By Geoff Smart and Randy Street, EO speakers
What is not your number-one problem in business. Who is. What problems have to do with the products you sell and processes you use. Who refers to the people you put in place to make the what happen. Getting the who right is the single most important thing you can do to grow your business.
We set out to discover how entrepreneurs solve this problem by conducting exclusive interviews with more than 20 billionaires, 60 CEOs and investors in small and large companies. From these interviews, we offer a solution that we call the “A Method for Hiring,” as it allows you to hire A Players.
- Calculate how much hiring mistakes are really costing you. The average hiring mistake costs 15x a person’s base salary, not to mention the drain on your personal time. Nate Thompson, CEO and Founder of Spectra Logic, couldn’t even go on vacation for many years because he mis-hired five heads of sales in the span of three years. Fortunately, Nate discovered a better way to hire (described below) and hired an A Player into this role. He has been happy ever since.
- Make hiring decisions with data, not with gut feelings. Entrepreneurs are “fast and loose” when it comes to hiring. They hire people they like, people who look good on paper or people who look good in a suit or dress. Through our extensive research, we’ve found that that’s the wrong way to do it, and it yields a 50 percent failure rate. To achieve 90 percent or more success in hiring, you’ll have to change your mind set. Hiring is an analytical process based on facts, not first impressions or gut feelings.
- Hire the specialist, not the generalist. Conventional wisdom among entrepreneurs says hire the generalist who can adapt to whatever situation you have. In fact, very few people are truly good at many things. Most people are only good at a few things. Hire for those things. Alec Gores, the billionaire founder of Gores Group, told us, “I look at our team almost like a football team. If I am hiring for a position, I ask myself, what is this person going to be doing? Are they a quarterback? A center? I don’t try to get the quarterback to operate like a center or a linebacker.”
- Build a hiring scorecard before you start. Clarify why you are hiring somebody before you do anything else. Document the mission for the role, desired outcomes and competencies that match your culture. This will give you an objective standard against which to compare candidates.
- Source great candidates from your network. Seventy-seven percent of our superstar business leaders find their best performers through tapping their own personal and professional networks. They ask their trusted employees, friends and customers, roughly 50 times per year, “Who do you know whom I should hire?”
- Interview across the person’s life time. The best type of interview is something we call the Topgrading Interview®. Ask candidates to go through each job and tell you what they were hired to do, what they accomplished, what mistakes they made, what their bosses would say about them and why they left. Asking these same five questions for each job will generate a wealth of data that you can use to rate the scorecard (see #4 above).
- Sell candidates by remembering the 5Fs. Superstar entrepreneurs remember to sell candidates on 1) Fit (how a person fits into the company), 2) Family (remember to sell the spouse or significant other), 3) Freedom (to make decisions), 4) Fortune (how much money they will make) and 5) Fun (because life is short).
If you let go of the voodoo hiring methods of the past and embrace the “A Method for Hiring,” you can expect to improve your hiring success rate from 50 percent to 90 percent. What’s more, you’ll find you’ll even have time for vacations!
Geoff and Randy’s most recent book, “Who: The A Method for Hiring,” recently made it to the top of the bestseller list! To learn more, click here.
Categories: Best Practices