Hiring Right, Hiring Cheap, Hiring Great

Q: How do most people hire individuals?

A: Based on arbitrary "qualifications". For example, a senior IT manager should have junior IT manager experience of 5+ years.

Q: How SHOULD companies hire?

A: Based on the ability and motivation to get the receivables done.

Is there a conflict of interest?

Yes, there is, especially in small companies.

There are two reasons for this:

1) By giving small-step-promotion positions you are naturally weeding out A players. Why? Because A players want a challenge and want to focus on something new that they haven't tried. They WANT to stretch themselves. They are COMPELLED to stretch themselves. In fact, you will not find an A player that has done the same position for over 5 years unless it is a CEO of a company.

2) In small companies, the titles can be misleading and unnecessarily costly for the hirer. Why?

Let's take for example a 10 person company that needs a new "CEO". Now, what happens when we go out and hire a CEO? Well, we pay for a CEO. That means at least $100k, more realistically at least $150k regardless of industry, location, etc.

But do we need a CEO? NO. A CEO doesn't even mean anything discrete. Will this person be a decision maker, will he make the hiring decisions, etc. A CEO is not a clear title and does not represent the receivables that he will have to provide.

What is the CEO's main goal? Well it will vary greatly from company to company, but in a 10 person company the CEO's main goal is managing 10 individuals. In a big company, like GE, the equivalent to an individual that manages 10 people is a junior manager (and he might be managing 25 people and get $50k/year).

Will the junior manager from GE be able to be the "CEO" of your company? I would venture to say that he/she would do a great job (GE has an excellent training program).

In order to make sure we capture the entire market we need to think about the receivables we are targeting when we make the hire. Focus on what the individual needs to do, not the title that he/she has, ESPECIALLY when hiring for a small company (since it is not analogous to a big company). Realize that you are paying dearly for titles. What is the CEO became a general manager or even a manager? Guess what. You are paying $50k/year for him/her instead of $150k/year.

Think titles don't matter? Think again.