Hiring Within Your Network

Yesterday I spent my day training Charlie, our second part time warehouse employee.  Like John, he picked everything up very quickly and by the end of the day was able to do 90% of the work without asking a question.  And like with John, this is partly because he’s a very intelligent guy and partly because we did a good job of designing systems that set him up for success.

I think we’re now pretty confident that any hard working, smart person can be up and running at full speed in our warehouse in less than a week.  That’s great for us to know.  It gives us the flexibility to know that if we need to staff up for a busy few months (like the spring time or the holidays) we don’t need a month lead time to train someone.  It’s also kind of a requirement for this type of position that will likely be filled by part-time students that need flexible schedules.

Now that we’re confident in the systems, the real problem is finding the right people.  How do you go about finding the right employees?

How Most Businesses Hire

First, let’s take a look at how I think most organizations hire.

They have a HR department that’s isolated from the rest of the company.  A manager who has an opening creates a job description and notifies HR of the open position.  HR posts the job internally, either physically or on a company intranet, or both.  People who check those postings regularly see the job open and apply if they think it’s something they’re interested in.  The company might also offer a bonus for anyone who refers a new employee, so some people check the postings in hopes of getting some extra cash.

If anyone on the internal side applies, they are doing so for primarily their own benefit – either for the job itself or for the bonus.  In most cases though, the HR department is also working hard to post the job in the newspaper, on Monster.com, on Craigslist, and maybe going to some job fairs.

HR collects resumes, the manager reviews them, invites a few in for interviews, and then hires someone based upon a few interviews, previous experience (as listed on the resume), and maybe the recommendations of some references picked by the applicant.

Not exactly my recipe for picking a good hire.  It leaves a lot open to interpretation.  What are you really trying to find out when you interview someone:

  • Does the person work hard? You really have no idea.
  • Does the person have the technical skills to do the job? Hopefully their job experience and education give you an idea, but without actually seeing them work you’ll never know.
  • Does the person have the morals and ethics to fit into your company culture? References probably won’t tell the truth, plus your company is different than other companies anyway.

At best you barely answer those questions, but in most cases you’re probably still left guessing.  And if that’s the case, why not try to hire differently?

How I Think Businesses Should Hire

I know this is a really, really simple idea, but I believe that following these two rules highly minimize the risks listed above:

  1. Hire from within your network. This means that someone within your organization knows the person well enough to say that they will be a good fit.
  2. Hire skill positions on a trial basis first. If someone is going to be a designer or programmer or web marketer, hire them first as a contractor to do a small project.  Be clear that it’s a test and that if they do well they will get the permanent position.

Now let’s revisit those things we’re trying to find out when you interview someone.

  • Does the person work hard? You’ve seen exactly how hard they work on a crucial project under stress.
  • Does the person have the technical skills to do the job? If you’ve given them a good trial project and they have the proper education & experience, you should have a pretty good idea.
  • Does the person have the morals and ethics to fit into your company culture? This is where you really rely on your current employee.  If you make referrals important from the start and preach the idea that new hires are there to help everybody and make the team better, current employees should have a sense of pride when they refer someone.  No one wants to refer someone that pulls the team down.  They put their reputation on the line.  There’s no reason to offer bonuses.  In fact, bonuses change the focus from helping your team to helping your wallet.

Instead of a manager and HR rep working to find a hire, you enlist the entire team.  Have a meeting and ask everyone on the team if they know anyone good for the job.  If not, have them work their networks – close friends, family, send a message out to their networks on Facebook or LinkedIn.  I’d think in most cases, particularly in our current economy, you’ll find someone this way.  In theory, the more employees you have, the larger the network, so I have every reason to think that this process can scale.  With some refinement it should work whether your organization is five or five thousand.

As always, there is a downside.  When you work with people you know, there’s always an additional risk for the lines to be blurred between work and personal.  Now, I honestly don’t think this is an issue if you follow the process and hire the best person for the job.  People generally meet friends through school, work, and other friends.  No sense in pretending that friendships and relationships don’t exist within every workforce.

Also, if you have a culture of being upfront and honest with everyone on your team, and everyone on your team treats everyone else with respect, you should never have an issue where there’s a nasty termination (short of theft…which is less likely if you’re hiring this way).  This means that if someone leaves for a better opportunity, you have to be respectful of their decision.  You have to make an extra effort to treat people well in all situations or this won’t work…which is how I expect myself and my partners to be anyway so for us this is a non issue.

Charlie has known both George and Greg all his life.  They all grew up in the same neighborhood.  When we were hiring for this position, we decided to tap within our network as opposed to throwing an ad on Craigslist.  We skipped over the trial project because of the simplicity of the job, but if he ever becomes a full time employee and takes on harder tasks we’ll approach the transition by first giving him some small projects as a test.

I’m not sure who the next hire will be for us.  Maybe a warehouse manager.  Maybe a web marketer.  Maybe a programmer.  Maybe something else.  Whomever it is, I think this approach will minimize the risk and give us the best chance for success.

14 comments on Hiring Within Your Network

  1. Adam McFarland says:

    Some comments over on the Brazen Careerist

  2. nethy says:

    Adam,

    If you could hire talent at this point, what would it be?

    • Adam McFarland says:

      Hypothetically, if money was no object, I think I’d hire in this order:

      *A warehouse manager. Someone who works 5 days a week and can handle all of the day to day operations, including placing orders with our vendors.
      *Web marketer for Detailed Image. We need someone to manage our (small) PPC campaigns because I’m certain those can be a lot more beneficial. We also need someone doing “external” SEO. The site itself is well optimized, but there’s no one pushing opportunities with car sites to get backlinks. We have a lot of content and access to great writers, so it should be a no brainer
      *A pro detailer who can write. This person would take over all of the customer service, both via email and on our forums.

      Those to me are the likely next 3. After that, I’d really want to target designers/programmers who could help us build and deploy more sites. There are a lot of colleges with talent in the area, so there will be opportunities to work with students and develop more young entrepreneurs. That will be when it gets really fun…but it’s probably a ways down the road 🙂

  3. Oke says:

    If what you propose to Corporate America regarding hiring–I wouldn’t have gotten the last job. I was awful for the position and never found a footing at the place. I think what you said will retain people and will show, especially in the beginning, motivation to the company that the employee has.

  4. nethy says:

    Adam, it sounds like you see your company as a web company, rather then a retailer. It sounds like you want DI on autopilot as much as possible and then go start different sites. Is that mostly your take (you are the programmer, after all) or is it the whole team’s? If you put that question or some other question that hints at how they see the company would you get similar answers?

    Can I try another one? If you were going to introduce one big risky project with a chance of being a huge success but a bigger chance of being a substantial failure, what kind of things would you consider?

    Sorry to psychoanalyse.

    • Adam McFarland says:

      Nice questions Nethy 🙂

      I’m not 100% sure how my partners would answer, but I do think they mostly agree with me. I think they definitely agree with me on the priorities of hiring. Right now we’re all just entrenched in too much day to day crap and I think that any successful business owner wants to remove themselves from all of the work that they don’t have to do.

      Programming wise, there’s only probably a year left of real important improvements to make. After that, the core e-commerce stuff doesn’t require full time attention. I think with a few new major features a year and we’ll be able to stay ahead of the competition. That leaves me with maybe 60% of my time to work on other stuff.

      I think we all agree that we don’t have the resources (time & money) to enter into another retail venture any time soon. So logically I think we’ll morph a little more into a web company. Then again, I think that’s really speculating at this point because it’s 1 year+ away. A lot can change in that time.

      As far as your second question, I think I would try to eliminate chargeback fraud. I’d try to build a network of retailers who paid a fee to access an API to check if a customer has previously done something fraudulent on another website. It would be a huge undertaking – you’d need programmers to build plugins for all of the major shopping carts, you’d need a massive amount of retailers to buy into the system to make it work, and you’d need a way to categorize each fraud correctly so that one minor miscommunication wouldn’t blacklist a customer for life. It’d be a big challenge with a lot of things to overcome, but it’s something I have experience in and am passionate about, plus it’s improving the web for everyone.

  5. Tim says:

    It’s a shame you can not plaster this on billboards across the nation, so many people miss the point on establishing and maintaining a network. Everything I have ever done or accomplished in my life has involved people and for better or worse relationships are formed with every interaction I have with individuals – isn’t that a grand theory! Even though this concept is so obvious you would be shocked how many people simply miss the boat and spend time surfing Monster, and other career sites, if they knew the facts maybe they would maintain and develop a solid network. Roughly five years ago, I don’t know if it’s been tracked more recently, but career placement sites like that accounted for just under 20% of all new hires when the facts were looked at. Don’t get me wrong 20% is not bad, but it’s not your best bet either, working with people you’ve met in the past is a much better avenue to explore so you don’t get lost in the sift.

    I cannot stress the importance of developing a network, it takes very little effort to maintain and can yield unbelievable results. I learned a trick from a great salesman I used to deal with, he passed away a few years ago and one way I like to maintain his legacy is to share one of the tricks he shared with me about how he was so good at what he did. Bare in mind this was about 15 years ago, he kept index cards in his car about everyone he talked to, names, interests, things they mentioned, any detail about the individual he thought was worth noting and he would review the appropriate index cards before he stopped at any account. He was enormously successful and made it look effortless, despite him passing away roughly 7 years ago I still have fond memories of how he created a highly organized system that resembles the internet only with paper and a pen. He was never at a loss of finding the right people for the right task, his cards were very organized and easy to interpret.

    In other words, as I ALWAYS preach, one of the primary pillars of successful business: People deal with people.

    • Adam McFarland says:

      Great story Tim. Sometimes it’s easy to overlook that PEOPLE are why we’re all in business. If you don’t make someone’s life better, your business will fail. If you can’t build a team that works well together, your business will fail. On a grander level, developing and maintaining relationships are a large part of happiness in life (at least personally and based upon happiness studies I’ve read).

  6. nethy says:

    good answer.

  7. Leigh says:

    Adam:

    Great points about the hiring process. I’m curious as to whether you’ve ever hired a “virtual” employee, like a programmer or virtual assistant. I hired a virtual assistant last year, and it was a total disaster. I had to chase her down to get updates on assignments and she dragged things out so she could bill me for more time. It was more work for me to chase after her than it would have been for me to just do the work myself. I’m wondering if there’s a good process for evaluating people for virtual positions.

    • Adam McFarland says:

      Leigh –

      Sorry to hear about your experience with the virtual assistant. I have never hired one. The closest I came was hiring a company in India to do a small amount of Craigslist marketing for us, and that didn’t go very well. I do hope to outsource more mundane tasks in the future because you can get so much for your money, but as you pointed out there are trade-offs.

      I guess I’d just take a similar approach – try to find a referral to a company that people have had success with and start by giving them a few small test projects. Also, read 4 Hour Work Week if you haven’t. Tim Ferriss breaks down in quite a bit of detail what worked for him and what didn’t.

      Adam

  8. Rob says:

    I was re-reading this post of yours earlier, and it’s so right.

    We’ve just had the most awesome couple of days in terms of staff and something one of our staff told me today thrilled me to the core. We’ve now got 26 part-time staff based around the country that we work with, some we work with a lot, others not so much. We’ve become pretty good at training them to do the compartmentalised, production line type tasks we need doing and while we value them highly individually they are mostly quite interchangeable, because that’s the way we intended things to be. A couple of days ago we needed some help in a hurry. I put the word out with my guys and they came up with someone. They have checked his skills, taught him our procedures and trained him very well. I have not yet met this person!

    Because I trust the judgement of my staff (almost all are from within networks, a few from online job ads.) and have built solid, simple procedures we’re able to do stunning things like this. I can’t wait to see what’s next (I’m also looking forward to meeting the newest member of the team!)

  9. […] is warehouse manager, and the guy is Charlie, who has been with us on a part-time basis for just about year now. Through his consistent hard work he’s proven beyond a doubt to us that he’s the right […]

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