonna have to let you go. Conversation.
- [15:48]
Joel Peterson
Well, I think the performance improvement plan, typically known as the pip.
- [15:53]
Alison Beard
Yeah.
- [15:54]
Joel Peterson
Is really sort of the precursor to letting somebody go in many cases. And I think many employees view it as that. I think if you can set it up where you say, you know, I wanna give you feedback, let's keep talking about things, let's have an agreement, you can keep it. So it's not quite as formal and as threatening as that. On the other hand, the performance improvement plan does give somebody adequate notice. It gives them a chance to get their resume together, to start interviewing to doing things like that and the outside chance that they can improve. I always try to tell people we're having this conversation on feedback. This is not a firing, you know, but if these things don't improve, if we're unable to improve these things, then you and I will have to talk about whether or not this is the right place for you.
- [16:38]
Alison Beard
That in itself can be a really awkward conversation. How do you make sure that the employee leaves it feeling positive and as if there's hope?
- [16:46]
Joel Peterson
It starts out by saying, by fundamentally letting them know that you're invested in their well being. So I want to help you develop your career. Here's some things that are getting in the way of that in your career development and in your progress here. I'd really like you to work on running effective meetings. Here's what I noticed. So being specific, here's what I noticed. The last meeting that you ran, you didn't have an agenda. The follow up, there were too many items that you covered and there was no follow up. Let's work on that. And so that doesn't feel like a performance improvement plan where everybody signs off on it and it becomes part of your file. It feels like me coaching you.
- [17:26]
Alison Beard
What are some other big mistakes that people make when they enter into that really tough conversation?
- [17:33]
Joel Peterson
I think one of the worst ones people make is they wait for a triggering event. You know, they wait for something. I know I don't like what you're doing. I know you're underperforming. This is a problem. This is miserable for both of us. But you haven't done anything yet that will allow me to fire you. I'm just gonna wait. I'm gonna pounce when that happens. The problem with that is I'm usually upset by the time it happens. I have one of my entrepreneurs comes in and she says, you know, I love you, I love You, I love you. Get out of here. You know, because she just can't make the decision to say, okay, this is enough. Okay, that did it.
- [18:10]
Alison Beard
And you are obviously not a fan of outsourcing any of this to HR or.
- [18:18]
Joel Peterson
Yeah, I think it's kind of a chicken way to do it. And I think people tend to resent it. I think the HR folks have a big role. I think they have a role in making sure that you have a full file and making sure that you're following all the legal issues. I think they can help with severance, with vacation pay, with outplacement, with the announcement, with a lot of the details of it. I think they can be quite helpful. But in terms of, if you and I are working together, in terms of me sitting down and saying, you know, I've made this decision, it's just not working out, I want to help you be happy someplace else. I want to do that myself. And I think, and I've had experience where people come back years later and say, I really appreciate that you did that. It actually turned into a good thing for me. Or I appreciate that you took the responsibility rather than coming in and saying, well, the board made me do that. I wouldn't have done this. It was the board that made it just some faceless monster. I just think people don't like being treated that way.
- [19:13]
Alison Beard
Yeah, you talk in your article a lot about sort of a forward looking mindset, even in that conversation, talking about ways that you can help. So how do you do that in a way that makes the message perfectly clear?
- [19:28]
Joel Peterson
I try to describe it as we've decided to move on or we've decided to make a change. People understand that people change and organizations change. Firing is such a harsh word that I would try to avoid using that word. But.
- [19:41]
Alison Beard
But I think it's hard because people will know you're using euphemisms. You're not letting me go, you're kicking me out.
- [19:47]
Joel Peterson
Yeah. Well, we're moving on together. You're moving on and I'm moving on. I have a duty to do the best thing for the organization. You have the duty to do the best thing for your life. And I think this is the right thing for you. But I want to help. What I'm doing then is I'm recruiting an alumnus, an alumna. I really want to make sure that if I run into you on the street, if I hire you again, if I someday work for you, if we end up in the same company again, I mean, the world is small and Networks are tight and getting tighter. I want to have an ongoing relationship. I made a mistake as well as you made a mistake. We both thought this would work. It hasn't worked. We may not know all of the reasons, but it hasn't worked, and therefore we're gonna move on. But that's not to say that you're a bad person or that I'm a bad person. It just hasn't worked.
- [20:37]
Alison Beard
Yeah.
- [20:38]
Joel Peterson
And so that's an easier conversation, I think.
- [20:40]
Alison Beard
Yeah. What's the most difficult firing situation you've ever been in?
- [20:45]
Joel Peterson
So I had one where I had to actually walk somebody to the elevator, lock them out of their office, ship them their computer. So that's the most stressful. It's happened one time in 45 years of doing this.
- [20:59]
Alison Beard
Because of the person's behavior or company protocols?
- [21:02]
Joel Peterson
Because of the person's behavior.
- [21:04]
Alison Beard
Oh, wow.
- [21:05]
Joel Peterson
Yeah.
- [21:05]
Alison Beard
So that gets to my next question. What do you do if it's a person you don't want to help going forward? You think that they're an underperformer? You don't agree with their values, think they have a bad character?
- [21:17]
Joel Peterson
Well, so I start out by saying, you know, how did I bring them on? How did they get here? I have some culpability for that. And even if I weren't the one that hired them, I let them stay on for a period of time. I didn't correct them effectively. I was unable to manage them to a better place. And so I start out by saying, you know, I have some responsibility for this that helps me not just feel anger. And then I think you just say, you know, they have a life. They're a human being. They may have kids or spouses or whatever. And I do want them to get on with their life in the very best possible way, even though I don't approve of or like them or whatever. I've often told my students that I love them even though I don't like some of them.
- [22:04]
Alison Beard
Right, right. So we're talking here about empathetic firing. How much of that is showing in the room that you aren't emotionless, that you aren't reciting in monotone. Here's a checklist of things we need to go through. How do you convey emotion without letting it get out of hand?
- [22:27]
Joel Peterson
So in many cases, I'd say I'm really sad that this hasn't worked out, and I want the future to work out for you, and I want to help with that. Or I want to make a few suggestions at some point. Or you just do something to connect with them. But I don't know where there's a line at which you can't cry. You don't want to be there blubbering together.
- [22:49]
Alison Beard
Have you ever been fired yourself?
- [22:51]
Joel Peterson
Yes.
- [22:51]
Alison Beard
Tell me about it.
- [22:53]
Joel Peterson
Well, so this is one where I was fired, sued in county court, sued in state court, and sued in federal court.
- [23:01]
Alison Beard
Oh, my God.
- [23:02]
Joel Peterson
It was a very short conversation. And actually, as I look back on it, it's probably the best thing that ever happened to me. Which, by the way, in many cases of being let go, turns out to have been the best thing that ever could ever have happened to the person. So if it's for the right reasons, I think in my case it was because I was standing up for a principal that I just couldn't bend on. I just felt like I couldn't bend. And I think it turned out to have been a very smart thing for the people who fired me because they were able to. I was actually the managing partner of the whole company. And so I think they sent a message to the other partners that, oh, my gosh, if you don't go along with this, look what can happen. If they're willing to fire the managing partner, they're willing to fire any of us.
- [23:46]
Alison Beard
Wow.
- [23:47]
Joel Peterson
So it was actually very traumatic, very difficult, and But a great thing in the end.
- [23:53]
Alison Beard
You have been working for a very long time across so many industries. Has the way people hire and even fire changed?
- [24:02]
Joel Peterson
Yeah, I think it has. I think organizations used to be more command and control, and people had jobs and they wanted to maintain their jobs. I think now, particularly information workers are volunteers. They have all kinds of options out there. So you're really recruiting every day. You're assessing every day. These are conversations that you need to have. So you stay this dialogue and you understand that we're all, this is a dynamic team. This is a team that's forming, reforming, changing all the time. And so I think you develop a sensitivity around that, and in some ways it's easier.
- [24:39]
Alison Beard
Do you find that managers are so focused on hiring and recruiting that they forget how to let people go who need to go?
- [24:49]
Joel Peterson
Yes. I think there's a tendency to just be focusing on growth and hiring and holding on to people. What happens is if you don't pay attention to the other, is you build up dead wood in the organization and people get shuffled off to places that don't matter. And pretty soon you build up these little corners of deadwood in the organization, which is a cancer in the organization. People sense that things aren't hitting on all cylinders. And so I think it's really important to go through the organization at least every year and say, where are we doing really vital things? Who's really vital to it? Where's the future taking us? How do we recalibrate, reorganize? Who can grow into new positions? I always tell my young entrepreneurs, you know, if you're a founder, at some point the organization is going to outgrow you and you have to be willing to let go because it's in the best interest of the organization. So every organization, every founder, every CEO has a shelf life. And I think that's an important thing to set up as a kind of a rule, a norm.
- [25:57]
Alison Beard
Well, thank you so much for coming in today. It's been a pleasure talking to you.
- [25:59]
Joel Peterson
Yeah, my pleasure. Totally.
- [26:06]
Hannah Bates
That was Joel Peterson in conversation with Alison Beard on HBR IdeaCast. Peterson is the former chairman of JetBlue Airways and the author of the book Entrepreneurial Leadership, the Art of Launching New Ventures, Inspiring Others and Running Stuff. We'll be back next Wednesday with another handpicked conversation about leadership. The Harvard Business Review if you found this episode helpful, share it with your friends and colleagues and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you're there, be sure to leave us a review. And when you're ready for more podcasts, articles, case studies, books and videos with the world's top business and management experts, you'll find it all@hbr.org this episode was produced by Mary Dew and Sanni and me, Hannah Bates. Ian Fox is our editor and music by Coma Media. Special thanks to Rob Eckhart, Maureen Hoch, Erica Truxler, Ramsey Kabaz, Nicole Smith, Anne Bartholomew, and you, our listener. See you next week.