Entrepreneurial Mistakes #5: Hiring Mistakes

Here's a story I heard recently:  A young MBA student had the chance to meet with a wise old CEO who had taken his company to great heights.  He only had a few minutes, so he chose his questions carefully. 
"What I would really like to know," asked the MBA student, "is how you got to be so successful?"
"Oh, that one is easy," said the CEO.  "It comes from having good judgement."
The MBA student was not going to accept such a short answer.  "Well, then," he asked, "how did you get good judgement?"
"That--oh that comes from experience."
Maybe a little frustrated, the student asked one more, "Where did you get the experience?"
"That comes from having bad judgement."

The mistakes below are not like the big hiring mistake that was described in Entrepreneurial Mistake #2, but rather fall into the category of "bad judgement."  In any case, they are mistakes I'd like to not make again.

Hiring Mistake #1:  Hiring first employees as Vice Presidents
This one is more subtle than it sounds.  There are people who are terrific for a company of 3-5 people, who really are the Vice Presidents of that company and carry a load like could never be described--but who also just are not the right people to lead a group of 5-10 employees, and become seriously challenged with groups of 25-50 employees.  In these cases, hiring the employee was right, making them the leader of their function was right early on, but the mistake was instead in giving them the expectation that they would remain in a leadership role indefinitely.  (I mean, outside of a bank, how many vice presidents can their be?)  All of these people were outstanding contributors when I had them in the right role, and the mistake was in letting them believe that the role would last forever.

Hiring Mistake #2:  Hiring real executives too soon
This one is again subtle.  I have a gentleman that I truly respect, who had been a consultant for the company for some time and had real and genuine enthusiasm for the technology, the industry and the team.  He was so talented that when he sat me down and explained to me, for two hours, that he was ready to join the team, I made room for him by giving myself a promotion to CEO and making him President.  That wasn't the issue. The issue was that he was used to running a company of 80-100 people, and didn't understand when I told him we weren't going to spend money on a cleaning service and where the broom was.  His first acts were to decorate his office, hire an HR consultant, attempt to hire a cleaning service, and tell me that I had to fire my best employee or he would leave.  "Why?" I asked.  "We don't work well together," he said.  "It's him or me."  My response was, "He is a terrific employee and a good friend and I think you should learn to work together."  He quit less than 90 days after he joined, but stayed on as a consultant and board member, and never really got over the scars formed by the right person joining the right company at the wrong time.

Hiring Mistake #3:  Hiring order takers as sales people
In the course of running Innegrity, I hired about a dozen different sales people, and all but two and a half of them stank in the role I gave them.  This was my fault, not theirs, because all of them had excelled in the role of salesperson at different, established companies.  The problem was that, in a big company with established product lines, the role of the salesperson is really to take orders and facilitate communications, but the product has already been sold to the customer.  This is especially true in industries where there isn't much growth, much white space left to conquer.  For those industries, a salesperson might be very successful at winning accounts from customers who were buying from their competitors, but even in this case, the customer is already buying the product, and is now making a supplier decision.  A completely different skill set is required to convince a customer to take on a new product where the primary competitor is inertia and alternatives that perform very differently.  In hiring people who were very effective in the role of catcher, I did them a disservice by asking them to be pitchers.

Hiring Mistake #4:  Hiring some friends
Careful here, because I am not saying don't hire friends.  My very best employees were friends, and I would hire them again today.  In fact, I am desperate to hire two of them, but won't get the opportunity because, frankly, I've used those chips. I love them both and will not disrupt their families or their lifestyles again.  However, the decision to hire friends should be made very carefully, and only with the understanding that either the friendship will survive a quit/fire decision, or that you are willing to give up the friendship if the situation arrises where one of those is necessary.  The mistake and challenge here is the potential to hold onto a friend too long, to have a blind spot for lower performance, and not move to correct it.  The problem isn't with the friend--it is with the person doing the hiring (me, in this case) who may not be objective.  In taking the role of President or CEO of a startup, you are making a bunch of unspoken promises to investors, customers, and other employees that the needs of the company will come higher than everything except your God and your family, and there is not room for compromises that can crop us with an underperforming employee who is also a friend.

Hiring Mistake #5:  Being loyal to underperforming employees
I'm a doggone collie, and will coach, help, cover, extole--anything to keep an employee performing at a level that the rest of us can put up with.  The silver lining to this is that it has earned me extraordinary loyalty from people who have worked for me, and also in several cases helped me to find the right role for employees who were underperforming in a different role.  The mistake was not in keeping employees who worked hard and weren't effective, but rather more subtle.  I kept employees who were relatives of friends/employees, giving them oh-so-many chances to improve.  I kept employees who were started as full-onboard members of the team, but who later checked out. I kept employees who had left comfortable jobs at big companies but couldn't adjust to the dynamics of a small company.  I kept employees who refused to take a leadership role when it was necessary.  I kept employees who were knowingly overlooking serious flaws in the systems they were running (to my credit, I didn't learn of this until after I fired them, and then only as retribution).  "Hire slow and fire fast," is very good advice.

Hiring Mistake #6:  Not praying
While I ran Innegrity for seven years, at our peak we only had 25 or so employees, and so you may wonder how I could make so many mistake in such a short period of time and somehow still achieve what everyone involved would call a technical and marketing success (but financial failure).  The fact is, every one of those mistakes could have been avoided if I had just taken the few short moments to lay them at God's feet and ask for guidance.  In almost all cases, I did not, and suffered the consequences of having made the decisions alone, rather than with the help of the Almighty.  It was arrogant and unfair to the other employees, to the investors and to God not to let Him play a more pivotal role in the day-to-day running of the company.