The Single Most Important Factor Growing Businesses Get Wrong

In his seminal work, Good to Great, Jim Collins examined why some companies make the leap to greatness and others don’t. He and his team analyzed over 1,400 publicly-traded companies over a 40-year period.

How did they define greatness?

After the leap, a company had to generate cumulative stock returns that exceeded the general stock market by at least three times over 15 years — and it had to be a leap independent of its industry.

Out of the 1,400 companies studied, the team found just eleven qualified for the term "great."

The single common factor in each case? People.

Collins likens running a business to driving a bus where business owners have to decide where they’re going, how to get there, and who’s going with them. Instead of focusing on “what” or “where” the great organizations focused on “who.”

“They start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats. And they stick with that discipline—first the people, then the direction—no matter how dire the circumstances.”

It sounds simple enough, but standing up an effective personnel selection process can be challenging for many startups. Even some of the best companies in the world struggle.

For years, Google was infamous for its emphasis on GPAs and requiring job applicants to answer nearly impossible to solve brainteasers. And without a degree from MIT, Cal Tech, Stanford, or an Ivy League school, a candidate’s resume would likely get rejected out of hand.

It’s no secret that Google has a history of being incredibly choosy when selecting employees. But until recently, many aspects of their hiring processes, according to Laszlo Bock, Senior Vice President of People Operations at Google, “were a complete waste of time.”

Kim Clark, the head of selection testing for a large federal organization, provided me with some insight as to what selection best practices might be of value to fast-growing companies that need to scale their workforce.

What follows are three invaluable tips to getting your bus properly situated.

Define Your Job Positions with Science

Few founders are skilled in job analysis, the science behind effective selection practices. Though we might think we can pick the right people, we often have a skewed sense of what might make a good hire.

The key to hiring well is about person-job fit.

What amazes Kim is the number of organizations that don’t know their work at an intimate level. When an individual is a good “fit” for a job it means, above all else, they have the KSAOs — the job-related Knowledge, Skills, Abilities, and Other characteristics — that an applicant should have to successfully execute at the level the work requires.

An even better fit is when a prospect has the type of experience using those KSAOs in the work of a specific business.Kim admits that while this may sound intuitive, what is missing across many organizations is the nuance; the devil really is in the details.

Without knowing what tasks make up the work of a given job and precisely what KSAOs a person should have to be able to perform those tasks, the map you’re using to find your first or next hire is unclear and likely incomplete.

Don’t Let Culture Become a Distraction

How does a startup avoid wasting time with irrelevant hiring processes?

Kim recommends staying away from gimmicks, gut instincts, or self-report tools.

Organizational culture is a good example. Sure, culture can matter. It’s largely what helps employees connect with or use to extend the meaning of their work. But she says while a culture fit may result in some benefit for employee and organization, infrequently, does it take up the slack for an ailing set of skills.

If a business doesn’t prioritize getting people on the bus and in the right seats with the proper abilities to do their work, culture won’t do as a stand in.

In fact, she says that she has seen it weigh negatively on an otherwise healthy organization.

It’s not always useful when employees all think roughly the same about a given concept or problem – especially when it comes to creativity.

Often, hiring for culture as a priority can result in a lack of diversity of thought with a potential to stymie an organization’s ability to innovate.

Ask the Right Questions

The first place an organization should begin is determining the tasks for a given position and the KSAOs required to perform those tasks — then finding or creating assessment tools that align to them.

Kim stresses that it’s imperative that tools used for the purpose of employee selection be validated for the purpose intended or their ability to predict likely job success and their legal defensibility will be questionable.

In the absence of properly validated tools,” she warns, “people latch onto things that may lack value or be detrimental to the hiring process.

She laments the fact that personality assessments like DISC and Myers-Briggs have found their way into the selection process of many small businesses. Tools such as these may provide insight into a prospect’s personality type, but using this information as foundational in personnel selection is not advisable.

The information collected and leveraged as part of a selection process is subject to professional and legal scrutiny ranging from an educational or physical requirement to the qualifications listed in the job description itself.

And that’s a really important point.

If it’s not something that employees need upon entry to perform that job, professionally and legally, one should think carefully before using it as a decision point in the selection process.

There’s a soft, legal underbelly within this process,” Kim warns. “The last thing any business wants is an EEO (Equal Employment Opportunity) investigation. The criterion upon which an individual is selected should be job-related.

This is where many organizations can find themselves in hot water. She referenced an incident in which a hiring manager asked obscure technical questions in an effort to determine the knowledge of a candidate.

This common practice is the kind of gimmick that can get you into trouble if it’s used as a criterion for making a hiring decision,” Kim says. “You can’t just dream this stuff up. It has to be a valid predictor.” 

For any organization to effectively scale, the use of valid employee selection instruments is a vital part of establishing a sound hiring process.

Beyond the potential legal ramifications, valid and reliable selection processes should be a critical component of any talent acquisition strategy because, at the end of the day, you want the right people on your bus.