Geoff Smart - Who: The A Method for Hiring

CONTENTS

This book is dedicated to the clients of ghSMART.
Thank you for giving us the honor and privilege of serving you.

The most important decisions that businesspeople make are not what decisions, but who decisions.

JIM COLLINS, AUTHOR OF GOOD TO GREAT

Who is your number-one problem.

Not what.

What refers to the strategies you choose, the products and services you sell, and the processes you use. You can spend your whole career chasing solutions to the million what problems plaguing your business. That is what most managers do. Unfortunately, focusing solely on the what means you will continue to feel stressed, make less money than you desire, and lack the time to do what you want.

Or you can decide today to focus on the who.

Who refers to the people you put in place to make the what decisions. Who is running your sales force? Who is assembling your product? Who is occupying the corner office? Who is where the magic begins, or where the problems start.

Just ask Nate Thompson, the CEO of Spectra Logic. Thompsons company is now thriving. But in the early years, he was such a captive to the poor performers he hired that he couldnt even go on vacation.

It wasnt that Thompson didnt interview thoroughly. He did. He pored over resumes. He often spent hours with each candidate trying to sense the chemistry. He thought all of the people he brought on board looked terrific. Yet many ended up being fundamentally unsuited for the jobs for which they had been hired. One particularly awful hire embezzled over $90,000 in commissions.

On the commission sheets, Thompson told us, the sales VP would take those 1s that the accountant wrote in and would turn them into 4s! This inflated his commission to four times what it was supposed to be.

The financial pain was great, but Thompson suffered personally even more. Employees he had mishired, and the problems they created, made it impossible for him to get away from the office. When he did, Thompson spent most of his time dealing with crises back at work.

I love to ski. Back in the early days, I would drive my family up to Vail, Colorado. But once we got there, I might as well have been back at work. I couldnt get on the mountain for the first four hours of every day. I had to be on the phone and deal with e-mails, doing the job of people I had mishired. I remember seeing my wife and kids roll their eyes and go out to ski without me.

Sound familiar? Ultimately, who failures infect every aspect of our professional and personal lives.

At ghSMART, we are in the business of helping companies make better who decisions. Our mission is to use our expertise in human behavior to help CEOs and investors build valuable companies. Geoff Smart is CEO and founded the firm in 1995. Randy Street is a partner in the firm and heads the ghSMART Executive Learning business unit. Our clients include Global 1000 companies and start-ups, and range from Wall Street bankers to passionate leaders of nonprofits. Our work has taken us from Vancouver to Sydney and from Milan to Taiwan as weve helped these clients make over twelve thousand who decisions using the method we will show you in this book. And weve trained another thirty thousand managers how to implement it. Weve spent years dealing with these issues every day, yet this book is much more than the sum total of our experiences.

To test our observations and to glean new ones, we engaged Dr. Steven N. Kaplan and his team of finance wizards at the Graduate School of Business at the University of Chicago to conduct the largest-ever statistical study of its kind to help understand what types of candidates are successful performers and which are not. Kaplan and his team spent the better part of two years sifting through data we had gathered on over three hundred CEOs to discover some surprising insights.

Most important, we have talked with and listened to many of the worlds most talented leaders as they taught us their secrets to hiring success.

More than twenty business billionaires, most of them self-made, have contributed their insights and experiences to this book, an unprecedented assemblage. These are people who have been on the front lines of some of the most exciting and defining business ventures of our timespeople whose hiring decisions have sometimes moved markets.

We also talked with over thirty CEOs of multibillion-dollar companies to get their perspectives, and we interviewed dozens of other successful CEOs, managers, investors, nonprofit heads, and experts on management.

All told, we conducted over thirteen hundred hours of interviews and countless additional hours of analysis for this project. We are unaware of any study that matches ours for depth, breadth, and hands-on experience. Most of our focus was on managers rather than HR departments, since making the right who decisions is so fundamental to career success. As Joe Mansueto, founder of Morningstar, put it, Your success as a manager is simply the result of how good you are at hiring the people around you.

Out of this mountain of research, we have identified four parts of the hiring process where failure typically occurs. It does not matter whether a person is being hired as a call-center worker or the CEO of a $50-billion financial services institution. Who mistakes happen when managers:

Are unclear about what is needed in a job

Have a weak flow of candidates

Do not trust their ability to pick out the right candidate from a group of similar-looking candidates

Lose candidates they really want to join their team

These who mistakes are pricey. According to studies weve done with our clients, the average hiring mistake costs fifteen times an employees base salary in hard costs and productivity loss. Think about it: a single hiring blunder on a $100,000 employee can cost a company $1.5 million or more. If your business is making ten such mistakes a year, its pouring $15 million down the drain annually. Nate Thompson estimates his early years of getting who wrong cost Spectra Logic as much as $100 million in value.

These who mistakes are prevalent as well. Peter Drucker and other management gurus have long estimated that the hiring success rate of managers is a dismal 50 percent. Just think of the lost time and energy that represents, not only for you but all through the organization.

What most managers do not know is that who problems are also preventable.

The purpose of this book is to give you a solution to your number-one problemto help you make better who decisions.

CEOs, middle managers, and front-line supervisors who have benefited from this solution tell us that it is the simplest, most practical, and most effective way to make great who decisions they ever learned. The benefits are huge to you, your company, and even your family. Nate Thompson, for one, finally applied the method and now has a winning team and time for vacation.

Decide to make better who decisions, and you will enjoy your career more, make more money, and have more time for the relationships that matter most.