“The secret of my success is that we have gone to exceptional lengths to hire the best people in the world.”
This quote, famously coined by Steve Jobs, perfectly sums up the importance people play in your business.
And, as a co-founder at Altar.io, I’m always looking for new processes to onboard the best talent possible.
The last book I read on the subject was Who: The A Method for Hiring by Geoff Smart & Randy Street.
After reading it, I was impressed. I could see why the book featured on both the New York Times & Wall Street Journal’s bestseller list.
I took to LinkedIn to share some of the ideas the book had taught me about how I could improve my hiring process.
It was nice, then, to receive a message from Geoff Smart thanking me for my post.
I asked Geoff how he would feel about sitting down with me to talk further about his hiring process, and how entrepreneurs can improve their ability to onboard top talent.
And in the conversation that follows, Geoff not only shares his insights on hiring but also gives his advice for entrepreneurs on all aspects of the startup journey.
Paolo: What’s your view on the saying “Hire slow & fire fast”?
Geoff: When it comes to hiring, it’s not about fast or slow, it’s about best practices. In my book Who: The A Method for Hiring, there are four steps that I think you should complete quickly.
The A Method for Optimal Hiring
Step One – Scorecard
Exactly what you want a person to accomplish in this role. The outcomes and competencies which ensure:
Step Two – Source
Systematically source talent before you have roles to fill. The best way to source candidates is to tap into your personal & professional networks to ask for referrals.
Step Three – Select
Select through a series of structured interviews which build on each other and allow you to fill out your scorecard.
Step Four – Sell
Persuade them to join your team.
To read the full process for optimal hiring check out Geoff’s book here.
If I talk to an audience of entrepreneurs and I tell them hiring is a slow process and firing is a fast process I think it gives them the wrong mindset. The mindset should be one of process, discipline and speed.
If you can write a scorecard quickly. If you can get through your screening interviews quickly. And if you design your second interviews well you’ll be able to move fast.
But my advice is you have to follow the four steps I mentioned, without cutting corners. You don’t get a 90% success rate when you cut corners, you’ll get 50% success rates.
It’s less a game of fast vs. slow and more of a game of adhering to the best practices.
I do think firing can be fast. But in this legally sensitive world, if you treat people with disrespect and fire them too quickly, you’re going to get sued!
However, you should make that decision quickly. If you think you need to fire someone, put them on a performance improvement plan, give them three months plus to prove themselves, meet with them weekly, try to coach and develop them and if it doesn’t work out you fire them.
“I think hire slow, fire fast is stupid advice for entrepreneurs. If you follow it you won’t be hiring the right people quickly enough and you’ll end up in a lot of legal trouble.”
According to Employee Benefit News, it costs employers 33% of a worker’s annual salary to hire a replacement if they leave. To put that in dollars and cents, if an employee is earning $45k a year, it’s going to cost you $15k to find their replacement should they leave.
Maybe the focus shouldn’t be on hiring slow and firing fast, but on hiring right an avoiding unnecessary staff turnover.
P: In Who: The A Method for Hiring, You write about the characteristics of A players. How do you detect high-quality candidates in a short space of time?
G: There are a lot of bad ways to evaluate a candidate. Let’s start with bad methods. Take The Handbook of Industrial and Organisational Psychology for example. This is filled with different methods for evaluating a human being.
Starting with psychology tests – which are always filled with obvious questions. For example, there’s a question on a psychology test for Sales Leaders that asks “Where would you rather be on a Friday night? At a library or at a cocktail party?”
So psychology testing is far from accurate when it comes to evaluating candidates. They can be good for team building, like the Myers-Briggs can be a great way for teams to understand each other’s psychology.
Psych tests don’t work, they’re too easy to fake and you’re not going to get the truth from someone.
Next are brain teasers. This is a very limited way of evaluating people. Google, McKinsey, all these big firms that were known for doing brain teasers have moved away from that. Because they realise if you ask someone how many bowling balls you can put into a Boeing 747 it shows you a very narrow slice of their problem-solving skills. You don’t learn anything about persistence, project management, interpersonal communication, etc. by asking people brain teasers.
You end up over-indexing on good mathematicians, but they may not be good and managing people, managing deadlines and the long list of things that also matter.
“Brainteasers in an artificial setting aren’t a good litmus test for how people will perform in their job.”
The next one we hear about a lot is going with your gut. Don’t hire with your gut. 60 years of research on psychological assessment and interviewing methods suggest that people who follow unstructured hiring methods have a sub 50% hiring success rate. So that doesn’t work. If it worked it would be great! I could say “Cool I like that guy, I don’t need data or real information I know he’s the right fit.”
Next, the “Tell me about a time when…” question. “Tell me about the time when you were creative?” sure they’re gonna tell you about a time they were creative at least once in their life. But can you just take that one example that they chose to provide to know if they’re creative? No, of course not.
Finally, the hypothetical questions. For example, “How would you resolve a conflict with a colleague?” question. Unfortunately, the way they reply in an interview situation is probably going to be very different from what actually happens when issues arise in the workplace.
“With all of these bad methods, you’re gathering information but that information doesn’t enable you to make a better hiring decision.”
So, as boring as it sounds, you should find out:
That kind of data is very useful because it happened in the past and you can pair that with reference checks to verify what they said. Those two things give you 90% accuracy when hiring.
In terms of finding out if they’re persistent. Well if I talk to candidates about every accomplishment, low point, their education, their work experience, etc. All of those aspects will paint a relatively clear picture as to how persistent they are.
Even creativity, you can tell from the way someone describes their accomplishments. Imagine a marketing candidate who’s telling you they increased brand awareness by 28%.
If you ask them how they did it and they reply, we bought ads – not very creative. But if they tell you: “We came up with a whole new way to access a whole different market and it boosted our sales by 400% and we won awards.” – That’s a creative candidate.
“All the answers to these characteristics are in the facts and the data. It will tell you how persistent or creative.”
As for honesty, it’s about asking those who, what, how, tell me more about… questions.
For example, I interviewed someone once, and when I asked them why they left their previous job they told me: “I didn’t agree with some of the strategies or policies of the company.”
So I asked him, Like what? And he kept talking and as it turned out the guy falsified some sales information to inflate his bonus pay and got fired for fraud. This same person admitted that they were put in jail for selling drugs in college. So if you ask the right questions people will tell you a lot.
Then you have your references where you can crosscheck what the candidate is saying. And when talking to references outright you can ask them, “How creative is this person from 1-10?”
According to Statista, it takes an average of 41 days to onboard a new member of staff for companies with 1-500 employees.
It’s important to start thinking about onboarding new team members before you need them, so you don’t rush the onboarding process.
P: You write about not hiring generalists but hiring specialists. In a startup environment, one could argue that in the beginning, you need some generalists. What’s your opinion on this?
G: Generalist vs. specialist as it relates to startup and entrepreneurship. Let’s start with the idea that startups need generalists, the argument always goes like this:
“Oh, my college roommate is good at a bunch of things. He’s willing to work for little to no money and a bunch of stock options. Also, we don’t have a lot of startup capital so I can’t hire a bunch of specialists. I need to hire people who can wear lots of hats and then when we get bigger we can bring on the specialists.”
Where I think that’s flawed is that I firmly believe that humans aren’t good at lots of things. From my 25 years of assessing thousands of people is that there aren’t that many generalists who are good at lots of things. There are people who are willing to do lots of things, but they’re not great at it.
I also believe that only a small number of things matter in a startup. Proving the product, landing key first customers, raising startup funding.
In any stage of a business, there are very few things that are important and that people are only good at a small number of things. Therefore if you find a specialist who’s a rockstar at the given thing you need at your given stage of growth then you’ll end up having a lot more success than if you hire generalists who’re generally lousy.
“It’s very rare to meet a generalist who’s great at everything they do.”
Very early on I hired a CFO. I didn’t hire a CFO who was a generalist who was going to sales and marketing and finance and IT, etc. Instead, I hired a guy named Ron who’s really good at financing and accounting at the startup level.
I didn’t have a marketing person or salesperson, because I could do some of the rainmaking myself. What I needed was a counter-balance to my skills and that was a CFO.
With that, we were able to grow the company until we could look at bringing in more specialists in the roles we were missing.
I don’t know that you’re going to have the power to move your business to the next stage if you just hire generalists.
Whereas I’ve seen in hundreds of cases where they went without certain specialities until later. They prioritised what they needed at the moment to get to that next milestone, and found the best person for that job.
I talked with 26 self-made billionaire entrepreneurs and these folks were telling me:
“At any given time you’re only really hiring one or two key people, and if you hire someone who’s outstanding at that specific thing you’re going to get better results.”
Related to that is strategic priorities:
“Startups that have 55 priorities generally don’t do as well as a startup that has one to three really clear and focused priorities.”
With that in mind, you should hire people with a clear focused talent in what you need.
The only place for a generalist I can think of in any business is actually the CEO of a very large company. If you’re running Pepsico or JP Morgan Chase, etc. Then you should hire a CEO who is capable of having a point of view and can manage leaders across different function layers. But I don’t think startups deserve generalists until they’ve grown and managed collections of leaders.
But between 0 and 1 billion+ in revenue, you should hire the specialist your business needs.
“Most startups fail because of some sort of HR dynamic. The vision might be good, the market might be good, but if your team can’t execute against it, then you’re already one foot in the grave.”
Yaron Samid, Serial Entrepreneur & Startup Founder
P: What should founders who aren’t HR specialists do to improve their ability to hire?
G: The interview scripts that I write in my book serve the purpose of helping anyone, regardless of experience, ask good questions and collect good data. That will make things clearer as to whether or not a candidate can do the job or not.
If you’re a young founder and you’re not used to hiring someone outside of your functional area, or you don’t have an HR background, I think that’s ok if you’re willing to be coachable and humble and can ask lots of questions using the framework we’ve offered.
If you follow Step One of the Who book and you create a scorecard you can interview experts outside of your field very successfully.
Like when I hired my first CFO I didn’t know what I should be looking for. So I talked to other entrepreneurs and asked them what the different flavours of CFO were. I discovered the flavour I needed and made that into a scorecard of criteria and asked candidate questions surrounding that.
And as I ask them questions I’m listening for them to say the things that I already have on my scorecard and I’m checking it off as I go. It’s about identifying the criteria in a scorecard format then identifying the existence, or non-existence, of that criteria in the interview.
“If you follow my framework you can effectively assess whether or not someone is going to be able to do the job you need them to.”
I helped a unicorn tech founder create a nano-tech research lab. Neither of us knew the first thing about nano-technology. What we did was create a scorecard based using expert input to find out what we would need from the head of this research lab to do and what competencies were important and we applied it to the interviews.
Then because of that, we were able to find a list of candidates who were the right fit. I remember this one candidate told me he didn’t like to follow processes. He liked to be very intuitive, and we didn’t need that. Our scorecard said we needed a process-oriented candidate.
So with that scorecard that we developed with the help of experts, we were able to build the research lab.
According to CB Insights, 36% of startups that fail do so because of team-related problems (23% because of the wrong team for the jobs, 13% because of disharmony among team members).
It’s not only important to onboard a team of top talent, but you also have to make sure you have a positive environment with healthy company culture.
P: How do you make sure that founders and managers hire for company culture, and not just hiring people who are similar to them?
G: Firstly, it’s a mindset. A bad mindset is feeling safe hiring people who’re similar to you. It’s natural human behaviour but it’s not good for business.
A better mindset is to say to yourself: “I want to hire people who’re outstanding performers in their field.”
“Hiring people based on whether you both like golf or steak is a horrible way to hire. You need a mindset of hiring for performance, not chemistry.”
The second part is how you source people for the position you’re hiring for. You want to source talented people from diverse backgrounds. When you’re doing the sourcing step, sometimes you have to explicitly tell people we’re looking for sales talent and we want diversity in background, gender, ethnicity.
Otherwise, you will end up getting people just like the people you asked for candidates, or just like you. In that case, you’re not seeing the full range of talent available to you.
Finally, putting company culture aspects on your scorecard and looking for them in the interviews can really help.
For example, the pace of communication is a cultural aspect of many companies. Some companies are very methodical where you have to do a lot of work before you speak up. Others are more agile and fluid where it’s more of a test and learn environment.
So that’s really important to ask people about their work styles and having your company culture on the scorecard can really help in that respect.
It’s said that around half of the hiring mistakes out there happen because of some kind of culture incompatibility.
“Make sure that you don’t just hire clones and you’re hiring for excellence from a diverse background.”
P: How do you spot the perfect co-founder and handle the interview process?
G: You should find a co-founder that has a one-third overlap with you in skills and a two thirds complementary skills.
There are hundreds of examples of this where there is a small overlap and a large aspect of complementary skills – take Jobs and Wozniak. Jobs has some basic technical background, but Wozniak was the tech brain. Wozniak had knowledge of promotion and sales and marketing but nowhere near as much as Jobs.
You’re experts in different fields but you’re able to speak the same language.
Then it’s about making sure that values and cultural aspects are consistent between you as well. As well as how hard you’re going to work you need to be on the same page about that as well.
But the main thing is to hire for skill complementarity. Do NOT hire someone just like you with the same skills as you, I’ve never seen that work.
P: What other advice would you give founders starting their journey?
G: Before you start your company have:
P: What resources, other than your book, do you recommend to founders? It can be a book, a podcast, or anything you feel like.
G: New Venture Creation by Jeff Timmons. It’s the bible for startups.
I want to thank Geoff for taking the time to sit with us and share his insights on hiring the best talent for your startup.
It’s important to remember, as you move through your startup journey, that it’s the people around you that will carry you towards success.
Your product might change, your market might pivot, but it’s your team that will adapt to these changes and help your startup become a valuable asset for all stakeholders involved.
This interview was originally published here by Paolo Dotta.