Olivia: A study of thousands of executives at top companies found that a third of them were in the bottom half of the competence curve. Jackson: Hold on, a third? You’re telling me that in the world’s most successful companies, one out of every three leaders is basically… mediocre? How is that even possible? Olivia: It’s not just possible, it’s the default. And it’s because we are all, as leaders and managers, fundamentally terrible at the single most important part of our jobs. That’s the core argument in the book we’re diving into today: “Great People Decisions” by Claudio Fernández-Aráoz. Jackson: Okay, "Great People Decisions." Sounds like a standard business book. What makes this one different? Olivia: The author. This isn't just theory. Claudio Fernández-Aráoz spent over three decades at Egon Zehnder, one of the world's most elite executive search firms. He's been in the room for thousands of these make-or-break hiring decisions for the CEOs of global giants. He’s now an Executive Fellow at Harvard Business School, teaching this very craft. He’s seen firsthand why companies worth billions rise or fall based on one thing: who they choose to hire and promote. Jackson: So he’s seen all the skeletons in the corporate closet. Olivia: All of them. And he argues the biggest problem is that most organizations get the entire process backward. They obsess over strategy, but they forget the most important variable.

Olivia: The book builds on this powerful idea from researcher Jim Collins: "First Who, then What." The best leaders don't start by figuring out where to drive the bus. They start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats. Jackson: That’s a great line, but it sounds a little chaotic in practice. How can you hire someone if you don't even know what your strategy is? Are you just hiring smart people and hoping for the best? Olivia: In a way, yes. But it’s more about hiring for adaptability and core competencies than for a narrow, predefined role that might be obsolete in six months. The book uses the legendary CEO of General Electric, Jack Welch, as a prime example. Jackson: Ah, Jack Welch. The ultimate celebrity CEO. Olivia: Exactly. And the book reveals that Welch famously spent over half his time—more than 50%—on people decisions. He wasn't just tweaking supply chains or marketing plans; he was obsessively focused on identifying, developing, and placing talent. He personally interviewed candidates for senior roles, he nurtured leaders, and he was ruthless about removing underperformers. Jackson: So he was the team's General Manager, not just the coach. Olivia: That’s a perfect analogy. He knew that if he had a team of A-players, they could figure out the strategy. They could pivot, they could innovate, they could win. If he had a team of B-players, the best strategy in the world wouldn't save them. GE became known as a "CEO factory" because of this. Its alumni went on to lead other major corporations, all because Welch prioritized "who" over "what." Jackson: Okay, I can see how that works for a giant like GE. You hire a brilliant, adaptable executive and you can plug them in anywhere. But what about a startup? Or a small team? You need someone who can code, or someone who can sell, right now. You can't just hire a philosopher because they seem smart. Olivia: That's a fair challenge, and one the book addresses. It's not about ignoring skills. It's about weighting them correctly. For a junior developer, technical skill is paramount. But for the person leading that team of developers, their ability to attract and motivate other great developers—their people skills—becomes exponentially more important. The higher you go, the more your success depends on the quality of the people you surround yourself with. Your job stops being about doing the work and starts being about building the team that does the work. Jackson: Right. Your personal output has a ceiling, but a great team's output is limitless. Olivia: Precisely. And that’s the easy part to understand. The hard part, and where the book gets really fascinating, is that even when we know we need to find these A-players, we are psychologically wired to fail at spotting them.

Jackson: What do you mean, "wired to fail"? I like to think I’m a pretty good judge of character. Most people do. Olivia: And that’s the first trap! The book argues that making great people decisions is not an innate art; it’s a learnable craft. But we all walk around thinking we have this magical "gut instinct." The data suggests our gut is, frankly, a terrible hiring manager. Jackson: Come on, it can't be that bad. Olivia: Oh, it's worse. The book cites some absolutely jaw-dropping statistics. One study found that 44% of job applications contain outright lies. Another found that a staggering 80% of all resumes are "padded" or exaggerated. Jackson: Eighty percent! So basically, almost everyone is lying on their resume? That's both terrifying and, honestly, a little reassuring. I thought it was just me who stretched the truth about my Excel skills. Olivia: (laughing) You and 80% of the workforce. But it gets deeper. The biggest trap isn't even deliberate deception from candidates; it's our own minds betraying us. We're sabotaged by our own psychological biases. The book tells the incredible story of Warren G. Harding. Jackson: The U.S. President? Olivia: The very same. In the 1920s, Harding was a senator from Ohio. He wasn't particularly smart, he had a messy personal life, and he had no significant policy achievements. But he had one thing going for him: he was tall, handsome, and had a deep, commanding voice. He looked like a president. Jackson: The "presidential look." I've heard of this. Olivia: Exactly. And people fell for it. They made a snap judgment. His appearance created a "halo effect," where they unconsciously assumed he must also be competent, decisive, and wise. He won the election in a landslide and went on to be ranked by historians as one of the worst presidents in American history, presiding over a scandal-ridden administration. He was hired based on a feeling, a superficial impression. Jackson: Wow. That's a high-stakes hiring mistake. And I can totally see how that happens on a smaller scale. You meet a candidate who is charismatic, well-dressed, and gives a firm handshake, and your brain just fills in the blanks with "competent" and "leader." Olivia: It's an unconscious shortcut. The book calls it the "branding" bias. We get sold on the package, not the contents. And we do it in seconds. Studies show that most interviewers make up their minds about a candidate in the first few minutes of a conversation, and then spend the rest of the time just looking for evidence to confirm their initial snap judgment. Jackson: That is a brutal truth. So if our gut is a liar and we're all just casting for a movie in our heads, what's the alternative? How do you actually learn this "craft" of hiring? Olivia: You replace intuition with a disciplined process. And a huge part of that process is shifting what you're looking for. The book makes a powerful case that for most leadership roles, Emotional Intelligence, or EI, is a far better predictor of success than raw IQ or even experience. Jackson: Okay, "Emotional Intelligence" is a term that gets thrown around a lot. It can feel a bit like a corporate buzzword. What does it actually mean in this context? Olivia: It's the ability to manage ourselves and our relationships effectively. It's self-awareness, self-regulation, empathy, and social skill. The author analyzed hundreds of his own hires and found a stunning pattern. The combination of relevant experience and high IQ had a decent success rate. But the combination of relevant experience and high Emotional Intelligence was almost foolproof, with a failure rate of only 3%. Jackson: A three percent failure rate? That's unbelievable. Olivia: And conversely, the biggest reason for failure, especially at senior levels, wasn't a lack of smarts or skills. It was a lack of EI. It was the brilliant jerk who couldn't build a team, the abrasive leader who alienated clients, or the insecure manager who couldn't handle feedback. These are all failures of emotional intelligence. Jackson: So you need to interview for that. How do you even do that? You can't just ask, "On a scale of one to ten, how emotionally intelligent are you?" Olivia: (laughing) No, and if you did, you'd run into another bias: people are terrible at self-assessment. The book suggests using structured, behavioral interviews. You don't ask hypotheticals like "How would you handle a conflict?" You ask for real-world evidence: "Tell me about a time you had a major disagreement with a colleague. What was the situation, what specific steps did you take, and what was the outcome?" Past behavior is the best predictor of future behavior. Jackson: You're digging for the story, not the theory. Olivia: You're digging for the story. You're looking for evidence of self-awareness, empathy, and resilience. You're trying to figure out who they are, not just what they've done.

Olivia: So when you put it all together, the book proposes a two-part revolution in how we think about building teams. First, you flip the script: it's "People First, Strategy Second." You commit to getting A-players on the bus. Jackson: Right, you become a talent scout before you become a strategist. Olivia: Exactly. And second, you accept that your brain's default setting is to be a terrible scout. So you build a disciplined, repeatable process to find those people—a process that values evidence over intuition, and emotional intelligence over simple smarts. Jackson: That's a powerful framework. So for someone listening right now who has to hire a new team member next week, what's the one thing they should do differently after hearing this? Olivia: I think the most actionable advice is to deliberately hunt for evidence of Emotional Intelligence. Don't just get dazzled by their resume or their charisma. Ask them to tell you about a time they failed. Ask them how they recovered. Ask them about a conflict they had to resolve. Jackson: And what are you listening for in their answer? Olivia: You're listening for humility, for self-awareness, for an ability to learn from mistakes, and for empathy towards the other people involved. The book is clear: a candidate who can't talk intelligently and openly about their failures is a massive red flag. Their past performance is important, but their ability to handle the inevitable future struggles is what will truly define their success. Jackson: It’s not about finding someone who has never failed, but someone who has learned how to. That’s a great takeaway. Olivia: We'd love to hear from our listeners about this. What are your hiring horror stories, or your biggest successes? What's the one trait you've learned to look for? Find us on our socials and join the conversation. Jackson: This is Aibrary, signing off.