EXECUTIVE SUMMARY: Attracting and hiring A Players, at all levels of the organization, is as critical as landing the right customers. This requires the active participation of the marketing function in the recruiting process and the use of Topgrading methodology in the interviewing and selection process. With both, detailed in this chapter, your company will have a huge pool of candidates from which to choose enough “strange” people (who fit your differentiated strategy and culture) to scale up the business.
NOTE: The cost of a bad hire is 15x his or her annual salary, according to Topgrading, so it’s important to get the recruiting and selection process right.
When Scott Nash needed a CFO for MOM’s Organic Market, simply asking a recruiter to scour the country for a financial whiz who knew the grocery industry wasn’t going to cut it. Nash founded MOM’s in 1987, at age 22, as a home delivery and mail order company based in his mother’s garage in Maryland. It has a unique culture, built around the company’s Purpose: to protect and restore the environment. Now a chain of 11 stores with 700 employees, MOM’s is willing to walk away from potential sales to stick with its core commitment. For instance, it bans the sale of plastic water bottles in its stores. So MOM’s challenge was recruiting a top-notch CFO willing to embrace the spirit of the company’s Purpose while navigating the financial trade-offs required to “live” it.
Gene Browne, who founded Galway-based The City Bin Co. in 1997, was facing a similar challenge recruiting people to work on the back of his garbage trucks and then keeping them. Though his business was recognized as one of the Best Managed Companies in Ireland by Deloitte for four consecutive years — from 2009 to 2012 — and won Deloitte’s Gold Standard Award in 2012, CEO Browne still couldn’t easily attract and hold on to employees to sling garbage cans. It’s a dirty and physically demanding job requiring an early start in the morning.
Follow along as we share how Nash, Browne, and other leaders recruit and hire tough-to-find talent.
Before starting your search for a key executive or frontline associate, create a Job Scorecard (vs. the standard job description). A Job Scorecard details a person’s purpose for the job, the desired outcomes of this individual’s work, and the competencies — technical and cultural — required to execute it. This tool is part of Topgrading, a methodology for hiring A Players, co-created by Brad and Geoff Smart. We consider it the best interviewing and selection system available. It has a proven track record of helping leaders hire the right person more than 90% of the time vs. the 25% to 60% success rates achieved with “feel-good” conversations, testing, or standard behavior-based interviewing approaches. And considering the costs of making a bad hire, it pays to get this process right.
An A Player, by the Smarts’ definition, is someone in the top 10% of the available talent pool who is willing to accept your specific offer. Read that definition again. They are not implying that you have to pay beyond what your business model can sustain. They do mean that you need to attract the largest and most capable talent pool excited about the job and willing to accept your compensation package (e.g., McDonald’s has the same chances of hiring A Players as Goldman Sachs), and have the tools to select the best people from this group of prospects. The Job Scorecard is the starting point.
A central element of a Job Scorecard is the handful of specific and measurable outcomes that a potential hire needs to accomplish over the coming one to three years. While a job description tends to list what people will be doing (e.g., coaching sales reps, building client relationships), a Job Scorecard describes the outcomes you want from such activities ($8 million in revenue, seven new S&P 500 clients, a 100% contract renewal rate among the customers the trash collector serves). This is a critical distinction between the job description (hope you’ve not wasted time creating these) and the Topgrading Job Scorecard.
Being specific about outcomes allows you to directly evaluate each candidate’s capacity to actually deliver these results. Can you really see the person you’re interviewing taking your top line from $20 million to $35 million over the next three years? Is there anything in her history of results that supports this conclusion? (For more practical insights about building Job Scorecards, read Bluewire Media’s excellent blog on the topic.)
Another central element is the list of candidate competencies that align with your culture and strategy. As experienced leaders discover, it’s more important to hire for this kind of fit than for specific skills, so long as a person has the capacity to learn and grow (though it’s best if you can find someone who’s a match in both cultural values and skill set). The rapidly changing requirements of most professions require a constant updating of skills, anyway. On the other hand, cultures are like immune systems and will spit out very capable people who don’t align with its norms (Core Values).
In addition to seeking culture fit, it is critical to hire people who can deliver on the Brand Promises and activities underpinning your strategy (see “The 7 Strata of Strategy” chapter). The City Bin Co. looks for garbage collectors who possess the competencies to deliver on its customer service promise. Southwest Airlines needs flight attendants who can deliver on its Brand Promise of “Lots of Fun.”
These central elements of the Job Scorecard — the outcomes and competencies — drive the recruiting, interviewing, and selection process.
Good managers play checkers while great managers play chess, according to researchers Marcus Buckingham and Curt Coffman, authors of First, Break All the Rules: What the World’s Greatest Managers Do Differently. In checkers, the pieces all move in the same way, whereas in chess, the pieces move differently, allowing you to bring different strengths to the game.
In scaling up the people side of your business, it’s crucial that you start playing chess sooner rather than later. Think of “The A-Team” of action television fame — a ragtag group of renegades bringing their individual and unique talents, personalities, and strengths together to act on the side of good!
You, too, need a team of absolute specialists — chess pieces — to achieve your ambitious goals. In our experience, the learning curve for well-rounded generalists (checker pieces) is simply too long and too steep in today’s fast and complex world. This is why we encourage leaders to look for “idiot savants” (i.e., people who are extremely talented at one particular thing and possibly quite bad at others). As Geoff Smart points out, “You would not let your family-practice doctor perform open-heart surgery on you.” Teams need to be well-rounded, but their individual members don’t have to be. Leaders don’t always grasp this, which explains why the traditional “feel-good” interview has such a high failure rate. We have a tendency to hire people most like ourselves and end up with a company of look-alikes vs. tapping the diversity of talent, backgrounds, and personalities needed to drive the fruitful debate, innovation, and differentiation that powers growth.
Daniel M. Cable goes one step further and suggests you hire people who are downright strange. Author of Change to Strange: Create a Great Organization by Building a Strange Workforce (a book that we strongly suggest you read), Cable notes, “If your competitive advantage depends on your people creating something valuable and distinctive, then your workforce can’t be normal.” Therefore, if you want to have a differentiated strategy, you can’t hire, compensate, and have the same HR systems supporting the same people as your competition.
NOTE: You need a “strange” culture and a “strange” strategy to differentiate your firm in the marketplace. This is why it’s so critical to discern the real Core Values underpinning your culture; and create the elements of an industry-dominating strategy. (How to do both is detailed in the “Strategy” section of this book.) With these values and strategic attributes, you can then generate Job Scorecards, as described above, and use them to identify the right “strange” people to hire.
The best people to consider first are those with whom you have already worked. Culture fit can be evaluated in interviews and tests, but nothing substitutes for your own real-time observations of someone over prolonged periods of time.
However, most growing firms will exhaust such lists fairly quickly, so you will need clever ways to attract a sufficient applicant pool of specialists who fit your culture. Research strongly suggests that you need a minimum of 20 applicants per position (frontline to senior) if you want to dramatically increase your odds of hiring A Players. Sadly, because of the stress that comes with growth, many leaders simply hire whoever comes along and can fog the mirror (e.g., “You’re breathing. You’re hired!”).
This is why marketing is such a critical function to scaling up a business. The marketing team must be as actively involved in recruiting a steady stream of potential employees as it is in attracting potential customers, yet most organizations fail miserably in this area. They think the perfect candidates will fall from the sky. The best candidates are probably working somewhere else and need a reason to consider your organization. And because budgets are always tight in growing firms, you must find clever marketing approaches to attract the specific kind of “strange” talent you’re seeking.
One of the classic recruiting campaigns was launched by Google in its early years. A single billboard (placed near Yahoo’s headquarters — “Fish where there are fish”), with no mention of the company, simply displayed a sophisticated math riddle. The mere intrigue of the billboard generated millions of dollars of free publicity as the technorati went nuts over the question of who placed the ad. This, in turn, exposed the ad to tens of thousands of potential hires.
The actual solution to the puzzle led to a series of websites with additional equations to solve. Eventually, Google identified itself as the author of the billboard and said: “One thing we learned while building Google is that it’s easier to find what you’re looking for if it comes looking for you. What we’re looking for are the best engineers in the world. And here you are.”
This kind of guerilla marketing is within any company’s reach. Atlassian, an Australian software company, hired 15 developers after it toured 15 European cities with a flashy bus that bore this message in large letters: “Europe, we’re coming to steal your geeks” — generating loads of free publicity as news agencies reported on the unusual bus tour. Employment Group, a Michigan staffing firm, invited the local business journal to cover its quarterly meetings themed around various rock bands. This landed the company several fun articles and resulted in a score of unsolicited quality résumés. It is easy to stand out if you use whatever approach fits your culture and you show some originality.
To find the ideal CFO candidate for MOM’s Organic Market, rather than advertise on job boards or in the local Washington Post, CEO Nash cast a line where those mostly likely interested in his company’s Purpose tend to hang out. He placed an ad for a CFO on Treehugger.com, a green-living and environmental news site. The ad asked questions chosen to help the company attract a financial pro who fit into the culture of MOM’s: Do you want to work for a David, rather than a Goliath? Are you an entrepreneur in a CPA’s body? Would you rather come to work in jeans? (To read a copy of the full ad, go to scalingup.com.)
Bingo! MOM’s received 40 résumés in a week from a group of great candidates who clearly understood and appreciated the company’s Purpose. Ultimately, Nash hired Kelly Moler, who had the requisite talent and shared the team’s green values. Eight years later, she has helped the profitable company navigate the challenges of growing to $130 million in annual revenue amid competition from giant players like Whole Foods.
MOM’s has taken a similar approach to attract candidates in a variety of other positions, from grocery baggers to executive-level jobs. For instance, on the “Join us” page on its website, a recent advertisement said:
You:
• are really interested in electric vehicles
• appreciate a good debate, even with your boss
• figure out how to fix it instead of who’s to blame
• paid for your own stuff when you were a teenager
• have pulled recyclables out of the trash
We:
• work to protect and restore the environment
• like real food
• aren’t afraid to make mistakes
• care more about your intelligence and values than your experience
The ads have helped the company save time and money on attracting and retaining talent. “Ten years ago or so, before we did a lot of this stuff, people were churning in and out,” recalls Nash. The typical candidate, he says, “was someone who wanted a paycheck. MOM’s was a stepping-stone for people to go someplace better.” Since MOM’s tailored its recruitment strategy to its core culture, he says, “retention rates have just skyrocketed. It seems to be easier to hire people and find people.” The ad, he notes, “is an example of how we give our company culture and value a high priority.”
Appletree Answers, whose success in tackling employee turnover we’ll discuss in “The Core” chapter, typically receives 500 to 600 applicants for every open call-center position it has — attributable to its reputation as a great place to work. Austin-based Rackspace Hosting, a longtime Rockefeller Habits practitioner, received 52,000 applicants for 569 openings in 2013, blowing away the recommended 20:1 ratio — again, driven by a stellar reputation. Rackspace has made Fortune’s list of the 100 Best Companies to Work For four years in a row (climbing to #29 in 2014) and counting.
NOTE: Given that even Harvard’s record-low acceptance rate for the Class of 2017 was 5.8% (2,029 admissions out of 35,023 applicants), it’s been noted that it’s harder to get a job at Rackspace than to get accepted into an Ivy League school!
Making it onto Best Places to Work lists, even local ones in your region or city, is a clear sign of an attractive workplace that will draw applicants to your company. A book written by the CEO (something we strongly recommend); a regular column in the local biz journal; a popular blog; and/or regular LinkedIn Influencer posts are great recruiting (and marketing) tools and ways to grab attention in an industry.
The City Bin Co.’s Gene Browne was winning similar workplace awards and garnering excellent local attention, yet he needed to get creative in attracting the right people to work on the back of his garbage trucks. Hearing Dan Cable, author of Change to Strange, speak at a Young Presidents’ Organization program at London Business School, Browne wondered:
1. How can we expect our employees to be extraordinary and differentiate the company if we use the same hiring and onboarding methods as competitors?
2. What characteristics describe our ideal workforce that our competitors could not or would not use to describe theirs?
For Browne to try to differentiate his waste collection company through service is tricky, since the people working on the back of the trucks are the ones who can make or break a service experience. Yet shortly after Dan’s lecture, something “strange” happened. A young man named Gary Manogue applied for a back-of-the-truck job because (a) he saw it as a chance to do part of his daily workout while also being paid and (b) the early start and finish times suited his lifestyle. Gary was a competitive kickboxer and had ambitions to win a world title fight. He needed to train as many hours a day as possible. In December 2013, Gary became the world super welterweight kickboxing champion. In a pre-fight interview, the Galway Advertiser noted:
“This is Manogue’s first seven-round fight and he has prepared with a fitness regime that involves an eight-kilometre run every morning, work-out in the gym in the evening, and in between working for The City Bin Co. ‘Running after bins keeps me pretty fit too,’ he says.”
Based on this chance situation, The City Bin Co. has since developed a hiring campaign aimed at unemployed young men (no shortage of these in Ireland) who are big into fitness, asking, “Would you like to be paid for your daily workout?” The company is advertising in local gyms and letting word-of-mouth do the rest. These young men do not perceive the job in the same way as the typical young person who is handing out CVs looking for a job.
Like MOM’s and The City Bin Co., many growth companies realize that to achieve their goals, they need the right people on the bus. But in many industries, these folks aren’t just waiting at the bus stop. And you won’t find them solely by advertising on job boards. The key to finding them, as Nash, Browne, and others have discovered, is by creating a recruitment strategy that reflects your Core Values and Purpose and then using your marketing skills to reach the right potential pool of talent.
Once you have attracted a large number of qualified candidates, which significantly increases your chances of finding A Players, a rock-solid evaluation process (not your gut feeling) is needed to bring the numbers down from 20 to 10, then to three, and finally to the one top candidate who will deliver 150% of your Job Scorecard.
At MOM’s, the online job application asks questions such as “What companies do you admire?” to get a sense of a candidate’s values. “That gets us to a place where we know what is important to them,” says Nash. The company also asks why applicants are interested in MOM’s. “Some people say they want to work for MOM’s because we’re in a booming industry. They want job security and some money. That’s okay, but it has nothing to do with our values.”
These gatekeeper questions, along with various online tests we recommend — Assess Systems’ wide range of pre-employment tests and OMG’s Sales Assessments among them — are very helpful in narrowing your long list to the final five or 10 candidates.
At this point, it’s time to interview. And as mentioned above, the process we recommend is Topgrading. For an excellent overview, read Geoff Smart and Randy Street’s book Who: The A Method for Hiring; to learn the details of the process, read Bradford D. Smart’s book Topgrading: The Proven Hiring and Promoting Method That Turbocharges Company Performance. We also recommend that at companies doing regular hiring, at least one person become a Certified Master Practitioner through an online course at scalingup.com that includes several hours of video instruction by Brad Smart; interaction with other practitioners; and one-on-one coaching with one of Smart’s certified trainers.
The Topgrading methodology includes a screening interview used to further narrow your list from 10 to the top three candidates. This interview consists of five powerful screening interview questions. They work for any position for which you’re hiring and can be addressed in 30 to 45 minutes over the phone or in a short meeting.
Once you’re down to the top three candidates, it’s time for the Chronological In-Depth Structured (CIDS) interview — a thorough three- to four-hour interview covering a candidate’s entire career history, with the objective of discovering behavioral and performance patterns that are likely to repeat themselves at your workplace. When hiring, bear in mind that past performance is the best indicator of future performance.
The length of this interview offers several benefits:
1. A Players like a vigorous process and are leery of companies that make it too easy.
2. “Professional” interviewees can’t keep up the façade for hours.
3. Meanwhile, those who are not initially comfortable will have time to relax and open up.
4. Besides, what’s three to four hours now vs. thousands of hours of headaches if you hire the wrong person?
NOTE: A three- to four-hour interview is appropriate for a middle or senior leader; one to two hours might be more suitable for entry-level or less experienced candidates with limited work history.
While Topgrading was initially designed for senior executives at General Electric, it works at all levels. Speed Wire, a cabling contractor headquartered on Long Island, grew from 25 employees to 325 (mainly technicians) in one year, relying on Topgrading to make sure all its hires were A Players. Kevin Donnelly, founder of Speed Wire (now a MasTec company), was thrilled with the results. “We can’t believe the caliber of people it has helped us hire. We couldn’t have done it without Topgrading,” he says.
At MOM’s, Nash will lead the three- to four-hour Topgrading interviews with candidates for major positions, like successful CFO candidate Kelly Moler, while MOM’s managers will do abbreviated interviews with other employees. “It’s the most effective method I’ve come across,” says Nash. The company will go through each candidate’s entire work history, as recommended, and ask questions about whom they reported to at each job — including the spelling of that boss’s name, to show that the company is serious about checking references. A typical follow-on question is, “What will so-and-so say about you?” “It’s a real truth serum,” says Nash. (This process is called TORC — Threat of Reference Check — in the Topgrading methodology. It works!) Interviewers will also ask candidates to discuss a time that they had to deal with a difficult boss or when someone said something painful to them. “We’re looking for people who receive candor well,” says Nash.
As emphasized earlier, MOM’s has customized the interview to its values. Nash believes that people who had to earn money for themselves as teenagers tend to be well-grounded, so the questions might include: “What did you spend money on as a teenager? How did you get that money?” (Hint to future candidates: You will not impress the team at MOM’s by saying your parents gave you a $100-a-week allowance.) An interviewer might also ask questions like: “Do you discuss religion and politics with people? When was your last passionate debate? Who was it with? And what was it about? How did it turn out?” “If the answer to the last question was, ‘I’ll never respect that person again,’ we know the person isn’t open to different ideas,” says Nash.
Checking for culture fit in the interview process can be handled in a variety of ways. At Southwest Airlines, for example, if people don’t get the team’s omnipresent jokes, it’s clear that the airline is not the right place for them. Commerce Bank first screens for people smiling while waiting to be interviewed. At online apparel retailer Zappos, administrative assistants always handle part of the interviewing and testing, even for C-suite candidates. If a candidate seems irritated at being interviewed by lower-level employees, he probably lacks one of Zappos’ Core Values, which is being humble.
Though it’s not always possible, the best way to select the right people is to have candidates work with you for several weeks. For frontline hires, temp-to-perm placement firms are popular because they allow you to test-drive candidates. For management hires, see if they can work with you in the evenings on a consulting basis. The founders of Google appointed Eric Schmidt chairman of the board of directors four months before making him CEO.
Zappos requires all new hires, no matter what the position (executive, programmer, marketer), go through a four-week training program that includes extensive time working in its call center serving customers. During this trial period, they offer these newbies a $3,000 bonus (besides their salary for the month) if they quit, guaranteeing that only those who really want to work at Zappos stay. Since acquiring Zappos, Amazon has adopted something similar for fulfillment-center workers called Pay to Quit. In an employee’s first year of work, the offer is $2,000. It goes up by $1,000 every year after that until it hits $5,000. The idea, writes Amazon CEO Jeff Bezos in his 2014 letter to shareholders, is “to encourage folks to take a moment and think about what they really want. In the long run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company.”
It’s important to hire the best A Player you can find for each position in your company based on four criteria (in this order!):
• Will — a desire to excel, act with courage, persevere, learn, and innovate
• Values — the test for culture fit – do they align with your core values
• Results — in the end can they deliver on your KPIs/outcomes
• Skills — the least important since most skill-sets need updating every 5 years
Doing so builds an internal momentum and strength that pays dividends for years. You hire the right people and life is great; you hire the wrong people (fit) and life is miserable.
In the next chapter, we’ll look at the leadership and people systems that Nash, Browne, and other leaders use to keep and grow this talent.