HIRING SMART
As you add resources to your business or your life, you still need to keep your cash flow heading in the right direction. Obviously, you don’t want to begin hiring if doing so is going to put you in the red. But as you hire, you need to be clear in your mind, and with those you hire, that if the business becomes less profitable, you will have to decrease resources. This may seem harsh, but if you have employees in your organization who are not getting you to cash, it puts the whole company at risk. It is better to lay off those people who are not performing or creating value so you can create opportunities for more employees in the long run.
I was a middle manager in a company that hired a lot of employees but did not become profitable. That company waited until it was completely out of money and had declared bankruptcy before telling the employees they were out of jobs. To add insult, the employees were let go without being paid for their last month of work. Blind bliss is not bliss at all. It would have been much better for every person in that company to have been laid off when the problems started so they could begin their new job search, rather than wasting a month doing work for which they would never be paid.
In your life, you have to do the same thing. When you get to cash, you can spend a little more money adding resources such as a house, a car, a computer, or just some things that will make your life nicer and more efficient. When times get tight, you need to immediately tighten your budget and stop adding those resources. If times get really tight, you might have to sell off that nice car to make ends meet. The key is to always keep a close eye on your bottom line. Always stay profitable. If you’re creative as you think about adding resources, you may be able to make more progress and spend less money.
When we began to add resources to CastleWave, the business Ron and I bootstrapped with only $5,000, our first significant hires were not college graduates. They were not even college students; they were nerdy sixteen- and seventeen-year-old high school boys. In our drive to profitability, I needed to add the resource of engineers. I knew I couldn’t afford to hire engineers at the going rate, and I also knew I could train people who had a working knowledge of computers and the Internet to do what needed to be done. It hit me one day that my labor force could be found among my teenaged sons’ friends. My only concern was that I needed them to have a strong vision, so I told them, “When you walk in this door each day, you’re no longer seventeen. You’re an MBA graduate from Harvard, and I expect you to behave like one.” And guess what? They did exactly that. They grasped what I needed them to do, and they bought into the company culture. It probably didn’t hurt that we paid them far more than they could have earned flipping burgers, but for a number of strategic reasons, those kids were so excited to come to work, they would sleep on the couch some nights because they were totally vested in what we were trying to do.
On the flipside, at this same time I made a couple of horrific hires, in part because we didn’t have our value system clearly in place. During this time I was literally living off three to four hours of sleep a night. I hired an executive assistant who had a good resume, but what impressed me even more were her outstanding grades and recommendations. I had some concern that her work experience was a bit thin; but I needed someone quickly, so I hired her assuming her grades indicated a solid work ethic.
One week while my partner, Ron, and I were working a trade show in Florida, I kept trying to call into my office. I tried at several different times, but I just could not make contact with my new assistant. I finally called another recent hire who was supposed to be at the office. She did call me right back and said she was on a short lunch break and would call me back, which she failed to do. After four days of not being able to reach anyone, I called my wife and asked if she would go by the office and find out what was going on. When she arrived, the front door was locked and all of the lights were off. She found the main telephone was set to voice message. She did find an engineer in a back room, where he was working on a project. When she asked him what was going on, he told her that these two women, who were supposed to be answering my phones and greeting people, had decided that since I was gone that they would “work from home” that week.
Needless to say, I had to terminate both these women when I returned from my business trip. I made the mistake of hiring two young women who weren’t hungry for the work I offered and who had a safety net at home that would rescue them. I also made the mistake of not screening them effectively against my organizational values, one of which is that we value hard workers.
Since that experience, I have learned to not be too busy to pay close attention as I add resources. I’ve also developed a series of questions and skills assessments that I run potential hires through, especially my executive admin, who I believe is my most important hire.
One of my best hires is a woman named Colette Marx. She is a mother who, by mutual agreement, is working for me from her home (which is yet another way to conserve resources). When I hired her, I gave her a copy of my book, Bootstrap Business, and told her she needed to read it and then take a test. The other people I hired at the same time all went home and skimmed through the book. But Colette wanted to succeed at this job; so she read the book, and then she went back and read the book again, this time highlighting it and making copious notes. When she brought it into the office to take the test, it was dog-eared, it was tagged, it was well used. Not surprisingly, Colette scored a perfect score. She’s the only one to have done that. (She even scored higher than I did, and I wrote the book!) Colette didn’t come with the strongest resume or the most extensive experience, but she is one of the most committed and engaged employees I have ever had.