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Posted: July 16, 2009

Get smart about hiring mistakes

Evergreen-based HR expert Geoff Smart shares insights from his bestseller, "WHO: The A Method for Hiring"

Patricia Kaowthumrong

After its release last September, “WHO: The A Method for Hiring,” by Geoff Smart and Randy Street, topped best-seller lists at the New York Times, Business Week, USA Today and Amazon.com. Smart, who lives in Evergreen and is CEO of management assessment firm, ghSMART, shares with ColoradoBiz some of his secrets to avoiding the “single biggest problem in business today:” hiring mistakes.

Q: Why do think unsuccessful hiring is “the single biggest problem in business today?”

A: The Economist ran a cover article about a year ago called “The Search for Talent,” in which they proclaimed that talent and hiring is the No. 1 problem facing businesses today. It’s a very prevalent issue. We’ve seen over the last 50 years that managers tend to make hiring mistakes 50 percent of the time, which is really often. Hiring mistakes cost money, culture and time. But it’s preventable. Colorado business leaders or business leaders everywhere don’t have to suffer a 50 percent failure rate in hiring because we have a method that has proven to work 90 percent of the time. And it’s just a method of unlearning old habits and learning new habits to achieve the success rate.

Q: Can you tell us how successful - and unsuccessful-hiring rates are determined, and what constitutes an unsuccessful hire?

A: We define hiring success as whether or not the hiring manager regrets the decision to hire the candidate or not after six months on the job.

Q: Your methods have 90 percent success rate. Why do you think they are so successful?

A: It’s the best-researched method in the world. There’s 50 years of research in industrial psychology. My firm ghSMART has 14 years of consulting experience, and we’ve done over 10,000 projects, a lot of CEO succession and management succession at large and small companies. For the book, specifically, we went out and interviewed 80 successful business people, some of which are Colorado folks. They gave us their best advice and stories on the topic of hiring.

And finally, we engaged the University of Chicago. A professor named Steve Kaplan did a statistical analysis of our data to gain even more insight into what types of hiring methods work and don’t work. We learned from the people who have a 90 percent hiring-success rate and learned from the successes and failures of managers. Over the past five years, we’ve trained over 30,000 (people) on the methods described in the book. It’s moving from the informal process of hiring to a more structured one, which makes it easier to get it right nine out of 10 times.

Q: As chairman and CEO of ghSMART, what advice do you have for businesses about hiring during these tough economic times?

A: Three pieces of advice:

1.) Fire your low performers. Now is the time. They’re not making you any money anyways. Great businesses use recessions to weed out their low performers.

2.) Try extra hard to recruit some great hires. There are a lot of Colorado businesses that I think could use this recession to snap up some superstar talent and to use Denver’s and Colorado’s business infrastructure and lifestyle as selling points for getting some good out-of-town talent to move here.

3.) Use this downtime to train their managers on the “A” method for hiring, which is described in the book. Entrepreneurs and business leaders use down or slow times to train folks in key areas. The book has an easy four-step process that works for both entry-level hiring and hiring CEOs in giant companies.

Q: Your father, Brad Smart is responsible for Topgrading, the method of hiring used by most HR departments today. How did he influence your career?

A: He influenced my career by allowing me to grow up in the field. He’d interview CEOs for top jobs -- and showed me how to be a successful consultant in the field. At age 12, I was shadowing him and watching the master at work.

It’s like one of those recent success books like “Outliers” by Malcolm Gladwell, where he talks about how important it is to have concentrated experience early in your life with a mentor. My father and I actually co-created Topgrading as a philosophy of talent management in 1997. In addition to teaching me the industry, he was a key collaborator in creating the Topgrading concept, which has not only swept the country but the world as a helpful philosophy for talent management.

Q: Can you give us a short definition of Topgrading?

A: It’s the process of hiring, developing and retaining top performers. It’s a whole method of how to do that. My book only focuses on the first part of those three things, the hiring piece. But Topgrading not only includes the hiring part, but the firing part, the development part and the retention part.

Q: What are your plans for the future?

A: I’m CEO of ghSMART, and we’re a management assessment firm for CEOs and investors. We get hired to make important-people decisions at the top of the house. For example, if a board is hiring a CEO, we help them pick the right person. We will continue to grow our consulting firm. We have 29 full-time people right now, and we’re growing 20 percent per year. And with the surprising, breakaway success of our book, we’re getting offers from companies all over the world to conduct training workshops. That part of our business has really taken off.

Q: And you’re Denver based?

A: I’m based in Denver as the CEO, but we have offices in seven other cities in the U.S. and roughly two or three people per office. The business is headquartered in Illinois, where I founded the firm in 1995.

Q: Who are other influences for what you do?

A: Boulder-based Jim Collins wrote the best-selling management book of all time, “Good to Great,” and that was a huge influence. We modeled our book after his approach.

Marshall Goldsmith is the world’s greatest executive coach and also a New York Times best-selling author. His advice helped us plan and execute a strategy to create a best-selling book. Without him, we wouldn’t have been able to do it.

Tom Peters wrote a book called “In Search of Excellence: Lessons from America’s Best Run Companies.” It was a breakout book in the 1980s. Of all of the endorsements we got for our book, the most exciting one was from Tom Peters himself in his blog. He said, “This is a big damn deal. I’m hooked.” He really gave us a great plug. It was just great that a legend in writing management books was so turned on by little old us.

Q: Are you from Denver?

A: I’m not. My family and I moved here almost five years ago for a better balance of business infrastructure with lifestyle. And we found it. We’re very, very happy here, and we plan to make this our home for the remainder of our lives. You can’t pry me out of here. It’s a great place to work and live.

Q: So what can people learn from your book?

A: People make hiring mistakes because they don’t have a method that works. This is the “A” method for hiring, which is made up of four steps:
1.) Scorecard: You need to identify numerically what you expect someone to do at a job. This rarely is done. Managers rarely quantify the responsibilities they’re giving someone.
2.) Source: How and where do you find talent? That’s the No. 1 question that’s asked. According to 77 percent of successful business leaders in our study, the No. 1 source of talented candidates is through personal networks and employee-bonus referral programs. 
3.) Select: Interview guides in the book help select the right candidate for the job -- using systematic approaches instead of gut feelings.
4.) Sell: How do you sell somebody on joining your company?

Q: What advice do you have for candidates hoping to find a job right now?

A: Good luck! Keep networking. Most jobs are gotten through personal networking. Send out fewer blanket cover letters to hundreds of places and do more one-on-one lunches with people who know people. It’s a mystery to me why job searchers send out hundreds of resumes to people they don’t even know. That doesn’t work. It’s figuring out the five or 10 people you do know who are influencers, schmoozing them and getting personal introductions to job opportunities. I think that’s the only way to get a job during a recession.
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Patricia Kaowthumrong is a student at the University of Colorado School of Journalism and Mass Communication. Contact her at Patricia.Kaowthumrong@colorado.edu.

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Readers Respond

Ever wonder about the hiring mistakes when the # 1 pick didn't work out at all, for what ever reason, when in reality # 2 pick would have been a lot better for the company... I had been passed over & I knew for a fact "IT" wouldn't work out because I knew the number one pick & he was in "IT" for the short term... In both cases as # 2 I was never called back after #1 was fired or quit... I guess some folks just couldn't confess they made a mistake in their first pick & went through the process again, & again... II personally learned from my expierence & had no problem making that second call a few months later. By Ron Wilson on 2009 07 20

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