When Referrals Go Wrong

Jeff Hyman is the CEO and Founder of Recruit Rockstars, the Amazon bestseller of the same name, the host of the Strong Suit Podcast, an esteemed speaker, and in his spare time, he teaches a course on recruiting at Northwestern’s Kellogg School of Business. Jeff joins Adam this week to discuss what to do when a trusted associate sends you a referral that just isn’t a fit. Jeff also digs into Google and Facebook’s take-over of the job board market, what to do when you find the perfect person for your company but don’t have the right job for them, and more on this episode of The Best Team Wins Podcast.


Connect with Jeff on Twitter, Linkedin, and Facebook.







































Adam Robinson: Welcome to the Best Team Wins podcast where we feature entrepreneurs and business leaders whose exceptional approach to the people side of their business has led to incredible results. My name is Adam Robinson, and for the next 25 minutes, I’ll be your host as we explore how to build your business through better hiring. Today on the program, Jeff Hyman is the CEO and founder of Strong Suit, based in Chicago, founded in 2007. Strong Suit has three employees. Jeff has started four company’s total, raised over $50 million in venture funding, and hired or placed over 3,000 people for his own companies and others.


  He teaches the first-ever MBA course on recruiting at the esteemed Northwestern Kellogg School of Business, and he hosts the Strong Suit podcast, and is the author of Recruit Rockstars, an Amazon bestseller. Wow. I am so excited to have you on the program today, Jeff. Thank you for being here.


Jeff Hyman: Adam, it’s great to be here, and it’s great to talk with someone who shares the same passion. I am a huge fan of your podcast and your book as well.


Adam Robinson: Yeah, I appreciate that. Well, so we have the opportunity Jeff, today, to talk about your experience in the founder CEO seat building a venture-backed hyper growth business, and we have the opportunity to talk about your expertise as an executive search professional and just someone who’s been at this awhile and has seen a lot. And so, for our listeners today, it’s really going to be a real treat to hear you share what you’ve learned right or wrong about how to do this the right way.


Jeff Hyman: So plenty of wrong. I’ve made every mistake in the book.


Adam Robinson: Before we focus on that, let’s talk about Recruit Rockstars and what you’re up to now. Give our listeners 30 seconds on what you’re doing.


Jeff Hyman: Yeah, so I do two things. I do executive search for venture capital and private equity portfolio companies, so that’s my day job. My night job, if you would, is, as you said, I teach a course on recruiting at Kellogg, up in Evanston, and so I take these relatively new minds who are going out into the business world and try to impart on them some of what I’ve learned about recruiting and retaining talent.


Adam Robinson: Excellent, and if the listeners want to learn more about what you’re doing, what’s the best way for them to do that?


Jeff Hyman: They can just go to recruitrockstars.com.


Adam Robinson: The book, the podcast, all linked up there?


Jeff Hyman: Yep. Everything is at Recruit Rockstars.


Adam Robinson: Fantastic. Okay, let’s jump in. I want to go back to when you started Retrofit, which eventually raised a good sum of money, and now, you’ve transitioned that into very capable hands. That first employee-


Jeff Hyman: Yes.


Adam Robinson: … when you scaled beyond yourself and it was time to go for it, talk about the process you used, if there was one in fact at that time, to go about building that early team, when you were getting out of the gate there.


Jeff Hyman: So, it would have been 2011 as I was starting to build the team for Retrofit, which is now a relatively sizable online healthcare and wellness company based in Chicago. The very first few hires, to be honest, Adam, were about selling the concept, selling the idea to get someone to join a nascent startup … you know this because you’ve done it … is as much about selling and convincing and cajoling and a little bit of begging as it is about assessing the individual. In my case, the first hire was a young lady named Whitney who I had the good fortune of knowing previously, and I remember her very clear.


  I met her at a Starbucks and took her through the business concept. It wasn’t even a business model yet. It was just this idea of online weight loss, and she was very intrigued, very compelled. It probably was a mating ritual of a couple of months before she finally agreed to do it full-time and leave what she was doing. So that was the first hire.


Adam Robinson: Would you say you followed a defined hiring process at that time, or is that more of a gut feel and pattern recognition type of hire?


Jeff Hyman: I do my best to avoid gut feel, just because it’s so misleading. I think I’ve learned a lot even in the past few years about recruiting, which has helped, but I knew that she had the DNA that I was looking for at the time. I was really looking for, as I think a lot of startups need, a sense of optimism. When there’s a 95% chance you’re going to fail, and every day is harder than the one before, an optimist is a really good thing. Flexibility, versatility, which Whitney certainly had and just a Jane of all trades that could help on marketing, help on sales, help on operations. She just did it all. And so, that was really the DNA I was looking for.


  I had a lot of room for the particular competencies and experience, but DNA was something I couldn’t compromise on, and she was the one during that process, and I must have talked to three, four dozen people who just epitomized those things.


Adam Robinson: So, jump forward then to when Retrofit is scaling, it’s growing quickly, you’ve got VC fuel behind you, and you’re having to bring people on 10 at a time. How did you do that? So for our listeners who either are experiencing that or are contemplating what it’s like to go through something like that, where your success is literally tied to your ability to hire 10 people a week, you know, that kind of a growth rate.


Jeff Hyman: Yeah, sure.


Adam Robinson: How’d you do it?


Jeff Hyman: Well one of the first things I did was said, “This is going to be a full-time job.” You know, hiring, interviewing, assessing, vetting. It’s so vital, but it’s so time consuming. We hired a head of talent in our first 10 hires. I think number eight, seven or eight, an incredible young lady named Vicky who served us well, in that, she hand-picked an amazing team of wellness experts, registered dietitians, sports psychologists, software developers and just was such a guardian of our DNA, much like a head of marketing is a guardian of the brand. That was incredibly helpful.


  We also involved our board of directors and our investors in some of the hiring to get their buy-in, to get their perspective especially on the senior team, the executive team. We just never compromised it. It was painful sometimes. We would leave a seat open for six months until we found the right person, which of course means everyone else has to chip in, but I’ve always found that’s far preferable to settling for a B player.


Adam Robinson: Absolutely. Can you think of examples where you might’ve rushed it?


Jeff Hyman: Oh sure.


Adam Robinson: Even as the pro, right? Who knows what they’re doing here?


Jeff Hyman: I am far from a pro because this hiring thing is very experiential, right? I don’t know about you, but I think it’s as much art as science, and so, hopefully, with each hire, I get a little bit better, a little bit smarter. But yeah, we made plenty of hiring mistakes. Warm bodies that came along and we just had to get someone on board or someone we didn’t fully vet because they were referred by one of our investors, and so, we just took that as this person is amazing, and within weeks, we knew we had made a mistake. It’s a distributed company, so Retrofit has people across the country, and we consult with clients via video.


  So, having people who had never done that before I think was very difficult. We had quite a few people who thought they could work from home, stay focused and work on their own independently, and after a month or two, they realized they just either weren’t structured enough to be able to do that, because it does take a certain discipline, or they were so extroverted that they found they were getting depressed and getting lonely. And so, I think that was something that we changed, which was not hiring anyone who had not worked remotely before. So, yeah, we made every mistake in the book.


Adam Robinson: So, you know what? I want to stay on this notion of a board member or trusted advisor telling you, “This guy’s awesome.” That happens all the time. I’ve had that experience a number of times where someone says, “Oh he or she was the head of XYZ at my last company. They’re amazing. You should hire them.”


Jeff Hyman: Exactly.


Adam Robinson: And of course, as the CEO, and you’re sitting there going, “All right. Well I trust this board member. They’re telling me they’re awesome. They must be awesome.” I think maybe 0% of the time, that’s turned out to be the case. That’s been my experience. Why do you think … Now put yourself in the provider seat. Now, you work with venture firms all the time who need to take their money and turn it into talent that’s going to produce growth for their portfolio company. Why doesn’t that work? Why doesn’t that this guy’s awesome hiring process work for companies?


Jeff Hyman: I think there’s a number of reasons. There’s no shortcuts in recruiting no matter how someone was referred to you, whether it was from an investor or a board member, even from an employee through your own employee referral program. I think there’s a bunch of reasons. One is a rock star in one company is not a rock star in another company. Every company has its own values, and DNA, and work processes, and limitations, constraints, and so, just as when I lived out in Silicon Valley, during the dot-com boom, the first one, so many big-company people came from McKinsey, and P&G, and world-class companies, where they were rock stars, and they bombed miserably at small start-up companies just because it was a total misalignment. So not everything is transferable.


  And then the second is investors have a very different perspective. They don’t hire people every day for a living, and so, many of them will understandably rely on what school the person went to or what companies they worked at. They’re from Google, from Apple, GrubHub, therefore, they must be amazing, but science will tell you that those things are not necessarily predictive of success. And so, taking those shortcuts can be very dangerous. So, I feel your pain, because I’ve made those same mistakes.


Adam Robinson: What is the conversation then … Now we’re getting into a little bit of-


Jeff Hyman: Inside baseball.


Adam Robinson: … business coaching here, but what’s the conversation you have when your largest single investor, that’s got tens of millions invested in you, says, “Hire this person. He or she’s awesome,” and you’re thinking, “I talked to them. They’re not awesome”? How do you stand up for your own culture in the face of that type of pressure?


Jeff Hyman: Well it’s not easy. It takes some fortitude, but I try to rely on data. So subjectivity is what drives people crazy in the recruiting process. People say, “I like him,” or, “I like her.” That’s crap. It’s meaningless. It needs to be based on specific objective measures. So in developing a scorecard, which is where I always start whether it’s for clients or for myself of getting agreement from the investor on what the scorecard is, what are the competencies, and what is the DNA we’re looking for. So now, we know what we’re looking for. Now, we have something we can actually compare that individual against, right? Versus it just being warm and soft and fuzzy.


  I think the second thing is having another candidate, right? To compare to, to look at. In the absence of anyone else, it’s pretty tough to say, “No, we need a director of sales, we need a Java developer,” or whatever. Even an independent board member. I’ve had this debate. So you hustle and you find other candidates so that you can compare and contrast and run a process and agree with the board and the investor that we are running a process and happy to engage your candidate and include them in the process. They’ll have every opportunity, obviously. We’d love to go with someone who’s pre-approved, pre-vetted, but it’s not reason by itself to skip the process.


Adam Robinson: So armed with data then, armed with data, you can have those conversations. What do you say to the six-employee startup, founder-led, you know, he or she is facing that pressure to just get to that next milestone. They’ve got three unfilled sales spots. They’ve got to hit a revenue number. Every day is an opportunity cost. They’ve got the money. They just don’t have the talent. What do you do?


Jeff Hyman: I say, “Don’t settle.” I know that is painful. I’ve been there so many times, and every time I’ve settled, no matter who the person was referred by, it didn’t take a week or two or a month before I said, “What was I thinking?” You then start diverting your focus and spending more of your time babysitting and micromanaging and coaching that B or C player, which takes your eye off the ball further. So, you’re asking everyone else to pinch-hit, to fill in the gap, to bridge it until you find the right person, and I know that’s painful, but that’s what I’d tell a six-person company or a 600-person company.


Adam Robinson: I’ve enjoyed your writing on the topic of employment brand, and so if we could shift to talk about, now, how do we address this issue? How can companies take control of this? And so important the concept of branding, and you’ve got some really good advice for entrepreneurs looking to take charge of this. What are some things that that leaders can do to make sure they’re putting their best foot forward in the market?


Jeff Hyman: Well it goes back to your previous question. When you don’t have an employer brand and you’re not always recruiting, and you don’t have a pipeline, a flow of candidates, just like a great salesperson or business development person should have a great flow or a pipeline of business opportunities, you tend to fall into just-in-time hiring, right? And that’s when the problem begins. Oh my god. Sally quit. We don’t have a back-up plan in place internally. We don’t have a pipeline of people externally. So, you tend to hire the first person that comes along.


  When you have a pipeline mentality, which is derived from having built an employer brand, which doesn’t take much time or money, you have choices. You have people coming through that say, hey, I’m interested. I’d like to have a conversation. Now, sometimes, you want to hire them before you even have the perfect position. I’m sure you’ve done that at your shop because top performers are so hard to find, right?


Adam Robinson: Yeah, hire the person, find them the job, that is-


Jeff Hyman: Correct.


Adam Robinson: … certainly a necessary time to do [crosstalk 00:15:42]-


Jeff Hyman: Hard to do for a six-person company, but it doesn’t take long — 30, 40, 50, 100 people — before you say, “You know what? Rock stars come across my desk so infrequently that when I find one that’s actually interested in what we’re doing, in our mission, it’s worth grabbing them,” and like you said, finding the position later. But building an employer brand, to answer your question, is all about just like building a consumer brand. What is your differentiated point of view and unique employer value proposition? Why should someone come work for you in your city? I think it’s very relevant to your city or your town and who your competing employers are.


  So if you’re in the valley, you’re competing with Google and Apple, but if you’re in New York, you’re competing with someone else. But who is our target candidate? Much like marketing. How do we build a pipeline, a funnel to attract them? How do we engage them? And it’s not going to be by paying the most money, because no matter how much you can afford to pay, there’s always someone that can afford to pay more, right? So it can’t be based on dollars. It has to be based on the value proposition that you can provide to that individual.


Adam Robinson: In your methodology, you lay out some best practices or steps that that people can follow in order to drive a predictable result. Take us through what some of those major steps are, so our listeners have some guideposts as to how you recommend doing it.


Jeff Hyman: There’s 10, so we don’t to go through all of them. But as I talk to people, I usually find they’re like, “Yeah,” three or five of them, I get rung, and then they wonder why they have 50% batting average, meaning half of the people work out and half don’t, which is, you know, what other part of your business would you be okay with that? So none of these by themselves will solve the problem, but little by little by little, they build. So an example is focusing on things that are predictive, right?


  If you ask a lot of people, a lot of executives, “What do you focus on? What school did the guy go to? What was his GPA? What companies did she work at? What was her title? How many years experience? Does she have industry experience?” All those things are nice, nice to have, but they’re not in and of themselves highly predictive of success, especially compared to DNA, which is how someone is wired even before they turn 10, and that is a primary determinant of someone’s behavior, someone’s performance over the long term. So focusing on just what’s predictive, right?


  Doesn’t sound like rocket science, but a lot of people don’t do it. Relying on expensive recruiters like me or job postings or things like that. When you’re not tapping out your own employee referral program, at least 50% of your hires should be coming from your employees, and if they’re not, then they’re either not happy, in which case you got one problem, or they don’t even know you have an employee referral program, which half of companies don’t. So that’s another big issue. Probably the biggest one, one that I’d like to focus on with clients is the test drive, which I’m guessing you do, because you’re pretty sophisticated about this, but 90% of companies don’t.


  They do the interviews and then they stop. They say, “Hey, we found our director of marketing. She interviewed unbelievably, and she’s great,” and they hire her. It turns out what she talked about, what she said in the interview, she can’t do, and so, the test drive is just a couple hours or a couple days where you have a job audition or an opportunity to see the person in action. You do it for every role, every time, CEO down to office manager, and you see the person in action. And many times, you’ll be shocked that someone who did great in the interviews just can’t do the job for many reasons.


  So that’s probably the biggest one. It’s not so much a mistake as much as a failsafe to avoid bad hires.


Adam Robinson: Yeah, I got to tell you, Jeff, that test drive, as you term it, is something that I have learned. And from experience, every time I’ve made a poor hiring decision, it’s been because I haven’t put them in the environment. Not the theoretical verbal description of the environment, but the actual job environment, where I can watch them do what we need them to do. So we have sales candidates get on the phone and make calls with us.


Jeff Hyman: Yeah, you see them in action.


Adam Robinson: Yeah, we have customer success folks work through data and then look at save information and just try to be in the position. We’re hiring for a vice president to handle some of our most important larger accounts, and we’re going to ask them to put a presentation together, a business review, as if we were their large customer and come give it to us. So, let me just concur. It’s a must do, it’s a must do.


Jeff Hyman: Yeah. I don’t understand companies that don’t do it. It does take a little bit of time. Sometimes I even pay the candidate for their time, so it costs a little bit of money, but compared to some of the bad hires that I’ve avoided, because they bombed the test drive. I mean, they couldn’t even follow instructions. They couldn’t even make decisions. They weren’t on time. I mean, basic stuff that you never would have known, coming out of the interview where they did exceptionally well.


Adam Robinson: I suppose the question is, would you rather find out before or after they’re on your payroll that this person can’t do what you need them to do?


Jeff Hyman: You know the answer to that, right?


Adam Robinson: It’s self-evident.


Jeff Hyman: It’s really painful. It’s the same reason people don’t like checking references, because by that point, you’re so emotionally invested. You’ve spent so much time. You don’t want to hear it. You don’t want to know. But as soon as they start, you’re going to find out, and then you’re going to be like, “What was I thinking?”


Adam Robinson: I had a conversation today with the management group. They were asking me this, and I’m going to throw a little bit of the jump all at you here, because you’re well-versed in the tools available to recruiters. Google and Facebook are about to eat the technology world as it pertains to jobs now and-


Jeff Hyman: It’s already starting, yeah.


Adam Robinson: … in candidate search. How can smaller operators or those without sophisticated talent, acquisition teams, take advantage of this changing landscape? Because most of them now are still the post-and-pray model. “I’ll buy some ads. I hope they work. I’ll buy some ads. I hope they work,” that world’s going to change now. What would you say to them?


Jeff Hyman: Well, I think it’s great, right? Because it’s going to level the playing field for small companies. A lot of it is automatic, right? So when you, for example, post your jobs on your company’s website, which, if you’re not doing by now, I don’t know what to tell you, Google will scrape those and format them and make them readily available to job seekers who go to Google and, say, type, “director of marketing in Chicago,” it will make it much easier for candidates to find those. And, Facebook is similar. The problem, as you know, is when you’re at 4% unemployment on your way to 3%, not as many people are looking for jobs.


  There’s a good number of people looking, but not nowhere near as many as when we were at 6% or 10%. So waiting and posting and praying, exactly as you said, is a very dangerous strategy, because you’re going to see a relatively small pool of the available market. Most of your recruiting needs to be networking, personal referrals, introductions employee referrals, investor referrals. If you sit and wait for people to read your job posting no matter where, Google or otherwise, you’re going to be waiting a long time.


Adam Robinson: Undoubtedly. Undoubtedly.


Jeff Hyman: Every time I do a search for a client, I post it on LinkedIn, just to make sure I’m covering the basis. I’ll get three, four, five hundred resumes. I can’t tell you the last time I ever hired one from that source, not that there aren’t great people on LinkedIn, but statistically the odds of the right person seeing the job at the right time and applying is just very small.


Adam Robinson: Very good point. And thematically, what I’m hearing from you today, Jeff, is that recruitment is a core business process. Let me put those words in your mouth. You can’t be done reactively. You will always be chasing to catch up, and it leads to poor decisions.


Jeff Hyman: I’ll go one step further. Not only is it a core business process, in my opinion, and this is a little controversial probably, it is the only sustainable source of competitive advantage and differentiation. Technology is no longer a source of differentiation like it used to be. You can’t patent anything. And if you do, you can’t protect it, because you don’t have a war chest. You launch an app and there’s five others just like it a week later. Marketing and building a brand takes forever, extremely hard to do, with fragmentation of media.


  I haven’t found a competitive advantage source other than building an amazing team who can out-execute your competition. And so, it’s not only a business process, it’s like the most important business process.


Adam Robinson: I couldn’t have said it better myself. Jeff Hyman, thank you so much for being with us on the podcast today.


Jeff Hyman: It was a pleasure, and like I said, I’m a big fan, so thank you for all the work that you do.


Adam Robinson: Ladies and gentlemen, that is a wrap for this week’s episode of the Best Team Wins podcast, where we’re featuring entrepreneurs whose exceptional approach to the people side of their business has led to incredible results. My name is Adam Robinson, author of the book, The Best Team Wins, which you can find online at www.thebestteamwins.com. Thank you for tuning in, and we will see you next week.