Have you heard about a very smart startup called Developer Auction?

Developer Auction, which allows companies to bid for the services of high-performance software engineers. It’s a disruptive idea because the San Francisco-based company makes it easier for companies to find workers, which in turn get more money for their services.

It generates revenue by taking 15% of the negotiated salary and then kicks back 20% of that to the candidate.

I’m sure it will make a lot of money, at least in the short-term considering the current hot market.

It also is the absolute stupidest hiring move companies can make, not that that will stop them.

I can think of no better way to find developers to whom money is everything and product passion and loyalty are words in the dictionary.

Not to mention the effect on the current team, company culture and internal salary structure.

But it does offer the wow factor of cutting-edge bragging rights and the fanfare will probably camouflage the hiring manager’s lack of staffing skills.

Rather than address the stupidity again, I refer you to three posts I wrote early last year, insanely stupid hiring, insanely smart hiring and insanely smart retention and stars that thoroughly cover the subject.

Take time to read them and feel free to call or email me (contact info on the right) if you need any assistance at no charge—I never charge for doing good deeds.

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A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Flattery and agreement can be a lethal combination for a CEO, according to research by Sun Hyun Park, James D. Westphal and Ithai Stern.

“Our theory suggests how high levels of flattery and opinion conformity can increase CEOs’ overconfidence in their strategic judgment and leadership capability, which results in biased strategic decision making,”

In the same vein, John O’Farrell, Andreessen Horowitz, says that founder-CEOs need to be especially careful.

“Hire people who are different from you, and who will have the courage to challenge you when it matters.”

The road to failure hell is paved as much with yes-people, which leads to homophily, as with good intentions.

What you want are those who think differently, but have similar values.

Values are the foundation of your culture, not race, creed, gender, university, sorority/fraternity, fashion brand, etc.

Whatever your culture, by using it as a hiring filter you can get out of your comfort zone and stop hiring people like yourself—who are most likely to become yes-people.

Option Sanity™ avoids ISO flattery.
Come visit Option Sanity for an easy-to-understand, simple-to-implement stock allocation system.  It’s so easy a CEO can do it.

Warning.
Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.”
Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Flickr image credit: HikingArtist

Continued from last week

Reference checking is where a lot of bad hires happen.

The three major factors that negatively affect reference checking are

• unskilled or inept reference checking;
• assumptive reference checking; and
• procrastination.

The first is the easiest to overcome, since reference checking is a learnable skill.

The second is a matter of overcoming selective hearing.

The third is more difficult, because procrastination is part of MAP.

It is also of critical importance to check all levels, not just bosses.

Some managers completely skip reference checking or delegate the responsibility to a third party either because they can’t be bothered or consider the time spent wasted; others may do it, but they are careless or sloppy for the same reasons.

Believe it or not, I know of managers who check “likes” and “followers” rather than references.

Yet these managers are usually the biggest complainers when a hire goes wrong.

In short, just as preparation is the key to most things it is definitely the key to successful hiring.

SUBMIT YOUR STORY
Be the Thursday feature – Entrepreneurs: [your company name]
Share the story of your startup today.
Send it along with your contact information and I’ll be in touch.
Questions? Email or call me at 360.335.8054 Pacific time.

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A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

A few days ago Fred Wilson wrote about the importance of culture and fit.

Some entrepreneurs and CEOs buy into “hire the best talent available” mantra. That can work if everything goes swimmingly well. But as I said, it often does not, and then that approach is fraught with problems. The other approach is hire for culture and fit. That is the approach I advocate.

That’s the same approach I’ve advocated for decades.

What many forget is that “the best talent available” refers to whoever will perform best in your culture as part of your team and focus on your company’s success.

Too many founders, CEOs, other execs and even lower level managers seem to hire for bragging rights instead.

I wrote about hiring and culture here last Sept and included a link to an article I wrote for MSDN way back in 1999 that explained how to use your culture as a screening tool when hiring.

I’ve always told clients that the fastest way to success is to always hire the right person at the right time and for the right reasons.

Good hiring is like cooking Chinese—80% of the time used is spent prepping and the balance doing.

There really are no shortcuts; especially not hiring other people’s stars.

Not to sound self-serving, but I’ve been surprised at how closely the ideas I’ve always believed in parallel Wilson’s thoughts.

Even Option Sanity™ parallels his ideas on allocating equity.

Option Sanity™ is culture in action.

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock allocation system.  It’s so easy a CEO can do it.

Warning.
Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.”
Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Flickr image credit: HikingArtist

I write a lot abut the importance of culture and now and then someone calls or writes asking why I keep harping on it (BTW, I love when readers call, that’s why there’s a toll-free number in the right-hand column.)

I’m not the only one fixated on the role culture plays in everything from acquiring, motivating and retaining employees to creativity, innovation and overall company success.

• Booz’ strategy + business annual innovation survey focuses on culture, not money to improve results.

Booz & Company’s annual study shows that spending more on R&D won’t drive results. The most crucial factors are strategic alignment and a culture that supports innovation.

• A personal tragedy drove Jay Steinfeld, founder and CEO of Blinds.com, to re-evaluate himself and his values, which caused him to move from a culture of fear and micromanaging to one of trust and delegation.

“My turnover was non-existent. Our turnover is only two percent. We also hire the right people almost every time, because we know that core values are more important than skills. We can teach the skills. Now that we’re all aligned for what the vision is and what’s important to us as humans, we have a culture of resilience and efficient productivity.”

• Lani Hay, founder/CEO of defense contracting company Lanmark Technology, turned over three COOs in the same year she won a prestigious national women’s entrepreneurship award and quadrupled company revenues.

“I don’t want to let anyone in the corporate culture who’s going to disrupt the culture and isn’t a good fit.” … Hay says she’s learned that she needs to listen to a wider array of Lanmark staffers, and make sure she values effective communications and an ability to work well with her team. She’s also paying more attention to cultural fit in hiring.

And for those looking to improve hiring there is no better screening tool than culture.

The biggest complaint I hear is that “culture stuff takes so much time” and I suppose that’s true when culture is applied like paint instead of stain.

Flickr image credit: zedbee

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Yesterday I wrote abut new approaches to recruiting, a la online puzzles, to find tech talent from non-traditional sources, as well as advice from a successful entrepreneur who says that the most important traits to look for are behavioral and can only be identified through good interviewing, which requires time.

All this says that younger entrepreneurs are willing to try radically new, as well as mastering old, approaches to finding talent.

The one thing I’ve found that many are not willing to do is hire outside their peers.

An old attitude that dates back decades (if not centuries) and which can be boiled down to five words—“people like me,” which defines your “comfort zone.”

It doesn’t matter that it’s illegal to say it involves age, but it does.

The bias is dangerous, especially when hiring more senior people as you grow. Consider these points,

• Can that brilliant developer you hired lead?
• Does the Twitter whiz kid understand creating and implementing a complete marketing strategy?

What exactly does a twenty-something a year or few out of school know about employment law, strategy, team-building, managing, conflict resolution, contract negotiation, the list goes on and on.

Whatever gave people the idea that creativity and innovation dropped off as experience increased?

One of these days in the not-too-distant future you are going to lose out on an opportunity because you are outside the company’s/manager’s comfort zone and the company is going to lose out on the richness of your experience.

How do you hire? What have you missed out on recently?

Option Sanity™ rewards performance.

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  It’s so easy a CEO can do it.

Warning.

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Image credit: kevinspencer

In 2007 Google developed an algorithm to improve their hiring. In a post citing that I wrote, “Google’s known for only hiring grads with a 3.7+ GPA, double 800 SAT scores and world-class interviewing skills—none of which are viable predictors of creativity or working success.”

Considering the story related by George Anders in his new book The Rare Find: Reinventing Recruiting it must not have worked.

These days the hot recruiting strategy for Google, Facebook and others are puzzles—at least for tech types, since the puzzles are focused on technical issues involving software and coding.

The great point about the puzzles is that they are open to anyone who wants to solve them, no matter their education or experience.

That’s right, no-name school or no school, iffy or rotten GPA; what’s important is how they think and how creative they are, but if you’re in the very early stages of hiring, even brilliant puzzle solving isn’t enough.

Your first hires are so critical, not just to traditional success, but because of the impact they have on determining the course of your culture, which can impact hiring forever.

Cezary Pietrzak, co-founder and director of business development at Wanderfly offers excellent insights on identifying your own gold-plated hires.

He assumes the candidates are “smart, talented, and, generally speaking, a rock star” and talks about the characteristics for which you should look.

Most of these are behavioral in nature; you’ll likely not find them on a resume, and traditional interview questions won’t uncover them, either. Yet their importance cannot be overstated, as often times they’re the difference between a great and poor working relationship.

Identifying these assets requires real work and a lot of it; ideally you’ll make interviewing a core competency for yourself and your entire company.

It requires committing time ungrudgingly, because you recognize the stratospheric ROI of good hiring.

After all, you are betting your company on those you hire.

Flickr image credit: {Guerrilla Futures | Jason Tester}

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

For years I’ve told managers ‘you are who you hire‘ and offered them tools so they become more proficient at hiring; this is true whether the company is a startup or it’s been around for decades.

Startup hiring happens in phases, which have a predictable pattern—

1. hire your friends,
2. hire friends of friends,
3. hire ‘outsiders’.

The first two phases usually go smoothly, since friends typically share similar values and, therefore, are at the least synergistic as to the company culture.

Phase three presents a totally different and disconnected challenge.

Accurately identifying a stranger’s values and evaluating how well they mesh with yours is not only difficult, but also time-consuming.

And therein lies the problem—not the difficulty, but the time.

When this subject comes up entrepreneurs often tell me that I don’t understand how busy they are.

They say it’s hard enough just finding the actual skills they need without adding an extra set of cultural hoops for candidates to jump through.

If that doesn’t shut me up they use the ultimate argument, “You haven’t actually done it, so you wouldn’t know.”

However, there must be a reason that Tony Hsieh pays people not to work at Zappos after they go through training and that hiring is number one on his list of how to build a company.

Hire very carefully — you’re creating an enduring culture.
“I’d rather interview 50 people and not hire anyone than hire the wrong person,” Amazon.com chief Jeff Bezos told a colleague in the company’s early days. Why? “Cultures aren’t so much planned as they evolve from that early set of people.” New employees either dislike the culture and leave or feel comfortable and stay. So the culture becomes “self-reinforcing” and “very stable.”

I wrote about using culture as a screening tool way back in 1999 and have reposted it often, most recently in February.

Your culture, no matter how young, is the best filter you have for finding the kind of people you need to follow in the footsteps of Bezos and Hsieh.

Assuming, of course, that you think they are worth following.

Option Sanity™ mirrors and reinforces culture

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock allocation process.  So easy a CEO can do it.

Warning.
Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Image credit: Image credit: kevinspencer

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Tony, a founder, called and asked why I kept harping on culture instead of providing real help to startups. He said that culture was all very well, but there was enormous pressure to get the product out, meet with investors and hire people, especially considering the high rate of churn he sees.

In short, Tony believes that culture is a rich CEO’s game; not something a hard-charging founder should be wasting his time on.

I sent him a link to David Hornik, a guy at August Capital who invests for a living, who had this to say in a post on his blog that I saw at Business Insider.

…why am I so high on company culture as an investor in startups? It is because culture matters. Companies with a strong culture inevitably find it easier to recruit like-minded employees. What’s more, a strong culture dramatically decreases attrition. Companies with a shared purpose are more efficient — they work well together in pursuit of a common goal. Employees can appreciate their company’s priorities and focus on the stuff that matters. And, at the end of the day, fun and games matters. People would rather work at a company that they genuinely enjoy and believe in than one that lacks any real sense of purpose.

There are dozens of others I could send, but after our conversation I doubt they would impact him—Tony’s mind is made up.

What about yours?

Option Sanity™ IS culture

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  It’s so easy a CEO can do it.

Warning.
Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Image credit: Bun in a Can Productions

Yesterday I said I would share ways to find employees who would be invested in your company and not just in themselves.

The best place to start is to take a look at the stupidest hiring practice I know and why it is so stupid, i.e., only hiring people who are currently working or not off more than six months.

I’ve seen this attitude before during other recessions, but to see it this rampant now, when the economy is still shaky and the job market hasn’t turned around is beyond belief.

As I told the managers who contacted me and I’m telling all of you, I have no empathy for managers who say they can’t find good people.

Pundit managers (those who share their views through articles and blogs) are constantly saying that attitude is more important than skills; add willingness and ability to learn and the value skyrockets and if the candidate is a good cultural fit the value jumps by an order of magnitude.

Manage them well and you will get additional benefits that money can’t buy—gratitude, appreciation and loyalty—all because you gave them a chance.

The wisest engineering vp I ever met once told me that he would rather have a programmer who knew multiple languages than an expert in the one he needed at the moment. He said that technology would keep changing faster and faster and he needed people who could learn on the fly and change with it. He said that a proven ability to change was more valuable than expert status.

When hiring stay focused on the fact that your next top performer won’t necessarily

• have the best grades;
• attend a prestigious school;
• work for your competitor,
• in your industry or
• even be working at all;
• be younger than X;
• have a full head of hair, with no gray; or
• fit easily into your comfort zone.

The bottom line is your success is the result of your ability to recognize jewels where others see only lumps of coal.

Flickr image credit: ZedBee | Zoë Power