Acquisitions Anonymous - #1 for business buying, selling and operating - How to hire great people - Acquisitions Anonymous e70

Episode Date: February 18, 2022

How do you make a repeatable, scalable, unbeatable Hiring system? Michael Girdley (@Girdley) walks us through his take on hiring. Save on resources in advance by hiring the best fits for each role.-----* Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel.* Do you enjoy our content? Rate our show!* Follow us on twitter @acquanon Learnings about small business acquisitions and operations.-----Show Notes:(00:00) - Intro(01:58) - My story: I got sick of making hires that didn’t thrive(03:30) - Building a repeatable system(04:16) - Looking at the data! How to predict a good hire?(07:06) - Gathering the important and search for existing systems(10:00) - What makes people really great at a position?(13:42) - My hiring proces(14:57) - A-B-C players idea(18:34) - Hiring sales funnel(24:02) - Topgrading: Interviewing, reference checking and offer crafting(31:13) - Culture Index: Science-based personality trait assessment(34:15) - Criteria: Pre-hire screening assessments(35:25) - Example process with steps(39:49) - Complementary readingsDid you like this episode? Rate our show!Links:* girdley.com/hiring* https://www.criteriacorp.com/* https://www.cultureindex.com/* https://www.predictiveindex.com/-----Past guests on Acquanon include Nick Huber, Brent Beshore, Aaron Rubin, Mike Botkin, Ari Ozick, Mitchell Baldridge, Xavier Helgelsen, Mike Loftus, Steve Divitkos, Dzmitry Miranovich, Morgan Tate and more.-----Additional episodes you might enjoy:#64 How to find the expected benchmarks and KPIs for your industry?#67 I bought a business. Now what? Learn with us from an expert - Dzmitry Miranovich joins us once more#62 Two Landscaping Businesses for Sale - Mike Loftus CEO of Connor's Landscaping#66 Analyzing Software Businesses for Sale with Steve Divitkos, experienced industry CEOUnusual Profits Podcast:#Subscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Hey everybody, Michael here. Thanks for listening again this week. As you know, we're trying a lot of experiments with different types of content to bring more value to folks in our listener base who are in small business and operations of those businesses and small business MNA. So today we have something special for you. It's actually a presentation that I recorded about the hiring process that I've developed over 25 years being in business. So I have learned a lot in that time, made a lot of mistakes. And what you see today is really what I use every time I bring on a new person or try to find somebody to join an organization that I'm involved in.

So with no further ado, here's the episode of the podcast from my other podcast, Unusual Profits. And I hope you enjoy it. Definitely let us know what you think. Thanks. Hey, Michael Gridley here. I am here to talk to you today about something that's really important and maybe even more so important these days with how hard it is to bring on great team members and how tight the labor market is. And the title for today's talk is, you know, how do I hire great people? And, you know,

after 27 or so years in business, this is the system and techniques that I use now and also how I think about hiring. So no system like this is perfect, but this is the best set of resources and approach that I've come up with and happy to walk you through that today. So if you're listening, audio only, there is a set of slides that I'm talking through, and I'll try to talk through the side so it makes sense if it's audio only. But if you go to my website, gurdly.com slash hiring, there's a set of slides and resources and also a copy of this video. And you can see it. You see it there. But hopefully I make it today in a way that if it's either audio or on YouTube, it comes across as hopefully intelligible. So we'll go from there.

So, you know, my story, I've been a manager of people for going on 20 years now, involved in big companies, small companies, startups, you know, wind downs, the whole gamut of stuff. You know, and I think where I started realizing I had a problem was I just got sick of the pain that happened when I was making hires that just didn't thrive in the role. And, you know, I think about when people get into roles, the best thing that you're looking for is that person that just, you know, my grandfather used to say, like takes to a role like a duck to water, right? Like they're just meant to do that one thing. And I was just sick of hiring people that, you know, worst case, they turned out terrible

and you had to, you know, deal with the ramifications of that, you know, potentially let them go or help them find their next thing. Or you ended up with those people who were really passionate about the job about the company, but just weren't cutting it, right? They just couldn't thrive in the role. And so I started on a quest. You know, I said, there's got to be, I'm not the only person in the world trying to hire great people and do it at a high success rate. So how do I go out and figure out what the best to breed kind of options are for that and become more successful than I was, which frankly, some of my hiring techniques were like, oh, you seem nice, when can you start? And so, you know, I had tried everything and ended up with these things after really going and trying to find the right stuff. So in the end, like, What I wanted was, you know, not just a roll the dice, hopefully things turn out well.

You know, I had seen all the different types of systems that people were using. And I wanted to find a repeatable hiring system because, you know, in the end, like, this needed not just to work for me, but also like, how do the people that work for me also hire great people? Because, you know, I'm not always going to be there to be doing that in terms of doing hiring. So the objective was how do I have like a repeatable hiring system that totally works or at least has a high hit rate, right? No system is going to be perfect, but at least it would be better than just, you know, a hope and a prayer, which is kind of what I was doing earlier in my career. So this is a set of data that as I went out and tried to think about hiring, I came across. And basically, this is a meta study and I pulled up the data here. And basically what it shows is some researchers went and looked at how do you predict who's going to perform well in a role or not perform role in a role.

And they correlated the different things that people were using. And here they correlated 19 different things. And you'll see, if you see this on the video or on the slides, you can see that they went and correlated, you know, how much do the age of the candidate or sending them to an assessment center or giving them, you know, asking for, copies of their work samples, how much do those things predict whether somebody's going to be successful in the role? And it really turned out there were five or six things that correlated better than anything else in terms of predicting if somebody was going to be successful and very good in the role. So number one was work sample tests. So this was an idea that you would ask candidates to show you work samples of things that they had done previously that related to your job. So for example,

if you were an architect and you're an architecture firm and you're interviewing for architects, a work sample would be asking the candidate architects to show you plans or drawings that they had done previously in a real world scenario. So this is different than like doing a mock job trial and stuff like that or like a sit-down assessment. This was actually like, show me something you've built before. So that was number one, had a 0.54 coefficient of validity. Number two, they discovered that was a good predictor of success was what are called general mental abilities tests. So cognitive ability tests, basically they're just wanting to see how quick you are mentally in terms of being able to compute things. So GMAs are those. So there's very definitions of what those are, but in general, they're often called things like Wonderlic or the SAT is one. Your ability to, you're to produce well on those tests correlated well to your ability to think well when on the job. Number three, with a 0.51 validity coefficient, was employment interviews. Number four was peer ratings, and number five were job knowledge tests. The things that didn't correlate to doing very well

in a job was like, how much experience do you have in terms of years, your education measured in years, your interests, and then actually negatively correlated was your age. So, Yeah, then they also, back when they did the study, tried graphology, which was handwriting analysis. Like, give me a break. So anyway, when I saw this, I said, oh, like, here are the things that if I make sure, like, I just have a solid way of trying to incorporate all of these things into my hiring process, I'm going to have a leg up on everybody else in terms of hiring. So basically, I took those in here, like, you take the top six, say, these, the work sample tests,

the cognitive test, the structured employment interview, peer ratings, job knowledge tests, and the behavioral consistency methods. You look at those, and what I did was, I went out and had gotten exposed to different systems that were being used to evaluate candidates.

And just in terms of context, like, I've grown into becoming very much a systems-oriented person. Like, I want everything to have a system, either that I've created or better yet, some experts spent, several decades putting together to be able to do any particular thing, right? Whether that's a sales system or a system for interviewing or a system for HR or a system for finance, like I want all that

to, I just want to pick it up off the shelf so I can just run that system and I don't have to think about it and I know I'm doing the best possible way. So, you know, as part of my CEO peer group, I had been exposed to different versions of these systems around hiring and selecting talent. and three different ones had become really, you know, apparent to me. A friend of mine had told me about the system called Top Grading, which is an interview and reference checking methodology, and I'll talk about that more in successive kind of parts of this going through the presentation. And then another friend had exposed me to personality assessments,

and I'll talk a bit more about those. The one I actually like to use is called Culture Index the most. There's a bunch of these, and I'll talk a little bit more about why I like Culture Index. And then the last group was I had seen friends who were other business owners and managers telling me about cognitive assessments, right? Like, how do you select for somebody that's going to be quick on the take in terms of their mental RPM and ability to learn stuff quickly? So that's where kind of this general mental abilities, the cognitive assessments came in.

So I ended up with a combination of realizing that these three systems together, which are off the shelf, they cost some money or they're free, those together worth. things that I could combine those and hit on almost all of these top predictive factors for hiring, right? So these kind of top six, they all correlated to these systems of top grading, the cognitive ability tests via the service I like called criteria, and then the culture index test, which is around personality assessment. So I realized, hey, I've got these things. I'll just take these off-the-shelf things and put them together into a single system together. And so, I kind of keyed that back in terms of my experience and thinking, well, what was it that made people

really great, right, above these kind of predictive things? And I realized they all had kind of six different things altogether, right? You know, number one, they were intelligent, right? They were people who could come in and really think well through problems and they were quick on the uptake. Number two, they had the right personality, right? If they were somebody that was very detail and rule-oriented, like they were the right people to do that job, right? And so I realized, okay, they're smart. They're wired in the right way. You know, some people want to be creative.

Some people want to live in a rules space or a project space or a task space. And like, how do I find the right person to fit there? And the last thing was thinking about this other kind of nebulous stuff that we talk about besides intelligence and how you're wired as a person, which is kind of the cultural skill set. and then also grit. And those are each kind of three different things. So culture was like, are you going to get along well in this set of values that we have as a company? And it was something that I said, okay, well, I need to make sure I find that, right?

Because ultimately, a cultural fit is also how you decide that you actually really want to work with somebody. And they're going to be fun to spend every day with skills. Do you have the right job skills, right? Can you do what we need in terms of being a man? or in terms of being a salesperson or in terms of being an accountant, all those are the skills that we need to assess that you have those. And the last thing is this thing that I think a lot of people refer to as grit, which like in Texas we kind of call that the give a shits.

Like how much do you really care that you want to grind it out and win and put the mission of the company or the organization as paramount, right? And really, really work hard and bring your full self to the company during your work hours. So, you know, those were really the things that altogether, you know, I realized, oh, looking back, like, and in terms of thinking about these systems, like, are those the things that made sense and, like, all the winners had those things? Yes. Like, the A players, they're really good. They're really good people who came into the business world with me or the organizational world. Like, they all had these things. And so they actually correlate really well to those assessments that I had run across and been referred to. So intelligence was definitely. done by the mental aptitude tests, right? The test that would, you know, tell us how quick somebody is on the uptake and computationally kind of in their head for problem solving. The personality traits, like how is somebody wired in terms of, you know, what disposition they bring to the job every day? You know, culture index and other tools like predictive index,

which is kind of a number two favorite of mine, there they came to light. And the number three, that bucket of kind of cultural fit, skills fit, and that grit, those three things came out in this top grading methodology, this interview and reference checking methodology that I'm going to go into a bit

in the future. So, you know, just as I thought to validate, okay, well the data says, you know, as I talked about earlier, the things that are going to predict the performance of somebody and correlate to high performance, does it match with my theoretical view of it? And it did, right, based on this analysis.

of these five or six things that are really important to me in terms of somebody being successful and getting to a candidate that you're like, heck yes, we need to hire this person. So what I did was is I had this insight and these connections to these systems and I put them together into a hiring process. And, you know, with those hiring process, I had three design goals. So number one, I wanted to hire A players. And so A players will go into the devil definition of that a little bit further in the next slide. But eight players are top-tier performers. So I wanted to hire really good people. And that ties back to the title for this talk. Like, how do I hire great people? Great people are A players.

Number two, like I want to achieve my mission. And number three is I want to do as little work as possible. So let's dig into those two. So number two is I want to achieve my mission. Achieve my mission is I want to hire a great person and I want to win, right? That's as I think about a process that's going to work for me in terms of hiring. That's it. Like in my mission, maybe I need to hire an A player and it's going to be a great person. And then I'm also lazy. Like, I'm a lazy person. And I don't want to, I don't want this to take any more work to hire a great person than it needs to. So those are the three things as I kind of thought through these systems and put them together into a single hiring process. So I talked a little bit about this A player idea.

this is a Steve Jobs kind of thing, and it's just a way of thinking about the segmentation of the candidates that show up for individual roles, right? So let's say that you're hiring a salesperson. There is a hypothetical distribution that there are terrible performers. They're kind of the bottom 20 to 30 percent. There are B players, or the terrible performers are the C players in the bottom 20 to 30 percent. The B players are kind of the middle, the middle segmentation, and they're the 60-ish to 70-ish percent of players. And players, I mean, employees, teammates, contributors, right, in a role. And then the A players are the top 10 percent, right?

So that's pretty straightforward. And when I say A players, what that means is I'm looking for somebody that's going to be a top 10 percent performer, right? They're going to be better than 90 percent of the candidates. and why are those important? For me personally, A players are just more fun to spend time with. They're the ones that you're like, oh my gosh, how did you accomplish that? And it's because they brought that combination of grit, intelligence,

cultural fit, and the right personality traits to the role. And they're the ones that get in and thrive, right? You've crafted that job for them that is something they're just meant to do, like on the earth right now. And the second reason to get excited about A, players is they're the ones that give you extraordinary return on your invested time and money, right? So there's this kind of old wife's tale that software developers, you know, a player software developers can be 10 times as productive as like a B player. That's not really

proven. But, you know, in practice, I've seen it. Like your top performers, they're just making those decisions better and better all the time that cause them to outperform the B player. That's players, right? And so for me, like, that's the sweet spot. Like, how do you find those diamonds in the rough, those A players, and bring them in? So I wanted a hiring system that would have those people be selected in as much as possible. So what's important to remember about this A player idea is it's not in general, right? It's not in general. It is specific for a given role and a given pay band. And so that's the idea like there are A players for being a CFO, right? I would not be an A player for any CFO job, just because I don't have that level of attention to detail and enjoyment of rules, for example.

There are A players for being salespeople, right? Like, I just naturally don't like smoozing. I'm not going to be a good A player for that. So it really depends upon the A player characteristic means for that role and that given pay ban. So there's an interesting kind of inverse of this, which is that that means for any job, as long as it's a realistic job, there's an A player out there for that job, right? And so an A player just sticks to that individual role, right? Assuming the job is not stupid and it's paid market and all that kind of stuff. So the reason that this A player kind of thing works per role is because every role has kind of different demands on your innate traits, talents, skills, and abilities, right? So the talent, skills, and abilities that you need for, say,

a blacksmith, you know, those are very different traits than you want, say, in the CEO of a high-growth startup. And that's very different from, say, what you want in the CFO of a sleepy industrial conglomerate, right? Those are all very different. And the reason is, is because if you look at people, we're all wired very differently, and we're all in different places in our lives as well. So we're born a certain way, we're wired that way. We develop different talents, different abilities, and also different interests, right? And so if you extrapolate it and say, oh, what I want in a salesperson, it's different than I wanted an engineer, which is different when I wanted somebody in marketing versus janitors, like all across the spectrum there. So it's important to remember A players are just for that individual role.

So basically, what I do is I take one of the insights from sales, which is this idea of a sales funnel. And so a sales funnel is basically how you start with at the very top leading with a set of sales leads, right? Or if you include marketing in your sales funnel, it also includes marketing leads that work their way through your funnel. And at the bottom squirts out a number of closed deals, right? Sold customers. So you can apply the same thing and just think about your recruiting process as a sales funnel just instead of selling things, to people, you're signing them up for a job to work with you. So, you know, my sales funnel has kind of six steps, right? So number one, like, you go out and you advertise for the job.

And we all kind of know how to do that. It's not a subject to my talk today. You tell everybody about it, post on social network, social networks, put on zip recruiter, indeed, LinkedIn, all that kind of stuff. You call candidates and go from there. And then the first step, after kind of finding interested employees or interested team members through advertising is where, for me, I start with the assessments because I know that I want to have a hell yes kind of person that I hire. And I know hell yes, people are going to do awesome in the interviews. They're going to pass and be wired the way we want them to me from a personality trade standpoint, and they're going to have the level of kind of cognitive ability that we're looking for.

So the first step that I do, which I have interested people, is I know these assessments don't take a ton of my time, and I spend the time to get the potential teammates willing to spend the time to do those assessments, right? And it takes 20, 30 minutes of their time, and then they do that as a first step. And then we start to have more in-depth kind of first interviews, and that's where, you know, in my typical recruiting process, there'll be a phone screen and a discussion, some wooing of the candidate. And then that's after that point when they really, we know there's kind of a meeting of the minds. We're going to be able to afford the candidate. They want the job. They're willing to do

do some of the effort to go through the process. That's when we go to serious interviewing, followed by reference checking. And we'll talk a bit about how I do reference checking is very much on steroids compared to normal reference checking. And then you give somebody an offer, really is the last step. So you advertise, have them do the assessments, preliminary kind of phone screen, to make sure you're on the same page, in-depth interviews, followed by reference checking and then offers. And I'll talk about how each of these works because these terms are pretty common

in how people are doing interviewing and hiring. The way I do them in practice is actually very, very different. So what's cool about this is if you look at the sales funnel, steps two through five or two through six as well, they are covered by those systems that I talked to about, those systems and tools. So, you know, we talked about the personality and systems that measure your general mental aptitude like criteria and culture index or predictive index. They handle those.

The top grading stuff is the methodology for phone screening, interviewing, and also doing reference checking. And each one of these gives you a system or a tool set that you can use through that process. And what I like about this is it not only minimizes the amount of my time that's going to be required because it pushes a lot of the high value, high leverage stuff to early in the process, the assessments, but it also like saves the candidates time because the worst thing I would want to do is bring a candidate all the way through my interview process and then realize as we get through it that their personality isn't the right fit or they don't have the kind of RPM that we need

in that particular job. So, or the skill set, right? So, you know, one of the things I like to do if I'm hiring an accountant is that accounting skill set test, which is often done through criteria to assess their skills, or you have one of your accountants do a, do a skills interview with them. Like, I like to push that to beginning because I don't want to waste the candidates time, right? If they don't have the skills, like, there's no reason to lock them in an interview room all day long. So, so those steps tie back to these systems.

how I run each of those in general. So let's talk a little bit about top grading. So top grading is the system that is what I use for interviewing, reference checking, and offer crafting. So there's a number of different ideas in top grading that I think are pretty powerful. And I kind of think about top grading as like the contrarians interview methodology. And it actually comes from a book called Top Grading, which is written by a man who has since passed away

and his last name was Smart. And you can actually, I'll talk a little bit later in the process here of this presentation and give you a link to that book so you can buy it. So one of the things I like about Top Grading is it takes the idea of how normal reference checking is done and really turns it on its head. So normal reference checking,

like you call the people kind of at the end, you call their former boss or whomever, and hey, did Joe work there? We can't tell you, okay, but he wasn't fired, okay. You know, like, it's just a cursory thing, right? And so what top grading does is actually realize this idea

that A players that we talked about before, A players have a track record of, success and a trail of people who are happy to speak about their performance and ability, right? So if you think about the best people you've worked with in the past, if somebody called and said, hey, Jane worked here. Did Jane work there? Can you tell me about it? Oh, yeah, Jane was the best. You know, like, unless you're, you know, you might run into corporate policies that prevent that from happening. They're fewer and far between these days. But the insight here is that A players have a trail of people that they've worked with in the past who will

say great things about them. And it's not just their mom, right? It's former boss, as colleagues, because when you're an A player, other people love to work with you, and they're happy that you made their life better along the way. So one of the ideas of top grading is you do this thing called Torque, threat of reference check. And it's not a threat so much as you just make sure all the candidates know from the very beginning what you're going to be doing during the process. And the top grading methodology actually has you call these people and do four or five hours of learning and interviewing of former employees, peers, customers, bosses that you ask for connections to from the candidates past, right? And what that does is if the candidates know that you're going

to be doing that at the end of the process, the weak candidates who have gotten by in life by BSing employers, they drop out of the process. they say like, oh, forget you. They get mad or they just ghost you. And what it does is it creates this self-fulfilling process where this threat of reference check, where you're going to be telling candidates, hey, I'm going to be calling 45, 67, 8 of your former bosses, coworkers,

and folks like that. I'm going to give you the names of the people that I'm going to want to talk to. That causes them to disappear if they're not a high performer. And the inverse happens, which is really interesting, is when you tell a players that you're going to do this, they get excited. And the reason they get excited, it surprised me when I started to do this. They get excited because they realize that a company that does this is only going to be filled

with high performers. And they want to come work there. It's fascinating. So reference checks, it does the top grading methodology does this reference check approach really on steroids. Number two, top grading has this idea that the best predictor of future success is past performance. So the interviews that you do actually spend all your time to understand the track record of what people did all the way through their life and what really made them tick,

right? How did they learn? What was their progression? What was the, what happened in each of those steps through their career up until now? And this works for, obviously, for middle, junior, senior people. It also works for very junior people because it turns out that people fresh out of college who were extraordinary, who were going to be extraordinary on the job, were often extraordinary in their life up until then, right? So you can dig into that. It may not last as long as interviewing somebody my age, but it's something that can be totally powerful to see what their trajectory is in life and use that as the best guess of, oh, you mean you were a C player in all your previous jobs, and now you're promising me you're going to be a high performer here? Like, that just doesn't happen.

So it uses this idea that the best predictor of future success is their past performance. It also changes and throws on its head the way interviews are done. So your typical interview process is like come in, meet with everybody for 45 minutes, and then you end up hiring the person who went to the college you went to who looks like you and whatever, right? So what it does is it actually condenses that down to where there's an interview team, a lead interviewer and a pair and a wing person, and you interview your candidates just for several hours, and you just sit there and go through their whole life story

to really understand their whole professional career trajectory, and you start to see these patterns that don't show up in resumes. And there's this idea in top creating that resumes are BS, because they're full of crap. Like most of them have lies in them. So you end up in many situations, not even really working with their resume because the stuff you want to know isn't really in their resume because they hide that stuff. And you know, I talked a little bit before about the way references

work. Unlike classical interviewing where references just make sure the person isn't a criminal, the references in top grading are expected to mostly tell you what they think, the good and the bad of the client. And in the end, what you're doing in top grading is trying to really get a complete picture of the person. And when they start on day one, you know, hey, here's how I'm going to make them as successful as possible. Here's where their gaps are. Here's where they're strong. And you use that as a way to get them off and hopefully on a path to thriving, you know, in your role. The other thing top grading does, which is very, you know, very uncommon in other hiring methodologies is it has you write a hiring memo prior to offer, right? You sit down and before you make the offer of the person, you write a one or two

page memo. Where are they strong? Where's the candidate strong? Where are they weak? What are we going to do to help them. What are the risks and then what is our recommendation in terms of bringing them on? So, you know, that helps just like with investing. Writing investing memos is a really good idea. That helps with the way that you can encapsulate your thinking. And then look back and see where you screwed up if it didn't work out or see where things right or what you got wrong in that later because memories fade and that sort of thing. So that's top grading. Culture Index. So that's the second kind of system that I use. This is an assessment. It's an online assessment. And basically what culture index is, you pay for it. It's a science-based

personality trade assessment. And it's based on the idea that we're all wired in different ways. Some of us have high attention to detail. Some of us want to be creative and live in the clouds. Some of us want to be leaders. Some of us want to be great teammates. Some of us are extroverted. Some of us are introverted. And it's this idea that you think about the jobs that you have around you, the way you want, say, a quality assurance engineer, right, whose job is to make sure things are done precisely, perfectly, and correctly before they go out the door, that's very different than the way you want a salesperson to be constructed from a personality standpoint. And so this is an assessment that basically came out of a researcher out of Vanderbilt

and has been since commercialized, right? And they use these words to basically build a view around each individual person. And there's lots of these kind of assessments, disk, Myers-Briggs, Strengths Finder. You know, Culture Index, as I went to go look at all of them, there were two assessment tools like this that proved to be the ones that were most popular and stuck with companies when they started to use them. And number one was Culture Index. Number two was predictive index. And those are the two. They look very similar. I've heard predictive index is more expensive than Culture Index. I don't know. And some people like some and some people like others. The reason I chose Culture Index, A, I like it and B, all my friends,

that our CEOs use it. So it's good. It's not cheap, right? So anyway, you know, I think Culture Index is one of those things. We talked about kind of the Venn diagram of the things that together you check those circles and that matches the right trait, the right traits to the right role. And the people that, you know, I look back and had gotten through and really thrived in their role, like a duck to waters, my grandfather used to say, like they were wired for it, right? Just like you don't want to ask me to be a QA engineer. Like, I'm just not wired that way or an accountant. I am wired to be creative.

And so if you can use an assessment like Culture Index to short circuit your way to understand how I'm wired, you have a much better chance of putting in person in a role where they're going to thrive. And to me, that's like the greatest gift you can give somebody. Like you help them do what they're put on earth to do at this moment. And it's beautiful. And so Culture Index helps you do that by having insight. into how they think and how they're wired in terms of looking at the world.

Downside, it costs money. So good things aren't cheap. So we talked about top grading. So that's interview, reference checking, and offer methodology, culture index. That's how we measure how a person is wired from a personality trait. And then the last batch is the thing I added most recently, which is how do I kind of screen for skills and intellectual ability? the one I use are these pre-hire screening assessments from a company called criteria. It's not very expensive. I think I'm paying $1,500 a year or something. They do, the one I use the most is the cognitive assessments.

And then there are skills-based batteries. For me, this has been a game changer. I just enjoy working more with people who are able to learn things quickly, right? And that correlates to these assessments. And it also saves a bunch of time. Like if I know I'm hiring somebody that needs to have basic accounting skills or typing skills, I can use this system to run those assessments. So this is that third bucket of skills and, you know,

general mental aptitude assessments. It does cost some money. You know, the cheapest one of these is actually the top grading stuff. You can go to a class for it. You can also buy the book for like $10. And so we can talk about that a little bit later. So let's go through an example process. So what I'll do when I'm running a hiring process is I will break it down into steps.

And so, you know, for example, this is a 12-step example process. One, advertise the role. Two, collect interest, see who's interested. Number three, ask people to complete the assessments. That's typically a quick email. I might have then an email to the candidate, making sure they understand the role, how much it pays. do they need to move to another city, any of that kind of stuff?

And then, you know, in this case, this is a process where next I'll do a phone screen because I want to sell the candidate a little bit on the role because I think a good process, including mine, has the candidate do some gating steps, a little bit of work, right? And if you ask them to do a little bit of work, the people that are just kind of like, sort of milk toast, sort of interested in your role, like they won't move on to the next step because they won't invest 15 minutes to do some prep work for your role. So the assessments are to that. It's a 20 to 30 minute investment of the candidates time.

Some say yes. Some say no. That's okay, right? Like I actually want to screen out people that don't really want to work with me, right? If you're just kind of looking to see I want to offer you way too much money to work with me or you're searching out, you know, getting lucky, something like that, then I'm okay with something that screens you out, right? That's cultural, right?

I have a personal culture where, like, when I go after something that I want it, right? And I'll go get it. And I want to work with people who are like that too. Top grading has you complete this thing called a career history form. Sometimes I do that. Sometimes I don't. It's basically taking the resume format and putting it into a template that includes the stuff you want to know as a boss.

Sometimes I do. Sometimes I don't. That is one thing to know about top grading is that it's often a system that was designed for a time when employer had all the leverage on employees, that's not that way anymore. So you have to kind of modify some of the ideas that it has in the book and do that. So anyway, step six, they may complete the career history form. Step seven, you look at it and you see, is this a person a winner, right? Or do they have a story that when you look at their entire track record of stuff

makes sense to have as part of your company? Then we'll do the end person interview. In this case, it's the two to four hour interview. then reference checking takes about a week to talk to all the different references. And then you do culture fit interviews, which, you know, that's where you can socialize them with other people in the company, especially if they're leaders, you want to do that as well. And ask in the end, do you want to work with this person?

So, and then number 12, we put together an offer. So anyway, I went through this pretty quickly, but it's a 12-step process where you say, okay, here are the gating steps that we go through to hire. and what I'll typically do is I'll write this all down in a one page or a two-page piece of paper. And you can put it into Notion or any of these kind of other things, but I'm old school using Word docs and stuff like that. So you take this and you use it as the way to hand over to a person and say, okay, well, this is a template process. Like, let's craft it to work for your role, whether it's, you know, somebody working in the warehouse, moving boxes, or it's a new CEO for, you know, 500-person company.

versions of this can be adjusted, you know, each way. For example, if you're interviewing somebody for a call center, you don't need to do a four-hour interview. You know, you can go pretty straight. And you don't need to call as many references, you know, all that kind of stuff can be modified. But you can kind of see the steps that I showed in the early sales funnel to put together the process, right? You advertise the role, do the assessments, you know, phone screen, make sure their minds are met on stuff, do the top grading interview, work to references, and then put together an offer. So kind of has that flow, but more added steps here in this example process.

And you can find this. I have a copy of one on my website, gridly.com slash hiring. And so you can find that there in terms of being able to see a template version of a hiring process that I use internally. So next steps, you know, the books that talk about, top grading. Obviously there's top grading the book. Number two is a book called Who, which is actually written by Dr. Smart who wrote top grading. His kid wrote a book called Who, which takes some of the ideas from top grading and simplifies them a bit. So I have friends

that like Who a lot, but the core ideas that you're doing around reference checking, you know, the interview methodology, how you get the names of references, all that stays pretty consistent and you can use those ideas from these books. I'll just forewarn you, the top grading book is one of those books that has some of the best ideas I've ever seen, and it is one of the worst written books I've ever read. It's 700 pages long, so you should definitely skim it, and Mr. Smart, I believe he's passed away. He is perhaps one of the worst book authors ever, but the system he put together was just incredible. So a huge fan, huge fan of that. And yeah, check out the book.

I think you can get a used copy for like $12 on Amazon, so it's super cheap. The two systems that I pay for and recommend, you know, I use criteria for these assessments. There are other tools out there. You know, we went and looked at about 30 of them. And this was the one we liked the most in terms of skills and cognitive. And then the two that I would recommend for personality assessment are Culture Index and predictive index. there's two reasons I like these more than the other ones.

One, they're both based on science. So at least in the case of Culture Index, they paid researchers at Vanderbilt to put together the system. They are proven to be not biased for hiring purposes, unlike some other things like Disc or Myers-Briggs. And then the second reason I like these two is because my friends who I see them use Strinks Finder or any of the other kind of random tools around this stuff, they don't stick, right?

So culture index and predictive index are the two that I see getting used and are very, very sticky. And you see them for all kinds of stuff. They come up in the meetings. They're used for hiring. They're used for organizational design. They just end up very, very powerful. So recommend those two, and I've been using them both for years

in the case, Culture Index, which I really like. I also like Culture Index because it's not owned by private equity, which Partective Index is. And as an aside, I've also heard predictive index is like one of the greatest businesses of all time. Runs it like 80% free cash flow margins or something. So yay, intellectual property businesses. So whereas Culture Index, I believe is still owned by a husband wife team. At least that's what the book says. So cool in conclusion, like hiring is a lot of work. You know, there's a tweet by Jason Limkin. And he wrote, there is always a better candidate in theory,

force yourself to interview 30 and hire the best one. So, you know, what he's saying here is you need interview at least 30 people. I agree you should look at 30 people. If you do things the way I'm talking about, interviewing 30, it'll be your full-time job, right? Because you're spending a week or so per candidate. And it turns out actually the math backs up what he's saying. Some mathematicians did a study of what's called the optimal stopping problem. And the optimal stopping problem, basically, it was originally called the hiring a secretary problems, very sexist back in the 60s when some guys did this. But anyway, it's called the optimal stopping problem, which is, you know, what is the optimal time to stop interviewing people?

And it turned out that the correct answer was, you know, do 37 interviews and then hire the best one out of that batch or the next best one that you see. Nobody has time for that. And if you see kind of the way I've set this stuff up with the assessments and with the ability to kind of screen people early on, you know, that really helps short-circuit that, right? So you don't have to do 37 interviews and 37 reference checks and all that kind of stuff. But all this together, like, people invest way too little in hiring and way too much in how much compared to how much they're going to have to spend when somebody isn't a good fit. So, you know, for me personally, like, hiring and retention, like, those need to be as much work or much more work than you do on dealing

with your, you know, your poor fit candidates or folks that aren't the right folks in the roles. So again, you know, hiring is a lot of work. It's why I love it when companies have recruiting staffs and CEOs and managers who see team building as their, you know, their number one job. So anyway, just remember it's a lot of work here. So cool. So definitely, you know, thanks for listening here. It's 45 minutes overview of, you know, how I do hiring.

you know, if you do want to reach out to me and have any questions about hiring, any of that kind of stuff, or look more through these slides. Hit me up on Twitter. I'm on there at at Gurdley and more than happy to help with folks, especially if tweeted at publicly. And do appreciate you listening today, whether you're hearing it on one of the podcasts or on YouTube. And I did have the slides up. if this is on YouTube. Otherwise, you can find the slides that I was going through on my website, gurdly.com slash hiring.

I'm not charging anything for this stuff. I see this as a way to get back and help people get better. And the universe has a habit of paying me back when I do. So thanks again, and appreciate you hearing it. Bye.