Editor’s note: Managing human beings is one of the toughest jobs you’ll ever face, especially as your team grows. We spoke with six founders about what works (and what doesn't).

Eric Ryan vividly recalls the origin of his rigorous hiring philosophy. It was 2005, and his sustainable cleaning-products business, Method, was growing fast. "I heard someone say, ‘We just need a warm body,'" recalls Ryan. "It scared the crap out of me."

Mediocre hires are like empty calories: They make you bigger but less healthy. At Method, which has 158 employees, and at his new vitamin and nutrition business, Olly, which has 12, Ryan approaches each hire as though the company's future depended on getting it right. Landing a job at Method is hard. Ryan estimates that the process takes twice as long as at many other companies. "We maintain a very high standard, and if it takes a while to find the perfect person, that's OK," says Ryan.

"I want to know if candidates are focused on selling themselves or are listening."Eric Ryan, co-founder of Method and Olly, on job interviews

Great people practices produce great people, who produce great companies--and great brands (see "Reprogramming Retail," page 96). From the first hire they bring on to the day they replace themselves as CEO, entrepreneurs must make recognizing and realizing potential the core-est of core competencies. On the following pages, some of today's most talented business leaders, starting with Ryan, describe how they approach employee challenges from mentoring to building teams.


I'm a marketer, so I approach recruitment as marketing. We launched Method in 2001--pre-social media days. But even back then, we aspired to go viral with our job postings, which I would email to my personal network of about 100 people. To maximize the likelihood they'd get passed along, I created each posting as a PowerPoint slide, written with attitude and featuring cool photos of the office and our products. Today, our job postings comprise three slides, and we've retained the art and the attitude. For example, every post lists "working reception once a month" as an area of responsibility, with a footnote explaining that "we're not joking." If you're too cool to take a turn at the front desk, then you don't belong at Method. At most companies, job postings are just boring Word documents. That's a waste.

Between us, my co-founder, Adam Lowry, and I speak at about 15 conferences a year. Those are great opportunities to get audiences excited about the business, and I'm not shy about promoting Method as a workplace from the stage. Marketing and design conferences are particularly good. When people approach us--or anyone at the company--about working here, we direct them to the website, where they can sign up to get job postings. In theory, I believe in finding roles to fit great talent. In practice, Method can afford to hire people only for roles that need filling. We want to talk to you. But only if there's a real possibility we can hire you. We don't do informational interviews for the same reason.

"We try to hire people we'd be happy sitting next to on a plane during a cross-country flight."

Our culture is also an amazing recruitment tool. When we share it with people online, it's like branding from the inside out. At Method, we have lots of colorful events. A themed prom (with costumes). A Ping-Pong tournament (with costumes). The anointing of our employee of the month (cloak, hat, scepter). Both the company and individual employees post photos widely to sites like Instagram and Facebook. And then it's like online dating: People view them and think, "These look like people I'd like to spend time with."

We phone-screen or, more commonly, Skype all job applicants. Then they come in for two rounds of interviews, the first to meet with their prospective teams, the second to meet with people they'd work with in other departments. When I interview someone, I always start with the question, "Why Method?" When I meet with someone after he or she has interviewed with everyone else, I'll ask, "What have you learned?" I want to know whether candidates are focused on selling themselves or are listening and learning. I also want to know how insightful they are.

If a candidate performs well throughout, we've reached the point where most companies would make an offer. For us, that's when things get interesting.

I came up with Method's homework assignment 10 years ago to create a speed bump. We had made some bad hires, and I wanted a process that would slow us down and force us to really get to know each candidate. We try to hire people we'd be happy sitting next to on a plane during a cross-country flight. The more time we spend with them, the better our chances.

Here's how the homework assignment works: Candidates approaching the finish line are asked to prepare responses to three questions. The first is strategic. For instance, we might ask applicants for the CMO position how they would approach building a portfolio of brand-development strategies. The second is tactical. We ask those same applicants to prioritize competing demands within a small budget. Finally, we ask all applicants how they would keep Method weird. Method fights corporate vanilla by being every flavor imaginable. We want people who are creative and fun and wholly, comfortably, themselves.

After one week, the candidates appear before a cross-functional group of about 10 people. Drew Fraser, who's our CEO, Adam, or I will always be present. Typically, candidates will present responses to the first two questions in PowerPoint, although they're welcome to do anything. We're not looking for right answers, but rather at how they think and where they focus. The biggest mistake people make is going too long and too deep.

Sometimes we'll switch up the questions a little if we're trying to figure something out about a person. We recently had a candidate for a senior position who was a very big-picture strategic thinker and could clearly inspire a room. But we had some red flags on his ability to execute. So instead of one strategic and one tactical question, we gave him two very tactical questions. He really fell down on those: He couldn't give concrete answers about what he would do. We loved him so much we gave him a second chance. He talked like a textbook. So we knew that wasn't going to happen.

"While in a big company, one bad hire is an issue, in a startup--it can spell the difference between success and failure."

For the weird section, we want people to share their passions. They may sing, dance, or do theatrical performances. A few have led the group in yoga. One guy took us all outside to play tennis at a court he'd set up in the alley. For the most part, anything goes. But while we give people a lot of freedom, we need to know they recognize boundaries. For example, we often talk about "naked" here in terms of our products--we don't put bad stuff in them. Some people have tried to do something with that theme and taken it a little far.

For extra credit, we ask people to come up with their own titles. It signals the freedom they'll have at Method, and the results can be pretty funny. One of our packaging engineers wanted his title to be "The Perfect Package." That's fine with us.

Adapting the homework assignment so we can hire people in larger numbers or in different capacities has been a challenge. We created a modified version of the practice when we recently brought on 54 people over 18 months for our new manufacturing plant in Chicago. In that case, we were evaluating for attitude more than skill, so we asked one question: Which of Method's values do you connect with most, and how have you demonstrated that value in or out of the workplace? Of course, we still asked how they would keep the company weird.

The homework assignment is a high hurdle. I estimate that just 60 percent of candidates make it over. But it's our most powerful hiring tool. Not only does it almost guarantee cultural fit, it also encourages people to hire candidates smarter than themselves. Many hiring managers find that uncomfortable. But when the person you put forward as your choice must prove herself before company leaders, her performance reflects back on you. You need her to shine.

Perhaps most important, the homework assignment makes the hiring process very visible to the whole staff. Current employees observe the long, arduous process through which talented people go to get jobs here. Often, they see those people fail. It reinforces the message that Method is a very special, very selective place. The fact that they made it means they are very special people.

The employee challenge has been different at my new venture, Olly, which I co-founded with Brad Harrington. With Method, I had to beg for funding. This sophomore effort quickly raised $6.5 million. That's allowed us to hire a starting team of nine executives with an average of 20 years' experience in their specialties. I call this model the "grownup" startup. These team members know what kind of people they want to work with. They've hired many such people in the past. So as we fill out the ranks beneath them, we can expect to make fewer hiring mistakes.

Another advantage of being a grownup startup is that we can operate as though we're bigger than we are. Our first order, from Target, was for $5 million worth of product. We put two supply-chain veterans on it, and they delivered. Our people have also been around long enough to understand in detail functions outside of their own. My creative director, for example, was recently in a client meeting where she ably answered questions about operations.

We'll use the homework assignment at Olly, too, as we grow. It will be critical, because while in a big company one bad hire is an issue, in a startup it can spell the difference between success and failure. In fact, I've already used the homework assignment with the few early team members I haven't previously worked with. There's just one difference. Olly is headquartered in San Francisco's Presidio. We have a porch with a hammock. You can walk down to the beach. So we won't ask candidates how they would keep Olly weird. Instead, we want to know, "How will you make life better in the park?"

From the June 2015 issue of Inc. magazine