Tuesday, April 12, 2011

A Business Lesson Learned “The Hard Way” – Part 1

By Steve Little 
One of the most challenging areas for me as I first got started was hiring the right people at the right time.
Sometimes I got lucky…but…
Sometimes I hired the right person at the wrong time.
Sometimes I hired the wrong person at the right time.
Sometimes I even hired the wrong person at the wrong time.
Trust me on this, these are ALL frustrating and COSTLY business lessons.
There were plenty of times I just threw up my hands and cried “I quit” in exasperation. (But dealing with that frustration is a story for another message).
Do you remember from the previous story that I knew pretty quickly that I needed to bring on some people to transform my cabinet shop into a business that delivered what I expected? Well today I’m going to tell you how I went about it so you’ll learn from my (less than ideal) experience.
I started by defining all the jobs that I was doing myself at the time and divided them up into individual areas of responsibility. I then wrote newspaper ads for each new job. (“way” back then we did not have the internet for job postings)
As candidates called to inquire for each job posting I’d interview them on the phone first and then bring just the top candidates in to the shop to meet with me.
So far so good, right? Just basic sound and sensible recruiting practice.
At the time I was still producing everything in the business myself so you can probably imagine what a nightmare it was to schedule all these interviews. Whew! I was working some long hours those days.
At times I would find myself working until 2 or 3 in the morning because I had spent all afternoon interviewing people. Many of whom turned out to be less than qualified.
Not much of a life, huh? Certainly not the lifestyle freedom I had in mind when I started the business.
As the pressure to get these jobs assigned kept mounting, I eventually began to compromise my better judgment and hire people just to get the bodies on board and working on the projects. I figured I would be available to monitor them and make sure everything was done to my satisfaction and that making some progress was better than making none.
For instance, instead of actually testing the skills of the painter/finisher, I took him at his word, checked a few of the references he’d provided and brought him on board to do the finish work on a set of 20 walnut book cases for a prestigious law firm downtown.
Instead of actually verifying the references of my installer, I ran out of patience and hired a guy who seemed qualified, had demonstrated some ability and whose claims sure sounded ideal.
I ended up with a complete and utter nightmare on my hands.
Every time I turned around there was another crisis or catastrophe to deal with.
In almost no time at all schedules slipped and I lost important contracts as a result.
Projects had to be redone because the work quality was so poor.
Customers became irate and with-held payment.
Believe it or not, I even had an installer caught drinking from a collection of exotic liquors one of my clients had in the middle of the afternoon!!!
On the job no less!!!
Can you imagine how embarrassing that was for me?
Here I had put my reputation on the line…I’d staked my name and my personal commitment to negotiate the award of a large office renovation contract with one of the biggest commercial developers in the area….and this…idiot….was stealing the guys most expensive whiskey….in the middle of the afternoon…on the job site!
I was mortified and ashamed.
I really did go home and upset that night!
I’m telling you this story because I want you to see that I stupidly compromised one of the basics tenets of building a sound business….and as a result…….in less than a month my business had flown completely out of control and had become a complete and utter disaster.
I was working longer and longer hours, spending more and more of my diminishing revenue trying to recover, and falling further and further behind.
And, worst of all it was all damaging my hard-earned reputation of excellence.
I was heartbroken…dejected…distraught….I felt like a total failure…
My girl friend’s father looked me straight in the eye and in a stern southern drawl (I lived in the South back then) asked, “What the h%$$; are you gonna do boy?”
Well, here is what I did:
At the end of the 6th week I just stopped. Yup….I just stopped.
NO! I didn’t quit…
I just stopped. I closed the shop temporarily and sent everyone home. I called what remained of all my clients and told them that we were going to stop work for 30 days. Where appropriate I told them why.
If they couldn’t wait for me then I forfeited the contract.
By the end of it, this lesson had cost me tens of thousands of dollars not to mention 3 of my top 10 clients.
I need an entirely new approach; a new business strategy, a new business model. I needed to shift my perspective 180 degree before I went on.

You’ll recall that, after I had temporarily shut my business down, I had determined that I needed an entirely new business model. And to pull that off I was going to need some help from someone who knew something more than I did. I needed to hire a business manager; someone who could run my business for me, while I did what I was best at doing. I need to hire my boss (so to speak). I needed someone to run my business in manner I was unable to. And I needed this person to be someone I would listen and respond to.
I interviewed dozens of people and spoke to dozens of references for each. I invested hours and hours and hours in the process. Once I had identified a good candidate, I spent real time with him and got to know him. I spent time with his family and got to know them too.
Look, I was planning on putting my livelihood and my reputation in his hands and was going to be absolutely certain he was going to do a better job with it than I could.
After investing the part of a month really getting to know all I could about this fellow, when it came time to hire him, I paid him well. MUCH more than I was paying myself. And it was worth every cent.
Once on board he created all kinds of new procedures, systems and job performance standards. He really dug into the details (something I am just not very good at doing) and clearly defined roles and responsibilities for each position in the business. He established simple step-by-step recruiting & hiring process which included (much as I had done with him) several layers of reference checks and verification for new people.
We invested the time necessary to brief each employee and contractor we employed at the time to be certain they each understood these new work standards. We put them all through the process we had just created no matter how long they had been working with me prior.
If they objected or refused to do it, we let them go. We left nothing to chance.
A few weeks later when we re-started the business, we had a well oiled machine.
I had all the right people…with all the right skills… doing all the right jobs…
I had processes for everything from answering the phones to collecting payment from the client.
I’m pleased to tell you that this machine produced results orders of magnitude greater than any I had produced previously….in any business at the time. It was an awesome experience.
In almost no time at all I had recovered the financial short-fall I’d experienced (as described in the previous post) and began growing our revenues in excess 10% per month and more.
Our customer satisfaction and reputation for excellence returned. My employees and contractors were satisfied and were happy to work the reasonable hours we all kept.
And best of all,
I was doing the work I had always dreamed of doing. Can you imagine how elated I was?
Can you appreciate the stark contrast between what I’m describing here and the experience I had that day I’d gone home literally in tears feeling an utter failure?
Can you imagine how gratifying it was the day I realized my business was no longer a fledgling startup but was instead a successful and growing enterprise?
There are 2 lessons I want you to get from this story:
First, when it comes time to hire someone ALWAYS ALWAYS ALWAYS HIRE “UP”. By that I mean, when you hire people…whether employees or contractors…Always hire people who can do whatever job you need them to do better than you can do it yourself.
Second, ALWAYS, ALWAYS, ALWAYS have them prove it!
It doesn’t matter how much time it takes or how many people you need to interview in the process. Any compromise you make in this part of the process will cost you dearly later.
If you have to compromise anywhere, DO NOT do it here. I’m not saying you shouldn’t trust people. You should. You must in fact.
But verify that the trust is well placed before you hire them.
If necessary and appropriate, devise a test scenario for the candidate to handle. One that verifies his or her ability to do the job.
When you check references, don’t just check the ones the candidate gives you. Ask those people for other people to speak with, and then ask those next people too. Ask other people in the candidate’s industry if they know anything about him or her.
If you are working with a contractor or outsourcing agent, don’t just stop with the testimonials and references on their web site. Ask around and check first and second level references there too.
Take the time necessary to dig a little and prove to yourself that this person can do a better job at whatever it is than you can.
If you’ll take the time to make sure you have the right person in the right role at the right time and surround yourself with people who can do every job that needs to be done better than you can do it yourself, EVERYONE WINS!
Your employee or contractor is accomplished and successful….
Your customers get the quality product they expect….
Your job becomes effortless….
Your business delivers the financial and lifestyle rewards to expect….
And continues to grow and prosper…

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