What Now? Hiring.
Last month, as CEO of SpiderNet, you were faced with the issue of firing your newly hired VP of Engineering, who initially seemed like a rock star but was ultimately ineffective. Your board unanimously agreed that you should terminate him immediately.
It is now the new year, and you are faced with the rather undesirable task of hiring a new VP. Upon reflection, you realize that the SpiderNet hiring process failed. Given the issues (laziness, lack of leadership ability) surrounding the VP you just fired, you realize that your process (or lack thereof) did not properly vet prospective job candidates.
So before you move on to hiring again, you take an inventory of the current process in order to better understand how to correct things in the future. Here’s what you find:
- You identified the requirements of the position and developed a comprehensive job specification on your own. Since the position reported to you, you did not see the need to ask for other input.
- You hired a search firm and saw a number of good candidates. You felt that the candidate pool was adequate, but not exceptional.
- The interview meetings were always with you, your co-founder and one or two other people from the executive team. Everyone exchanged emails on the candidates after their meetings.
- The search firm did the bulk of the reference checks, which significantly helped your schedule and time.
What mistakes do you think you made and how can you better go about interviewing future candidates?
I have often considered the ability to hire great people as being analogous to a batting average in baseball. A player who hits .300 is near the top of their game. While I have certainly had a much better than 30 percent success rate in my hiring overall, I’m not sure that I’ve topped 30 percent for truly exceptional hires. Hiring phenomenal employees, like hitting in baseball, is difficult. I must admit that only recently did I come to realize that there is a set of steps that a company can follow that will significantly increase the hit rate.
With respect to the SpiderNet situation, there were several mistakes made with the current process. First, there was no input from either the board or the other executives on the job specifications. It is particularly important to gain agreement on the position and have the interviewing team help develop the requirements. Second, there wasn’t a defined interview team and the results of the interviews felt a bit ad hoc. Having a defined interview team should be part of the process. Finally, the CEO left reference checking to the search firm, which was a huge error in judgment, and probably the biggest mistake of the entire process.
I took the liberty of asking Jeff Stump, our partner responsible for Executive Talent at Andreessen Horowitz, and he outlined the following steps that should be taken when hiring an executive:
- Develop the candidate profile and expected qualifications
- Lay out the compensation framework
- Craft a set of questions to be used in the interview process
- Identify your interview and recruiting methodology
- Perform reference checks
Let’s look at each of these in more detail.
Candidate Profile and Qualifications: There should be a universal understanding of what the profile is and why the company is looking for this new hire. What is the charter of this hire over the next six months to one year? What does the company/hiring manager expect this person to deliver during this timeframe and what does success look like for this hire one year out?
The focus in this phase should be on developing a set of non-negotiable attributes as input to the interview process. Make sure to include input from anyone who is going to have a say in the interview process, including the Board and the management team. There does not need to be universal alignment, but this process will help identify any differences of opinion that can be addressed up front. This first step will drive consistency in the interview process and candidates will take notice.
Compensation and Reporting Framework: Determine the title, reporting structure and compensation of the position. Not doing this up front can often lead to misalignment late in the recruiting process.
Interview Questions: Once the profile and qualifications have been identified and agreed upon, develop a set of questions that are going to be used in the interview process. These can also be used by the search firm to screen candidates. Questions should be crafted to gauge motivation, fit and expectation.
During this phase, the hiring manager also should identify the interviewing team and start the selection of a search firm. In most cases, the company’s internal network will not be sufficient to identify the absolute best candidate and a search firm is recommended. There are exceptions to this, but in most cases, thinking that the company has enough contacts often results in a substantial delay.
Interview and Recruiting Methodology: High-level items to consider:
- Decide on the appropriate team members to be involved in the search process.
- Determine who is running point on the management team. Tasks may include interview coordination, candidate follow-up, feedback collection, reference coordination, compensation, negotiation, etc.
- Who from the board of directors will be involved?
- Define the sequence of interviews and meetings. Who needs to meet when and what is the strategy/objective during a first round vs. a second round of interviews? I also recommend spending a great deal of the first meeting on determining “fit.” Can you work with this person? Nothing else matters if you can’t check this box.
- Have the team interview for different attributes to create a better experience for the candidate and to avoid overlapping questions in the interview process.
- Define the feedback loop: What info gets captured and recorded and how/when is it shared?
Reference Checking: One of the most important — and overlooked — parts of the recruiting process is reference checking. When you make an offer to a candidate, you should feel as though you really know the person, warts and all. Reference checking is the best way to really understand what a candidate is like to work with.
Often your search firm will offer to do reference checks. While it is fine for them to do some investigation, do not leave all of it to them. You need to do a large part of the reference checking yourself. Compare notes with the search firm but handing it off to someone else is a huge mistake.
In general, you should do between 10 to 15 reference checks and they should have a 360-degree approach (i.e., 1/3 bosses, 1/3 peers, 1/3 subordinates). At least one-third of these queries should be backchannel references.
Finally, when you have settled on the final two candidates, you should have the finalists come in to present a 100-day plan with your executive team at your staff meeting. This will give you a very good sense of how the person responds to an assignment and the nature of their work.
Hiring takes planning and time, and the process is often ad hoc or simply non-existent. Don’t make hiring a batting average. Take the time, develop a clear process, and you will see much better results in your overall hit rate.
Peter Levine has been a lecturer at both MIT and Stanford business schools and CEO of Xensource. Prior to Xensource, Peter was EVP of Strategic and Platform Operations at Veritas Software where he helped grow the organization from no revenue to more than $1.5 billion, and from 20 employees to over 6,000.