Hiring and Firing

How to attract talent, pick the right candidates, retain star employees and say goodbye

People are a business’s biggest asset and the thing most companies spend the vast majority of their budget on. So the question is: How do you get — and keep — the best people on the boat, when the boat is constantly being rebuilt? 

I think of entrepreneurship as an art form. You don’t know what combination of elements you need on the palette until you start creating, and things evolve over time. 

The best way to make sure your team evolves to meet your company’s needs over time is to hire committed, talented people who are capable of doing lots of different things based upon their experience, interests and talents.

Too often, though, business owners set themselves — and their employees — up for failure with haphazard recruiting, unstructured interviews, and ineffective onboarding. When they pick the wrong candidate, managers often take too long to fire an employee; and when it comes time to part ways, they botch that, too.

Here’s some advice on avoiding common pitfalls:

• To attract a talent pool, let people know what you stand for.
• Use a highly structured recruiting and interview process to pick the right candidate.
• To keep employees, allow talented employees to work where their passion lies.
• Remain on the lookout for opportunistic hiring. 
• When someone quits, remain empathetic, and ask, “Is this a problem or an opportunity?” 

Why I like structure

Especially for small organizations that are growing fast, the burden of hiring is substantial. It takes a lot of resources to hire effectively. And it’s extremely costly — not to mention painful and time-consuming — to hire the wrong person.

You can reduce the cognitive load if you create a clearly defined structure from recruiting all the way through to onboarding.

Decide who you want to hire

To hire the right people, you need to know what you’re looking for. That will vary to some extent for every company, though high-performing teams generally share similar characteristics: specialized talents that compliment each other.

Whatever characteristics are right for your company, decide on that first. Then set up a structured recruiting and interview process to test for those characteristics.

Beware of the culture trap

Companies sometimes fall into the culture trap, focusing so much on culture that they end up with a monoculture in which everyone acts and thinks the same.

At Music Exchange — just like most entrepreneurial companies — we are constantly innovating and testing new ideas, so we place a premium on a unique point of view and willingness to share it.

We look to build an A-Team of people with highly specialized and complimentary skills, rather than a team of generalists who are average at most things and don’t excel in any one.

Fly your flag

Once you figure out the type of team you want to build, get the word out about your company to attract the right candidates. This is a prerequisite for any advice on hiring and retaining employees.

Your company is only as good as your employees, and they are only as good as your talent pool — so focus first on filling that pool with quality candidates. Look for ways to communicate to the public about who you are and what you’re doing. 

In “The Secret to Successful PR” I shared tips on effective public relations, recounting my own experience working with the media. I first invested in PR in order to attract talent in the Denver area, where we’re based. Articles in the local business publication helped fill our talent pool with the types of candidates we wanted.

Personality tests

At Music Exchange we ask job candidates to take a test called Talent Insights, which draws from several of the leading psychological tests to get a read on someone’s disposition. This test has proven effective for determining three key qualities:

• Detail orientation,
• Independence, and 
• How quickly they make decisions.

We look to balance these three areas on our team, and the test gives us an idea of how a candidate might fit in and helps us formulate good interview questions. 

Interview process

The best way to make sure you get the best candidates is through a highly structured interview process.

You should be able to explain the process from beginning to end at the first point of contact with a job candidate. Anything short of that and you risk losing some of the best talent off the bat, because top talent expects a professional experience.

This is our process:

• First, a professional recruiter screens the candidate, allowing us to communicate expectations of the role and note any immediate red flags.
• Then candidates are invited to an initial interview with a small group of employees. This is a thorough examination of their past performance generally lasting 2-3 hours.
• Candidates that pass the first interview are invited to a second one with a new group of employees that includes at least one interviewer from the first round. 
• Following the second interview, the candidate goes to lunch with another group of employees to get even more perspectives, giving us a bit of a chance to “try before we buy.”

Your one chance to ask

During the interview process, try to understand the candidate’s motivation for major decisions in their life. We use Lou Adler’s Performance-based Hiring system, which focuses on an individual’s drive to achievement in prior roles. 

Ask about why they attended a certain school or took a certain job; ask about past work projects and decisions they made. If you ask a future-based question, you’ll usually get an answer you like. So avoid those.

If you don’t ask these questions during the interview process, the reality is you’ll never get the chance once they join your company. There’s never an opportunity for you to comfortably ask an employee about their entire work history and the core decisions they made over their life.

Onboarding

Once you make a hire, I recommend a deliberate onboarding process, which can drastically cut the time it takes a new employee to get comfortable and start being productive.

At Music Exchange we invest a lot of time getting new employees oriented to our people and processes to ease their path.

Dealing with an underperformer

Entrepreneurs have an obligation to their employees to create an environment where they can excel. Ultimately, if you really care about your employees, you want them to do the things that they want to do — in life and within the company, too. 

Your office should be a sanctuary for the people who work there: They should feel confident they will keep their job even if performance dips due to a personal issue or some other temporary circumstance. 

If an employee isn’t performing at a high level but they’re honest, have a good attitude, do reasonable work without major blunders and take feedback well, you owe them the right to try to find a place where they can create more value in the company. 

An employee may not be 100% what you were hoping for, but the risk of letting them go in hopes of finding someone else might be greater than making adjustments with the team you have. 

When an employee makes a mistake, first ask yourself, “What did I do wrong? Did I not make sure that they understood that this was important? Did I not show them how to do it? Do they not have the natural disposition for this level of detail work? Is there a better fit for this person somewhere else in the company?”

When people leave

When your business is growing fast, what you need today is different than what you needed last year. When any employee leaves — including one who contributes dramatically to the business — you should ask yourself, “Is that still the right person for the job?”

Even if you feel the person leaving was doing a good job in their role, take the opportunity to consider what else you might get out of the role based on your company’s current goals. Then, be prepared to communicate that to new recruits.

Opportunistic hiring

I recommend that all entrepreneurs keep an eye out for opportunistic hiring at all times. These are talented people you’ll come across who may not fit into any open positions today but who could provide a big boost to your company if you carved out a role for them. It may not even be clear how you’d use them.

These types of hires are risky because they are senior level and demand high salaries. You pay them more because of the responsibility they take on, recognizing it could be a lost bet. On the upside, though, the right opportunistic hire can have an outsized positive impact on your organization.

Try before you buy

In his book Work Rules, Laslo Bock, the former head of people at Google, outlined the two main things that predict success for a Google employee: First, an employee was more likely to work out if they had some prior experience working with Google, either as a contractor or in some other role. In other words, this is the “try before you buy” approach that can be so effective. Second, the higher the IQ, the better odds of success.

If you’re able to hire someone as a consultant first — or even hire them on a trial basis — that can greatly increase the comfort level for everybody involved.

Retention

There’s no trick to keeping people around. You have to create an environment that people want to be in that’s a better environment than other environments they could choose. 

Especially for early career employees, money can be a big factor. More experienced employees are more likely to care about their overall job satisfaction: “Am I making a difference? Do I see a future here? Is the business doing the right things?”

Managing employees is always a two-way process. You should constantly inquire about what your employees want to be doing and look for ways to expand their roles to play to their strengths. The biggest thing is to have an open dialogue with all of your employees about how their role might evolve.

Firing

Sometimes, despite your best efforts to find the right roles for everyone, you have to fire people. I believe that when it’s really clear that you have a mis-hire, you should fire right away.

I’ve done this rarely as an entrepreneur. The times I have mostly involved employees who demonstrated a consistent pattern of putting their personal interests ahead of the rest of the team.

My rule of thumb: If my commitment to your success is greater than your own, there’s nothing I can do for you.

When firing an employee, try to part as friends. This is not the time to air your frustrations with the employee. Remember that this is likely a humiliating experience for the employee.

When it’s not a red-line issue like stealing or treating a coworker poorly, arrive prepared with a clear explanation for why it’s happening. 

Remember to be generous.