← How I Built My Small Business
How I Built My Small Business
Geoff Smart - Building the Perfect Team: The Power of WHO from New York Times Bestseller
00:53:03
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Foreign.
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Welcome to How I Built My Small business. I'm Ann McGinty, your host and today we're diving into why building and scaling a business and achieving more freedom and free time starts with the who in your business. Our guest, Dr. Jeff Smart, is the chairman and founder of GH Smart, a leadership advisory firm specializing in helping companies make high impact hiring and leadership decisions. With over 100 million in revenue, GH Smart's hiring strategies are in high demand because they deliver results. If you've ever wondered who's the world's expert on hiring, just ask ChatGPT and Jeff Smart's name will surely come up. He's the New York Times bestselling author of who Ludocracy and Power Formula for Leadership Success. Jeff's mission is to help leaders amplify their positive impact on the world. His expertise has been featured in the Wall Street Journal and businessweek, and he's a regular contributor to Psychology Today. You can find a link through to his business in the episode's description before we dive in. If you enjoy today's episode, please share it with someone who could benefit from the insights and stories. I'm an indie show and your support helps me reach and inspire more listeners. Let's get started.
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Thank you to our listeners for being here today. Jeff, thanks for coming on the show.
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It's a great pleasure to be here.
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Anne, to lay some groundwork for understanding your expertise for anybody that is listening in. How did you first develop your perspective on identifying and nurturing effective leaders?
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So it's a super long story. Let me do this short version of it. It's kind of like I'm a dentist and my parents were dentists and there's a version of dentistry that I sort of leaned into. That's basically what happened. So my father was an industrial psychologist, whatever that is. That's like a business psychologist. So he had his own practice. My mom was a speech pathologist. So both of them were sort of in the helping profession. And so honestly, that was just like a big helpful start. Where I was aware of there's this whole field out there where human beings are helping other human beings perform well in the workplace. And so that's where it came from. And if I didn't mention that, you know, all the remaining choices I made in my career, you know, you'd miss the. The origin.
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Okay, and so you've been doing this now for how long?
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30 years. The company I found at GH Smart, we celebrate our 30 year anniversary next June of 2025.
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Congratulations. Thanks so what do you see as the biggest mistakes that businesses make when it comes to hiring?
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Oh, okay. All right. So the mistakes that businesses make, like your listeners, like small, medium businesses. All right, number one is not spending enough time on it. Let's see here. I'll tell you the three answers to your question, then I'm going to give you a mind blowing inspirational story of Rob Waldron, who is a small business person who is struggling with hiring. So number one is not allocating the right amount of time to it. I was listening to one of your earlier podcasts. The private equity person was talking about the difference in mindset. When you're in the business and you're chasing, you know, customers and product and operations and execution and finance, you're doing everything. And, you know, where's the time left over for focusing on the people part, the talent part. So problem one is not allocating enough time to the talent, hiring, firing, developing your teams. Number two is doing it wrong. So how many classes in high school did you take on hiring?
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And Zero.
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And how about college?
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Zero.
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And like, okay, so it's nobody's fault that almost everybody is terrible at hiring. But I'm telling you, as the self proclaimed world expert on hiring, everybody's terrible at it. They do it wrong. So why do they struggle? They struggle because they ask hypothetical questions in interviews. How would you do this? How would you do that? Well, the listeners can see I'm pulling a big red textbook off my bookshelf behind me. The Handbook of Industrial and Organizational psychology, which for 50 years has been saying, hey, you hiring managers, stop asking people hypothetical questions because they give you hypothetical answers in interviews and they don't help you predict what someone's likely to do. So number one, they don't put enough time into the talent part. Number two is they, they use faulty methods for making hiring decisions. You know, hypothetical questions. Just one gut feel is another one. Ooh, what's wrong with gut feel? There are even some, I think, books on hiring that, that really encourage you to listen to your gut when you hire. It's like, no, don't listen to your gut. Your gut is biased. Your gut has, you know, all sorts of weird psychology around it. Here. Tell you what, don't listen to your gut when you're hiring. Like, that's not the way that you're supposed to collect data and objectively evaluate candidates. What are other things? Oh, yeah, someone else, this entrepreneur at an MIT entrepreneurship conference once told me he likes to stress out the candidate during an interview. And I was like, well, tell me more. And he said, well, we have a very challenging culture, so I like to replicate or sort of simulate our challenging culture during interviews to see if they can handle it. And so he does the old, like, sell me a pen or actually, this is literally true. He told me that he used to pick up the resume of the candidate in front of them and say, I don't see anything on this that makes me want to hire you. Prove me wrong.
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Oh, my gosh.
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Aggressive and unfortunately not a useful way to interview people, because as it turns out, people don't like to be intimidated during interviews. So there are a hundred bad ways to interview. And those of us out there in the. In the world economy who've never really been trained on this stuff use all the. All the bad ways to interview and hire. And as a result, we have a 50% error rate in hiring. If you survey your listeners and say, hey, just reflect for a moment on your last few hires who have been with you for, you know, over the last two, three years or so, how many of them would you say? You weren't surprised they performed as advertised and you're happy that you hired them? The numbers, 50%, it just is across regions, across sic codes, across industries. And what I learned from reading all the psychology stuff in my PhD program in psychology on this topic and then practicing it and refining it over the last three decades is you can achieve a 90% hiring success rate if you follow a couple of best practices. It's actually four best practices, but if you don't follow them, you're doomed to a 50% success rate.
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Okay, so then how can we, as small and medium business owners, how can we fix this bad hiring that we're doing?
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You do what Rob Waldron did. So now I don't talk about clients or people whose confidential stories they share with us, except if they give us permission. And Rob gave me permission to tell his story. So check this out. He was stuck at a $13 million valuation for his business. Not bad. They made education materials, like, for students and teachers and parents. 13 million. 13 million. 13 million. Thirteen million. And what Rob would tell you is he was chasing all the what issues in his business, but what he wasn't doing is solving the who issues. Right? And so he listened to someone in our company give a keynote speech about 10 years ago saying, stop chasing the what and really allocate more time to solving the who. So he said all he did to change his leadership approach, his management approach, was to go from spending less than 5% of his time on hiring and developing his teams to spending about a quarter of his time on it. So that's a lot of time. 25% of your time. That's a lot of time, right?
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That's a lot of time.
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And listen to what happened in his business. Because I asked him, and he actually, he sought me out. I was giving a keynote speech. He was in the audience. He's like, hey, come over. Before I went on stage, he told me a story right there. And he said all I did was really focus on what are the two or three key hires I need to be making right now. And rather than looking at one or two or three candidates, I'd look at dozens of candidates and I'd get referrals. And he practiced the four methods that you and I are definitely going to talk about on this podcast. So he followed the correct approach to hiring. He spent the right amount of time on it. And his $13 million business turned into 30 million, turned into 500 million, turned into a billion, turned into a $5.2 billion business over a decade. And I said, well, come on, what else happened in the business? He said, I didn't do anything different other than change from not really focusing on the talent part to really making it a major allocation of how I spend my time and then just getting the next two or three key hires. Right. Has made all the difference in the world.
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Okay, so what is the magic here? What is the formula that you taught him?
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Yeah, well, here it is. So. So we already talked about what not to do, right? Don't ask the hypothetical questions. Don't, like, not spend any time on it. Right. Don't intimidate candidates. Okay, so here's what to do. You do these four things, and the four things are called scorecard, source, select, and sell. So these four steps in good hiring, it starts with a scorecard where, I don't know. I'm an entrepreneur, right. Found in my company. I'm a little bit. For sure. Entrepreneurs don't like to sit down and to think for 20 minutes about what are the outcomes you expect this person to achieve in this role? What are the, you know, adjectives or competencies you would use to describe, like, kind of the ideal candidate for this role? So step one is sit down and talk to your team. But, like, really do a little bit of, like, Zen reflection on, you know, what is it that you really need this person to accomplish in this role? And that becomes the scorecard. It's the set of criteria you're using to evaluate candidates. You have to do that, like, success in hiring begins with scorecard. Step two, that's when you start sourcing, sourcing candidates. So a big, big, big, big mistake entrepreneurs make. I'm talking to you and entrepreneur. Business starters out there is you hire your cousin to be head of marketing and then, oh yeah, your next door neighbor is like your product person. Knock it off with the hiring. The warm bodies who happen to be around you, okay? Knock it off with that. That is your business is too important to just hire whoever is just around you. Like, stop that. Sourcing looks at its best. Looks like this. I hired a CFO a year ago. We engaged a search firm that we looked at 150 candidates, like, for real, and we picked this amazing CFO. So that's what good looks like when you're sourcing is you get your colleagues, everyone's looking for talent. Maybe you have search people helping you, maybe you don't. Maybe you're all over, you know, online. So basically going, going with fists of fury to source as many great diverse candidates from all backgrounds. Get a huge pile of candidates that you're considering. That's like step two. Not like, oh, this person I know really well. I imagine they'd be good in this role. No, get, get a big list of, of folks. Step three is called the select step. And this gets a little bit more nuanced where there are good interviews and bad interviews. The world's greatest interview is we feature in our book who. This book, who has been the top selling book on hiring in the world for the last 16 years. So our book is number one. It's. Oh yeah, it just came out at the Ukrainian edition. Look at that, huh? It's in Mandarin. It's in Portuguese. Like, anyway, this. So this is literally that if you ask ChatGPT, my kid did this yesterday. What's the top selling book on hiring in the world? Who the A Method for Hiring by Smart and street is number one. So in it, we describe the interviews. If you want to like, learn more about it, we just share like, here are the interviews. But basically the best interview takes a candidate like a finalist candidate, like someone you're pretty sure you want to hire. That's when you wheel out this heavy duty interview and you basically just walk them through each of the chapters of their career and you talk about highlights and accomplishments. You talk about low points and things that didn't go well for each job they've had. You're asking them what were they hired to do? What did they accomplish they're most proud of what were some examples of mistakes or things that didn't go well? Who do they work with? And this is a great one. Watch this. What was your boss's name in that job? And then they tell you. And then you, like, show that. Show them you're, like, writing the boss's name down. Ooh, you know, Susan Jackson. And then ask them to spell the boss's name. Like, how do you spell Jackson? And they'll say, you know, J, A, C, K, S, O, N. And then write down, great. And then you say, oh, at some point in this process, we might ask for your help setting up some reference calls, if that's okay. And then the candidate says, like, yeah, that's fine. And then you say, great. When we talk with Susan Jackson, what's she gonna say were your big strengths and weaknesses when you work together? And now the person's really motivated to give you some pretty good information because there's some accountability to it because you're gonna talk to their boss and they're gonna tell you stuff. So that's like a little bit of a deep dive on step three of four, the select step. Step four of four is called the sell step. And as entrepreneurs, we have to sell like heck to land the A caliber talent that you want to bring into your business. Because guess what? They're already gainfully employed some making money and making impact and treating their colleagues well somewhere else. So you have to really put the sell on them in order to get them to say yes to joining your smaller company.
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And does this process work regardless of the size of the business? So small to large corporations?
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Yeah, it really does. And like, now that I've told you the four steps, like, which step would you take out for a small or large corporation? Like the part where you figure out the criteria that matter? No, that's pretty important. The part where you, like, go get a bunch of candidates. Like, it's. It's a very scalable process. So if in my firm, we, we. We do CEO succession projects for some of the biggest companies in the world, this totally works. And when we're hiring a landscape. Oh, you used to have your lighting business, right? I thought of you because I met with the lighting guy last night. He's gonna, like, you know, put holiday lights in our house. You know, my wife and I had a set of criteria. We're like, hey, here's what we want them to deliver. Here's the price point we're looking for. Here's the kind of creativity we want. And we had like, a little Scorecard and we got some referrals and then we're, you know, talking about previous, you know, jobs these people have done. So, yeah, I mean, pretty much picking anybody to do anything. These four steps are useful. And yeah, so I, I give most of my talks. I don't love public speaking. I'm not constantly like out there giving talks. I, I really love the business that we're building. So I'm, I'm mostly a behind the scenes founder, but when I'm on stages, it's mostly for small, medium businesses and owners are saying like, hey, we're having a hard time hiring great talent. Like, you know, give me some guidance. And, and, and so yeah, this stuff definitely works for teeny tiny companies with like one person or the biggest companies in the world. We also have done this for state governments. We've served special operations, military people, nanotechnology researchers. I mean I, I can't think of a context in which they, these four principles for good hiring, like kind of wouldn't work.
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And what about a position like skilled trades or line workers or sales teams, for example? Does top grading work effectively in these situations?
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Well, sure. So to me, like unskilled trades, do they show up? Do they, you know, like, okay, there's like criteria that matter, right. And some people are great and some people are not great. So the goal is to hire the great ones for skilled trades. Absolutely. There's a huge range. It definitely works for that. Salespeople. My gosh, salespeople are good at BSing their way through interviews. Let's say there are a hundred salespeople for a role. Half of them are like below average in their performance. Right. And like the other half are like the top half. So your, your trick is to try to figure out who the not only top half are, but like the top 10% in a given talent pool who are willing to work for the same amount of money. You know, there's a massive range and performance and who you're going to hire. I was interviewing this sales manager who used to work at Oracle selling software? And, and he told me, yeah, you know, I did great in that last job. I was named president's club. And then I naturally asked him, well, what percent of your peer group made president's club that year? And he said, well, nine, about 95%. And so I'm thinking, oh great buddy, you're in the top 95% of your peer group. So salespeople are, you know, they have the gift to gap. So here's three great follow up questions. If you're picking salespeople one. And as you're talking about, you know, sales jobs they've had, ask them. It's called the three Ps. What were your results relative to your peer group? You know, did you perform in the top 10%, bottom 10%, somewhere in the middle. So versus peer group number two would be versus plan. Oh, you sold, you know, 1.3 million last year. Okay, well what was the plan? You know, if the plan was 500k, they did 1.3, like that's great, right? Or if the plan was 6 million and they did 1.3, that's like really bad. So find out the plan, find out what their actuals were. And then the third one, you don't always need to have all three Ps but is like previous year performance. So like if some business, you know, product group, you know, did 2 million in revenue the year before you joined it, and then they did 1.5 the year after you joined it and 1.1 the year after that, that's bad. If that Same group did 2 million before you joined it, and then under your leadership it went to 1.5 to 3 to 6, that's good. So to me, it's all about getting the data of what they've actually accomplished and getting examples of it, getting the real numbers, verifying it with references. That's what good hiring looks like.
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And let's say that there is a.
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Company that has the hundred salespeople on their team and those half are underperforming. What advice would you give to the leaders of that company who are dealing with the underperformers on their team?
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Well, this is a very controversial question you're asking. I'll tell you what I think and also tell you where the range of opinions is on this topic. I think. And we practice this at GH Smart. We like practice what we preach here. Internally, I think it's great to give people very honest feedback, give them a lot of feedback, give them more feedback than they even want to hear so they really understand where they stand. Really be clear on expectations, really be clear on steps that they could do in order to perform at, at the target level. And then if you do all that, people will be like, you know what? And I really appreciate you're having these sessions with me and you've been giving me all this feedback and coaching. I don't think I can get there. In fact, I don't even believe in the product that much. I don't feel like I want to sell at the Target level, I'm gonna go do something else. And then you say, oh, okay, well, you know, take your time finding something. You know, you can work, you could take some time off and then they, you know, go find something else. And to me, that's like beautiful, frictionless capitalism where yes, you have a high bar for performance, but if you give people honesty and supportive feedback and coaching, at some point most of them will just punch out if they, you know, if they realize they're not going to be successful. So that's good for folks who don't get the memo. I had a very early colleague in GH Smart's journey where they weren't making clients happy. And at the end of the day, like, you gotta make clients happy, right? So clients were complaining. She's not giving me the attention I need. It takes too long to get work products back. And so I'm giving this colleague performance feedback and, and she just like kind of was acting like that's not my problem, you know, it's the client's problem. They're unreasonable, you know, that kind of thing. And so, you know, at some point you do have to take action on someone who like, doesn't get the message. Even though you've given them tons of feedback and support to try to help them be successful. The number one regret, the last, I don't know, thousand managers we've advised or worked with will tell you is waiting too long to remove a low performing colleague. And I'm telling you, if that person's also culturally toxic and is like being mean to people or mistreating juniors or doing anything bad, that's like cultural deep. That is very, very costly. You got to have those chats with the people pronto and get them out of the organization. We're a very nice firm. I'm really happy. Our Glassdoor rating is the highest of any top firm in our industry out of like 70,000 companies in consulting, like, we're very nice, supportive, friendly place. That said, if someone's like not living the values and being disrespectful, we will give them quick warnings and then out they go. If they're doing like hashtag me too stuff, they get vaporized before they even like leave the room in which they like committed the offense. That's literally true. So if there's like values abusers at your company, get them out pronto, Pronto, Pronto. Maybe not even a whole lot of coaching and feedback because it's just so costly to those around. Or if someone's struggling technically get them Some more training or if they're struggling performance wise. But they're living the values, you know, you invest in them, you try to help them be successful.
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Have you as well? There's a few different questions I want to ask you, but in the 30 years that you've been doing this, has anything changed dramatically from the methodology that you originally created to now?
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Yeah, two things. So we didn't create the methodology 30 years ago. We just started consulting. And then this book really codified it 16 years ago. And so I'll speak to from when we published this till now. Two things are different. One is basically like just the globalization of talent markets and the importance of having diverse folks with, you know, different language backgrounds and cultural awareness of people from like all backgrounds. That's a more deliberate, important thing to do now clearly than I think we had language for or best practices around, you know, 15 or 20 years ago. So that's one. The second thing is, is digital tech, you know, is a huge, huge deal, right? And there's a lot of time wasting that can happen if you misuse technology to try to do good hiring and management of your colleagues. But it's, it's pretty awesome. I was on a like, chat board yesterday in consulting where top performers out of like really good firms, like, share their thoughts about what they like and they don't like about their employers. It's called Fishbowl. Someone, a candidate we're trying to hire, told me about it. I was like, all right, I'm gonna check it out. And you can be like anonymous if you want or you could, if you're really brave, you like actually be yourself, you know, in the, in these things where, you know, you post questions or you respond to other people's thoughts and all that kind of jazz. That's like pretty important. I have personally sourced about 10amazing colleague candidates in this last year by just being present in digital platforms like that. That, you know, that wasn't the case 15 years ago. So I'd say those two things. The first one is as the importance of. And that like, kind of explicit value of building diverse teams is like number one and the use of technology is number two. All the rest of the stuff kind of holds. Otherwise, this book still is the top seller every week on Amazon. It's not outdated yet, you know, because like the core method really works. But I'd say if we were to like rewrite the book today, we would have more chapters or more explicit best practice sharing on those two topics and maybe some stories.
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That is incredible. And Your company now, like I think I read correctly, you, you've grown your company to over a hundred million in revenue, Is that correct?
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Yes, yes. We went from zero at the founding, where it was just me and delusions of grandeur, to, yeah, I think we're at 110 million, trailing 12 months with about 23 in pre tax profit, no debt. And the culture is really good and we're, we're doing well. It's like not easy. You know, it's like nothing's ever easy when you're growing a business, but we're having a lot of fun with it. So. Yeah, I don't know, does that make us a medium sized business? So I was just happy we survived a year. I think, like what, you know, one in 10 new ventures survive even a year and maybe it's literally as low as like one in a thousand make it, you know, 29 years. So we feel very proud and happy to be alive and kicking and we have growth goals. We're still, you know, we're still hustling, we're getting clients and growing in new markets and inventing new products and services, all the while trying to keep our culture really positive.
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So this might be a bit of a loaded question because it could be a very long answer, but how did you, in the course of, I don't know when the exponential growth took place, but how did you in that timeframe, grow your company to 110?
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Yeah, by hiring a great number too. So I grew the firm 0 to 10 million in revenue as the President and CEO, as the person running the meetings. Like how they. I kind of burned out in the 2009 financial crisis where our revenue was off 20%, I think, and like everyone's freaking out for their jobs. And, you know, it was hard. Clients weren't spending any money. I got us through that. It wasn't on a podcast, but it was in like an EO or YPO type speech where someone was talking about the difference between working in your business versus working on your business. And a light bulb just went on and siren sounded and I was like, wait a second, I can work on the business without working in the business. You know, I was carrying a 20 client load. Like I'm, I was in it, in it, in it. And then I looked around in 09 and we all were like, okay, who wants to run this thing? I was like, I don't need to run this. Like, I'm a proud founder and sort of chairman here. But if someone else wants to step up and run it like a show of hands. And so we picked Randy street, the co author on the who book. So we had worked really well together on the who book. And he is an engineer by training. He's a Harvard MBA. He worked at Bain for like 10 years. He ran a company. He had operating chops, as we would say, not just consulting skills. And so he became the president and managing partner in 2010 and he 10 axed the business over the next 10, 11 years. So I mean, it wasn't like, how did I do? I picked Randy. Randy did it. I mean it was like literally like that simple. I would highly recommend to your listeners. Highly, highly, highly recommend. For gosh sake, find someone to help run your business. Maybe it's a muscular CFO who could play the role of CEO. Maybe it's like you do what I did, you know, hire a president to run the day to day run, really run the business, run the meetings, you know, create budgets and strategies that you can approve, you can get. And Randy did such a good job of training me on how to be a good founder while having professional management running the business. He's like, hey, whatever info you need, let's get the cadence of, you know, do you want monthly dashboards? And we can chat quarterly and like, what do you need? And but by the way, here's the scary part. He said that I was no longer invited to come to management meetings.
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How'd you handle that?
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I felt like, what? I am so smart and wise and I've got all the vision of being the founder. What do you mean you don't want me coming to management meetings? And he said, oh, no, it's simple. Like if you're in the room, I can't manage the business. Right? So he's like, so why don't you not come to management meetings? I'll manage the business, but you and I can meet whenever we want. And by the way, let's come up with a good scorecard for your chairman, Lane. Enroll and like, what do you want to spend your time on? He was so amazing by helping me figure out what I'm good at and to create basically my own job description and to stay in that Lane while he managed the business. And it was, you know, a lot of small, medium businesses, owners are like, oh, you know, no one. I wouldn't trust anyone else to run the business. And that's probably true because their hiring process takes. They shouldn't trust other people to run their business. But if they improve their hiring process and they really find some excellent talent for gosh sake. I shall now quote Warren Buffett who said, hire well and manage little and just think about that for a moment. That guy's seen tons of successful and unsuccessful small to medium and then larger businesses. But there's something to it. If you really hire well and you're willing to delegate and you're willing to make bets on people and then stay in your lane and let them do their jobs, you can scale. In fact, I dare almost suggest that's the only way to scale. Because if you're hanging on to everything and you're the decision bottleneck, oh, great, you're gonna have a $5 million revenue business forever. But if you get good at like Rob did, the next couple key hires, make them hire the amazing person in those functional areas or those important key areas and give them room to operate. Align on goals, be clear about what you want them to do, but be pretty flexible on how they are to. To do it. I'm a big, like, work from anywhere fan too. Like, you know, don't micromanage your star performers or they will leave. But if you align on goals, you have a great culture. You're willing to delegate and let people have room to operate. You reward and incent when they really do well so they can share in the upside. You're good. You're going to be. You're going to be golden. As a small business owner, you're going to find yourself suddenly a medium business.
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Owner with all of that freedom. Do you trust that the employees, the team will just perform as expected?
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Yeah.
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Okay.
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A
Yeah. Well, remember, we're like, really good at hiring. So we make mistakes. We fire about, I don't know, 3% of the people in our firm per year. It's not a big number, but we'll make mistakes. People will come in and we'll be like, oh, no. And then we'll coach them and then get them out. But the people who stay, we're pretty clear on what their job expectations are. We're pretty good at measuring stuff. So everyone has the same data. We know if people are doing well or not doing well. And yeah, we trust them to do. Do the work to an absurd level. Like, we have Harvard Business School case studies written about our freedom culture by this person. Professor Ashley Willins at Harvard Business School wrote a book called Time Smart. Your listeners can't see. I actually have it right here. It's called Time Smart. Of course, I love the title because my name is Jeff Smart and the name of this book is Time Smart. But she studies it says how to reclaim your time and live a happier life. So she studies what makes people happy in the workplace and spoiler alert, freedom makes people happy in the workplace. When you have freedom to choose and you have control over your time, you're way happier than if you're living in a more coercive environment. And so we, we live that to such an absurd degree that that book author that like best selling author literally wrote a 30 page case on GH Smart as an example of what a freedom was it called Time smart culture looks like. And it starts with having clear expectations, hiring well, but then really letting people figure it out on how to, to get the work done when and how they best can. So I just dropped my daughters off at. Didn't drop them, took him to gymnastics. I have four year old twin girls. I'm talking to our investment bankers. We're going to do a transaction, you know, like minutes later and so, and then I pop in here and I'm talking to you like, you know, taking advantage of modern communications to hire people and give them a lot more freedom to do their work when and how they want is I think a magical formula for success today that small business owners really should take advantage of. Because a lot of these big companies that are doing mandatory, you know, back to the office are losing great talent and they're looking for places where they could go perform and have more freedom.
- [33:10]
C
So it in your company as you grew so rapidly, I don't know how many people do you have working for your company now?
- [33:16]
A
We have 185 people in our company now in five countries. We're in the US, UK, Germany, Canada and Australia.
- [33:24]
B
How have you gone about maintaining your.
- [33:27]
C
Company'S culture being so spread out and also having grown like that?
- [33:32]
A
I think there's five ways to maintain your culture. We've written four books as a firm. We published, they were all bestsellers. We for sure should write a book on culture. We haven't yet, but I'll give you my secret sauce here. There are five things your listeners can do to manage their culture. To like create the culture that they think is going to, you know, win the day. The five things are who you hire, right? Like hire people who naturally do the culture you want, right? That's like, that's actually the easiest way to, I mean if you want to have a nice culture, hire nice people. If you want to have a. I don't know, it's like it's literally that simple. So that's one clear expectations. Hey, here's here's what we need you to do. Here's what's okay or not okay as far as ways of working that kind of thing. Three is incentive alignment, which is like, just like at our firm, people developing other people into. Into good consultants and good partners is important. And if we didn't pay people to do that, they. They wouldn't do it. But instead we're like, oh, your bonus is like, heavily dependent on, are you developing your colleagues? Are you helping people learn and grow, that kind of thing? Right. So you have to reward people for it. Training. Give folks training so they can know how to do whatever the key elements of your culture are. And then the last one I don't have a good name for. I call it like, structures, but just the idea of, like, who's meeting when, what's the org chart look like, all that. So if you're basically like, oh, yeah, we need to have fast cycle times of product development, but the product people are over there and the sales people are over there. Well, don't have them so separated. Have them, you know, more working together in the same room, you know, surf or on the same zoom calls or meeting more often. So the five things to build the culture you want, and we've done these in spades. Who you hire, what you tell them you expect, how you incent them and pay them for doing the culture you want. Training and structures. That's it. And if your culture stinks, you're probably not really using one, one or more of those levers in order to get the culture that you want. It's also who you fire. When we have fired people who weren't living our values, although it's a sad day, and we're like, oh, man, you know, I wish we could have, you know, helped that person not be such a culture destroyer. But when we've done that over the years, the very next day, everybody sighs a big sigh of relief and you go, that was an important thing. That's a very important part of, of building and sustaining your culture is taking out folks who are actively, you know, toxic in that culture.
- [36:03]
C
Okay, yeah, I know exactly what you mean because I've experienced it firsthand. And when you cut out the muck, then everybody gets lifted.
- [36:13]
A
Sometimes it's really weird. I've had a weird experience where people who were living the values, who are being. We have values of, like, generosity and gratitude and developing others, all this kind of stuff. What's weird for me is when someone comes in, does the culture for years, sometimes like three, four, five years, and Then all of a sudden, I don't know, maybe they're going through it or something in their personal life. Something happens where suddenly they're not living the values and they. They don't seem like they're ever going to be able to go back to, you know, living the values, and then they have to go. That's pretty weird. That's rarer, though. Usually what happens is folks are on their best behavior, they get hired, and then you end up seeing there's some, you know, jerks in the midst, and then you have to go deal with that.
- [36:54]
B
Yeah.
- [36:56]
C
So for anyone who is maybe on the younger side and they are aspiring to become a leader, they want to be an. A performance leader that gets hired by someone like you or gets put into a leadership position later on in their career, what skills do you think that they should focus on developing early in their careers?
- [37:17]
A
We wrote a New York Times bestselling book called the CEO Next Door. I didn't write this, but one of my colleagues, Elena, wrote it and Kim. So CEO next door based on a study of over 2,600 leaders. So we worked with the University of Chicago's professors of management to crunch the data and find these insights. This is not like my opinion. This is like, based on data, they found four things that, that really mattered. These are all skills that you can build. And then we had a different study, it's like a different cut that found three things that matter. So four plus three. So I got seven things that matter. So put these two together. Here's what you got. We'll go with Elena's first. They spelled dare D A R E. So she found that leaders who really worked on being decisive, like, make more decisions, not less. Make faster decisions, not slower. Working on being decisive, decision maker massively correlated with success as a business builder. So that was one. Two is a adaptability. So don't fall into the trap where you're just like, well, that's what I always did, you know. Meanwhile, market conditions have changed or product conditions have changed, like being able to face reality and then adapt. That's the second thing. Third is reliability. If you say you're going to do something, like do it, we're huge in gh smart on. We start meetings weirdly on time. We end them on time. If we say we're going to do something two years from now, like, we do it like we're very, very reliable. And it creates trust. It creates just like a really high competence culture if you're super reliable. So that's the Third one, the fourth one is E. Engaging for impact. So it's not good enough just to have the right answer. As a leader having the right answer. Oh, congrats. Great. You have the right answer. You need to, like, persuade other people and influence and listen. And basically it's like persuasive communication was the. The fourth thing that matters. And it's just learned skill. I mean, you can learn how to be a more persuasive communicator. So that's. Those are the four that came out of that study on this. Those. These are kind of, I think, bigger companies, managers. The power score. 1. We looked at smaller company managers, and there are three things that if you and your team are good at these three things, you are 20 times more likely to accomplish your goal for that team than. Than if you're not good at all three. So it's kind of like a triathlon, Swimming, biking, and running. Like, you actually have to be good at all three. Can't just be good at, like, one. But the three things are being able to prioritize. They spell power, by the way. PW&R. Prioritizing is like, what's the goal? I think it's on any small business owner. Like your previous podcast, Pursue said, you know, they were doing 8 million in revenue, and he said 30. We're going to do 30 and 30 million in revenue. Setting a goal, setting the right goals. Not too many goals, but just a small number of the right goals. I think that's basically the spirit of what good prioritization looks like as an entrepreneur. That's the P. The W is who's on your team. So back to the hiring and firing thing. Learn it. You can learn it. Read our books. Like, listen to this podcast. Like, you know, learning how to be good at hiring and firing to build talented teams. Super important skill to develop. And then R is relationships. And this is kind of like relationships focused on results. So it's not just being nice to everybody or kumbaya and everyone's just getting along, but, like, nothing's getting done. It's like, how do you build relationships that are focused on achieving shared goals together? Like, achieving results through your relationships is kind of like the third habit. And you put the three together, you're 20 times more likely to achieve your goals.
- [40:59]
C
Well, that's all anybody needs to study, I think.
- [41:03]
A
Yeah. And it's the CEO next door. That's Elena's book. It's great. That's the dare stuff. And then Randy and I, who wrote the who book, this is our second book, Power Score, along with Alan Foster, one of our other colleagues. It's called you'd formula for leadership success. We had 15,000 people's careers with 9 million data points that went into this book. And this is Big and small companies.
- [41:27]
C
Oh, my goodness. See, you seem like a generally upbeat, very optimistic, very energetic person. Over 30 years, I'm sure you have faced something that is a very large challenge or setback beyond an economic downturn. Can you share anything that you face that was really tough for you to get through?
- [41:48]
A
Sure. All right, let's see here. So on my highlights list of like worst moments in business, my assistant and I disclosed some info to a client's assistant that I guess the client, as it turned out, you know, didn't want us mentioning. Like, so basically I was trying to like get a follow up meeting with this billionaire titan of industry who's a great client or was about to become a great client. And his assistant wasn't letting me set up a call. She's like, no. I was like, what do we know? Like, he requested this follow up call. She's like, to talk about what? And the subject line of like, what he wanted to talk about was a sensitive issue in their office. So as it turns out, she basically got really mad and told some other people. And then this titan of industry got really mad and called me, actually called my assistant. He left a message that was like, I can't believe how you violated our confidence and our trust and like, I never want you to contact me again. You know, goodbye. And so like, that was pretty rough. We were like, oh man. We were just trying to offer enough info that the gatekeeper would like, let us set up the meeting. But we blew it because it was a sensitive matter. As it turns out, that was one another one. I was too confident in our study of a company and what was good and bad about the company. We spotted one weakness in the company. But here's where I made a mistake. Just because a company has one glaring weakness, we were hired to do an evaluation of this management team. They had a couple other glaring weaknesses too, but the one was so bright, we kind of took our eye off the ball and didn't see the other one. So we missed. And we were very confident in our analysis. And our client ended up really investing more in this company than they should have. And it was a complete write off the client. Their multimillion dollar investment went to zero. And we looked like, you know, it was just bananas. So that one was a matter of doing like Actually kind of poor quality work and then making a big deal about how right we were in this, that influenced our client to extra invest. That was pretty bad. What else? I sort of yelled at one of our colleagues 15 years ago who I thought just wasn't prepared for a meeting. And you know, I'd like missed some family stuff to be at this meeting and try to help this colleague land a client. And the colleague like sort of wasn't prepared and didn't do that great a job. So rather than be supportive, I was like, in that, you know, I can't believe you blew this kind of attitude and the guy quit. Like he. And we. No one quits our firm. Like very few people quit. So that was a case where I regretted being negative in my feedback with a colleague. That was like 15 years ago. So, you know, learn my lesson. Like I don't like yell at people anymore. But that was an early, an early thing. What else is like, I think we started and then stopped doing digital innovation a long time ago. That would have been really smart to keep going. We're doing a Good job now. ChatGPT AI Predictive Analytics. The tools available now are amazing for those of us who have huge databases. Right. Of information. Like, so we're, we finally, like, we got the memo. We're on it. But for many years there we were early into, for example, like survey data analytics technology. Like we invented something called feedback planet in 1999. It was like an automated 360 degree feedback tool. And it was kind of hard and people called and had tech support questions and we just shuttered it. I mean that could have been like $1 billion. That was like SurveyMonkey or Qualtrics before SurveyMonkey or Qualtrics. So yeah, I'd say that's a huge regret. Is not sticking with the digital priority earlier. And then we kind of got our act together about five to eight years ago and not being international earlier. I really like the idea of bringing best practices of hiring and developing teams around the world. And we're only in five countries. There are 200 countries. So like we're slow to get this to spread around the world. Those are some regrets and things that like haven't gone well, I'd say. Is that pretty good list?
- [45:48]
C
Yeah.
- [45:49]
B
Yeah.
- [45:49]
C
Well, I think your perspective of slow may differ from other people's perspectives of slow. I think you're doing pretty darn well out there.
- [45:58]
B
So just as a closing question here.
- [46:01]
C
If you could go back and talk with yourself when you were in your younger 20s, what life wisdom would you give yourself?
- [46:09]
A
Yeah. All right, so I think I did a good job of carving out plenty of time for family. So I think a lot of our fellow entrepreneurs who like, burn the midnight oil and really, you know, really give it all to the business have great regrets around not prioritizing either family or friends or faith, whatever their faith may be, or doing like, social impact. Give back. I actually went really big on all that this whole time, so I'm not gonna give you the leg. Oh, I should have, like, carved out more time for family because, like, that's not a regret. So I'm sitting here trying to like wind the clock back. And So I have nine kids. So we blended, my wife and I, four and three. So we blended seven like the Brady Bunch, so then we had two. So hence the four year old twins. So the kids are four to 23 and they're great. And the life wisdom that we do give them are things like, I'll give my wife Lauren credit for this. Doing the hard things to learn like tech or STEM or finance or hard things earlier is smart because you can always go less tech later, but it's hard to go more tech later. So I'll give my wife credit for that one. I think our kids have gone STEM hard science heavy early and then a couple of them have pivoted to, you know, like consulting or whatever rather than like stay in the computer science, et cetera. So I'd say that's one is you don't want to like, do the easy path when you're in your teens or twenties. You want to do like the path that's impactful and hard, I think, but then sets you up for being able to have the networks and the wisdom to choose your own adventure later. Oh, gosh. Other, like career strategy lessons. Oh, yeah, here's a huge one. I'll leave you with this thought. I cannot believe what percent of high performing small business owners who turn into medium or big business owners. What percent of them cite having good mentors as like, one of the most important things? Mentors were super important to me. Mentors are super important to people who build amazing things quickly. Yet I don't see even my own kids to the degree I think they should. I don't see young people proactively searching out mentors and kind of collecting mentors. So I'd see. I'd say that'd be like the last career strategy advice is it's free, it's not that scary. DM people on LinkedIn find out, get referred to so and so freaking Steve Jobs called up the founder of Hewlett Packard of HP to get computer parts that he could like build something when he was 12. Like weirdly, people out there who get like a step function of success and you're like, how do they do that? They all have mentors giving them advice or intros or computer components as it turns out. So I'd say if you're young and you're listening to Ann's podcast, just think about what do you want to learn or what are some jobs or industries or types of roles that really sound interesting to you? Who do you know? And maybe you don't know anybody but like use the network you have to get to folks or just go Ahead and blind DM people on LinkedIn. Call them up, email them. You can figure out this stuff and try to recruit. I'd say by the time you're 20, to have like five really good mentors who are very successful people in the field you want to be successful in is unbelievably positive return on investment of your time.
- [49:38]
C
That is great advice and one that I'm going to pass along to my kids as well. Or maybe they'll just hear it when they listen to this. Jeff, thank you so much. This has been a phenomenal and highly educational interview. Thank you so much for taking the time to share your expertise with us.
- [49:54]
A
Your your podcast is brilliant. The interview is super enjoyable. Thank you to everyone who's listening. And here's to hiring and developing your team so you could build your small medium businesses into medium to bigger businesses that make impact, make money, and you know, create wonderful jobs for everybody.
- [50:16]
B
Today's Key Takeaways Many businesses fail by not allocating enough time to hiring, relying on faulty methods like gut instincts or using hypothetical interview questions. Instead, focus on structured, objective hiring methods to improve success rates. Jeff shared his proven method which includes scorecard, source, select and sell. Clearly define the role and expectations. Build a diverse and robust pool of candidates. Use structured accountability driven interviews to predict real performance and actively attract top talent by showcasing the role and company benefits. Dedicating more time and effort to hiring and developing the right team can transform a business. If your business is stuck in growth, consider spending 25% of your time on hiring so that you can work on your business instead of for your business and focus on the who instead of the what. Maintain your company's culture while scaling by hiring for alignment, setting clear expectations, incentivizing the right behaviors, training for your culture and establishing effective structures. If you're aspiring to be a leader or hired into a leadership position. Develop critical skills like decisiveness, adaptability, reliability, and persuasive communication. Also, prioritize building relationships with those with shared goals. You've heard multiple times throughout Season one this next bit of advice. And here it is again. Proactively seek out mentors. The earlier the better. Who can guide your journey. It's free. It's not that scary. And if you establish a relationship with your mentors, they can provide advice, introductions, and more. Lastly, take on challenging paths early.
- [52:41]
C
Don't take the easy path.
- [52:43]
B
It's the challenging ones that help you unlock your full potential. That's it for today. I release episodes once a week, so come back and check it out. Have a great day.