How Do You Hire for Scalability?

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CEOs share their trials, tribulations and success stories.

George Kriza, president of Marketing Technology Concepts Inc. (MTC), has seen his company grow from revenues of $2.4 million in 2001, to an anticipated $10 million-$12 million this year. Yet he yearns for more. MTC, a developer of business-incentive programs in Schaumburg, Ill., had difficulty scaling its slim profit margin of 12%. Kriza says the problem hinged on one position: MTC's operations manager.I needed an operations manager who could not only scale with MTC, but drive its scalability and increase our profit margin, not just revenues. But we had trouble finding the right person. The difficulty revolved around me: I made gross assumptions based on the impressive degrees and titles I saw on candidates' resumes. The solution? I hired an industrial psychologist as a consultant, who helped me realize that I needed to consider not only the skills needed for a great operations manager, but also the right work habits and personality. The psychologist assisted during the interview process and resume evaluations by perceiving candidates' immaturity, lack of commitment, restless job histories and the need for kingdom building — all things I missed. Yet his sound perceptions still didn't override my compulsion to follow my gut. I was so sold on one candidate that I hired him against the advice of my competent consultant! The guy was brilliant, but he only lasted one day — he couldn't handle an entrepreneurial atmosphere. After that, I piped down and listened. Finally MTC hit the mark. Our current operations manager and I share a wavelength, a crucial aspect for this hire. He combines the right balance of tech and management skills, work habits and personality. And under his guidance, MTC's profitability is expanding. Indoctrinate the young
Greg Corson, president of IT-recruiting firm Global Technical Talent Inc. (GTT), gives employees tools to keep pace with its growth. Corson, who co-founded the Portsmouth, N.H.-based company in 1999, created a process to prevent employee obsolescence. We hire young recruiters so they're not indoctrinated in another company's methods. Then we train employees in the "GTT way" and promote from within. That increases the likelihood that they know what's expected, where the company is going and how to prepare for our next level. GTT's first recruiter is now our director of recruiting. Our revenues grew to $15 million in 2000 and then declined to $12 million in 2001, a rough year. To find employees who can keep pace with these oscillations, I look not only for master's degrees but also for exposure to entrepreneurship. You can't ask for that information directly in an interview, but by asking open-ended questions, such as what brought them to the interview, you can often get candidates to discuss that information. Hire for stages
Jim Pyle is founding partner and CFO of Your Corner Office LLC, Houston, a $12 million human resources and accounting firm. According to Pyle, it's rare to hire someone who can traverse different business phases, so he hires for specific stages of growth. With 130 employees, Pyle expects his company to generate revenues of $18 million this year. Hiring for scalability is too hard. The second stage of your business requires process builders and managers, while the next stage demands mostly managers. Finding a senior person who can traverse all stages is like finding a needle in a haystack, but it's possible to jump from one stage to the other. Here are five tips to increase the likelihood that employees will scale at least one stage:
  1. Set expectations correctly. Before soliciting job candidates, ask: Are we hiring this person to build it or run it? Those are two different hires. Also, if they have never built before, don't hire them to do it on your nickel.
  2. Hire former entrepreneurs. To increase the likelihood that a senior person will be with us for the next stage, we only hire people who have had to make a payroll.
  3. Stick to the core. Figure out what skills you absolutely need and which ones can be outsourced.
  4. Changing people is difficult. With maturity, a builder can grow into a manager, but a manager typically cannot become a builder.
  5. Conduct personality tests. Don't test for type. Instead, figure out what you need and what sort of person would do that best.
Recruit constantly
Greg Moran, president of training firm Talent Management Group (TMG), a division of Emergeon LLC, Troy, N.Y., believes employees with character are more likely to scale with the company's growth. Accept the fact that there are stages to every company's growth and that people will quit as your company passes through them. Half of your employees will be gone in three years. The reason: You don't know people, and their priorities change. To counteract that, we focus on constant recruiting. This means always being on the lookout for replacements. I don't wait for people to reply to ads. One thing I always look for is character. Character is what sets scalable employees apart from ones who aren't. You can judge talent and character not from resumes, but by seeing them in action. For example, you may find your next star salesperson by listening to an "annoying" sales call and accepting the caller's invitation to pitch in person. If your company is outpacing former star employees, help them find employment elsewhere. Helping them reveals your character. All in the attitude
Jody Tucker, CEO of Cytek Corp., a $2 million information-technology firm in Kansas City, Mo., concentrates on finding a "can-do" attitude. To hire a senior manager — someone to keep up with growth and excel for a longer length of time — I concentrate on attitude more than skill. In our business, you can learn a lot of the technical stuff, but to stretch, you need to have a can-do outlook. Some people want to hop around for a few more dollars, and others want to grow as a person. I am interested in the latter. When our growth outpaces an employee, there are two schools of thought: Either get with it, or get out. They may no longer be able to do what they once did or what we thought they could. Draft an explicit plan for how that person could better grow with your company. I don't wait for annual reviews to discuss this issue. If I see that our growth is surpassing someone's skills, I confront them right away. No industry insiders
Co-CEO of commercial bakery Main Street Gourmet Inc. in Cuyahoga Falls, Ohio, Steve Marks looks for senior managers with no experience in the food industry. Those with management experience elsewhere have the skills without the misconceptions, he says. I've found that prior experience in this industry hinders employees' abili ty to scale. I avoid food-industry people because they are either burned out or have preconceived notions that hinder their ability to think outside the box. And that's a requirement here. Employees who can see beyond the typical way of doing things will scale here. For employees whose skills have been surpassed by the company's growth, I ask one question: Are you happy with your job? The answer can be telling. If they aren't happy, I don't think they should just be phased out. Help them find another niche. We did that for our former director of management information systems. He left to create his own company, and we helped him with that. We also became his first client. It was great to help a new company out, and we appreciated the fact that he already knew our business. No egos
For John Ward, president of 20-person TAP Architecture in Oklahoma City, the key sign of employees' ability to scale is whether they can swallow their ego. Architects are known for their inflated egos, but egos get in the way. We want team players at TAP. Sure, you can sense a certain demeanor during an interview, but people can fool you. So I ask open-ended questions to determine if they can swallow their ego. For example, I'll say, "Give me an example of a team project that you've worked on and the worst thing that happened. Tell me what you did about it." If that person has a bad attitude, it'll come out in the answer. They may say that it turned out to be everybody else's fault or that they "had losers on the team." Then they paint themselves as rising to the occasion as the hero of the story. Watch out for "heroes." You don't want them on your team, and they won't have the attitude to scale with your company. As for those competent employees whom TAP has surpassed: I used to let them linger for four or five years. They then became my personal project. No more. We review every six months to document employee growth with the company.
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