High-quality Recruitment Process For Founders: 4-Step Framework

Greg Marsh - 05 Jan 2021
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High-quality Recruitment Process For Founders: A 4-step Framework

Written by Greg Marsh, former CEO of Onefinestay

Greg Marsh is a former investor at Index Ventures and founded Onefinestay in 2009, grew his company from 0 to 700 people and sold it for more than $250M to Accor Hotels.

The best CEOs spend at least a third of their time on recruitment. Hiring is the most important process in any growing company, and you will spend a lot of time doing it. This includes hiring, interviewing candidates and refining the process itself. And it never stops.

In this article, you will learn to develop an understanding of what a high-quality recruitment process looks like for a scale-up in a 4-step framework.

Step 1: Source

Source

The most important determinant of output in a high-performance business is the quality of the team. Therefore, the greatest lever you have is hiring. You can break the hiring process into 4 steps:

(1) Source, (2) Assess, (3) Hire, and (4) Integrate.

The first step of the hiring process is sourcing. Ask yourself in this step:

“Where do good candidates come from?”

The single best source of candidates is via employee referrals or from the founders’ network. Because those people come qualified and engaged. You could introduce a referral programme where you pay your team for successful introductions.

You can also work with recruiters to find more candidates. But, when do you use recruiters?

Good recruiters can help you with sourcing and engaging executives and even support you during the process. They can reach ports that others cannot, especially for a senior or specialist role.
Recruiters can also help you to source talent in areas where you are not

currently searching for talent, such as new geographies. The disadvantage of working with recruiters is that they are expensive of course.

Next to working with recruiters, it’s your job as a CEO to always be selling. Collect potential candidates while you are travelling. This can range from:

- Meeting potential candidates at conferences,
- Investment meetings,
- And even via professional advisors.

So, how do you work with recruiters?

Good recruiters are prized resources. With LinkedIn, hunting has become a commodity, it just takes focus and time. You want someone that is a 50% salesperson and a 50% process manager. Plus, you want the recruiter to have a little bit of insight and intuition to help you iterate the search specifications.

Manage them like you would manage a lawyer: if you want excellent results, invest time and energy, because they are expensive. Expect them to cost 30% to 50% of the first-year salary of a new hire, to let them search for a candidate from a tier 1 firm. It can be even more expensive if you are searching for CEOs!

It’s also important to know what recruiters can’t do: persuading the best people to consider you. This is your job. A great analogy is the following: you can’t expect your best friend to get someone’s number at the bar for you; that’s your job! And you already know that the best marriage prospects aren’t hanging out at the bar in the first place.

To summarize, just like your best friend doesn't get someone's number for you, recruiters won’t do your candidate evaluation.

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Step 2: Assess

Assess

The second step of the hiring process is to assess. Assessment is mostly art, but some science can help you with this. None of it really works very well, the only real predictor of job performance is... job performance.

However you can avoid some bad mistakes, and you can send the right signals. With practice, you can get a little better, but it takes thousands of hours of practice. So devote a third of your time and you will be good enough within 10 years. Rely on a battery of approaches, never just one. It’s important to be self-critical and iterate your process.

There are four things I recommend you to do in the assessment step:

1. First, design a hiring process. Don’t take hiring for granted, it’s easy to make systematic errors.

2. Second, Actions speak loudest. When the CEO demonstrates that he or she takes hiring insanely seriously, the team will also take it seriously.

3. Third, use many tools. The best processes exhibit opposite variety, such as Tests, Interviews and References.

4. Fourth, test for motivation. The best measure of on-the-job performance is on-the-job performance. The 2nd best is candidate motivation, but everyone will say they are motivated, so find ways to elicit credible signals. Remember that we value the most for which we fought hardest.

If you think that you are okay at interviewing, you might think twice about it. Your intuitions are almost completely unreliable in the hiring process. This effect is called illusory superiority. This is a condition of cognitive bias wherein a person overestimates their qualities and abilities, compared to the same qualities and abilities of another person.

When taking a look at the effectiveness, a study shows that the key psychological insight here is that people have no trouble turning any information into a coherent narrative... People can’t help seeing signals, even in noise.

What’s great to see is the people’s confidence in their ability to collect valuable information from a face to face conversation. People feel they can do so, even if they know they are not being dealt with honestly.

We should be humble about the likelihood that our impressions will provide a reliable guide to a candidate’s future performance.

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You can mitigate the risk of a bad hire through implementing a solid hiring process. Here you can see an example of a designed hiring process. It looks like a circuit diagram because you need to think like an engineer to design good processes. Step through each stage and note the key features.

The process starts with a briefing, where you divide and conquer with your team, with a shared core.

The next step is to have several people interview the candidate through structured interviews. Then, you can design a bias-free decision process. It’s important to weigh the effects of veto rights in this step.

The last step is to debrief. Use the results of the debriefing to employ a formal feedback loop to improve your briefing.

After implementing a solid hiring process, take references about the candidate.

Kevin Ryan, an American investor and entrepreneur once said:

"If I could only interview or reference, I would reference. Otherwise, I’m hiring a basketball player by hearing them talk about how good they are, rather than asking someone who has actually watched them play.”

So, have as much discipline about references as you do about interviews.

When taking references, try to disprove your hypothesis about the candidate, be your biggest sceptic. The hiring manager should do the reference calls. It helps to have a script and take very detailed notes and listen to the words used by the reference.

When you are calling with a reference of a candidate, first soften them up, then ask the tough questions. For example, first, ask:

“Out of 10, how would you score this person...”

Then ask the tough question:

“Why not 10?”

Also, ask the reference person how you can manage this candidate to get the best from them.

And lastly, ask the reference:

“Has this person ever crossed a line? Have you ever seen them do something which made you question their ethics or integrity?”

Then, carefully listen to what the reference has to say.

Step 3: Hire

Hire

The third step of the hiring process is to hire. Hiring is about selling, selecting and socializing. It’s important to note that not everyone is cut out for the start-up life. It can be stressful and the context may often be ambiguous with deferred, contingent gratification.

A heavyweight hiring process does not discourage the best candidates. In fact, it highlights their level of motivation.

Use an offer to solicit information, for example, give the candidate a choice between base options and stock options.

This frames them on thinking about ‘HOW should I do this?’ instead of ‘should I do this?’. Next to that, it signals that YOU value the stock options, and so should they.

It also elicits the revealed preferences about the staying power of the company. And lastly, it helps you think about how to manage them after you’ve hired them.

Besides giving them a choice between different stock options, show the candidates a respectful urgency, be willing to walk away from them. Also, realise that not everyone will accept your offer, learn from those who do not accept it.

Step 4: Integrate

Integrate

The fourth and last step of the hiring process is to Integrate. You need to integrate the person into your culture, your company and your team.

It helps to have a structured induction program. Once you have the program, tailor it to the person, their team and the context.

How do you design such a program?

First, write up an induction manual for the hiring manager, not just the candidate. Think about bringing someone in like a service experience. Design the person’s first 30, 90 and 180 days. Then, meet every report weekly: it’s their meeting, but make time for it. And lastly, give your managers context, because you have extra information from the interview, they don't.

While integrating a new employee, it’s also important to listen to them. Andy Grove, the founder and CEO of Intel, once said:

“Regular one-on-ones are a high-value investment. Ninety minutes of your time can enhance the quality of your subordinate’s work for two weeks.”

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