Scaling Up: How A Few Companies Make It…And Why The Rest Don’t



Scaling Up: How A Few Companies Make It…And Why The Rest Don’t

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.

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.

The Best Hires

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.

Recruiting Is a (Guerilla) Marketing Function

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.”

It is easy to stand out if you use whatever approach fits your culture and you show some originality.

MOM’s Goes Fishing

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.”

Like MOM’s, 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.

The Topgrading Interview

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 Top-grading. 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.

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?

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.

Check for Culture Fit

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.

Test-Drive Potential Employees

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.

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.”

Will, Values, Results, Skill

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.

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