In my last book, I talked about differences in both the types of employees and even executives that a company needs throughout its growth and maturation. So here is a summary of that chapter from my previous book. For many entrepreneurs, the traditional wisdom is that if you do a good job hiring at the early stages of business, you only have to hire someone for a position once and they will grow with the company. I will get into why people think there is never a need to replace anyone, and why that is wrong in a later chapter, but let me focus on the hiring process itself in this chapter. Hiring the right people means you need to avoid hiring the wrong people, and there are many ways to hire the wrong people.

For instance, during those early employee hires, you need to be sure you hire for flexibility and trainability. Everyone, you included, has to wear a lot of different hats. The company can’t afford to hire experts to fill each need yet. Even the owners are probably not experts; rather, they are simply willing to pick up whatever needs to get done to make the next sale and do it.

If successful through the initial startup, what you want to end up with several years later is:

  • Written procedures and processes in place.
  • A management team that plans and knows how to minimize unplanned events.
  • Expertise in their departments who work with other experts in other departments.
  • No one is a jack of all trades anymore.

The personal challenge you face as the CEO – and that the rest of the CxO management team faces – is being OK with not knowing the up-to-the-minute operational details of the company the way you used to. Your focus is on guiding an ever-growing organization, which means, much like a conductor of an orchestra, you focus on what will be happening next, rather than what is happening now. You trust your management staff to execute on the future plans and keep you informed enough to be able to make the right strategic decisions. They, in turn, trust their department heads to know enough about day-to-day, but not necessarily minute-by-minute operations.

The most important reason to hire someone is that they have skills that a company needs, are willing to utilize those skills when the company needs them, and are eager to do this at a rate the company can afford. Secondary qualities, like people skills, will help determine how well this person fits into the company culture and how effectively they will interact with employees already at the company are also important. However, you as a founder or a senior manager liking someone as a person, while it is obviously a plus, should be much lower on the list.

I have been able to find very good people to hire for my clients, but that is not an easy process. Finding a great employee means the company has to do as much work as the person applying for a job. What I mean by that is great hires do not stay available for long. You may receive 25 resumes and see five great potential hires, but those five may have sent out resumes to 25 companies, and the first company to interview them and give them an offer is likely to get them. So do not waste time with filtering tactics that make the candidates jump through hoops. Instead set up an interview immediately with anyone whose resume looks impressive. The first interview may be only 15 minutes and cover just a few questions, but at that point, they are not likely to take another offer without talking to you first. If you simply email your candidates a list of questions, and other companies are already setting up interviews, guess what your odds are of getting a reply to your email?

If you take too long from initial contact to an interview, you will simply end up with the candidates who are most desperate, not the ones who may be the best fit. Finding the perfect employee is easy – it just takes the same amount of effort as making the perfect product or delivering the perfect service!

For many CEOs I’ve worked with, hiring people is second only to firing people as the least enjoyable part of the job in the company. Even ‘people’ people from sales and marketing departments dislike spending time to find the best candidates. Unfortunately, very often that means the solution is just to hire the first person who comes along, replies to filter questions, and doesn’t blow the interview just so they can end the hiring process. This leads to a company full of mediocre people doing an OK job. No one is terrible, but it also means it doesn’t take much to stand out in this crowd. The TV show The Office was based on following the fictional lives of mediocre people selling a boring product. In that show, no one is motivated to do more than the bare minimum. While the head of the office constantly comes up with ideas to motivate people but accomplishes nothing but distracting them from their work. The show was funny precisely because it showed an office full of people doing mediocre work and a boss who thought that his staff was great. It was a TV show written by utterly NOT mediocre comedy writers!

Another common occurrence is to see a company full of twenty-somethings. Yes, there certainly are examples of companies started by teens and others staffed by people just starting their professional careers, like Facebook in its early days, but let’s face it, a successful company like that is a unicorn – it just doesn’t happen very often. For most businesses that have an age bias in either direction, this is a detriment to the success of the company as it starts growing past a half dozen employees. Youth can have skill and energy, but if not balanced with wisdom, which only comes from making mistakes – maybe lots of mistakes – it does not provide the best workforce long term. Likewise, a company full of very experienced people will be missing the energy and creativity of inexperience which often leads to completely out-of-the-box solutions to problems.

I’m a fan of using interns precisely because they bring something unique to the workforce that cannot be taught – namely, an unbiased view of existing processes. But unless you are in college, and you don’t know anyone over 25, you really should be hiring some of your people based on experience and the wisdom it brings to balance out the exuberant enthusiasm of youth. Certainly, by the time you hire your 5th or 10th employee, you should be recruiting for skill and experience.

Mistakes can be made by everyone. Your goal in hiring more seasoned and specialized staff is to pay for what they learned from past mistakes through a higher salary or hourly rate. You pay for more inexperienced staff mistakes through unexpected business losses that come at the most inopportune times when a business follows through on a bad decision.

How do I find the best people if I don’t like wasting time on the hiring process? Well if you can afford to use recruiters (15-25% of annual salary) then do so, but only after doing due diligence on the recruiter. Don’t just trust someone who paid $9.99 for a business card with the word “Recruiter” to help you find a person who will be responsible for potentially millions of dollars in profits or losses for your company. Have the recruiter audition for you. Have them explain their process for finding the best employee for you. Have them tell you about their successes as well as failures of the past. Tell them you want to use one recruiter for the next five years, so they are potentially going to make hundreds of thousands off your company, and that you want to be sure that is the kind of relationship they bring to the table. If you can find a good recruiter, you can avoid having to find new employees on your own. If you can’t find a good recruiter, then don’t use a recruiter as they will merely cost you money and solve none of the problems that you would have if you just hired poorly yourself.

After the initial startup period of hiring generalists, one of the skills of a successful CEO is being able to surround himself with people who are more qualified than he is in their particular specialization. Look around your company and think about the people who you see as being better than you. For each one, you can honestly say that about – congratulations, you made a good hire. For everyone else in roles that are specialized, you probably need to start looking for their replacement sooner rather than later. For menial or entry-level roles you should not expect that people know more than you about doing that job, but they should at least be faster, more efficient, or more regimented in doing their jobs than you would be if you had to do it yourself. Any fault with the staff within a company always rolls up through management and executives to the CEO. Find good specialists, and set high expectations for their hires, and you will have a company of the top producers in your industry. Shrug off the responsibility to take the time to hire the best of the best, and your bottom line will suffer.

I had one client that had shown an ability to grow sales very quickly. They were riding the wind as it were. Then it turned out that the ride was unsustainable. When I came in, I was surprised to find a company full of people in their 20s. I wondered if it was all the innovative ideas of younger employees that helped them grow so fast. It may have been, but it was also the cause of their downfall. As I mentioned, everyone makes mistakes, as much as we try to be perfect. We can make fewer mistakes by remembering our own past errors and the mistakes of others. Nothing will prevent someone from making an error in judgment nearly as much as a bitter memory of the price they paid the last time they made the same mistake.

Learning from others’ mistakes is a half-step in the right direction, and it contains wisdom, but not the instruments of enforcing adherence to that wisdom. So when you have a company staffed by people who have made very few business mistakes in their lives, they will not help you as the CEO in avoiding mistakes. They have nothing to fall back on personally, and they will respect and admire you as a successful CEO even if you make bad decisions, further hurting your decision-making abilities by creating a false sense of always being right. We see this type of thing happen with politicians all the time. They surround themselves with sycophants and then end up falling from grace, but never understanding why they fall so far.

Making mistakes is human, learning from your own mistakes and the mistakes of others makes you superhuman. Unfortunately, most people need to make the same mistake multiple times before they actually learn from it. For companies that is often even worse because mistakes get institutionalized and become part of the normal process. It’s not wisdom unless you avoid the same mistake in the future.

If you have no other reason than this to surround yourself with people who are more experienced and better qualified than you, it is that their internal criticism and disagreements with you will give you the opportunity to prevent making extremely costly mistakes with the entire company. But that will only happen if you take their advice! If you surround yourself with only enthusiastic but inexperienced youngsters, they will have little criticism to offer you and you will keep making costly mistakes.

Excerpted From The Original

Beyond Sales: 50 Business Problems Every CEO Needs to Solve

Foreword by Roy H. Williams

Gene isn’t a journalist, but he is most definitely an investigator.
I was talking to a friend who employs about 250 people in 3 different companies when he mentioned that he had hired a specialist to figure out what was wrong with a company that was underperforming.
“Who did you hire?”
“A fellow named Gene Naftulyev.”
“He’s going to figure out what’s holding you back?”
“Yeah. He’s famous for it.”
“How famous?”
“Procter & Gamble. American Express. Kraft Foods. Target. They’re all clients of Gene’s.”
“What does he do, exactly?”
“He improves profits without spending money.”
“But how?”
“Process re-engineering, operational optimization, making business units autonomous, negotiating employee and consultant contracts and a hundred other things like that. It just depends on what you need. He refines the core of your business so that you become more efficient, have fewer frustrations and make more money. Naftulyev can always spot the problems and his fixes are famously quick and easy.”