Hey everyone, this is Steli Efti with Close.io.
And in today’s video I'm gonna share a lesson I learned from Jack Welch, the infamous manager
and CEO of General Electric back in the day, of how to identify and categorize talent for
your business.
And I'm gonna share one of the biggest weaknesses in my personal hiring, and how I overcame
that weakness and making that mistake, unfortunately repeatedly again and again and again.
So we're gonna talk about hiring.
And this is gonna be broadly applicable to all businesses, but I'm obviously talking
about it from the perspective of a startup founder.
So let’s start with the framework that I think is incredibly useful that I learned
from Jack Welch.
The framework is very simple; it's basically a quadrant.
And you put people into one of those four buckets.
There are the capable and willing, those people are rock stars.
They know how to do their job, they're amazing at what they do and they have a great attitude
about it.
You know, they come and they are a culture fit.
They have an amazing an attitude.
They are can do positive people, and they're there to do the job and they know how to do
it damn well.
Well, those are the rock stars, everybody has an easy time.
Any company that competes with you, and company around the world has a fairly easy time spotting
these people because they standout so massively.
No company has a tough time identifying these people.
Most companies are going after these types of people.
And some companies that are great, they are able to hire them.
The next bucket at the top of the right of the quadrant are the capable, but not willing.
Those could be categorized as the assholes, right?
There is the no asshole factor, or whatever the book is called.
Has a lot been written about these people that are great at what they do, they have
the experience, they have the network, they have the knowledge, they're amazing at the
work, but they are toxic for the business.
They just have a shitty attitude.
They're political.
They're vicious.
They're gonna go behind your back.
They're gonna create a negative attitude.
They're going to complain and bitch.
They're going to have problems.
They're not gonna show up.
They're attitude just stinks.
These people are not as easy to identify, and even worse for most businesses I would
say around the world, these are the most dangerous hires.
Because businesses are so blinded by their skills that they tend to either close their
eyes to the non-willingness, or pretend it's not as important, or just ignore it, or try
to live with it and compromise around it.
This is a point where lots of businesses make their biggest hiring mistakes.
They’ll hire somebody super senior, with an amazing skill set that is toxic as a personality
for your culture and business, and that person brings down the entire company, and in many
cases might destroy the entire business.
Fortunately enough for me, I never had a problem with these type of people.
Because I have such sensitivity to assholeness, I guess, that I don’t care how experienced
you are.
I don’t care how amazing you are at what you do, if I don’t like you, if we don’t
jive.
If I feel that you are arrogant, an asshole, or you have an attitude, I'm not tempted to
hire you.
I'm not struggling.
I'm not internally conflicted at all.
So I never made a hiring error on that end.
So moving forward with our quadrant, the next at the bottom left are the willing, but not
yet capable.
Those are the underdogs.
Those are the people that have heart, that have passion, that have a great attitude,
that are hungry, that want it, but they're not quite there yet.
And in some cases they are far away from getting there any time soon.
That and those people are my kryptonite because I'm probably one of those people, and I've
been one of those people for most of my life, the underdog.
These are the people where I make most of my hiring mistakes as a founder, and I will
elaborate on that in a second.
But I think that these are also the people that have the biggest potential for growth,
the biggest opportunity there.
You know, for the rock stars, you get a dollar, but you probably have to pay .90 cents to
get that dollar back.
For the underdogs, you might just pay .10 cents and get a dollar back if it pays off.
They are the high potentials for growth.
They're not yet realized potential is massive, so you might be able to snatch them and invest
in them and get the returns on that investment with almost no competition because nobody
else sees that potential yet in them.
So there's great opportunity there, but there's also great risk, and the risk is something
that I totally miss managed in my past, and we’ll talk about that in a second.
And then the bottom right of the quadrant are the non-willing and non-capable.
These are, I don't know what you want to call them, these are the obvious, you know, bad
fits.
I really restrain myself from calling them many other names.
These are the people that every business has an easy time identifying as a no.
This is person has a bad attitude and they don’t know what they're doing, no, we're
not gonna hire this person.
They're totally under qualified and we don’t like them on top of it.
So if you look again at the quadrant, the willing and capable, rock stars, everybody
has an easy time identifying them.
The unwilling and incapable, you know, the ones that are just bad and nobody has a problem
identifying that.
So these two corners of the quadrant are easy to identify.
It’s the other two quadrants, the capable but not willing, and the willing, but not
capable, where both the biggest risk and the biggest opportunities lie, on both ends actually.
I would just say that if you have somebody capable, but not willing, just don’t hire
them.
That’s all my philosophy.
Don’t try to change somebody’s attitude, to change somebody’s personality.
To take somebody that is a huge egomaniac asshole and turn them into a great person,
that’s a huge task, probably too big to handle, so I wouldn’t even attempt that.
Just don’t work with these people.
But when it comes to the willing, but not yet capable, there it's a lot more nuanced.
I think those are the people that you need to focus on in terms of figuring out how to
get both the best of them, and invest and take chances there, but also cut your losses
and make sure you don't waste any time because that was the biggest problem that I had as
a founder.
So as I said I've had my whole life a huge soft spot for the underdog, for the willing,
but not capable, probably because I identify with those people.
Early in my entrepreneurial career, I had a big ah-ha moment with one of the biggest
kind of willing but not capable hires that I had made, this is now over ten years ago.
I'm like 19 years old.
I'm hiring this guy that has just a beautiful heart, great personality, somebody lost all
their money, not just all their money, but betted really high on the stock market, and
had a massive amount of debt.
He had family and children and was just as hungry as can be, and as humbled as can be,
and really wanted it, but he was not capable.
He couldn’t do the job.
It was for a sale position.
And although he had the work ethic and the grind and the passion, he lacked the killer
instinct.
He lacked the ability to close.
He lacked follow up and follow through.
He lacked the hustle, not form a work ethic perspective, but from a being courageous and
taking changes and going for it, from that perspective.
So for over a year I was working with him and he was constantly underperforming.
And I spent late nights at the office coaching and training him.
And I spent weekends just with him setting up game plans and coaching him and helping
him follow up with people.
I invested more in him than in anybody else on my team during that year, although he was
giving me the least return.
That alone was just pure stupidity.
But then what happened was very surprising to me.
I thought, my God, here I am.
What a great human being I am.
I'm giving this person chances over chances over chances.
This person must appreciate me to death.
And he was telling me always how much he appreciated all the work that I put in to him.
And then I would – he would finally come through and prove me right.
But eventually after a year, even I ran out of passion and patience.
And I told him I feel like we're wasting a lot of time and energy.
We're taking time away from you and your family.
And we're taking away time from me and my top performers.
And both of us need to see a return, otherwise we can't justify keep investing in this.
So I'll give you two more months, we're gonna set some very realistic goals.
And then if you accomplish them good, we're gonna keep working together, if not we're
gonna have to part ways.
And he agreed.
And he set some goals for himself that I thought were ridiculous and not realistic, and I negotiated
with him even to bring down the goals to something that’s easier to accomplish.
And then, he worked really hard for two months and he didn't deliver.
And I let go of him.
We split ways.
You know what the surprising thing was to me; the surprising thing to me was that he
was pissed at me.
Yeah, he was angry at me.
He was pissed; he felt he deserved another last chance.
He felt that he had come short to the goal to 100 and he reached 80.
We set the goal to 100 and he reached 20.
He was like, “Well, I didn't quite reach the 100, but I accomplished something more
than before.”
He was pissed at me.
He didn't talk to me for six months.
He was angry at me.
That blew my mind.
I was like holly shit, what the fuck is going on here?
What is wrong with this person?
Can somebody be more ungrateful than this?
What I've learned over the years, because this is not the first time that I made this
mistake, it was the first and only time where it took me over a year to correct my mistake.
But I've made this mistake many many times and I would say he was the worst example,
maybe the next person I hired I stuck around for six months until we parted ways, and then
three months.
And today after over a decade of making this mistake, I've gotten so good at knowing that
this is kryptonite, a soft spot, something I'm really bad at that I'm bringing other
people to help balance me out.
And I've become so sensitive to this that I do give people chances, but I'm very fast
to pull the trigger if the trajectory is not great to split ways.
But the funny thing that I've learned working with a few people like this is that they were
always angry, always angry.
So what I learned is that it was not that particular person, today we're friends and
the relationship is at a really good point and he’s a great person.
But what I learned, at first I didn't know I was confused, was that it was not him.
It's that when you work with somebody that has willingness, but they're not quite yet
ready to execute on the level you need them to, and you keep investing in them, what you
do is you feed their hopes.
You make them belief that they will get there.
And the more time they're not getting there, the more time they invest in it, the more
invested they are.
And then it becomes very hard for them to just say: well, this person gave me all the
chances in the world and I fucked up, it's 100 percent on me, I'll let it go.
They feel like they worked so hard for you, they invested so much.
They’ve grown so much that you owe it to them to give them one more chance.
And I think that that’s a justified feeling.
You fed – and I did this – I fed his hopes for way too long.
And then I expected him to be all of a sudden be like: all right, that didn't work out.
No, I gave him false hope for way too long.
And I pushed him to invest so much time into something that wasn’t working that he was
way too invested to just let it go.
I didn't realize it at the time, but over the years I've learned to manage this.
So today how do I deal with people that are willing but not yet capable?
Well, first of all I asked myself what is the Delta X?
What is the not capable gap that we will need to fill?
How big is that gap, and then how much time do we have to fill it?
How many moths am I okay working with this person, or weeks, without them having reached
their full potential and operating at their full potential, and at the level that I need
them to?
I'm just trying to be a lot more realistic about it.
And then, I've just learned to be a lot harsher on my own judgment.
So if I think – I think this person could get there in three months, I just double it
and say: well, they're most likely going to get there maybe in six months.
Am I still cool with it?
And if the answer is no, then let’s not do it.
And this is the most important part; I cut the losses for both sides much faster.
You know, when you're a trader, the number one rule if you want to be a great investor
is don’t lose money.
And rule number two is don’t lose money.
And rule number three is look at rule number one and two, right?
Not losing money is incredibly crucial if you want to be a great investor, much more
so than just making a lot of money, is not losing the money that you made.
But in the same way I've learned to be very very sensitive to cutting both losses very
early.
If the trend is not exceptionally well, if the trend is not: wow, this person is really
a growth stock.
And that person is really growing in this environment with the help that I can offer
to reach their full potential realy really fast, then we both need to cut our losses.
And this person needs to be put in an environment where they can be all they can be all they
can be, and I need to find somebody that can deliver that to my business and my team.
It's a waste for both sides, it's not one sided.
So today when I start working with somebody like that, I'll invest, but I'm much harsher
on the return and the growth that I demand immediately.
And if I don’t see that, if the trajectory is not off the charts from the get go, we
need to cut our losses, usually it's within two weeks, within two weeks I know.
And I hate to cut my losses.
I hate to let go of a great human being, somebody that’s willing and hungry, but not yet capable.
But it’s not about me, it's not about if I like to do this or not.
It's about what is right for them and what is right for the business and the team, what's
right for the greater good, not just my personal convenience or beliefs, or not wanting to
let go of people that I find great on a personal level, but are not delivering for the business.
I don't know if this was helpful?
I hope so.
But I feel like this has been something that I've struggled with my entire life.
That quadrant that I shared from Jack Welch is something that has helped me identify talent
and categorize it to a degree to make better decisions and understand where my weak spots
are as I'm trying to identify talent.
And then realizing where my soft spot and my weak point are when I try to evaluate people
and hire people.
And learning to improve on that has been huge for my business; it’s made a massive difference
to my business and my life.
And I felt, you know, if I struggle with this I'm sure lots of other founders went there
a similar journey.
I would love to hear your thoughts and the comments, what was your journey like?
What are the hires that you're struggling with and that you have made mistakes within
the past?
I don't know you want to talk personal one on one just shoot me an email, it's Steli@close.io.
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