How much is your top salesperson worth? Your star engineer? Your best marketer? Everyone knows that some people get better results than others. But the best aren’t just a little better than the rest — they’re typically a lot better. Bain & Company’s research, discussed here, suggests that top performers are roughly four times as productive as average performers. Sometimes the difference is far greater. For example, the best sales associate at Nordstrom sells at least eight times as much as the average sales associate at other department stores.
Given the sizable differences between the best and the rest, a company with a higher percentage of top performers will naturally tend to outdo its rivals. The reason is that it has higher human capital productivity (HCP), which we know correlates closely with financial results. Raw talent isn’t the only determinant of HCP, but if you don’t have the “A” performers you need, none of the other factors will make much difference. So improving your overall talent level is the first step toward higher HCP.
How can a company raise its skill level—and in particular, how can it increase its proportion of top talent? Our research and experience at Bain suggests three keys.