This morning I fielded a question from Frank Riordan, Founder and President of DMC , regarding my use of LinkedIn.  Frank is a client of mine as well as a friend and colleague from Entrepreneur’s Organization, and his company provides “high-caliber engineering and software development services for manufacturing, testing, and product development organizations in the Chicago area and throughout the world. “ 

Frank writes:

Adam –

I have a couple of questions regarding LinkedIn/networking.  What are the top two or three ways that you use LinkedIn?  What are the benefits you see to being a “LION” vs. having a group of people that you truly know?  What other online tools have you found to be effective?

Thanks,

Frank

With Frank’s permission, I have reposted my answer to his questions with the goal of sharing some insight into how I use LinkedIn to build my businesses and keep a leg up on the competition.  [If you're not familiar with the term "LION," it stands for LinkedIn Open Networker and is a self-selected designation that means you will "accept" all invites to connect that are sent your way.  This approach to LinkedIn has the obvious effect of dilluting the strength of your connections on a per capita basis, but increases the size of your network by leaps and bounds - literally overnight.]

Frank,

I use LinkedIn to conduct market reasearch as well as recruiting. The power of LinkedIn as a research tool is unparalleled. For example, let’s say I want to create an org chart of my biggest competitor, to see how they’re built. The first thing I do is go to LinkedIn and search the company by name. Typically, people link up with co-workers, so it’s all there for the taking.  This approach works just as well for building recruiting contacts.

For me, the benefits of LinkedIn are related to the number of direct contacts that I have. As you probably know, you can only “see” people’s networks if you’re a first degree contact (usually). For that reason, I choose to be an open networker because my reach is geometrically larger than if I limited it to people I know.

I paid the 50 bucks at TopLinked.com and put myself on their list. In 60 days I received over 2000 invites. I now have a connection list approaching 5000 people, which gives me access to a network of over 17M people by extension to “networks of networks.” Keep in mind that a user can only invite 3000 people before they are capped by the system. It behooves you to let other people do the inviting.

FYI, I use Facebook as the tool for the network of people whom I actually “know.”  That’s how I keep my contacts straight.

So, Facebook is the other tool that works for me to keep in touch with my personal network. As far as research is concerned, I would also highly recommend a tool called ZoomInfo.  It’s not cheap, but it’s powerful and accurate, and saves you (and/or your marketing department) hours of time a week.

Hope that helps!

With LinkedIn, the possibilities for use are endless.  Recruiters have known for the last two+ years that LinkedIn saves time and money, and the investment of time required to build a strong network pays huge dividends over the long run.  What I am now seeing more of is the unleashing of LinkedIn as a corporate marketing tool.  Once the fertile selling grounds of 1-person consulting shops and small business owners, LinkedIn is now being used by marketing operations to research trends and better understand customer behavior – particularly in B2B.

If you’re an entrepreneur or business manager, and want to find a free and easy way to connect with top talent in your industry, then get started building your network today.  It’s an asset that will grow over time, in size and in value.

[Author's note:  This article is Part 4 of 4 in a series on hiring salespeople.  In Part 1 and Part 2, we discussed why hiring salespeople is so difficult, and what to look for when reviewing a sales resume.  In Part 3, we covered the proper approach to interviewing salespeople.]

You’ve finally identified a sales candidate that you’d like to hire, and now it’s time to make an offer.  Make sure you’ve completed the following checklist prior to sealing the deal:

[  ]  You’ve seen their W2’s for the past three years.  When you’re hiring salespeople, the W2 is the ultimate reference check.  Why?  Because the candidate’s past employers can’t lie to the tax man.  If they’ve earned the money, it’ll show up in the W2.  If it’s not in the W2, they didn’t earn it during that year.  Period.  End of story.  If the candidate told you that they had a $150,000 year last year, here’s where you find out beyond any shred of doubt.  If you don’t check W2’s, then caveat emptor, my friend.

[  ]  You’ve talked to every sales manager / boss they’ve had at each job going back at least 10 years. Do the reference checks.  Do the reference checks yourself.  Don’t pawn them off on an HR generalist or some 3rd party automatic reference-checking service.  You’ll get a worthless confirmation of dates of employment, and that tells you squat about whether or not they’re the superstar you think they are. 

[  ]  You’ve given them the 30-60-90 Day Homework Assignment.  I’m a huge proponent of asking final candidates to complete an abbreviated 30-60-90 Day Plan and present it to me.  This process will give you a real look into the mind of your candidate, revealing how they think, how they approach a new sales job, and how they set expectations for themselves.  You’ll also get to see their presentation skills when they explain the plan to you and answer questions that you have.  It’s a critical step in the process, and you need to add it to your sales hiring process immediately.  Ionix Hiring Systems offers a number of 30-60-90 Day Plan templates, including a full-length Territory Sales Plan, here at our online store.  Save yourself the time and start with a working template.

[  ]  Be ready to fire fast.  You’ve just asked them to complete a 90-day plan, and you’ve worked through it with them to define outcomes that will make you a happy employer.  Now it’s up to them to deliver.  If they miss their 90-Day Plan, it’s decision time.  Perhaps they deserve a second shot.  But in most cases you’re dealing with a mediocre sales hire, and, if you don’t cut them fast, mediocre salespeople will drain more cash from your company than you realize.  Make sure that your offer letter includes language in the offer that stipulates that “the first 90 days of employment are considered a probationary period.  Employment after 90 days is contingent upon your successful completion of all objectives outlined in the 90 Day Plan.” (disclaimer:  this is not legal advice nor should be construed as such.  Check with an attorney before using this language in your offer letters because labor laws vary from state to state.  Exciting, isn’t it?) 

[  ]  You’re prepared for their first day on the job.  Please, don’t be the employer who doesn’t have your new employee’s business cards available on the first day.  Don’t make them wait for IT to configure their laptop or telephone extension.  Don’t make them feel like they’ve just joined the wrong company because you make them read a manual on Day 1 because you don’t have anything else planned.  Be prepared, and only hire people when you can commit the time to get them started on the right foot.  Pair them with a “buddy,” or set up a mentor program. 

Congratulations!  If you’ve read this entire series, you’ve officially graduated from my short course on hiring salespeople.  Here’s to more revenue, less stress, and high profits!  For more information on the full Ionix Hiring System, or to talk with me about your company’s specific needs, shoot me an email at adam.robinson[a]betterhiringtoday.com.
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In Part 1 and Part 2, we discussed why hiring salespeople is so difficult, and what to look for when reviewing a sales resume.  Here, I’ll share with you the “rubber meeting the road” part of the process – the interview.

Sales interviews are a challenge to run if you’re not sure what to ask.  That’s why I recommend coming armed with a pre-defined interview script that lays out everything that you’ll want to ask prior to sitting down with your candidate.  It’ll keep you on track, ensure you don’t skip critical items, and enable you to relax and focus on listening to what’s being said. 

[author's note / shameless plug] : my company, Ionix, has compiled an In-Person Interview Guide that’s available for purchase on our online store.  If you’ve ever made a bad hiring decision, you know that even one week’s salary for a bad hire can cost you thousands of dollars.  At $399 this guide will pay for itself the first time you use it.]

So what do you need to focus on to run a great in-person sales interview? 

Focus on the candidate’s job environment.  In Part 1 of this series, I discussed that great salespeople are a product of their environment as much as they are a product of great selling skills.  Great sales skills + bad environment = a big performance handicap.  If you’re interviewing a salesperson who is making their numbers but is doing so despite a sub-par work environment, you’re looking at a truly great candidate.  On the other hand, if your company has weak sales and marketing support and very little process, then the candidate who has succeeded in a company with a solid support system will struggle mightily when working for you.

That’s why I teach managers to focus on the “how” more than the “what” when it comes to interviewing candidates.  How did they get their job done?  What were the obstacles that needed to be overcome?  How much support did they get?  The answers to these questions will give you the context needed to make a smart hiring choice.

Compare the candidate to their peers.  Your candidate has just told you that they were the top salesperson at their company.  Ok, fantastic.  “How many salespeople were on your team?”  Two?  Not as strong a statement.  300?  Now that’s impressive.

Make sure you’re getting the context of this candidate’s results in conjunction with the data.  Being the top salesperson on a two-person team, while important, is not very predictive of future performance.  As interviewers, we’re trying to build a narrative about each candidate so that we can determine whether or not their story can fit into ours.  Have you ever tried hiring a salesperson from IBM to work for your start-up?  Every tried slotting a salesperson who’s never worked within a big company structure to fit in at a company like Oracle?  While both cases may work out, you’re taking huge risks, in my opinion, barring outstanding sales management and coaching.

It’s not enough to know the data.  You have to get the context, because it’s the context of a candidates success that matters.

Dig into their sales activity.  Behind any salesperson’s performance history is a matrix of sales activity.  The number of calls made each day.  The number of appointments set and kept each week.  The number of proposals sent out the door each month.  Any revenue generated is a product of these activities.  It all starts with a call, and the more calls a salesperson makes, the more sales they have.  If your company has no marketing support, no inside sales team, and no appointment-setting support, then hiring a salesperson who hasn’t made cold calls in the last three years will result in your wasting a ton of money and time on someone who never should have been hired. 

Great salespeople know their numbers and sales ratios, and every industry is different.  Let’s take the recruiting industry, as an example.  I know that an executive recruiter is going to have to make at least ten calls to get two or three prospective candidates on the phone, and those two or three contacts will typically yield one potential lead.  10:1.  If I want my recruiter to get 50 potential candidates, they need to make a minimum of 500 calls. 

The implication is that my research team needs to produce 500 names for my recruiter to call.  Let’s refer back to my comments on environment and support.  If I don’t have the research support to deliver 500 names, then my A-List executive recruiter is going to spend all of their time searching for people to call instead of actually making calls.  They’ll miss their performance target because they’re wasting time chasing down names.  Does that make them a bad salesperson?  Nope, it just makes me a bad manager.

That’s why you have to dig into your sales candidate’s activity to find out if their process for achieving success is anywhere near the process that you currently support.  If not, you may want to move on to another candidate.  The other option which sometimes works is to be brutally honest with your candidate and tell them where you company needs to improve.  Tell them you can’t offer them all the support that they’re currently getting, but, with their guidance, they can have a huge impact on the future of the firm.

In the fourth and final installment of this series on hiring salespeople, we’ll discuss making offers, verifying compensation, and ensure that your new hire’s firs 90 days set them up for success.

To continue with the fourth and final article in our series on hiring salespeople, click here.

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 To continue with Part 3 of this series on hiring salespeople, click here.

Business managers, particularly entrepreneurs and small business owners, have a downright awful track record when it comes to hiring sales talent.  When you hire the right sales resource, you see instant results and amazing things begin to happen.  On the other hand, when you hire a mediocre (or worse) salesperson, you shell out paycheck after paycheck and begin to feel like you’re  running a corporate welfare program.

In this post, first in a series on hiring strategies for sales roles, I’ll layout the reasons why hiring for sales positions is so hard to get right.  Most of the issues that come up during the hiring process are due to one of the following:

Great salespeople are always in demand.  Problem is, there are so darn few of them.  That means that for you, the hiring manager, the market for the most productive biz dev resources is always tight.  Even in the midst of the current global economic slowdown, with millions of layoffs across the planet, the top sales people are virtually downsize-proof for obvious reasons.

This supply-side constraint forces you as a manager to do make one of two choices.  Your first choice is to up your recruiting and interviewing game to be able to locate and hire the top dogs away from your competitors.  Your second choice is to fish in the pond stocked with mediocre sales talent because that’s who’s on the market and easy to pick off.  If you’re reading this and feel like Choice #2 is somewhat autobiographical, then you’re reading the right article.  Help is on the way.

Mediocre salespeople are A-Players when it comes to selling themselves.  If only they sold your products and services as well as they sold themselves in that interview, right?  Most sales candidates are fairly adept at talking about the act of selling – what to do, what to say, how to act, and the other common tools of the trade.  But did they actually do any of it?  If they haven’t made plan for the past three years, I don’t care what they tell me.  They didn’t cut the mustard.

The beautiful thing about judging sales performance is that all you have to do is look at the scoreboard.  Did they make the number?  Have they consistently made the number?  Can they prove it?  All the yammering in the world won’t change their prior results.  Don’t be taken by smooth-talking sales candidates who proclaim to move mountains.  Check the math.

Great salespeople are a product of environment.  A recent study found that when salespeople classified as “top performers” by their employers left their position to work at another firm, they were classified as “top performers” by their new employers less than 50% of the time.    The study went on to show that the reasons for sales success have as much to do with environment as their sales ability.  You need both to be successful.

Take Bob Superstar, who’s worked at Acme Inc for the last 5 years, and was their top producer for the last 3 years.  Acme has an outstanding marketing department and is a wildly profitable company.  It’s managed well, and customers love them.  Bob is wooed by Amalgamated Inc and leaves his job for a new gig that pays twice as much base salary.  Amalgamated has no marketing department to speak of, has client delivery issues, and is a much less profitable firm.  Bob struggles mightily at Amalgamated and quits after 18 months of beating his head against the wall.

Is Bob a bad salesperson?  The point is this:  you could hire the best salesperson in the universe, but if you have bad process, weak support, and unreferenceable customers, then no amount of sales talent is going to get you where you need to be.

We’re desperate!  “We need a new salesperson, NOW!  Just find me someone!  Anyone!  No, I don’t have time to actually write a detailed Job Profile that explains what results  they’ll actually be accountable for…just find me someone!”

You might as well carry around a mirror in your back pocket and screen sales candidates using the Fog Test.  That’s what your doing when you blow through the pre-hiring process of analyzing and deciding what you really need.  The solution isn’t to hurry, the solution is to plan ahead so you don’t keep finding yourself in the same jam.

In How to Hire Salespeople Part 2, we’ll talk about reading resumes and looking at the fine print.  Stay tuned!

Today I’m stepping outside the typical “how-to” article and focusing on entrepreneurship. 

We’ve heard a lot of talk lately about “the role of the Entrepreneur” in leading the world out of this global economic maelstrom. We hear that “small businesses employ 90% of Americans” (true) and that “entrepreneurs will drive jobs growth and the economic recovery” (also true).  But most of this talk comes from politicians and policy-makers who have no idea what it really means to be an entrepreneur, and, frankly, I’m tired of hearing from our nation’s political class talk out of both sides of the mouth.  When I see U.S. taxpayer dollars going to fund big enterprises with terrible business models – think GM – it makes me wonder if the folks in Washington really wants to help small businesses, or simply want to talk about helping. It makes for a good sound byte when you support small business, I suppose.

This year my company will celebrate its 5th year of doing business. I’m proud of that accomplishment, but it’s been the most challenging five years of my life. Over the course of the last five years I’ve had the pleasure of meeting hundreds of fellow entrepreneurs on the front-lines of the economy, and this year the battle is tougher than ever before.  Contrary to what you’ll read in the newspaper, I’m here to report back that America is going to be just fine.

There’s a lot of uncertainty being communicated in the media. It’s not so uncertain for entrepreneurs. We don’t have a choice – we must succeed.  So, we will.  But, in the meantime:

We neither want nor expect taxpayer help.  We move fast.  We try fast, fail fast, fix fast, and try again.  If we’re losing money, we restructure our costs.  We’re nimble.  The last thing we want is the government stepping in with some other citizen’s money and giving it to us as a handout with strings attached.  That’s anathema to everything we stand for.

The government,  its quest to make things better, is going to make it harder for us to achieve success.  If the current administration lets the Bush tax cuts expire, it will amount to a massive tax increase on small business-owners due to the current tax treatment of S-Corporations and LLCs.  How can entrepreneurs be the source of the light at the end of the tunnel, and then be villified as “fat cats” and “the rich” when we successfully create wealth in the process?  Does anyone realize that without the incentive to keep our profits, we won’t keep taking these gargantuan risks with our personal net worth?  

Our house is already at risk.  Has been for years.  Most of us pledged the sum total of our personal assets to get that bank loan.  If our business fails, we lose our home.  So yes, we feel empathy for people who are upside-down on their home mortgages.  But it’s not the same thing.

Our biggest hurdle to hiring more employees? Payroll taxes.  The stimulus does nothing to actually drive employment within small businesses.  If government reduced our payroll tax obligation, we could hire more people.  These new employees would pay income taxes, and would buy goods and services from other companies.  Which means that those companies could hire more people who would then do the same thing.  Which means more than enough tax revenue to offset the cut in payroll taxes.  Duh.

We’re eternal optimists.  If we weren’t, we wouldn’t be able to deal with the overwhelming odds that are perpetually stacked against us.  So we don’t care what we hear on TV. We know it’s going to get better, because we’re going to make it better.  What, you think we’re going to to just roll over and die?  When there’s so much opportunity out there?

While the rest of the world laments the current situation, the entrepreneurs are siliently toiling to make a buck.  In the process, we’ll create jobs and help fund our government.  Someone else will take the credit for “fixing” the economy, but, then again,  we’re not really all that into getting the credit.

We want to succeed.  Lifting all boats in the process is a really nice bonus.

Today’s question:  Is the United States better off or worse off when it restricts the compensation of our nation’s top financial institutions?

Speaking as someone who has years of experience in building and managing executive searches for many of the Fortune 500, it is my firm opinion that, by caving to political pressure to restrict executive compensation at “bailed out” banks, the Obama Administration has made this messy situation much less likely to be resolved in a timely or effective fashion. 

The very best talent in any industry is always in demand, no matter the economic circumstances at the time.  The steel industry will always seek out the best steel industry managers.  Ditto for the car industry, the airline industry, the retail industry, and everyone else who’s in business to make money.  Why?  Because hiring talented people leads to producing higher profits.  In other words, great managers build great companies.  Just ask Jim Collins.

Over the course of my executive search career, two things have always been true:  (1) Great managers don’t want to work for poorly run companies , and (2) great managers want  the flexibility and trust to do the things that made them great managers in the first place.

Interestingly enough, they also want to be paid according to their ability to deliver results.

Earlier this week, President Obama announced that banks that have accepted TARP (bailout) money from the Federal government must restrict their top executive salaries to $500,000 per year.  Citizens of the United States are upset about the excesses of Wall Street, and the political pressure to do “something” to show that the government is being tough on Wall Street was running high.  “Cap their salaries!” was the knee-jerk reaction.  “That’ll show those Wall Street fat cats!”

Wrong.  Restricting compensation of bank executives was a terrible move.  The only impact this limit on executive compensation will have  – other than placating the rioting masses – is to guarantee that the best talent in the banking industry will simply avoid working for large banks.  And who can blame them?  Their choices are to either work for a smaller, boutique financial institution and make what they’re worth, or work for a nationalized banking system in which the executives are blamed for everything from the collapse the housing market to the melting of the polar icecaps…oh, and the added incentive of a 75% pay cut.  

If I were a shareholder of, say, Citigroup, I would be extremely upset that my government just forced Citigroup to go out in the market with a salary cap of $500K, when the market for top-level banking talent is well over $2M in compensation.  I’m upset because top bankers can bring in tens of millions of dollars in revenue to the bank.  Think about it:  if you gave someone three million dollars, and, at the end of the year, they gave you thirty million dollars back, would you be happy?  Damn right you’d be happy.

Alternatively, in the middle of the most complex financial meltdown in the history of the human race, would you rather place all of your chips on the banking executive that will settle for $500K a year?  The guy who’s simply happy to have a J-O-B?  I don’t know about you, but I want the absolute best person for the job doing everything they can to fix this mess.  Pay them what they’re worth. 

Many argue that it was these top-shelf financial types that got us into this mess in the first place.  That argument is misguided and fails to account for the fact that, in many cases, it was the US Federal Government that stoked the credit and housing bubble with cheap money and a mandate to the banking world via Fannie Mae and Freddie Mac to give mortgages to unworthy borrowers.  Blaming this crisis solely on banking execs is like blaming the fire department for not extinguishing a 5-alarm fire started by an arsonist.

There is no single constituency to blame for the mess in which we find ourselves.  Unfortunately, every executive recruiter in the world can look at this recent Obama policy and know with 100% certainty that the only thing we just guaranteed was that the best bankers in the United States – the ones most qualified to lead us out of this situation – won’t be the bankers we have on hand to fix our financial system.  The best people aren’t going to work for cheap, and they’re not going to work in a poorly-run (government-run!) bank that gives them zero leeway to do the things that made them great managers in the first place. 

They’ll simply go to work where they’re welcome, and where they’re paid what they’re worth.  Wouldn’t you do the same?

“What’s the best way to get consistently high levels of productivity out of my staff?”

If there’s any single question that I’ve been asked more than any other, that one is the hands-down winner.  No matter what kind of business they’re in, managers struggle to find a straightforward, repeatable approach to driving exceptional performance.  They struggle to find a common language through which they can communicate expectations and obtain employee buy-in.  The result of this communication breakdown is a lack of shared understanding, which eventually leads to frustration on the part of both manager and staff member.  Sound familiar?

One of the best ways to tackle this issue head-on is with the 30-60-90 Day Plan Approach.  A 30-60-90 Day Plan is a tool that managers can use to set performance expectations with members of their team, and lays out the outcomes that your employee must produce within 30, 60, and 90 days in order for you to consider their performance a success.  When done correctly, this simple, straightforward approach results in shared expectations and consistent performance.  (for a great template that will save you a ton of time, I highly recommend this MS Word-based 30-60-90 Day Plan Template from www.306090dayplan.com)

The first step in creating a 30-60-90 Day Plan is for you, the manager, to define the specific, measurable outcomes that must be reached by your employee.  These outcomes should be easily understandable, and as objective and metrics-based as possible.  For example, a weakly-written outcome for an Account Executive would be something like, “Win new customer accounts in the first 90 days.”  A stronger approach to writing this outcome would be, “Close 5 new customer accounts within the next 90 days.”  The difference is specificity – win 5 new accounts.  Either that happens, or it doesn’t.  There’s no gray area.

What are some other examples of specific outcomes?  For a controller, an outcome might be, “Reduce all Accounts Receivable to 50 days’ aging or less by 60 days from now.”  For a recruiter, an example might be, “Conduct 5 in-person interviews each week, beginning at 30 days from now.”  An outcome for a web developer may be, “Complete XYZ application, including QA testing and bug fixes, so that the application is in production within 30 days.”

When you’ve listed all outcomes for the next 30, 60, and 90 days, it’s time to share them with your employee.  Call a meeting, and share with them that you’d like to make sure that you as the manager are communicating expectations effectively.  Explain that you’ve written down some specific outcomes that you need to see over the next 30, 60, and 90 days, and that you want to get their feedback before moving forward.  Walk them through your expectations, and solicit their input.  It’s okay if they want to modify dates or results, because the process of negotiation engenders employee buy-in.  Once you’ve finalized the results, make sure to update the plan and provide your employee with the final copy.

The 30-60-90 Day Plan Approach works because it creates a common reference point for you and your staff.  It outlines specific, measurable actions that must be completed by defined periods of time, and asks the employee to commit to the result.  A huge benefit for you, the manager, is that it takes the emotion out of performance management – either the employee meets plan, or they don’t.  No more hand-wringing and misunderstood expectations.

Give this approach a shot, and unlock your team’s true potential!

Download a template to get you started by clicking here.

Good advice.

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I think I’ve finally found a “foolproof” way to size up a potential employee.  Matter of fact, I think this is a sure-fire way to size up just about anyone.  Several leading business thinkers have written on this topic, including the great Jim Collins – so I’m in no way claiming ownership of this process - but I’m telling you that this litmus test has never failed me.  I’m literally 100% successful when using this approach. 

It’s called the Locus of Control test. 

Locus of control is a term in psychology which refers to a person’s belief about what causes the good or bad results in his or her life, either in general or in a specific area, such as their career. It can either be internal, meaning the person believes that they control themselves and their life, or external, meaning they believe that their environment, some external power, or other people control their decisions and their life.

When applied to business situations, the locus of control concept will tell you the kind of person with whom you’re dealing.  Employees who subscribe to an internal locus of control will take responsibility for whatever results are achieved – good or bad.  Employees who subscribe to an external locus of control, by contrast, will look you dead in the eye and attempt to explain to you the 101 reasons why a bad result was achieved (aka “It’s not my fault!”).

I firmly believe that the locus of control concept can be directly applied to the hiring process to determine whether or not a candidate would be a good fit for your organization.  Here are a few examples of the concept:

Example 1:  An employee is leading a software development project, and has responsibility for translating the client’s business requirements into technical specifications, which are then turned into software by a team of developers.  When the beta version is released to the customer, they have a fit because it’s missing key functionality.  They feel that they had accurately communicated requirements to the employee. 

A person with an internal locus of control would say, “Well, I guess I failed to understand what they were looking for.   I accept responsibility for the situation we’re in, and will make it right.”  A person with an external locus of control would say, “I did everything they told me to do.  They even signed off on the specs!  This isn’t our fault!”

Example 2:  Your salesperson has a final presentation with the executive team at a company that he’s been chasing for over a year.  The deal is a seven-figure deal, and it’s a must-win for your firm.  The day before the meeting, the salesperson comes into your office and tells you that the client just called to say that they were going with another firm, and would be canceling the meeting.  You’re stunned, because this turn of events is totally out of the blue. 

A person with an internal locus of control would say to you, “Well, boss, this one took me by surprise.  I guess I didn’t ask the right questions to understand what we were really up against.  I own this 100%.”  A person with an external locus of control would say, “That S.O.B. totally screwed me!  He told me that we’d have a fair shot at winning this thing.  They were just using us to lower the price for their existing vendor!”

These are real-life examples, and I was the manager in both cases.  In both cases, I had employees who subscribed to an external locus of control.  The “it’s not my fault!” syndrome had burned me yet again.  Had I done a better job selecting talent for my team, I wouldn’t have had employees who couldn’t own up to mistakes.

So, how to use the Locus of Control Test when interviewing candidates?  It’s easy.  Simply listen closely to the candidates answers for your questions.  If they’re telling you the things that they could have done to impact the end result, then they’re coming at the situation with an internal locus of control (good).  If they’re telling you that their manager was bad, or that the company was under-resourced, or that the economy was bad, or that the price of tea in China was a factor, then they’re coming at the issue with an external locus of control (bad).

In my over 10 years of interviewing candidates for jobs, I have never once hired someone with an internal locus of control that let me down.  Not once.  Why?  Because even if they couldn’t meet expectations, they would acknowledge that the responsibility was theirs.  If the situation called for termination or reassignment, it never ended with ill will because the individual owned the end result. 

In contrast, every “ugly” management issue that I’ve dealt with has been with an employee whose locus of control was external.  Nothing was their fault!  I was a bad manager!  They didn’t know what I wanted!  How was this their fault?

Focusing on this one concept will exponentially increase your hiring results.  Try it! 

If it doesn’t work for you, then it’s your fault, not mine. 

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When it comes to recruiting, nearly every business manager I work with has two things in common. One, they understand the impact that great recruiting can have on their organization. Two, they all think that actually doing the recruiting work themselves is a royal pain in the ass.

The solution that many entrepreneurs and managers arrive at is to hire a full-time recruiter. While I generally agree that established businesses should have a dynamite recruiter on staff, there are some general guidelines that I ask my clients to consider before they add an expensive recruiting resource to the payroll.

Unless you hire at least one person a month, don’t hire a recruiter.  A good recruiter is going to cost you a minimum of $65K a year, before benefits.  If you already have someone on staff who’s responsible for HR, then you might be able to get away with hiring a lower-level recruiter with responsibility for sourcing candidates.  Without the volume of at least 1 hire per month, you’re spending money needlessly.  Consider using a low-cost candidate sourcing provider instead.

Most recruiters know how to do one thing:  search job boards.  It’s true.  90% of corporate recruiters are only effective when searching the major job boards for candidates.  The 10% who are well-versed in high-end recruiting techniques are either working for a search firm or are in business for themselves.   

That fact has two implications:  one, if your business doesn’t fork out $10K a year per license for sites like Monster.com and Careerbuilder.com, then there is a good chance that your newly hired full-time recruiter is going to struggle, big-time.  When you’re writing your job profile for the recruiter role you’re opening, ask yourself, “what kind of positions will this person be trying to fill?”  Executive level roles?  Mid-level managers?  Sales?  Admin?  All of the above?  Believe me, the answer matters.

 Recruiters make cold calls.   A lot of them.  When you’re screening your recruiter candidates, make sure you focus in on their production.  Just like sales, a recruiter should have the following approximate ratios:  100 calls to yield 10 viable candidates, 10 telephone screens to yield 3 in-person interviews, a minimum of 3 in-person interviews to yield one hire.  Some recruiters will tell me that they can do their job without making a lot of cold calls.  Baloney.  I challenge you to show me a salesperson who can close a 6-figure deal using nothing but email. 

The best recruiter on the planet won’t make a bit of difference if your hiring managers don’t know how to conduct an interview.   Let’s assume for a second that you’ve found the World’s Greatest Recruiter, and added them to your staff.  He or she tees up a dynamite candidate slate for your VP of Ops to interview and assess.  Your VP of Ops has never received any formal hiring training, and so they proceed to wing it throughout the entire interview process.  No two candidates are asked the same bank of questions.  In the end, your VP picks the person with whom they have the greatest rapport – not necessarily the person who has demonstrated that they can do the job.  Six months later, you’re managing performance problems.  Sound familiar?  Train your managers how to conduct interviews! (reading this blog is a good start)

Adding a full-time recruiter is a critical step in the growth of your company, but it’s important to do it the right way.  Don’t jump the gun, make sure you hire someone with solid recruiting chops, and train your hiring managers on interview techniques. 

Good luck!
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The final step in the hiring process is the issuance of a written job offer.  By the time you reach this step, you’ve reached a near-certainty that you’ve selected the right person for the job, and, if you’ve been following my advice on issuing verbal job offers prior to written ones, then you’ve already received a verbal acceptance from your candidate. 

The only goal here is to prevent a last-minute surprise – and, at this point, the only thing you can do wrong is to accidentally omit critical information in the offer letter.  To ensure that you cover everything that needs to be covered, I’ll run through the elements of a well-crafted job offer with you here.  Feel free to use these guidelines as a template for your company’s offer letter.  [note:  this document is in no way to be construed as legal advice.  Please consult an attorney prior to issuing any formal job offers.  There, I said it.]

The major elements of the written job offer are:

The Introduction.  Here, we’ll include all pertinent information about the job title, the start date, and a disclosure that nothing is final until all due diligence has been completed (you always want an out, just in case!).

The Tangibles.  The contents of this section will vary widely, depending on your company’s compensation and benefits structure.  I have included the most commonly used elements for this template.

The Legal Notice. In this section, you will remind them that employment is “at-will” and that this offer supersedes any prior discussion of compensation or benefits [note:  not all States in the US are "at-will" employment States.  Consult an attorney.  Seriously.]

The Conclusion.  You can get as mushy with this as you’d like.  I prefer to keep it simple.

_________________________________________

Your compensation will be the following: 

Base Salary:  $[amount] annualized, paid [bi-weekly / semi-monthly / etc].  

Performance-based compensation: 20% of base salary, or $23,388, earned within the guidelines of the [Company name] Incentive Compensation plan

Bonus Potential: Discretionary, based on achievement of the company’s operating goals and your individual performance

Employee Stock Options: Participation in the [Company name] Employee Stock Option program, at an initial grant of [number] option units 

Performance Review: Performance reviews are conducted twice annually, once in June and once in December.  Raises in base salary are considered on an annual basis

Paid Time Off (PTO): You will be eligible for [number] days PTO during each 12-month period 

Sick / Personal Days: [number] days for use during each 12-month period, beginning on your [number] day of employment. 

Benefits: As a full-time employee, you will be eligible for our standard benefits plan, which includes Medical, Dental, Vision, Long Term and Short Term Disability, and Life Insurance.   401(k) eligibility begins after [# months, years, etc.] of continuous employment. 

Employment with [Company name] is considered at-will.  Either party is free to terminate the employment relationship with or without cause or notice.  This offer letter supersedes all other oral and/or written agreements.

This offer is valid through [5 days from date of issue].  Upon acceptance of this offer, please sign below and return this letter to my attention via fax at [Fax number].  I will also send you a new hire packet for you to complete and bring with you on your start date.  If you have any questions regarding our offer, please call me at (###) ###-####. 

We look forward to working with you!

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Fewer than 10% of managers conduct their own reference checks. When you leave reference checking in the hands of someone else, you’re really rolling the dice with your new hire. Worst of all is the hiring manager who neither conducts references themselves, nor gets a third party to conduct references for them.

Would you ever consider forking over $400,000 for a house based entirely on what the selling agent told you? (“Of COURSE the house is mold-free!“) Heck no! That’s what home inspections are for. Yet, almost every entrepreneur I work with is more than willing to fork over fifty, eighty, or a hundred-thousand bucks (or more) for someone that they’re hiring based entirely on the belief that this person hasn’t embellished or inflated a single thing about their stated accomplishments or experience.

Faith in people is a good thing, but it’s “trust but verify” time when you’re hiring new employees. Here are three tops tips for conducting reference checks that tell you what you need to know about your candidate:

Conduct reference checks yourself. Seriously, I can’t believe I had to tell you again.

Approach the reference call like you’re about to make a $500,000 buying decision. I find that most managers who conduct reference checks blow through the call in about 5 minutes. “What can you tell me about Jim? Any performance issues? Well, great! Talk to you later.” Let’s say you’re hiring a $50,000 a year resource for your growing company. The general consensus amongst the HR community is that hiring the wrong person costs you 10x that person’s base salary after you factor in salary, benefits, lost customer opportunities and other opportunity costs. That means that you’re making a $500,000 buying decision when hiring a seemingly “inexpensive” resource. Act like it’s a half-million dollar decision. It is.

Clue into the nuances of the reference’s responses. The answers to the test are buried in the subtleties of voice inflection and tonal qualities of the reference’s answers. Does it sound like the reference is holding back on something negative? Are you getting stonewalled on your questions? Just scratching the surface? Getting nothing more than one-word answers? If you think any of these scenarios are the case, simply say, “Tell me more about that.” Push that reference to give you the second, third, and even fourth layer of detail. That’s where the reality of your candidate’s performance history lives.

Remember the most important question in the world: “If given the opportunity to hire this person again for a similar job, would you enthusiastically rehire them?” Any answer other than some version of, “Absolutely!” is the universe telling you that hiring this person will lead to issues. If it sounds like this person would be even the least bit hesitant to rehire your candidate, take heed. If they qualify their answer, take heed. It’s for a reason. Seek clarification, but don’t try to convince yourself that you should hire someone whom you know is getting a lukewarm rehire reception from a former manager.

The reference check is the most important part of the interview process, because it’s the first time that you have someone other than your candidate talking about that candidate’s performance. Don’t rush through this final screening step!

After 11 years in the search business, I’ve developed a Reference Check script that works…and it’s now available for you to use at your company.  Click here for the very same form that my executive recruiting staff uses to conduct spot-on reference checks for our diverse client base.  It’s an investment that will pay off the first time you use this invaluable tool! 

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• Now that I’ve pared my staff back to support an iffy 2009, is there anyone still working for me who I would replace in a heartbeat if presented with the chance to do so?
• Who on my team is employed here only because I am afraid of impacting a customer relationship with their termination?
• Who have I been avoiding terminating because their performance isn’t so bad as to make obvious the need to find a replacement?

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