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HBX Business Blog

Why People Matter Most When Making Business Decisions

Posted by Patrick Mullane on December 22, 2016 at 9:46 AM


The best business decisions are never ones of strategy, sales, or marketing - at least not directly. They are always people decisions. Who we hire, how we manage, and who we fire have far greater impacts on results than the things we usually think of as driving success.

This should be obvious to all of us; after all, decisions don’t just materialize from the ether, ready to be executed upon by managers sitting in a conference room primed to act. People make decisions. It’s probably not surprising we forget this. Headlines in the business sections of newspapers rarely read like this: Jane Doe Hires Well, Stock Price Soars. Instead, Jane’s successes are attributed to things like product decisions: Release of New Phone Drives Sales at Doe Industries.

My best business decisions have always been around people. Two in particular come to mind. One had to do with hiring; the other had to do with a termination. Let’s start with the latter.

I became the CEO of a manufacturing company in 2010 after a completing management buyout with some outside investors. When I took on the leadership role, one of the original founders was still in the business; the people I bought the company from had acquired the firm from him and had allowed him to stay in a very prominent role in the organization. In fact, he occupied the corner office in our brand new manufacturing plant. The founder was a great man. He was exceptionally smart and very good at what he did; he couldn’t have built a firm of the size he did without some skills. But he also (not surprisingly) had very strong views of how things should be done. Early on, I saw this as a problem. While having somebody who reports to you not buy into your own vision is a problem in general, it’s even more of a problem when that person is the previous owner and hired many of the men and women who still worked in the firm. Pretty quickly, issues arose around consistency of message, priorities, and the sharing (or lack thereof) of information. It was time for the founder to go. Over the course of six months, we worked together to organize a “soft” exit, essentially reducing the amount of time he spent at the office each month.

Upon his departure, things started to click. For example, he had been of the opinion that anybody we hired had to have fifteen years of experience in the type of manufacturing we were doing. The problem was that we were a highly specialize, niche business. And we were located in central Massachusetts, unable to draw talent from major metropolitan areas that were too far away for the average commuter. He also was subtly hostile to those with college degrees.  He didn’t have one, so why did our engineers need to? I used to tell him that anybody that met his hiring criteria already worked in the company! With his departure, I was more easily able to get hiring managers behind a new hiring philosophy and in short order we had added some very good personnel who significantly raised our talent bar. These new team members also more easily bought into the recently revised vision for our company, one centered on engineering excellence, not widget-making.

One of my other “best decisions” was around hiring. I ran a for-profit education location for a large multinational. When I arrived, the location had suffered some tough years, coming in annually as one of the worst performing sites. This location was in a major city and hosted students who were studying to prepare for the GRE, LSAT, GMAT and other standardized tests. When I got there, it became obvious what was driving the poor performance: much of the staff didn’t view themselves as customer service people but, rather, as academic administrators. While there’s nothing wrong with academic administrators, there is something wrong with putting them in a customer service role instead of an administrator role. We needed people who would provide service with a smile. A former waiter or retail delivery person fit the bill much better than an education bureaucrat. Within a year, the center I managed was in the top 5% based on several performance metrics. People matter that much.

While there are many decisions that can move the needle, nothing does it more than people decisions. Do that right, and the needle moves in the right direction. Do it wrong, and the needle will start trending toward “empty” … as will your company’s bank account.


About the Author

Patrick Mullane is the Executive Director of HBX and is responsible for managing HBX’s growth and long-term success. A military veteran and alumnus of Harvard Business School, Patrick is passionate about finding ways to use technology to enhance the mission of the School - to educate leaders who make a difference in the world.

Topics: Executive Insights