How to Deal with Pure Recruiting Mistakes

Posted on Nov 27, 2013 | 39 comments


One of the unavoidable realities of building a startup is having to fire people.

In a normal business you can often sweep bad performers under the rug and not deal with them. When you have millions or billions of dollars of revenue you can suffer a few bad performers or bad apples. You can miss a quarter’s target and not cull the inefficiencies. I’m not saying you should, but you could.

But in startups this equals death.

Death because just 3 extra non-performing employees in a company of 15 can either accelerate cash out date or can dramatically lower your productivity.

I’ve spoken about this before and my mantra, “Hire Fast, Fire Fast.”

When I first started my career I came across a term for this that has always stuck in my head and serves as a useful reminder of this mantra.

We called it “PURE.”

Previously. Undetected. Recruiting. Error.

My premise with “hire fast, fire fast” is that some companies over-analyze potential recruits and therefore chew up valuable months with functions unfilled. Most (whether they hire quickly or slowly) are very slow to deal with problems once they have them.

I have sat through scores of board meetings in the past year and in at least 25% of them the topic of a senior employee we hired that hasn’t worked out comes up. Almost always the CEO is defending why he or she has to hold on to that employee for an extra 6 months until they can fix a,b and c before letting them go.

I have never (literally not once) heard a leader later tell me, “I’m glad we waited.” Universally after the shock of letting somebody go and the reverberation in the company is felt a sense of relief and well-being ensues. Teams are organisms and they detect bad cells even more quickly than leadership does. Failing to act undermines confidence.

Yes, PURE employees have allies so it’s never simple. But when you make a mistake you need to own it and fix it ASAP.

This came up in the reverse last week when I spoke with a friend who has an asinine recruiting policy. He told me that everybody who joins must first have a “temporary contractor period” almost like one is on probation before she joins.

I say asinine because that has the likelihood of turning off some potentially great prospective employees and there’s zero reason for the probationary period. In the US you have the right to terminate almost any employee at will (subject to your not giving them a contract to the contrary and of course you should always consult a lawyer before implementing a firing or layoff) .

Thus everybody is implicitly on probation anyways so making it public does you no good and potentially limits some people who may join. I have come across several companies who have this probationary period over my years and I always try to talk them out of it.

Anyway, to the point of this article if you make a mistake in recruiting – if somebody is PURE – deal with it quickly and surgically. The longer he persists in your organization the more the badness metastasizes and the larger the treatment later.

 

  • Vasu

    I have somewhat the opposite situation – what if you have someone who is awesome but he is asking too much in terms of equity? Is that just a mis fit in terms of his expectations of ownership and the company’s willingness to give up a piece of their company?

  • Bhavin

    Mark – Thanks the post, I’m a regular lurker :)

    We use a temporary period, depending on the role, for a few reasons:
    1. Even though employment is at-will, we want to set expectations with all candidates that there’s no guarantee about their employment, and that if they aren’t comfortable with that ambiguity, then they may not want to work with us (much of our team has never worked at a startup before.)
    2. I assume, maybe wrongfully?, that if were were to fire someone, we’d be much more likely to let them go within the first several months, so after the temp period they’d likely be sticking around for a while unless something dramatically changes.
    3. Those willing to join, despite the temp period, have shown an incredible amount or passion for the company and the mission–3 of our last 5 left another job to join us.

    We’re around 15 people, so I realize a policy like this might not hold up well at scale. I’m also betting you’ve heard all these arguments before :) Just wanted share, and get your thoughts.

  • Guest

    Does the same thing to apply to Boards and the CEO?

  • Eric Rodriguez

    I agree with most of this, but I do believe in the “temporary contractor period” for most salespeople, given how salespeople often sink or swim in the first ~3 months.

  • http://bothsidesofthetable.com msuster

    hard to answer without knowing specific details. sorry.

  • http://bothsidesofthetable.com msuster

    always good to get other perspectives. if it works – stick with it. i personally am not a fan. i think you risk not hiring talented people and there are other ways to build a culture of motivated employees without a probation period

  • http://bothsidesofthetable.com msuster

    no. it’s not easy to fire a ceo so it needs to be treated differently.

  • http://bothsidesofthetable.com msuster

    yes but why make it “temporary contract period?” why not just let your sales execs go if they don’t cut it?

  • Venki Pai

    Mark – great read as always! Been following you for a few weeks now.
    Your strategy seems effective as a founder/leader of a company; However, as a team member and manager – I believe ( by experience), it is very important for management to communicate objectively the basis for hiring or firing. Unless this happens, there will be cloud of uncertainty and the work environment will breed further mis-trust.

    And then there is always the case of mis-fits. Extremely talented individuals but simply out of place in the current role. Being too quick to fire these folks because of ‘PURE’ might simply be a loss to the company. Due diligence and time for corrective action ( both from employer and employee) can result in mutually benefiting outcome.

  • http://joeyevoli.com/ Joe Yevoli

    Isn’t one of the reasons to have a contractor probationary period to save money on taxes while you evaluate the potential employee?

    It’s not going to save you much, but in a young startup every bit counts. “Rinse your cottage cheese” – Good to Great

  • http://www.justanentrepreneur.com Philip Sugar

    The issue I have with a “probationary” period is that once the person has completed it, there is an implicit assumption that they “have made it”

    Many times this is unclear.

    How long do you want the period? Three months? In my mind not long enough. One year? Ok, in my experience if you make it a year you almost never leave. But what are you saying here? You aren’t a “real” employee for a year? Hmmm that seems like a recipe for failure. “I’d work on your team but you are still on probation…”

    I agree 100% In a 15 person company 3 bad employees is 20% and worse they bring everybody else down. You have to be three times as productive, because you will get 1/3rd the opportunities big companies get.

  • jbarbagallo

    While it’s true, as Mark points out, that the majority of employees are at-will workers, typically a permanent full-time employee has to be put on some sort of performance plan and then offered severance before termination to keep the lawyers at bay. Whereas the deal with employees on a probationary period can be let go in real-time and without severance because that’s what they signed up for.

  • http://www.onetact.co/ Rishi

    Welcome back Mark! Here in India, finding a candidate who meets basic reqs + who is willing to work in startups is very tough. Would you still take chances by hiring a person who you think could “probably” learn on-the-job, become productive in few months, or wait for THE person who meets the basics?

  • bebraw

    I agree completely. The thing is bad fit can lead to a very negative cycle and you will might lose some good people if you don’t react soon enough. Dragging extra weight along just burns people out for no good reason.

    Of course this works the other way too. Great teams work like amplifiers (force multiplier).

  • https://www.sharegate.com/ Chris@Alexander

    Recently faced this in a clash with my CEO. He wanted to keep someone in my department because “he really believes in the company.” I wanted him gone because regardless of belief he was (a) a terrible communicator, (b) a terrible problem solver, (c) completely lacked initiative, and (d) simply did not fit the culture we wanted to build. Leaving out the details, he was given a contract by the CEO against my clear protest and now we’re stuck. Even the CEO regrets the decision (but too late). I considered going so far as “he goes or I go,” but felt that a little ridiculous. Maybe I should have? Not the end of the world, but it sure is painful…

  • http://hirethoughts.blogspot.com/ Donna Brewington White

    Hi Mark — Happy Chanukah! Hope you got the the XBox One vs. PS4 dilemmma that you tweeted about figured out. I’m imagining two very happy boys at your house!.

    I’m glad you raised the point about the probationary period. I wonder whether an approach like this can becme a self-fulfilling prophecy of sorts? This policy will influence the candidate pool that the CEO can hire from which may not provide the most competitive selection. It also makes the statement that there is some uncertainty around hiring and does not boost confidence. I know my experience is biased since I am generally recruiting candidates who are currently employed. But the best ones who are unemployed generally have options and can be selective. Will the company that wants to place them on probation for 90 days be as appealing as the company that is all in?

  • http://hirethoughts.blogspot.com/ Donna Brewington White

    @msuster:disqus Oh wait… make that THREE very happy boys!

  • marklanday

    Mark,
    Nice post. As an executive recruitment consultant, I might add that it is not necessarily the individual one hired that is bad person, but quite common a poor job fit. The CEO/company may of thought they needed A and hired A, but really needed B and hired wrong. A good recruitment consultant helps companies avoid this issue.

    Have a Happy Thanksgiving,
    Mark Landay
    Dynamic Synergy Executive Recruitment

  • http://byJess.net/ Jess Bachman

    Why would talented people be worried about a probationary period? Shouldn’t the untalented hacks be turned off by such a policy. There seems to be a marginal difference between a written rule (probation contract) and unwritten rule (hire fast, fire fast).

    Also, if we should hire fast and fire fast… shouldn’t be ‘test fast’ in between those. Not many talk about that. You can’t fire fast if employees issues take 13 months to develop.

  • http://byJess.net/ Jess Bachman

    Seems like the explicit or implicite probationary period should end well before the employee reaches any vesting cliff.

  • http://bothsidesofthetable.com msuster

    All great points. thanks.

  • http://bothsidesofthetable.com msuster

    That’s the tail wagging the dog. One GREAT hire is much more important the the tax savings benefit of anybody else. My fear is people losing out on their great hires by adding a layer of complexity.

  • http://bothsidesofthetable.com msuster

    “once the person has completed it, there is an implicit assumption that they “have made it””

    that is a GREAT point. Sends the wrong message.

  • http://bothsidesofthetable.com msuster

    that’s not always the case. If an employee is relatively new then a performance plan isn’t always required. at least not in the US (or UK). as always – check with a lawyer.

  • http://bothsidesofthetable.com msuster

    I value a quicker hire today that you *think* will perform well than a perfect hire later. In either case you only really know after a couple of months.

  • http://bothsidesofthetable.com msuster

    get rid of bad apples even more quickly than simple poor performers

  • http://bothsidesofthetable.com msuster

    ugh. too bad CEO didn’t trust your judgment here. hope you can figure out how to manage the person out as appropriate

  • http://bothsidesofthetable.com msuster

    “the best ones who are unemployed generally have options and can be selective.”

    That is exactly the point I wanted to make so thanks for adding.

    went with Xbox One. They haven’t received yet. Still 7 nights to go ;-)

  • http://bothsidesofthetable.com msuster

    makes sense. thanks.

  • http://bothsidesofthetable.com msuster

    re: “would talented people be worried about a probationary period” … I get your point but in competitive recruiting markets you don’t want any drag on ability to hire. And probation is negative psychology.

    re: “test fast” … great point!

  • http://hirethoughts.blogspot.com/ Donna Brewington White

    It seems like the CEO overriding your decision is a bigger issue than the underperforming team member, even without knowing all the details.

  • http://hirethoughts.blogspot.com/ Donna Brewington White

    Where does candid conversations with references fit into this?

  • https://www.sharegate.com/ Chris@Alexander

    Indeed. It’s now a “management challenge,” to put it in politically correct terms. Probably would make a good corollary blog post – managing the people you don’t want but are stuck with anyway…

  • https://www.sharegate.com/ Chris@Alexander

    True, but we are a small startup, so everyone knows everyone, quite well. The CEO wanted to keep this individual because of his avowed “belief in the company.” As I said, I don’t think belief is a substitute for competency, work ethic, and overall fit. That’s life in a start-up though – can’t afford to waste time being sour about it or not working with the employee, just have to get on with it and do the best we can.

  • http://blog.voicesage.com paulsweeney

    As part of the qualification process you can “prototype” by having that person solve a problem, or do a small job that is related to the central “one thing” you really need this person to be able to do. As for hire fast/ fire fast? that depends on actually knowing you have the wrong person for the job. The naonsecond you know that, act fast.

  • http://joeyevoli.com/ Joe Yevoli

    I see your point. Makes sense.

    Happy Thanksgiving, BTW

  • http://www.eliainsider.com Elia Freedman

    The first employee I ever fired left me crying. One of the most painful things I’d ever done. He was a great guy just not the right fit anymore as our business changed. I also learned how to be friendly without being friends after that. The second guy I thought would be a great fit but turned out to be a poor choice. He was gone within a couple of months after hire.

    There have been others, I’m afraid, but have always used the rule of thumb that if they make my life easier than keep him or her around, but the minute they are making more work for me it is time to go. Maybe cold but having an unemotional rule makes emotional decisions easier.

    Happy Hanukkah! Always enjoy your posts.

  • James Santagata

    Can you buy out his contract? Hopefully there was a clause in there that would allow this, either at the full value of the contract or some percentage of it. Even if there isn’t such a clause, why not approach this individual and discuss — just be careful not to have him dig in his heels and mismatch against you.

  • James Santagata

    From my experience and observation, normally this entire ssue can be avoided simply by understanding why mis-hires happen in the first place. The majority come from either (or a combination thereof) trait ascription bias, internal politics, ego and a misunderstanding of what talent as well as its limited portability due to the inability to separate talent from the system.

    Examples: Hey, this dude is a stud, he was the Sales Director at Google (etc.) so he’d make the perfect first hire for our startup sales team.

    When you are selling for Google, IBM, etc. about 90% of the sale is from your brand, team and resources. When you are selling from Puntster Analytics from Podunk Iowa, it’s all about your game and skills — talent.

    This is also clearly seem in taking the short cut of hiring from direct competitors and misattributing sucesses or failures to the person or team.

    Other examples are the filtering out / rejecting of highly qualified talent because the current interviewers / team see that person as a clear and present danger and threat to someone’s salary, position, title and/or ego.