During my 18-year career as a serial entrepreneur, I've vacillated between hating working with others and loving it.

If you've been in business for a few years, you can probably relate to this love-hate cycle:

Having gone through my share of these cycles, I've taken the opportunity to glean a few lessons:

Working with people is hard.
But it's worth it.
You can get it right.

Here are 8 real mistakes that entrepreneurs have made when it comes to hiring and managing employees, and their concrete advice on how to get it right:
 

1) Hiring Brilliant Jerks

Elon Musk, founder of SpaceX and co-founder of Tesla, is obsessed with hiring the best people in the world regardless of what job position he is hiring for, be it a rocket scientist or an ice cream server.

However, being too singular in this approach has its downsides. Musk elaborates in a Business Insider interview: "[My biggest mistake is probably] weighing too much on someone's talent and not someone's personality."

Now, Musk puts a lot of weight on a "good heart" and even has a "no asshole policy" (which he's only had to enforce once by firing someone). The Huffington Post and Netflix have similar "no brilliant jerks allowed" policies.
 

2) Hiring Bus Drivers When You Need Bus Builders

There is a difference between people who are good at creating systems and ones who are good at executing them. Not knowing the difference almost cost Kristen Koh Goldstein, CEO of Scalus (4.5+M revenue in 2014), her company.

"The company almost failed because I hired people who could drive the bus expertly, without realizing we needed people who could also design and build a better bus," explains Goldstein.

The team she put together as Scalus was launching might have been a great fit after the company was up and running, she says. Instead, she had to make difficult decisions and put a new team in place.

"It still weighs heavily on me that I interrupted the career trajectory of fantastic people who trusted me," Goldstein says.

Goldstein's advice: "Resist the urge to hire frantically. Finding the right people to scale your business is different than finding the right people to run your business. When you're in a rush they can easily seem the same, but you are hiring for different skillsets and, frankly, for different time periods."
 

3) Hiring Entrepreneurial Employees Without Creating An Intrapreneurial Culture

You spend months training someone, they become a star performer, and then they leave.

It's a painful and frustrating experience; one that Jason Duff, founder and CEO of multi-million dollar COMSTOR Outdoor, had to tackle when two of his key employees quit to start a competing company.

"From that experience, I took away a major lesson that has helped me: One should create a pathway for people who are entrepreneurial to be intrapreneurial within your company," Duff says.

The approach Duff's company uses works similar to Google's famous 20% management concept, which encourages employees to use 20 percent of their time on any activity that they think would help the company. This allows employees to tap into their creative and enterprising abilities, and gives Duff a chance to support them without losing them.

"I've created a culture where employees have started spin-off brands that I've invested in," Duff says. "So, their businesses have still helped my company, and they've been as motivated as ever." Duff's words echo Virgin Group founder and CEO Richard Branson's remarks on how the corporate group's growth into over 200 companies was due to "a steady stream of intrapreneurs."

Using the intrapreneurial approach allows for synergies to be created between Duff's company and employees' spin-off companies, so both are working together and helping each other. Not only that, but it allows employees to look behind the curtain, and see what it really takes to make a new venture work, Duff notes.

"Starting their own companies has helped them see how hard entrepreneurship is, and value the experience of working with my company even more," Duff says.
 

4) Hiring Based On A Person's Brand Rather Than The Person

The resume in front of you looks like it's coming from a rising star because all you see is big company names and splashy titles. The possibility of hiring a star from a big name is exciting. It's a sign that your company has grown to a point where brand-name people want to work with you.

Therein lies the mistake...

No matter how big the brand of the company the candidate is coming from, you are still hiring the person and not that previous company, says Brian Scudamore, serial entrepreneur of companies that total revenue in the 9-figures including 1-800-GOT-JUNK.

It's an important lesson Scudamore learned after he hired a former Fortune 500 company division president without the proper vetting.

"Even though I might have sensed in my gut that something was wrong, I was just thinking to myself, 'you know she comes from a Fortune 500 company. Look at what she's done. This is going to be incredible!' And I didn't spend enough time making sure that she and I were going to gel," Scudamore says.

The key to avoiding this mistake is following a rigorous hiring process with everyone no matter how great of a fit they seem, Scudamore says. In this case, making a bad hire meant that Scudamore was setting his company up for a downward spiral.

"As a result of the executive's guidance, we were going into the recession together, spending like crazy in areas that I felt we shouldn't spend in, and we just about bankrupted the company," Scudamore says.

As costs soared, Scudamore had to make a gut-wrenching call to pull the company back from the brink of bankruptcy by laying off 52 employees and firing the former Fortune 500 company hire.

Scudamore now uses the methods described in the book, Topgrading: The Proven Hiring and Promoting Method That Turbocharges Company Performance to ensure that he keeps his hires on target.

"Otherwise you end up settling on a person and talking your way through it, versus actually going, 'Nope, my process says this person isn't good enough, and we're not going to settle,'" Scudamore says.
 

5) Hiring To Fill An Urgent Gap Instead Of Hiring For Fit

Creating a job description. Sourcing dozens of resumes, doing multiple rounds of interviews and reference checks. A full hiring process is time-intensive, taking 25 days on average. So, when you need to fill a position feels urgent, it's tempting to settle for quickly hiring someone who is a decent fit, but not a great one.

A company can be particularly vulnerable to having this happen when there's a rush to make a hire to fill a gap, says Kimberly Eberl, owner of Motion PR, a public relations agency that works with clients like Red Bull. And that's never a good enough reason to hire someone, she says.

Eberl saw this happen when her company found itself left in a lurch after someone quit.

"We desperately needed staff to accommodate business needs," Eberl says. "We interviewed about five people and this prospect had the best interview, even though it was modest at best. Instead of thinking through if the employee fit as a long term solution, I did a patch job with the hire, and it showed over time."

An unsuccessful hire is likely going to backfire and cause more problems in the long run, Eberl notes.

"I had to field many complaints, mostly from employees, about this person's poor performance," Eberl says. The new hire never meshed well with workmates, and didn't have a work ethic to live up to company expectations.

"Other employees were having to pick up the slack and for half-completed work," Eberl says.

Eberl found that other consequences of a bad hire include:

Topgrading

Eberl does things differently now by thinking long-term and looking for the right fit. She takes the time to thoroughly vet a candidate and also listen more closely if her staff has concerns about a candidate she's looking at.

"I interview people who I would like to hire down the road, even if I don't have an immediate opening," Eberl says. "And I hire freelancers until the best candidate is identified."
 

6) Hiring Someone From A Big Corporate Company For An Entrepreneurial Company

You can't fit a square peg in a round hole, and sometimes the same goes for a person who has a corporate mindset versus having an entrepreneurial spirit, says Cameron Herold, author of Double Double and CEO coach to high-growth businesses.

It was a lesson he learned when hiring a director of marketing who came from a corporate background.

"I didn't ask about his entrepreneurial work ethic," Herold says. "What I found out later is that he was very good at the big corporate, but he wasn't very good at what we really needed."

Ultimately he wasted months of recruiting and months of training, Herold notes.

Looking back, Herold realizes the mistake could have been prevented had he really listened to what members of his staff were saying about the job candidate. The company's Vice President of Finance, who was softer-spoken, had tried to raise questions and concerns, but no one listened.

"We steamrolled over the quieter person's advice. We didn't listen, we just pushed ahead and disregarded his question and quiet warnings," Herold says. "Now we listen more carefully, and also make sure to hire leaders who speak up and ensure they get heard."

One way Herold ensures everyone's opinion about a new hire gets heard is by using this process:

 

7) Hiring Friends Without Drawing A Clear Line Between Friendship & Work

Hiring a friend as an employee can put you in an awkward, difficult, and ultimately gut-wrenching position, says Beth Kahn, co-founder of eZanga, an advertising fraud prevention platform that is projecting $8 million by the end of the year.

A few years ago, Kahn hired a friend to work for her company eZanga. Looking back, Kahn realizes it was a "fundamental mistake" because Kahn put her pre-existing friendship above the fact that the friend was also Kahn's employee.

"I found myself divulging company secrets to my friend and later found that she had embellished details and spread those secrets to other members of the staff," Kahn says. "I had held our friendship in very high regard and trusted this sensitive information with her, but she clearly did not reciprocate."

And because of this, she has drawn a strict line, and says she is now extremely cautious of hiring a friend - especially in critical management roles.

"Don't get me wrong, I am friendly with everyone, but also professional." Kahn says. "When I leave work at the end of the day, personal life begins and it's important to separate those two worlds."

The most important lesson learned for Kahn: Draw a clear line in the sand and let employees know what the consequences are for not doing their job. That's even more important if you have an employee who is also a friend, she says.

If you do choose to go forward with working with a friend, Kahn advises, "Keep your friend and your friendship, those expectations should be documented and clear early on in the professional undertaking."
 

8) Hiring Talented People Without Proper Onboarding

Inspect, do not expect when it comes to managing employees. These are words that Kent Lewis, founder and president of Anvil Media, a marketing agency (2.6+M revenue), learned the hard way.

"I hired and developed smart people and expected them to do their job or reach out to me if they had questions or concerns. They did not," Lewis explains. As a result, the projects they worked on were not successful.

Eventually Lewis realized he needed to be more proactive in checking in consistently to evaluate people's performance so that problems did not fester. Unfortunately, this led members of his former team to feeling like he was "changing the rules" after working for him for a number of years.

"I expected a few people to leave, but not as many as did," Lewis acknowledges. "On the plus side, the credo has attracted new team members that are a better fit."

Since then, our client retention and account growth has increased dramatically," Lewis says. As he wrote in a LinkedIn post, "even the most well-intentioned employee was prone to failing to meet expectations without proper tools, training and support."
 

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Special thanks to Rachel Zohn, Sheena Lindahl, Austin Epperson, Amber Tucker and Ian Chew who volunteered their time to edit this article and do research.

Disclosure: Some of the contributors featured in this article are members of Seminal, a selective council that distills research-backed, actionable insights from world-class entrepreneurs and leaders.

 

Published on: Oct 5, 2015