I couldn’t deny it anymore. Our sales team had started a coup. The uprising began when my co-founder, Mark, and I decided to change our project scoping process.  

Previously, a client would hire us to build their app, then we spent 3-6 months drafting a complex scoping document. We created wireframes, planned every function and feature, mapped even the tiniest details – and we had a serious backlog.

We had mountains of work that we couldn’t fulfill, but we needed to finish the documents to bring in revenue.

So, Mark sketched out a two-day, immersive session that we now call the Rapid Concept Workshop. After 5-10 more days spent refining the requirements, the project would be ready for development.

The price tag was about five times higher than a scoping doc, but the client experience (and the final product) was at least 10 times better.

We were ready to test this new model, but our sales team was not having it.

They thought we were ripping off our customers. They didn’t want to change. At one point during the attempted takedown, they asked to cut commissions and switch to a base salary only.

Our plan was unproven, but we were headstrong and determined, so we forged ahead.

Once the dust settled, almost the entire sales team had resigned or been fired.

The next couple months were rough, but we survived the coup.

And our instincts were right. Projects moved faster with less friction, and this new model has now become industry standard.

The real lesson, though, was all about growing a great team.

We had hired based on gut instinct, and nearly all those early salespeople were a terrible fit. They were actively fighting our culture – and they weren’t adaptable.

That’s a problem when one of your four company promises states “change is good.”

After all, technology is never static. We’re constantly revising and updating our models.

And personally, I can’t stand the phrase, “that’s how it’s always been done.” It’s so limiting. If you want to thrive in this industry, you’ve got to be willing to change.

It was time to overhaul how we hired and grew our staff.

From 75% failure to functional teams

startup hiring lessons

When we started Appster, Mark and I had absolutely no idea how to build teams.

We hired anyone who seemed personable and had the right credentials. As a result, no one stayed in the business very long.

There was nasty infighting and a huge range of personal competency, even among people in similar roles.

Our failure rate was about 75%. I hear that’s pretty average, but the actual costs of employee mis-hiring are massive. A bad front-line hire can cost the company about 3-5 times their annual salary. For executives, it’s more like 12- 27 times.

That’s a big deal – and the money adds up when you consider the time and resources required to attract, interview, onboard, and manage someone who doesn’t work out.

After the attempted coup, we looked around and thought, “why are we drowning in some departments?”

The sales team was gone. Business analysts came in and out through a revolving door, and the customer experience sucked. Suddenly, it all clicked.

If your business is working on paper, but you’re struggling in specific areas, look closely at the people involved.

Who’s leading? Who’s on the team? Are they high-quality employees?

After a whole lot of reading, listening and talking to advisors, we began to create an official hiring system. We also borrowed heavily from two helpful books:

We learned to categorize current and potential employees in three ways:

A players

These are the team members you want (and need) to keep around. Nurture their talent, ensure they’re happy and engaged, and invest in their development. A players strengthen and accelerate a business.

B players

Middle-of-the-pack staff. They’re not performing at the highest level now, but they could get there. Maybe they need more time, support, or even a sense of what’s at stake.

C players

Get these staff members out of the business as quickly as possible. They’re dragging teams down and lowering morale.

Next, we created detailed scorecards for each position. The first part of the scorecard is role-specific. It looks at what traits and credentials an A player should possess.

For example, a sales scorecard might include rankings for emotional intelligence (EQ), negotiation skills, persuasion, and the ability to read body language. We collate the data and move on to the second part, which is more behavioral.

Here, we borrowed the Ideal Team Player ideology. We’re looking for people with three key virtues:

1. Hungry

Is the candidate ambitious and eager to grow? Do they genuinely want to tackle the challenges inherent in this position, or is it all about the paycheck?

Everyone can seem eager in an interview, so it’s helpful to ask about self-development.

Are they reading books, listening to podcasts or attending courses? If someone says they don’t read much and their last skills upgrade was five years ago, that doesn’t feel very hungry.

2. Humble

People with inflated egos and low humility can damage teams. Confidence is great, but cocky is not. Jerks can see themselves to the door.

Testing for humility can be tricky, so listen closely to how a candidate describes their accomplishments.

Do they use the word “I” or “we?” This distinction is critical for managerial positions. Leaders with humility will always reference the team effort. They might have been leading, but a team took it to the finish line.

Talking about failure is helpful, too. Ask people to describe a time when they dropped the ball. What was your biggest mistake? How did you fix it? Owning an error and taking steps to correct it shows humility and personal responsibility.

3. Smart

Many people think “smart” is another word for IQ, but the role-specific part of the scorecard already tests for hard skills and knowledge.

In a behavioral sense, smart is all about EQ. Does the candidate show empathy? Do they read social cues? Are they fun to be around or do they seem standoffish?

Every personality is different, and that’s a good thing, but we’re looking for people who can communicate well, work effectively on teams, and be empathetic and vulnerable.

By the end of the interview, we can make an informed decision.

There’s still an instinctual, gut feeling involved, but the scorecard provides quantifiable data – and this process has drastically improved our hiring. It’s not perfect, but our success rate is now around 90%.   

Build your system and refine as you go

startup hiring lessons

As we are now over 400 global employees, our hiring and team-building process continues to evolve. The A, B, C categories and scoring systems are the foundation.

Here are some other techniques we’ve established to “get the right people on the right bus,” as Lencioni would say.

Look for patterns and a proven history

It sounds simple, but if you’re trying to fill a niche role, look for someone who’s done it 2-3 times already.

We often use this approach when we’re hiring executives. For example, if a VP of Sales took two other companies from $1 million to $20 million, there’s a good chance that he or she can make that happen for you.

Hire stage-specific talent

Roles vary widely depending on the age and stage of your company. For example, a CFO who’s managing a billion dollars in revenue has totally different skills and experience than someone who’s scaling up from $5-20 million.

You need to hire the person who matches your stage – and who can take you to the next level.

Don’t worry about obsolescence, either. Some people think that a stage-based hire could become irrelevant once you reach the target.

But, you can figure that out when you get there, and if you’ve found an awesome, indispensable team member, the role can always be re-worked.

Stay close to the hiring process

Mark and I still sign off on every new hire. We think it’s important.

Obviously, our managers have the final say, but we haven’t stepped into the shadows. We’ll continue to participate in this process for as long as we can.

Even in 2015, Google co-founder and CEO Larry Page still approved each of the 6,000 new employees hired every year. If he can do it, then we can, too.

Establish high standards – and don’t back down

We’ve had a lot of press about our rigorous hiring process. Some people think it’s excessive. We believe it’s essential for success.

A few parts have been exaggerated, but the process includes online screenings, multiple phone interviews, face-to-face interviews (where the scorecard comes into play), follow-up meetings, and full reference and background checks.

Strong candidates thrive under pressure, and they take pride in their new positions. After all, high performance is another one of our four promises.

How could we keep that promise if we didn’t attract and hire the right people?

outsource team

In contrast to the early days of 75% failure, a thorough screening also process minimizes personal bias. Quantitative scorecard data and collaborative interviewing keep us focused on the right details.

The team itself has to feel great about the candidate – and despite our sign-off, their judgment weighs higher than mine or Mark’s.

I realized that every time I disagreed with a team and over-ruled their decision, I was completely wrong. The new hire was always a bad fit. Maybe they had a huge ego or just didn’t fit the culture, but I’ve learned to trust the consensus.

So, you’ve built an awesome team. Now what?

Finding great people is just one part of the equation. Keeping your staff engaged, happy and hungry is a different challenge entirely.

I still believe that you shouldn’t worry about culture until you’ve nailed down the hiring. Once you’re there, build momentum by over-communicating your vision.

Describe your vision, mission and goals for the future until it seems wildly excessive. Keep talking and sharing, even if you feel like a propaganda machine.

There were times when we got distracted and failed to keep employees in the loop. We didn’t tell them where we were heading, or what we saw on our radar. That was a mistake.

Our executive team is constantly talking strategy, but our employees can’t read our minds. They deserve to hear what’s going on.

A couple weeks ago, we introduced the Founders’ Address. I gave a 45-minute talk about where we are as a company, what we’re trying to achieve, and how we’re going to accomplish it in an increasingly competitive market.

Honestly, I was a little unsure about the whole thing, but the response was incredible. People said it was invigorating. Now we’re making it a monthly event.

We also do bi-weekly Time Travel Tuesdays. This all-hands, virtual meeting happens on Monday in the U.S. and Tuesday in Australia and India, thanks to the time difference. It’s another way to nurture a cohesive, motivated team, even across different continents.

The culture question

team

In the startup world, “company culture” verges on a religion. People get fanatical about the team environment. Granted, it’s sooo much easier when you have a team of 20, versus hundreds or thousands distributed across multiple countries.

We’re still learning how to reinforce an awesome culture, but it starts with hiring those A players: the hungry, humble, smart people who will push and challenge you in the very best ways.

I’ve referenced our core promises a few times here, so it’s worth sharing them in full:

  1. Open company. No BS. We’re transparent and we ask the same of our teams. Don’t hide mistakes or bury disagreements. Get it all out there, take responsibility and move forward.
  2. High performance. Always raise the bar. We’re looking for ambitious, productive people who want to break our industry’s four-minute miles.
  3. Change is good. Be productively paranoid. If you don’t grow, evolve and stay hungry, the company could die. That’s a reality of our business. It’s competitive and it’s always changing. We have to keep pace and lead innovation.
  4. Ownership. When people use the language of these four promises, like “hey – we need to take ownership here,” it’s music to our entrepreneurial ears. That’s what reinforces culture. Everyone should take responsibility for our growth, and for their own.

Compensation – the final puzzle piece

Rewarding first-rate employees feels awesome. It’s one of the best parts of what we do – and once again, we use our scorecard to establish a clear rationale.

A players should get top dollar. They’ve earned (and continue to deserve) excellent pay, regular raises, and any perks and bonuses that we offer.

B players are well compensated, but they shouldn’t expect a raise anytime soon. We need them to reach higher and perform at an A level. Then we’ll talk money and perks.

C players need to be released from the company in a professional, respectful way. We’re not even talking about compensation here.  

Salaries and benefits should never involve favoritism, which is why we try to let the scorecard numbers speak for themselves. But if you’re in doubt, ask yourself one question:

If we could go back in time, would we re-hire this person?

The answer becomes surprisingly clear. “OMG yes!” means you have an A player. “I guess so” or a straight-up “no” reveals what should happen next.

About those organic blueberries and craft beer taps…

Our industry has become notorious for over-the-top perks. I’m sure you’ve heard the crazy stories about on-site massages and gourmet food in every fridge.

We’re not that fancy. We have perks, for sure, and we like to treat our teams, but we don’t believe in bribing them. Free meals for people who work late, transportation, fitness facilities, and day care make a real difference. These resources can help people focus and stay productive.

But, the most valuable thing we can offer is a stable, profitable company.

pexels-photo-450279.jpeg

We work hard to manage our finances. We stay lean and we try to get the right people on the right teams. At the end (and the beginning) of the day, that’s what matters.

We want our staff to know they’re doing awesome work – and they’re personally contributing to our success.

After all, no one leaves a company because they didn’t get acupuncture after a farm-to-table lunch. They quit when the work culture is terrible, their team is fighting, and their manager is an a-hole.

That’s what creates Sunday night dread, and we do everything in our power to prevent it.

Hire smart, stay involved, and see what happens  

As the founder or CEO of a growing company, remember that hiring is your number-one job.

It’s the ultimate leverage. You can have the most creative, brilliant growth strategy on the planet, but if you don’t have the right people to make it happen, you’re lost.

Appster is a young company. We’ve made a ton of mistakes, and if I could actually time travel, I would go back and fix our hiring process.

Getting that right from the start would have been a force multiplier. We can’t change the past, but we can continue to evolve and improve.

Hopefully, we can all stay hungry, humble and smart – and avoid another coup along the way.

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