by Ryan Blair
By coincidence Philip had been out partying in Hollywood that night and overheard some people talking about heading over to a party at Ryan Blair’s house. He recognized my name and decided to follow them in.
This was the guy who had recruited me and jumped me into the gang. This is the guy who had beaten me up and ordered many of the crimes we committed. I was literally staring my past in the face.
One of my friends came up to me as I was standing there talking to Carlos, and I said, “You’ll never guess who this is.” After I explained who the thug standing in my living room was, my friend turned to Carlos and asked, “Why would you recruit Ryan?” Then he looked at me as if to imply, “This pretty-boy white kid.”
Carlos said, “Ryan was an insecure kid. He’d just lost his father and would do anything to be accepted, and he was the perfect kid to do my dirt.”
In essence, he’d understood my psychology. I was the right age, the right socioeconomic status, and I had the right upbringing. I was the perfect person to get the job done. Carlos had developed a profile for the best recruit for the job he needed done, and when he met that recruit, he gave him the job.
Maybe it’s a strange example, but hearing his words as he described why he’d recruited me made me realize that I use the same technique when I’m hiring someone for my company. I am looking for the right type of person to get the job done.
In order to grow your business, you have to recruit and hire, just as Carlos did to grow his gang. On the streets you have to recruit new members frequently because you have high turnover, and the gangs that were the most successful were always building their numbers. It’s the same in business. I’ve seen companies fail because they didn’t hire people when they should have; I’ve also seen businesses suffer because they hired the wrong persons (see chapter 12, “Million-Dollar Mistakes”). The best advice I can offer as you start the hiring process is to know, just as Philip did, what kind of employee you are looking for.
In most cases, in a small business making its first few hires, you’re not looking for a person with highly specialized training but someone who can do a little bit of everything—a jack-of-all-trades. You need someone who will be willing to work the phones, take out the trash, interact with customers, and mop the floor—in other words, anything that will allow you more time to make sales or craft the company’s strategy.
You need to make sure that the person you hire is willing to accept that kind of position. Some people are adamant about what they are and are not willing to do as part of a job. If someone thinks dusting the shelves or refilling the paper towel dispenser in the bathroom is beneath him, don’t hire him.
The first position I’ve filled in any of my businesses has always been that of office manager. In fact, that was usually how I listed the job when I advertised it. I wanted someone who was interested in managing with a sense of responsibility, because that would indicate a personal connection to the company. In each interview, I would look for someone who would take the initiative, someone who would be on the lookout for whatever job might need doing. That kind of person tends to take pride in her work, which is exactly the kind of attitude I wanted in my company.
When you are ready to hire for highly specialized positions, you should keep this kind of attitude in mind. Employees need to have a defined job description and a clear set of expectations, but you should also explain that from time to time they may be called upon to step outside of their job descriptions to help with a project or situation that is important to the company.
People who are overly protective or territorial about their job descriptions tend not to be team players. You want someone who is concerned with doing good work for the sake of the customer, product, brand, and company, not someone who is just hacking away at a job strictly for a paycheck.
I’ve always believed that my most valuable asset is the quality of the people I’ve been able to attract and recruit for my companies. If you surround yourself with tremendous talent, you will find yourself challenged and stretched to levels you never imagined. It is my goal to be in awe of every person I hire. I want to see traits in her or him that are more dynamic or more positive than my own abilities in that area, because I know that simply by working with that person, I will be able to grow and the company will prosper, thanks to this continuous reach for improvement.
I’ve seen entrepreneurs stunt their growth because they were afraid to hire people smarter than they were. Bill Gates once said in an interview that the secret to his success was that he hired people smarter than he was, and he’s pretty smart. Good people don’t take a job just for salary. They take a job for camaraderie, learning opportunity, or because of their career direction. As the CEO, your job is to clearly articulate those elements you offer your employees that are not money oriented, so that you can attract the best of the best talent without necessarily having to pay the highest wages. In almost every great company I have studied, the elements that recruited the candidates were what led to that company’s greatness. And in every failed company I’ve studied, it was a lack of attention to those elements that led to its failure.
At ViSalus, we spent so much time building the sales culture that now we find ourselves shifting gears to work on building the internal employee culture, so we can grow our company into a great one. I didn’t pay much attention early on to the employee culture because I was focused on building the sales culture in the field. The sales culture is responsible for the current growth, and the salespeople should be greeted as heroes because they’re the ones generating the revenue that pays everyone else’s salary, but the one thing that could stop the rate of growth at this point is not building the employee culture to complement the sales culture. I’ve seen some businesses in my industry fail because employees and management actually grow to hate the very people who are generating the revenue.
Early on in my career, I couldn’t fathom hiring people who were more expensive than I was, but one time a venture capitalist, realizing I was weak in the finance area, required that I hire a world-class CFO at a rate significantly higher than I was making. It was humbling, but I knew this individual was the best person for the job, and I looked at it as an investment in the growth of our company. I never regretted that decision.
One of our board members, Bob Dilworth, told me that when he was CEO of Zenith, his top salespeople made significantly more than he did. I was shocked. “They make twice as much as you,” he told me. “That’s when you know you got it right.”
Several of our distributors at ViSalus make more than a million dollars a year, and there is no employee, including myself, who makes anywhere near that. As CEO, you have to remember that all of these talented, well-compensated people are building your equity and your profits, and that contributes to your compensation.
If you’re worried about how much you make a year as a business owner compared to what your employees are making, you’re being employee minded. You need to be entrepreneurially minded and create a culture in your company that is also entrepreneurially minded. To maintain that kind of chemistry, you have to be very selective about whom you bring aboard. A person who brings a condescending air, any kind of laziness, or a hostile attitude to the group can completely destroy the positive atmosphere you’ve worked so hard to create.
When I worked for my stepfather, I watched his business struggle because he continuously brought on the cheapest help he could hire, whether the people fit with his established team or not. He never took the time to screen for the right attitude, work ethic, or personality that would accentuate and add to the talent he already had in his company. As a result, the company never grew beyond my stepfather’s talents, simply because he never brought on anyone more talented than he was.
In my effort to build the best teams in the world, I sat down with Coach John Wooden to learn how he picked his starting five. He wasn’t into recruiting the hottest, most headline-grabbing players out there; instead, he researched each potential recruit carefully
to learn how that player would fit in with his team. When he or his assistants went on visits, they would carefully observe the young man’s behavior, not only toward his teammates but toward his parents—was he respectful? They would look to see how he interacted with the maintenance staff—did he quickly move out of the way when someone was mopping the court, or did he make the person work around him? How did he leave his area of the locker room—was it a mess he expected someone else to handle, or did he take responsibility for his own belongings and clean up after himself?
All of these factors were part of the recruiting process for Coach Wooden because he wanted to make sure that he was going after only the players who would enhance the chemistry of the UCLA basketball team rather than break it down with a negative attitude or disruptive personality.
I really take this lesson to heart when I prepare to hire someone. As I write up the position posting, I try to take a similarly thoughtful approach about what kind of person I want to recruit for my team. I think the way Carlos did when he was recruiting me, and I define the candidate’s characteristics, including history, personality, and what drives her or him; then I tailor the ad around that image.
I want to have as clear a picture as I can of the people I intend to bring on board. I want to know what schools they went to and why they chose those schools. I want to know how they view themselves, how they interact with others, how they perceive their role within the company. I really want to understand the personality, motivation, and worldview of each person I hire because those are the characteristics that will affect everyone else in the company.
Obviously, you would not hire someone based on things like political views or religious beliefs. Not only is that a violation of nondiscrimination laws, it is also unethical. You have to be careful not to ask too many personal questions regarding age or family status. You may think that you are simply being friendly, but it will be worth your time to do a little research to determine what kind of specific questions are and are not legally permitted as part of an interview.
But you do want to make sure that you evaluate your applicants based not only on their capabilities but also on how their personalities will fit in with the company. You want new employees to be comfortable with the ones already on staff and to be able to blend with them in a way that not only complements what you’ve already got but also gives the new hires a chance to exercise their unique skill sets, talents, or perspectives.
THE CONNECT FOUR TECHNIQUE
One screening technique I use is the Connect Four board I keep on my desk. I will often challenge a potential applicant to play me in a round, which enables me to observe a number of things about the person. Not only do I see how she calculates strategy, but I also get a chance to learn about her level of competitiveness and sportsmanship. If a person has a chance to beat me and chooses not to take it, I am not interested in bringing her on board. I want someone who isn’t afraid to challenge me and is willing to assert her point of view if it will result in the most favorable outcome. Likewise, if someone is a poor sport by being overly competitive and taking a loss badly, or by becoming overly aggressive during the game and gloating after a win, I don’t want that person as part of the team. All the mentors and business leaders I have spoken with have cited the quality of their teams as the reason for their success. Nothing is worth risking that team balance.
For me, commitment and loyalty are incredibly important. If the employee seems to jump from job to job to job, continuously chasing the bigger, better deal, I’m not interested. Sometimes, of course, a person has several “blips” on his résumé as a result of something else, so I want to make sure to give him a fair shake if he meets the qualifications. But I’m always on the lookout for people who match my image of how the ideal job candidate will act.
You need to go with your gut when making hiring decisions. If the person just doesn’t feel like the right fit, she probably isn’t. Trust your instincts in this regard—I’ve ignored mine in the past and made some horrible hiring choices that cost millions. Put a price tag on a new hire: Is it worth the $50,000 or $100,000 if she becomes a fully productive employee? What if the employee doesn’t work out? How much will it end up costing you if this is the wrong person once you take into account salary costs, disruption in the office, lost sales, advertising for and rehiring someone new? Often, hiring the wrong person can be a hundred-thousand-dollar-plus mistake.
Look for warning signs that the candidate might represent your company in a negative light with clients. Some of the worst mistakes I’ve made in hiring have come when I ignored my instincts and hired someone who seemed careless or not genuinely interested in the company. I have hired people who were overly casual, who used slang or even crass language in interviews. That kind of oversight has always proved to be a mistake. I also pay attention to whether candidates speak negatively about former coworkers or bosses. Sometimes, though, I have rationalized hiring a person who goes against the professional traits I hold so important, and it has always come back to haunt me.
Luckily, there are a few ways to rectify hiring mistakes. One is by relocating the person to a different area in the company. For example, if I hire someone to handle my customer accounts and I find that his job skills really aren’t a good match for that position, I can simply restructure his position if he is a good worker whom I would like to keep with the company. I can look to see if there is a better match for his talents or experience somewhere else in the company, so that I can retain his talent and loyalty but in a position that both of us will probably be happier with. Maybe he is better at operations; if so, I can slide him over there and start looking for a new customer accounts manager.
If, however, the person simply does not fit in with your company, and he or she is detrimental to your team, you need to let that employee go immediately. It’s not pleasant, and it’s not easy, but it is necessary to fire people—and you need to get comfortable with that reality very quickly. I’ve hired and fired hundreds of people, and I have learned that you have to look at the chore as a necessity for the life of your business.
Firing is one of the most important things for a growing business. You should think of it like pruning a plant—you don’t want its resources to continue to go toward branches and leaves that aren’t producing. Instead, you need to trim them off right away so the finely manicured result is something that maximizes its resources in the most effective way for the overall health of the organism. Similarly, you need to cut out the wrong people quickly. A bad employee is a cancer for your company that spreads and damages the entire body. The sooner you remove the problem, the better.
You need to call the employee into your office and explain how he or she is not living up to the expectations of the position. It is incredibly helpful to have available job evaluations from supervisors or even ones you’ve personally completed in which you have expressed your displeasure in the individual’s performance on previous occasions. It is important that you communicate with your employees so that they know what they need to improve before the ax falls.
If you have had a frank and honest evaluation of your employee’s performance previously, you will have had the chance to explain, “When I hired you, I thought you were the right fit for this job; but since then, I have come to see that your [communication skills or work ethic or attitude or judgment] is not up to par. If things do not improve, I will have to let you go for the sake of the company.” By communicating your expectations to employees before the point of needing to fire them, you are not only giving them an opportunity to change their ways, but you are also making sure you have a clear record of their poor performance should they choose to challenge your decision to finally let them go.
Ask yourself a question about each employee. If he came to you and said, “I am leaving your company for a new opportunity,” what would your gut reaction be? Would you be devastated because this person’s contribution is invaluable and irreplaceable, or would you be happy because by leavi
ng, he would eliminate many problems and open up an opportunity for someone more qualified? This is a lesson I learned from Jim Collins’s excellent book Good to Great: Why Some Companies Make the Leap . . . and Others Don’t, and it has proved invaluable.
One of the key ways to align your company with its employees is to align their compensation to the company’s objectives. Always remember this simple truth: compensation drives behavior. As you hire employees, think carefully about how you’ll compensate them. For my executives I create MBO programs, which stands for “management by objectives.” In my call center, I might give the workers a commission for every upsell they make. With my outbound call center, I give them a commission for every customer they win back. My event team receives bonuses if the event hits the quality mark and is on budget. If an employee is doing a good job and the company is growing, I like to reward that person.
I have seen many businesses where the owners are getting rich, but the employees’ salaries are stagnating. You don’t want that. It creates a morale problem. You want your employees aligned with the objectives of the company, so that every one of you is moving in step toward your goals. You have to give a clear path to compensation.
If your assets are limited, you may find yourself looking for someone with less experience who will not expect so high a salary. On the other hand, you may be willing to pay a higher price to bring on board someone with a proven track record and relevant experience and education. Sometimes you will find a great combination: someone who has experience but is looking for part-time work or who is willing to take a pay cut to be in a job she or he will love.
You should always strive to pay fair, market-based wages to recruit and maintain talented, reliable, and loyal employees. I have also incentivized my employees with equity if I want them to be long-term team members with the company. There are multiple ways to issue equity. You can do stair-step vesting, where one earns an increasing amount each year he or she remains with the company. You can do cliff vesting, which means that if an employee stays to a certain point, he or she gets the full amount of an agreed-upon percentage, but forfeits everything if he or she leaves before that point.
