This concept took me far too long to internalize, but I wanted to share some thoughts on hiring in this post. The insight below is a combination of my own experiences and a book I read a while back called Topgrading. I highly recommend it, and I wish someone had recommended it to me 10 years ago.
A Players, B Players, and C Players
The concept of A Players, B Players, and C Players originates from Jack Welch, former CEO of GE (and a client of the Topgrading author). The basic definitions are as follows:
- A Players: consistently high performers, strong judgment, high integrity, high agency, high urgency, and capable of scaling responsibility.
- B Players: competent, often hardworking, but capped – either in judgment, ambition, or consistency.
- C Players: persistent underperformers who consume time, energy, and organizational bandwidth.
The mistake most people make is thinking the differences between these categories are linear. In reality, the gap between an A Player and a B or C Player is exponential.
A Players Over Everything
A Players are highly sought after and therefore can command a high compensation package. Owners/managers often get sticker shocked when they see the cash cost (salary/bonus) of an A Player. The immediate thought is “don’t have the budget” or “this hire will crush our margins” or “way higher than the last guy”.
This is an irrational perspective. A Players create more value than they cost, and fast. The incremental compensation you pay an A Player is often self-financing within months, not years. A Players will find ways to quickly unlock more revenue and profits, justifying their higher compensation package. Standards rise. Decision quality improves. Velocity increases. Everything accelerates.
All this will ultimately drive enterprise value upwards, and as owners, EV is ultimately how you build wealth, so this is what you should be optimizing for.
Hiring Decisions Are Capital Allocation Decisions
Paying up for A Players means you are allocating capital toward higher-quality inputs (people) in exchange for disproportionately higher outputs (EV). The incremental cost difference of an A Player’s compensation (measured in tens or hundreds of thousands) pales in comparison to the value they create (measured in multiple millions) – clearly an asymmetric bet, and hence why I believe expensive talent is cheap.
Also, A Players attract more A Players, so everything I said above compounds over time. B and C Players typically repel A Players, which will quietly impair EV over the long run, far more costly than whatever compensation cost you believed you saved.
Once you view hiring through the lens of an investor allocating capital, it becomes clear which bets make sense and which don’t. There are some obvious parallels between picking quality investments and picking quality talent.