company-operating-system

10 · People & the Iceberg Model

Thread: every layer starts with people. Matching people has two layers — above the waterline (visible capability) and below it (invisible values/motivation/personality). Hire the wrong person and the above-water part can be trained; the below-water part almost never changes.

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1. The Iceberg Model

        ┌─────────────────────────┐
        │ Knowledge / Skills /    │ ← Above the waterline: visible, trainable, measurable
        │ Capability              │
        │ (degrees/certs/results) │
        ├─────────────────────────┤
        │ Values / Motivation /   │ ← Below the waterline: invisible, hard to change,
        │ Personality             │   determines fit
        │ (culture fit/drivers)   │
        └─────────────────────────┘

Layer	Content	Can it change?
Above the waterline	Knowledge, skills, capability	✅ Trainable (results visible in 3–6 months)
Below the waterline	Values, motivation, personality, cultural fit	❌ Almost never (stable once adult)

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2. Hiring: Look at Both Sides of the Iceberg

Stage	What to look at
Resume	Above the waterline (experience/skills)
Test / work sample	Above the waterline (capability validation)
Deep-dive interview	Below the waterline (motivation/values/personality) — behavioral interviewing
Reference check	Below the waterline (reputation/stability)
Probation period	Both sides, combined validation

Behavioral interviewing (ask about the past, not hypotheticals):

• ❌ “What would you do if X happened?” (hypothetical — unreliable)
• ✅ “Last time X happened, what did you actually do?” (past behavior predicts future behavior)

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3. Deploying People: The Right Person in the Right Seat

• Play to strengths, tolerate weaknesses (Drucker)
• Key roles require both sides to match (capability is enough + values align)
• Regular roles: capability clears the bar; values are a preference
• Promotions hinge on performance + values (great results but misaligned values = a ticking time bomb)

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4. Retention: Money + Growth + Meaning

Layer	Content	Who it’s for
Money	Pay, bonuses, equity	Everyone (the baseline)
Growth	Promotion, learning, challenge	Ambitious high-achievers
Meaning	Mission, recognition, belonging	Value-driven people

• Core talent: equity lock-in (aligned interests)
• Backbone: promotion paths + learning opportunities
• Frontline: fair pay + respect

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5. Making Culture Real (organizing what’s below the waterline)

Values aren’t words on a wall — they are mechanisms:

• Hiring bar: values don’t fit → don’t hire, no matter how strong the candidate
• Performance review: values are scored (performance + values, two dimensions)
• Rewards & consequences: publicly reward behavior that embodies the values
• Rituals & stories: turn values into stories people can tell
• Leaders model the way: culture is a mirror of the boss

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6. Cases

Company	Practice	Lesson
Alibaba (Chinese e-commerce giant)	“Six Vein Sword” values-based reviews (“wild dogs” = strong results, poor values → removed)	Values are the floor
Huawei (Chinese telecom equipment maker)	People-first for strivers; equity + high pay to keep aligned people	Lock people in with mechanisms
Haidilao (Chinese hot pot chain)	Apprenticeship system + service culture	What’s below the waterline becomes a competitive advantage
Google	Hiring committees + structured interviews	Systematize the hiring process

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📌 One-line summary: Hire for what’s below the waterline, train for what’s above — someone whose values don’t fit is a liability no matter how capable.

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