Building a solid pipeline of talent is critical for any business, but finding and retaining good employees can be especially tricky for small and midsize businesses.
John Sullivan, a professor of management at San Francisco State University and an expert in human-resources strategy, sat down with The Wall Street Journal’s Nikki Waller to discuss what smaller firms need to do to ensure they hire top performers.
Edited excerpts follow.
Focus on referrals
MS. WALLER: What is the state of the art for hiring right now?
MR. SULLIVAN: Hiring has become a science. For most people who recruit it’s an art, but that is a mistake.
The Google way is data-driven. It is focused on certain jobs. We know that 5% of your workforce produces 26% of your output, so you need to focus on hiring the people who really make the difference. You have to look at, when you hire someone, do they turn out to be “quality of hire.” Do they turn out to be productive and innovative? And if so, do it that way again.
Most people in HR have no clue. We don’t measure failed hires. There’s no feedback loop. When you hire Homer Simpson he stays forever and no one goes back and fixes it.
MS. WALLER: How does that translate to midsize companies who don’t have armies of recruiters?
MR. SULLIVAN: The better companies use referrals. You go to your top performers and say, “Nikki, who do you learn from? Who’s better than you? Who mentors you?” With social media, it’s pretty easy to find top talent [with the referral approach]. Selling them becomes the hard part.
Put together a sale list. Start with, “Nikki, I want you to come work for my company. You already have a job, and you’re treated well. What’s it going to take?” It’s basic candidate research.
And you find, “Oh, you want to be your own boss, or you don’t want to work on Thursday,” or whatever it happens to be. By identifying those job-switch criteria, you can get almost anyone, if you’re willing to change the job.
MS. WALLER: What kind of resources should midsize firms be dedicating to this?
MR. SULLIVAN: It doesn’t take any money. The recruiting is you build your brand. You want your employees telling stories about the company. If you’ve done something well, you want employees to spread it. Because it’s viral, it’s believable. That’s why referrals are so powerful.
MS. WALLER: How do you build an employee brand if you are a 25-person company, a 200-person company?
MR. SULLIVAN: You need to do a story inventory. Call your people and say, “Have we ever saved puppy dogs? Have we ever done this? Have we ever done that?” And if necessary, go save a puppy. But the premise is you have to do the thing that people go, “Wow, that’s the kind of place I’d like to work.” And it has to be something you’ll repeat.
MS. WALLER: You said you think 75% of hires at small and medium-size companies fail. How do you know you’ve got a bad hire, and how do you quantify the cost of that?
I have this phrase, “Average people suck.” If you want to grow, you need people who will become leaders. Average people don’t become leaders, average people don’t innovate, average people aren’t good in a crisis, average people can only do their current job. If you’re growing, you need someone who can do this job and the next job.
MS. WALLER: Where do you find these nonaverage people? Job boards?
MR. SULLIVAN: Do you think LeBron [James] would find a job on a job board? The best people are working
You have to steal them. Poaching is a polite word. But you steal their customers every day, so why don’t you steal their best employees? And, by the way, when you steal their best employees their customers will come with them.