Why Use Performance-Based Hiring When Building Your Startup Team

Every entrepreneur acknowledges that hiring great people is their most important task, especially during the early stage of their startup. Nonetheless, very few go on the hiring journey with a strategic plan. That’s usually because, on paper, the hiring process seems to be fairly easy: post a job opening, read applications, select a few candidates for face-to-face interviews, hire the one that performs better, and repeat the process. From this perspective, flair seems to be the only thing employers need to get the hiring process right. Right?

Well, not exactly.

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Don’t get me wrong. This used to be a pretty reliable method before the 2000s, before the internet gave employees and entrepreneurs access to a larger market; before remote work became a “thing”; before the rise of the digital native generation of Millenials. Now talented people start the careers they want more easily, and entrepreneurs have a harder time recruiting them.

That’s why the performance-based hiring process, coined by recruiting guru Lou Adler, is such a useful tool for today’s startups. This validated method integrates sourcing, screening, interviewing, and recruiting into a coherent procedure based on how top people search for, analyze, and accept a job offer over another.

Before we get into the details of what the performance-based hiring process is all about, I feel it’s necessary to shed some light on why hiring is such a difficult process.

Interviews can be very misleading

Every applicant wants to present their best self during an interview, and it’s pretty obvious why: employers are more likely to pick the candidate who is most attractive, affable, articulate, and assertive. This, unfortunately, leads to a problem for the employer: it’s not the best person that gets the job, but the person with the best interviewing and presentation skills.

For example, many talented engineers are also introverts who tend to get nervous when interviewing for a job. Some of them do not give too much attention to the way in which they write their CV either (or update their social profiles, for that matter). For inexperienced recruiters, these talents might fall off the radar. In such situations, the gut feeling is more of a foe than a friend.

Which leads me to another situation that one can avoid with the help of performance-based hiring process.

It’s easy to get tricked by your own emotions

Let’s assume for a second that the recruiter successfully completed the sourcing and screening stages of the process, and invited a few talented people to a face-to-face meeting.

Expert Lou Adler says the majority of the managers he worked with made emotional decisions during interviews. Employers get overly excited too when they think they found a hot candidate, and that clouds their judgment. They immediately get into sales mode and they stop listening and evaluating the candidate. They just focus on convincing them to join their team, and forget about further evaluating their candidate. Later on, they might discover their hot applicant isn’t as fit for the job as she/he seemed in the very beginning.

As Lou Alder further explains, the best hiring decision is not intuitive at all, and it’s misleading to rely solely on your gut instinct. Instead, a hiring decision should be based on an objective, data-driven process.

The consequences of a bad hire

What do you do, as an entrepreneur, if you realize you hired someone who was great at “getting the job”, not at “doing the job”? You either fire fast (but that means you have to restart the recruiting process again) or manage tough.

Hire smart, or manage tough – Red Scott

But to be honest, no matter how tough your management skills might be, they cannot compensate for the lack of talent or the small degree of fitness. However hard you try, you can’t compensate for a poor hiring decision.

Recommended reading: How to Find the Best People for Your Startup

Implementing a validated system remains the only reliable solution.

The performance-based hiring system

According to Lou Adler, the author of the best-selling book Hire with your headperformance-based hiring is based on two core concepts. First, every element involved in the hiring process must be designed to answer the very specific needs of top talented people. Second, each step of the process must be part of an easy-to-use system.

Here are four golden rules the author recommends for a successful hire.

1. Write impressive job descriptions. Focus on accurately describing the job needs, instead of emphasizing the skills and qualifications expected from potential candidates. A top candidate should be able to identify the challenge and opportunity for growth.

2. Design every aspect of sourcing to attract top people (whether actively or passively). Think about the context where you place your ad, how you design your careers page, your comments on Glassdoor and other similar websites. At Hubgets, we’re constantly looking for talented people to join our team, and that’s why we pay a lot of attention to the jobs section on our website. We want our applicants to get the full picture of what working at Hubgets really means, how others evolved in their career and what perks we offer.

3. Organize the interview to assess competency and create opportunity. This is why recruiters should sell and talk less during interviews. Instead, they should ask tougher questions to help them gather evidence that the candidate is both competent and motivated. Top candidates must leave the interview room convinced they have been properly assessed and the job is indeed an opportunity.

4. Make recruiting, negotiating offers, and closing a natural, integrated part of each step in the hiring process. An ideal hiring process ends when the targeted candidate is in for the opportunity and challenge, and not only for the money. This doesn’t mean that you should leave out or postpone the discussion on the compensation package. It may not be the primary topic, but it definitely deserves a proper conversation.

As a startup, you should know that you will be facing some keen competition on the hiring market. Other well-established companies may have the power of the brand on their side and they will use it to attract the most talented people out there. So you need a competitive advantage, and in a way, that’s what this system offers: it helps you shift your focus from “job” to “opportunity”. Make potential applicants see what your mission is, how it will change their careers years from now and your startup’s success will be ignited by a great team, right from the beginning.

Recommended readings

The creator of the term “performance-based hiring”, Lou Adler,  admits he was inspired by other thought leaders when working on his book, Hire with your head. I thought you’d find it useful to take a look at his list of recommended books if you want to up your recruiting game.

  1. Execution: The Discipline of Getting Things Done by Larry Bossidy and Ram Charan, with Charles Burck
  2. Good to Great: Why Some Companies Make the Leap… and Others Don’t by Jim Collins
  3. First, Break All the Rules: What the World’s Greatest Managers Do Differently by Marcus Buckingham and Curt Coffman
  4. Winning by Jack Welch and Suzy Welch
  5. Jack: Straight from the Gut by Jack Welch, with John A. Byrne

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