If you value hiring better, I just posted an article called Topgrading for Dummies which outlines the 3 main criteria I use to hire A-Players and includes the structure of the Topgrading “Speed-Call” I do in 15 minutes to find the best talent. Here’s the article.
If you care about hiring or being hired, I recommend you check out an in-depth article in which I offered some detailed thoughts on these 7 trends:
Go check out The Top 7 Reasons Hiring Is Being Reinvented…Right Now! for the full article — it’s hosted by Ongig, a new business I’m part of.
I invited third-party recruiters to comment on section #7 and a couple of them disagree with me — it’s great to have an open dialogue on this important topic.
I was thrilled when I saw that Geoff Smart and Randy Street of ghSMART came out with the book Who: The A Method For Hiring on how to improve hiring. If you are involved in any hiring, I suggest you acquire this book right now!
You may recall that I had an incredible experience studying under Topgrading guru Brad Smart (Geoff’s father) in Chicago a few years ago with Eben Pagan and some of the Hot Topic Media gang — that meeting inspired this post: A Mis-Hire Costs You 13X That Person’s Salary: Why You Must Topgrade.
It’s good to see that the Smart family has the additional hiring horsepower …
I’ve been thinking a lot about hiring lately.
I’m working on starting a new business and I also coach others on starting their own businesses – and hiring is perhaps the most important decision a business leader can make (you may recall how I previously wrote about a mishire costing you a cool $1 million).
I like formulas & frameworks and I’ve been keeping my eye out for a good one for hiring — I found a simple one from investor Warren Buffett.
He says there are just 3 criteria that every good hire should have: Integrity, Intelligence and Energy.
Does this person consistently exhibit a soundness of character? Are they, in a word, honest?
One good tip on figuring this out is to use Warren Buffett’s “newspaper front page” test.
Let’s pretend the potential hire is named Bernard.
If a New York Times reporter had access to the work that Bernard did for you, would you comfortable opening up the paper tomorrow and reading their analysis of Bernard?
If the answer is yes, Bernard is probably of good integrity…if you’re thinking too much about that, you might have a problem with old Bernie.
A favorite quote of mine on honesty/integrity comes from Mark Twain:
“If you tell the truth you don’t have to remember anything.”
Another good quote from unknown sources is:
“Hire for character, don’t hire characters
Raw intelligence is important.
Did a person test well in a competitive environment (such as grades in University or on a standardized test like the SATs).
I just met with one engineer today in part because he scored a 1,480 on his SATs and that’s higher than most people I know.
But it doesn’t have to be academic intelligence.
It can be “Street Smarts” – The ability to quickly read situations and people.
Or it could be “Emotional Intelligence” – the skills to create optimal results in your relationship with yourself and others.
By energy, I couldn’t find Buffett’s definition of it but here’s mine:
Good energy in a hire is when they feel motivated about a task at hand.
For example, most people consider me high-energy about most things: I care deeply about new Internet businesses, hiring & making the world a better place – so when I’m working on those things, you’ll find me at a high-energy level.
But there are tasks that you’ll find me much lower energy on, such as paying my bills or filling out a rebate form to get $100 back for my contact lenses.
So, if you need help with your paperwork, please do not consider me a good candidate!
Now, ideally you want all three criteria — Integrity, Intelligence and Energy — to be met when hiring employees.
But there is one that trumps them all: Integrity.
The reason, as Buffett explains, is that if you have the other two: an intelligent person who is high-energy about what they’re doing, but they’re missing the third (they are low-integrity (e.g. dishonest)), then that is a Perfect Storm of financial disaster.
Case in point: Bernie Madoff (you like how I moved to the real -life Bernie from the hypothetical “Bernard”?).
Clearly, Bernie was an intelligent man – he had the respect of a Who’s Who of Wall Street people.
And he was high-energy at what he did– was able to talk 1,000’s of people into hiring him to manage their savings; and hid his fraud for what investigators believe was over 30 years!
He even duped a couple of very smart people I know.
And Bernie served on a number of boards (including Yeshiva University’s Business School and Gift of Life Bone Marrow Foundation) and was clearly a high-energy multi-tasker.
So, I think Bernie qualifes as an intelligent and energized person…but he was low-integrity…and he robbed people blind.
To recap, there are three things that a good hire (or anyone you work with) should possess:
But to save yourself time, make sure they have the first (Integrity) because the next two don’t matter without it.
I’ve had to fire or let go a handful of people in my career. Firing someone can be tough, but if you follow these guidlines you should do just fine.
Here are my learnings:
Make The Decision Fast
The adage, “Fire Fast, Hire Slowly” is very true.
On the firing side, I have never regretted firing someone who was a consistent problem. On the flip side, I have often regretted moving too slowly on firing someone.
If your gut tells you that a person isn’t working out, you owe it to your business and the employee in question to move fast.
Clarify The Reason You’re Firing Them
You need to identify the reason that you’re firing your employee (for yourself first; and then later to explain to the employee). It could be for performance..or it could be that they did not fit into your culture.
Whatever the case, have it well-thought out for yourself and have specifics (examples or data) to back you up.
Document The Reason You’re Firing Them
You should make sure that you or the hiring manager document the reasons for the termination before the actual firing.
The most common way to do this is in a performance review (also called a Performance Appraisal) in which you share your feedback with the employee in question.
I should write an entire article on Performance Reviews…but in the meantime, check out Performance Appraisal for more background.
The most important point is that the employee should not be surprised that they are not working out…and the details of this should be documented so that if the terminated employee ever tries to to sue you for Wrongful Termination, you will have written details to show a hudge.
Determine Their Last Day
Now that you’ve decided to be decisive (good for you!), you should determine when you’d like the person to leave.
If the person you’re firing has done something crooked, you may be choosing for their last day to be immediate.
In most cases, the person you’re firing is just not performing to your standards or is not a good fit with your culture or values. In that case, I try to be consistent with all employees by using a standard amount of notice (2 weeks, 30 days, 2 months, etc.); though this may vary based on how long they’ve been with you or what their seniority is.
If you don’t have a standard, then use your next firing to determine your standard (so that this is easier on you in the future!).
If your company is small, like many I’ve worked in, it’s ok for you to learn as you go!
Determine Their Final Deliverables
Figure out exactly what you need from them between the time you fire them and their last day.
I prefer to make this list a fairly short list of deliverables to allow the fired employee to have some extra time to search for a job.
Determine Their Severance (if any)
Next you need to determine what severance payment if any you will pay them.
Again, this should be consistent where possible. There should be a minimum severance package for an employee who had just recently joined the company (i.e. less than a year) and there can be extra severance based on longevity and seniority.
For example, some companies pay a minimum severance of 1 or 2 weeks to anyone they let go and then an additional week of severance for each additional period they’ve been there (e.g. an extra week of severance for every year they’ve been at the company)).
Your industry may play by different rules so you should ask around.
And, again, if you don’t have a standard set of severance packages yet, that’s ok — you can use your next firing or two to establish one.
The point is to be standard/consistent so that this will be easier for you in the future.
What to Say When Firing Someone (Write a Firing Script)
Now we’re getting closer to having to actually fire the person. This is a very important conversation and I urge you to write out a script of what you’re going to say.
Here’s a script that I used to fire Cooper (don’t worry, I’ve never fired a real Cooper before):
1. “Cooper, this isn’t working out between us.”
2. “The primary reason is [fill this in with the reason(s) that you already identified above] “E.g.: “Cooper, the reason this isn’t working out is that we believe we need a more experienced person in your position to help us reach our objectives.”
3. “We value you immensely, Coop (list all his contributions and really make him feel loved).”
4. “And what we’d like to do is give you time to figure out your transition.” (This is optional based on when you determined their Last Day (see above) to be).
5. “Since we know it’s easier to find a job while still an employee, you can remain a paid employee until [fill in the date (see above)] ”
6. “Between now and [fill in the date], we ask that you complete the following deliverables, and you can feel free to use your remaining time as “flex time” to search for a job.
7. “We’ll do our best in supporting whatever next job you get.” (e.g. You say you’ll be willing to act as a reference (assuming you see some positive things in the person) or at least will confirm that they worked at your company)).
I recommend you practice the script with a fellow executive, your manager or a mentor. Do a dry run-through together — it will make you much more comfortable with the difficult conversation you’re about to have.
Really dig into what Cooper’s pain point is going to be regarding his imminent employment termination. It may be that he is driven by some extra money (i.e. severance) or it it may be that it’s very important for him to save face.
The Actual Firing
Ok, now comes the part you probably fear the most (I did too): You have to tell the employee that he or she is out of here.
Here’s what I do:
Most of the time, Cooper will eventually accept the decision; though he may try to bargain a bit in which case you should be open to exceptions to any of the terms you outlined if Cooper makes a strong case). But if you’ve done your homework, your Severance and Timing will have been fair and Cooper will accept it.
Other Things To Consider
A final reminder that I can’t emphasize enough: Deal with the issue swiftly.
You owe it to your company, yourself and Cooper to be decisive. Plus, the sooner you act the more flexibility you have in helping Cooper on his way (and the more money and headaches you save everyone).
And if you want to minimize the number of people you fire, please read You Must Topgrade.
If you have questions not covered in this article, please comment below (it can be anonymous).
I was inspired by the book MoneyBall by Michael Lewis who chronicles the Oakland A’s baseball team and its strategy of focusing on undervalued players in the Major Leagues.
I’ve found some success in applying this to business. Specifically, I am always on the look out for undervalued people.
Here are two examples of undervalued people I look out for and find:
Falling Stars (or “Falling Angels”)
Falling Stars are workers who hit a certain apex in their career and then for some reason fell — often far — from that level.
The reasons they are “falling” may include personal problems such as divorce, substance abuse or alleged unethical or illegal activity.
Such Falling Stars are worth a close look to be given a second chance, especially if they proved themselves for a long period of time before their fall from grace.
I recall an attorney who was having a challenging time on the job market because one of his prior employers had run into trouble with the Federal Government and this had tainted the attorney’s reputatin…but closer scrutiny showed that this individual had done nothing wrong and in fact had a track record of 25 years or proven value! He was a fallen star.
Note: Since I wrote this post, I read a good post by Dallas Mavericks owner Mark Cuban in which he used the term “fallen angels” to describe players who were former stars on the decline in performance, but whom improved in the right new situation.
Mark gets it.
Diamonds in the Rough
A second example of undervalued people is what I refer to as “Diamonds in the Rough.”
Diamonds in the Rough are different than Fallen Stars…as the label implies — they are quite valuable individuals who are simply not appreciated for their potential.
Diamonds in the Rough usually exist because of poor managers or leaders surrounding the Rough Diamond.
A good place to look for such Diamonds in the Rough are mismanaged companies as they sometimes forget to dig deep enough to find their diamonds.
A good sign of a mismanaged company is one ego-driven management; they typically take their Diamonds for granted.
A great time to hire Diamonds is when their employer is not doing so well in business…perhaps their sales have flattened or profits are down. The Diamond will have his or her antennae up a bit higher during those times…and you can scoop in and hire them!
MoneyBall Author Michael Lewis has written a couple of other good books I recommend (especially if you like “inside baseball” type books with real-life characters being written about as if they were fictional:
Liar’s Poker: Rising Through the Wreckage on Wall Street (in inside look at Wall Street from his four years working at Salamon Brothers) and
The New New Thing: A Silicon Valley Story (About Jim Clark who founded Silicon Graphcis, Netscape and Healtheon)
It can cost you 13-times a person’s annual salary if you hire the wrong person, according to Brad Smart.
Brad is the main man behind a couple of books, Topgrading and Topgrading for Sales, which I highly recommend to anyone involved in hiring.
A dozen of my colleagues and I were lucky enough to spend two days with Brad in Chicago in October 2005 when we took his Topgrading training program (which I also recommend).
The 13X cost of a mishire was a stunner! …