Entrepreneurial Leadership and Management . . . and Other Stuff


Hiring: Learning From the Behavior of Crowds

There are no simple ways to determine if you’re hiring the right person for a job and, in my experience, complex approaches to hiring fail almost as frequently as winging it.  OK, that’s a little extreme, but you get my point. Those who have used regimented hiring methodologies created by behavioral scientists and organizational behavior experts know what I’m talkin’ about. Nothing is better than simply laying down a few basic guidelines, understanding what you’re really looking for, knowing what’s important to you and listening to your gut to maximize your chances of hiring a good person.

The problem is, what if your gut isn’t experienced enough to help you with your decision? You can be logical about it, for sure. You can ask all the right questions, you can have everyone on the team interview, you can even have a checklist to make sure that the candidate meets all the criteria you set out. But how do you know he or she is the right person?

As with most things interpersonal, I think it’s a combination of many factors, many of them barely perceptible. Combined, they make up what our gut feel is. The way someone acts, how they greet you, the amount they talk, the number and kind of questions they ask. I’ve been thinking about the behaviors I look for when hiring and have been noticing something interesting when going out to coffee or a meal with a candidate (which I recommend – it can take them out of their comfort zone). It’s about how they move through crowds.

I lump people’s movement through crowds into four categories:

  1. Those that dive into holes in traffic as soon as any opportunity opens up
  2. Those that wait to see what people around them do
  3. Those that need to plot out their next few moves before making the jump
  4. Those who plow into the crowd without thinking or caring about the people they bowl over

Yeah, yeah, yeah, there’s a major amount of generalization going on here and there are usually roles for each type of person in some organization. The question to ask: is what each of these behaviors represents correct for what you’re looking for right now in your organization?

The last group includes people that don’t have the desire or good sense to be part of the crowd or an integral piece of the action. They think about themselves only and likely do the same when they’re at their jobs as well. Sometimes, behavior like this is a positive, but for the most part, these people are just assholes.

The people in the third group put optimization ahead of speed (no, they are not synonymous). Strong process skills are terrific and can add great value to a team. In heavy traffic or with big workloads, however, these people can often get paralyzed though.

The second group is the most problematic for me. These people usually aren’t particularly aggressive or driven – attributes of almost anyone I like to hire. On the other hand, there are clear places for such people.  Think customer-facing roles.

The first group represents the crowd behavior I like to see. Aggressive without being an asshole about it. These are people who can keep the noise going on around them in their peripheral vision in order to get things done. They move quickly, but not recklessly. For these people, moving forward is often the most important thing on their mind.

OK, I’m biased. The real point here is that people’s behavior – in this case, how they work in a crowd – is strongly indicative of how they will work when they’re your employee. Notice the small stuff like this and you’ll get that gut feel you need to hire the right person.

 March 31st, 2010  

Hiring and Firing the George Steinbrenner Way

For all sports-o-phobics out there, this is really an article about management . . . it’s likely to be a controversial one at that.

Even as a die-hard Red Sox fan, I can’t deny the fact that the New York Yankees are likely the greatest sports franchise of all time, at least as measured by success on the field.  George Steinbrenner (the owner of the team for those of you who live in a cave), doesn’t get all the credit for that, of course, but he can take much of the credit for their tremendous success over the last 30+ years.  A period that includes 10 trips to the World Series with 6 World Series Championships.

A key part of what Steinbrenner does to build championship-winning teams is to hire the best people, with the cost of those people being, at the most, a secondary factor.  The results of such a strategy can be clearly seen in the 2007 Yankees.  This year, Steinbrenner recruited Roger Clemens back to the Yankees with a $28M contract, making him the highest paid player in baseball . . . ever.  Clemens got that kind of money even though he was going to miss the first two months of the season and, as a pitcher, was only going to play every 5th game.  Since coming on board, Clemens is only 6-6 with an ERA of 4.18 (read: not very good).  So, you might ask, why does that make Steinbrenner smart?  Look at the team’s success before and after Clemens started: before Clemens, 48-44 (.522) and after, 42-22 (.656).  The money wasn’t only paid for his pitching arm, but also for his leadership, experience and the message about the importance of winning signing him sent to the rest of the team.

Clemens isn’t the only example, of course, the second and third highest paid players in baseball are also on Steinbrenner’s payroll.  Alex Rodriguez ($26M/year) is having one of the all time great years for any baseball player, ever.  Derek Jeter ($23M), is another one of baseball’s great players and, like Clemens and Rodriguez, is an easy pick for the future Hall of Fame.  Jeter consistently plays outstanding ball and is a fabulous team leader.

As you’d expect, however, it’s not just about spending all the money in the world to bring on the best individual performers.  Recruiting and retaining the best management is probably even more critical.  And, while Steinbrenner has had very public fallouts with his management team, he has always had some of the premier managers – both on the field and in the back office – of any team in baseball.  As you would expect, he pays them a lot, too.

I’m not suggesting that it’s as simple as just offering more money than anyone else to pick up the cream of the crop.  In fact, the Yankees carefully foster the culture they have of being the best; the historical significance of playing in pinstripes (the Yankee’s uniforms); and the psychological advantage of playing for a perennial winner.  These things and more attract players and management to the team.  But, if you look at how free agents move around the sport, you’ll see that the Yankee’s tend to retain their best players and this is greatly because of the money.

Steinbrenner isn’t shy about broadcasting that he pays the best and expects the best.  Thus, he has no qualms about firing anyone who isn’t an elite performer.  In his first 23 seasons, Steinbrenner fired 20 managers (including one, Billy Martin, five times).  There’s a well-known Seinfeld episode in which the character George Costanza, who works for the Yankees says, referring to Steinbrenner:

He fires people like it’s a bodily function.”

Personally, I can’t condone Steinbrenner’s antics nor his public airing of his displeasure with his team or its players, but he has a long track record with proof that his hiring and firing methodology works within the culture of his team.  Foster a winning environment and legacy that naturally attracts the best; pay whatever it takes to make them a member of the team; and cut poor performers as quickly as possible.  It’s hard to argue with the results.

Yeah, OK, that sounds pretty ruthless (insert your favorite Babe Ruth play on words here), but after years of watching good business teams turning lead into gold and poor teams failing with great products or markets, I can’t help but feel very strongly about the value of having a good team, especially a good management team.  And, when you look at things that way, what’s the real cost of paying (the total comp package – base + variable + equity) what it takes to get the best people.  I believe that, in most instances, the incremental compensation cost is virtually nothing compared with the opportunity cost of not doing it.  A great top-level manager is highly-leveraged and can make an organization much better.  If he/she increases the productivity of each of the members of a team by just 10%, does that not make the extra cost worthwhile?

As with the Yankees, to make a strategy of hiring the best regardless of cost work, you need to assume that you’re going to make mistakes.  When this happens, you have to be willing to fire the employee, especially if he/she is a manager, as soon as possible.  That same leverage that helps a great manager create great teams can also work negatively, running good teams into the ground before you realize it.  Finally, it can never be all and only about the money.  You have to build a culture that people are interested in working in and in which they are motivated to do there best.

Some of you are saying that paying more is unnecessary because you run a terrific company or group and people want to work with you.  Others may be saying that there’s no point in paying for the best because at some point you reach diminishing returns.  You may be right.  In fact, if you’re running a raw startup, the intangible recruiting factors often overcome the tangible ones.  Once your organization begins to mature, though, you’ll start to value wisdom and experience over pure determination and hard work.  You’ll always want to be bringing people with varying levels of experience and knowledge on board, especially at the individual contributor level, but keep in mind, you generally get what you pay for.  This fact is even more important at the managerial level.

Paying more is obviously no guarantee of getting more.  You still need to do all the due diligence you can in order to make sure that a candidate for a position is the right one – on a cost-independent basis.  If you find that the best candidate is also the most expensive, don’t be shy about selected him/her.  The best people are often known to be the best and are heavily recruited.  It’s all about supply and demand, good people will often cost more.  They also produce more.  Isn’t that worth the incremental cost?  George Steinbrenner and the winningest sports franchise in history think so.

 September 25th, 2007  

Recruiting and Hiring – Closing the Deal

One of the companies I work with just fell victim to a recruiting problem that I’ve encountered more times than I want to remember – losing a newly hired employee before their start date.  Most often, this seems to happen out of ignorance, sometimes because of lack of bandwidth and once in a while, out of sheer hubris.  In any event, it’s something that can almost always be avoided by recognizing what’s going on and paying a little attention to it.

When companies recruit the best person available for a position, it is a rare occasion when they’re not competing with other companies that desperately want to hire that same person.  They are also likely competing with the target’s current employer who anxiously wants to keep that person working for them as well.  It’s truly great to be loved and the really great people out there get a lotta love.

Since there’s so much competition for these key individuals, it’s likely that you have to put a lot of effort into recruiting them.  You focus on them every day, talk with them frequently, try to address any concern they have in a proactive manner and sell, sell, sell.  Just like everyone else who wants them does.

The problem starts when the recruit agrees to take the position that you have offered.  You quietly do your little Tiger Woods fist pumping thing to celebrate, agree on a start date with your new employee, then move on to your next most important task at hand.  Meanwhile, the competition for your new recruit redoubles their efforts to try to entice him/her to change their mind about their decision before they’re escorted to their new cubicle.  There are no rules of engagement here that state that it’s unethical to steal people away in the period between the hiring and start dates.  Just because you’ve won the battle doesn’t mean that the competition has given up the war.

After all, they have nothing to lose, the recruit is likely suffering from at least a small amount of buyer’s remorse and, if you’re like most managers out there, the huge amount of communication that took place prior to the agreement to join has virtually evaporated.  It’s just not unusual to see no real communication between a new employee and his/her employer during the time between closing the deal and the new employee’s first day.  These facts make the no-man’s-land right before the new employee starts the time when he/she is most vulnerable and most susceptible to the potential of other offers.

Now, perhaps you’re not staying in touch because you’re busy.  Maybe you’re thinking that everyone else will back off since you’ve won the battle or, maybe you think that you’re so great, everyone wants to work for you and you don’t need to do anything extra.  If you fall into any of these camps, you’re open to some potential hiring pain.

So, how do you optimize your chances to remove bumps in the hiring road?  Show the people you hire that you’re interested in them, not only their skills.  Make it personal.  Here are some ideas:

  • On the evening of the day they sign up, give your new employee a call at home.  Tell them how much you’re looking forward to working with them and how much you’ve enjoyed talking with them so far. 
  • Soon after they agree to join, give them a call and set a date for dinner during an evening prior to their start date.  Even better if you invite their spouse along.
  • If they’re a hire for a distant location – get on a plane and go shake their hand.  And don’t forget the dinner thing.
  • Send a hand written letter to their home telling them how excited you are about what they will accomplish in their new role (email is OK, but the old-fashioned way is much better for this purpose)
  • Have people they will be working with send them a quick email sharing their excitement about what they’re working on and the prospect for future work together.
  • A couple of days before they are scheduled to start, contact them and ask if there’s anything special they’ll need when they first come in.
  • Stay in touch by any means up until the very last day.  That doesn’t mean every day, but every few days is not unreasonable

I guarantee you that others are going to be doing the best job they possibly can to convince your new employee that they made a terrible mistake by joining your company.  If you keep in mind that the hiring process doesn’t end until a new employee shows up on a daily basis, you can counteract siren song offered by other would-be employers.  It’s a small amount of effort to save an awful lot of pain.

 July 31st, 2006