7 min read
Opinions expressed by Entrepreneur contributors are their own.
People are the most important part of any business. For fast-growth early stage companies it is vital that a founder/CEO fulfilling multiple roles hires the correct people to take the company to the next stage of growth. Research into fast-growing Series A+ companies suggests that high-growth companies hire four to five employees on average a quarter.
For founders at any stage of development, hiring can seem quite serendipitous and more art than science. Put a job description onto LinkedIn or a paid jobs board and you will be inundated with offers from recruiters claiming to have the ‘perfect’ candidate for you. In work done by Dr. Bradford Smart, author of Topgrading, the estimated cost of a bad hire ranged from five to 27 times the amount of the employee’s actual salary and, according to Gallup, bad hires cost the U.S. economy over one trillion dollars per year.
As a surgeon I am obsessed with data and reducing risk. When I built the founding team at Virti it was mainly from my network. We didn’t have a data-driven hiring process, and other than an interview system we didn’t capture a huge amount of data on candidates. We have scaled fast (employing over 10 people within the last few months alone), and I want to share some of my top tips to make hiring a science and hire superstars.
Defining ideal employee characteristics
The first step in creating your data-driven hiring process is to define the characteristics for the role. These characteristics will form part of your hiring score card. Initially we will make educated assumptions on the criteria that predict the best candidates. For example, who is your top-performing sales person? What characteristics do they possess that make them a high performer? The highest (and lowest) performers after a hiring cycle can then be re-scored and compared using the score card to iterate the criteria by applying weightings using regression analysis. I’m an advocate for starting from the end and working backwards, as defining the characteristics for the role will help to define the job description.
The steps below break down an example initial approach to establish a theory of the ideal hire characteristics for a role:
- Identify top performers internally or from outside organizations and build an ideal employee profile in terms of their CV, experience, characteristics, and anything else you deem important
- Write down a clear definition for each characteristic outlining what they mean to you.
- Order the characteristics by importance to the role and add a weighting based on importance. For example, the most important characteristic will have a score out of 10 and then a weighting of 10 to give a score of 100 to the overall total. A less important characteristic will have a score out of 10 and then a weighting of four to give a score out of 40 to the overall interview total.
- For each candidate, summarize the results on an Evaluation Scorecard (this can be in Excel or similar) using tabs for different interviewers and automating calculations, and consider at which part of the evaluation process each characteristic is best assessed.
The score card can then be broken down by which stage of the process you will assess candidate characteristics at.
Related: 7 Character Traits That the Best Employees Share
Characteristics of top performers
There are many ways to assess candidates. Google “How to Hire” and you’ll be presented with a variety of complex personality testing, trademarked eponymous scoring systems and interview tasks to provide you with insights. But are these actually useful to you and your company? An age-old adage in hiring is to “hire for culture,” since in early stage companies people who are a culture fit will likely align to your company mission and work in an agile, fast-paced start-up environment. While this is partly sound advice, it is vital that you go beyond a simple, accessible culture statement and vision, and define core characteristics that can form part of the scoring for every employee you hire.
The great thing about the evaluation scorecard is that you can reflect back at the six- or 12-month mark after hiring someone and re-evaluate your weighting and scoring as needed. Were your initial assumptions correct? Were certain characteristics actually more important and should have their weight increased? You can even continue to use the scorecard from the interviews for ongoing employee coaching and development post-hire.
Related: Investing in Your Employees Is the Smartest Business Decision You …
Defining your own evaluation strategy
Given that candidates interact with you at various touch points; from replying to emails, to completing tasks, to interviews, it is important to ensure you are scoring characteristics at the appropriate stage.
Screening and response time
When scaling-up fast, it is easy to disregard scoring at screening, especially if you are outsourcing elements of this, but it is vital to capture the opinions of the screener and also incidental behaviors like speed of email response, questions asked, and punctuality to interviews as these are likely indicative of how a person will behave once hired. It also give you data across a longer time period rather than a single episodic interview.
Tasks are vital to any interview process and should be representative of what candidates will be expected to do in the actual role. Tasks should be simple, accessible and quick to complete (one to two hours max), and most importantly should offer value to candidates, allowing them to show off their skills and approach. At Virti, the most important part of the task is the reflection following it.
When building out your interview questions, it is important to split these into sections that align to characteristics. Interview questions should challenge candidates, probe behaviors and pull out strong examples of the characteristics you will be scoring against.
Analysis and iteration of the hiring process
Your hiring funnel, much like a sales or marketing funnel, should push three to four solid candidates to final stage interviews. At the end of the evaluation process, characteristics can be consolidated across all tasks, touch points and interviewers, and can be pulled together in a radar chart for each candidate to quickly compare.
After each hiring round you can analyze time taken for each stage, number of applicants, drop-off and sources from where the candidates came from. It is helpful to build in a formal post-hiring sprint workshop to review this data and have hiring managers identify bottlenecks and results of experiments run to see whether you wish to tweak the process.
As your company scales and your hiring need intensifies, your hiring process should match demand. As a founder/CEO, you will likely want to be involved in all hiring decisions, often active at final stage interviews. For companies with 50+ employees or companies scaling very quickly, the founder/CEO should aim to empower team leads and hiring managers to follow the above process and then receive an interview pack of the final candidate that team leads wish to employ. This is a process employed at Google to good effect.
Once you have the hiring process created, the next step is to optimize your onboarding and coaching processes to ensure success post-hire.
Related: The Types of Team Members You Need to Hire at Each Stage of …