I've been an entrepreneur for 25 years, and the majority of that time I've hired just like most people do: When I had an opening, I'd write an ad, sort through résumés, and hire the best candidate I could find. Is it any wonder that the stats on bad hires are so shocking? According to a survey by Monster, 62 percent of small-business owners (with companies of 50 employees or less) have made a bad hire.
But thankfully there is a better model for hiring that will greatly increase your odds of finding an "A" player, and allow you to do it faster and easier than the traditional model. Instead of looking at hiring as a process to run only when you have an opening, what if you approached hiring like a professional baseball team with a farm system of deep talent you keep your eye on over time?
Here's how Dr. Geoff Smart, co-author of the New York Times bestseller Who, puts it: "The best CEOs all know that they need to invest in building a rich referral network of talented A players well in advance of having an opening. This way, when you go to hire that new VP of sales or operations manager, you have a network to turn to in order to find great candidates fast."
Smart, the chairman of ghSmart, shared the example of an early CFO he hired years ago. "At the time, our company had just under $5 million of annual sales," Smart said. "I was having dinner with one of our clients, a very successful CEO and venture capitalist, who challenged me on the fact that I was the one personally sending him his monthly invoice. He was right. So I had him introduce me to a great CFO, someone we could never afford to hire. I asked this CFO for a half hour of time to ask questions about the CFO role, the characteristics of a great CFO, the best compensation model for a CFO hire etc."
Smart continued, "By the time we actually went to hire our own CFO, I had interviewed two dozen CFOs, had a concrete scope of work for the role, and a clear hiring scorecard to use to make the right hire. Best of all, these other CFOs were able to refer me to the person we actually hired for my company. He stayed with us for over a decade."
Take a look at your company. What are the key roles that you need to hire for over the next few years? How can you start building your bench of potential hires?
"I used to go to industry conferences to spend time with other CEOs," shared David Blain, CEO of Blue Sky Wealth Advisors (disclosure: Blain is a business coaching client of my company Maui Mastermind). "But our biggest growth limitation was finding great, young advisers to hire. Now when I go to conferences I am on the lookout for smart, sharp, advisers who are just starting out in their careers. I meet them at the conference and start building the relationship with them well in advance of ever needing to make a hire. It's been a game changer for us."
Here's a quick list of ideas to start building your farm club today:
Ask 10 of the best people in a specific field to spend 15- to 30-minutes on the phone with you sharing their best ideas for the role you most want to hire for. Use this time to build a clear picture of who to hire, how to compensate, and how to start the relationship with a group of future referrers.
In your normal course of business, be on the lookout for great talent. When you find it, find creative ways to keep in touch with them and build a real relationship. This doesn't take a lot of hours or dollars. It can mean sending them a nice card, connecting them to someone you know who can help them progress on a key project, or congratulating them when they have a personal or career victory.
Like Blain, change your focus at the next conference you attend from "selling" your product or service to recruiting for future talent.
The next time you lose out on a great hire, keep in touch with the candidate who got away. You never know where life will bring them in the years to come.
I challenge you to get started today building your network of talent. Think of it like building a virtual bench of future job candidates and referrers to tap into over time. Good luck!