3 Key Points in this Episode:
- Finding talented people is only part of the solution.
- You also need an expert system to operate your business with.
- The solution is found when you combine talented people and an expert system in a specific way.
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Episode 114: There are two competing ideas about hiring people. On one side of the spectrum is the idea that you should hire the best and most talented people possible. On the other side of the spectrum is the idea that you should build an expert system and hire the lowest possible talent level required to run the system.
Both extremes come with advantages and disadvantages and as with most things finding some middle ground and using common sense seems to be the best way forward.
In this episode, I will deconstruct the two extremes and explain what I think is the solution.
Finding Talented People
The idea is relatively simple and seems to be self-evident.
Find the most talented people you can, and this will lead to business success.
It doesn’t take very long to discover that this thesis has some problems with it.
Talk to any business owner who hired people and tried to scale their business only to let those people go and got small again and you will understand why this is much easier said than done.
Here are the core problems with the thesis of finding talented people:
- Pareto’s principle states that 80% of the outcomes are produced by 20% of the people. This means that the “top people” in any field are going to be fiercely competed over by all the businesses you are competing with.
- The economic principle of supply and demand dictates that things that are in high demand and low supply will be at a premium price. This means that “top people” are expensive.
- If you successfully outbid your competitors and hire “top talent” you will reap the rewards of their talent only if you can keep them on your team. Frequently competitors will lure “top talent” away.
- When you solely rely on “top talent” you are at the mercy of these individuals. Often these people can be very demanding on you and the rest of your team and this can cause you to lose very good people along the way only to have the “top talent” leave as well.
But, what choice do I have you may think?
The System is the Solution
On the other end of the spectrum, we have the thesis that Michael E. Gerber put forth in 1977 when he launched the Michael Thomas Corporation which later became E-Myth Worldwide.
In his legendary books the E-Myth Revisited, Awakening the Entrepreneur Within and Beyond the E-Myth, Michael explains why creating an expert business system is so powerfully effective.
You can listen to Michael E. Gerber’s interview on this podcast by going to episode 64. (Link is in the show notes.)
Anyone who questions the validity of this approach need go further than one of the 36000 McDonald’s restaurants and consider the $21 Billion in annual revenue that is generated by a staff that is primarily made up of teenagers and other people who work at minimum wage.
It doesn’t take a lot of work to uncover a problem with this thesis, all you must do is revisit that last comment I made.
Here are the core problems with the thesis of developing an expert system:
- I have never met anyone who aspires to work at McDonald’s. Systemized jobs are low-income jobs and are a stepping stone at best for people who are looking to better themselves and at worst a method of systematically keeping people below the poverty line.
- An expert system is only developed if you have talented people who apply themselves diligently to its creation. Even if you attend Michael E. Gerber’s entrepreneurial trade school (Radical U) you still need to possess a level of talent to apply what you learn and the discipline to follow through.
- Technology is rapidly replacing those types of positions leaving only the jobs that require more education, experience, emotional intelligence, and well talent so if you focus on this to the exclusion of everything else you will be back at square one very soon.
If focusing exclusively on finding talented people is not the solution and developing an expert business system is not the solution, how do we address the issue of finding talent and building a better business?
After the break, I am going to explain why combining talented people with the development of an expert system is the solution and how to do it.
This episode is sponsored by:
This episode is sponsored in part by the Build a Better Business Blog.
Go to jamieirvine.ca/blog today for in-depth articles that will help you build a better business.
Talented People + Expert Business System = Better Business
We are back from our break, now before the break, I promised I would tell you how to combine talented people and an expert system to build a better business.
So many business leaders – executives and owners – have expressed the same frustration with finding and keeping “good people.”
I really believe that solving the “people” issue requires us to use multiple disciplines and combining the best aspects of several solutions. This is the formula that I believe you must use to win the talent war and build a better business.
Step 1 – Identify the Core Positions You’ll Need to Build a Better Business
Who do you really admire in business?
Steve Jobs, Oprah Winfrey, Sam Walton, Ray Kroc, Jeff Bezos, Mark Zuckerberg, Tony Robbins, Ray Dalio, Warren Buffet, Beyoncé, Arianna Huffington, Bill Gates, Sara Blakely…
Do you know what all these people have in common?
They all developed a core team of people who helped them build their amazing businesses.
Speaking of Tony Robbins, he teaches that every business requires three people to be successful. The artist, the manager, and the entrepreneur.
Which one are you?
If you’re not sure you can take Tony’s test. It’s called What is Your Business Identity and the link is in the show notes.
I’m an Entrepreneur according to Tony’s test so that means that in my team I need at least one artist and one manager to make my core team complete.
The point is that you are going to need talented people in these positions that you can trust to be successful.
Step 2 – Develop a Personality Profile for Each of Position
Just because you know what the position is called is not enough. It’s fine to say, “I’m an Entrepreneur and my best friend John is the Manager and his kid sister is the Artist.”
But what exactly does that mean for your business?
Defining the personality profile of these core positions on your team is essential to identify whether you should make John the Manager. After testing him you might find that he is not a good fit in this position.
The Artist on your team needs to be able to deliver on the businesses promise of providing the ideal customers with exactly what they need, want and will delight them. John’s kid sister may have an artistic flair but may or may not have the drive and energy needed to take your business to the next level.
You’ve got to know what you’re aiming for when making these critical decisions otherwise you will never be able to find the talent you need to be successful.
To learn more about the profile-first approach go to jamieirvine.ca/profile.
Step 3 – Find People That Fit the Profile
It can be tempting to rely on your gut and look for people that you know personally. Just because you know someone does not mean they are right for the position.
You need to build a scientifically accurate personality profile for the position, and you need to test every candidate and trust the results.
That may mean that when you test your existing employees you may find that the people you have in senior positions are not a good fit and employees that you would never think of are the people you should be training for these senior positions.
I’ve been told by my friends at Screen2Fit by Profile, long-time sponsors of this podcast, that in at least one occasion the janitor turned out to be the closest match for a senior management position.
In this occasion, the janitor needed a lot of training and a few years to build up the necessary experience but once this employee completed the training and got the experience, they were one of the most successful senior managers in the company’s history.
This is one of the beautiful things about the profile-first approach, it allows you to find talented people in unusual places, places that your competition is not looking in and that means you can scoop them up at a reduced cost. Supply and demand can work against you but in this instance, it works for you.
Step 4 – Build an Expert System
Now that you have your core team in place it is time to put them to work on developing an expert business system.
The best way I can define an “expert business system” is by referencing the movie The Founder staring Michael Keaton as Ray Kroc. Ray Kroc was in his 50’s and he sold ice cream machines to restaurants.
One day he met the McDonald’s brothers and he was amazed at what he saw. Things that took other restaurants 30-minutes to accomplish these guys were doing in 30-seconds.
Ray Kroc is then invited by the McDonald’s brothers to come into the restaurant and see “how they do things around here.” I’ll let you watch the movie to see how the rest of the story unfolds but the point is that everything that Ray Kroc saw that day was like magic.
This restaurant was filled with teenagers, but they moved in perfect synchronicity and maximum efficiency and he saw things that were simple but innovative. An example is how they applied the exact amount of ketchup and mustard simultaneously.
The McDonald’s brothers hadn’t figured out how to make the best hamburger, fries, and milkshakes. They had figured out how to be the best at serving hamburgers, fries, and milkshakes. They built an expert business system and so can you.
No matter what products or services your business sells there is a way to do it better than everyone else. You just need the discipline to figure out what that way is and then document it, call it a system, and teach your employees how to do it using the system.
Once you have this in place you can hire people with little to no education and experience and if they follow the system, they will produce consistent results. Put enough people together following that system and your business will produce consistent results.
The best part about developing an expert system is that you can help people who otherwise may struggle to find work that will adequately pay for their lives and you can teach them how to be proficient at a job that empowers them to rise above the poverty line and into the middle class.
I did this in my contracting business, and we cleaned gutters, windows, and power washed driveways. So, if I can accomplish it with that kind of business can’t you change the lives of good people who need a helping hand to elevate their standard of living?
Of course, you can.
Step 5 – Aim for the Bottom of the Top 20%
Going back to Pareto’s Principle I want to highlight something important to realize.
While it is true that the top 20% of people produce 80% of the outcomes it is also true that the top 4% of people produce the most outcomes out of the top 20%.
With an expert business system in place, you can aim for the bottom of the top 20%, something no other competitor will be purposefully doing, and you can empower those people to produce more than if they went to work for a competitor without a system in place.
Trust me, most of your competitors do not have a system in place.
This is a strategy that looks like pure genius when you execute on it and most people will not understand how you are getting so much more out of your people than they are.
I’ll give you a brief example.
One of my clients that I coach recently took over a new location.
The salesperson that works there was consistently hitting 95% of their budget which meant they weren’t getting any commission, but they were producing profitable results. If they were to be rank ordered with the rest of the salespeople, they would be hovering at the 20-percentile mark.
Within 9-months of my client instituting their system this salesperson is consistently hitting 120% of the budget, making commission, and now would be rank ordered in the top 10% of producers on that sales team.
A system was introduced, and the salesperson benefitted but so did the location. This location went from being in the bottom for results to the highest producing location in the region.
The point I am making is this:
Talented people in the leadership group that meet a specified personality profile working on developing an expert business system takes the pressure off finding “top people” and allows the business to find people in unexpected places at a reduced cost who once trained with the system will produce exceptional results.
This brings episode 114 to a conclusion.
On Tuesday, I am going to interview Dr. Ken Keis and we discuss how to become self-aware and why as a business leader this is so critical to building a better business.
Talk to you on Tuesday.
This podcast sponsored by:
If you are hiring a new employee, I highly recommend that you use the Screen2Fit recruitment platform by Pro.File.
I use FreeeUp to find high-quality freelancers to help me run my business and you should as well.
Every business needs a website and I have used Gerrit and Trackstar Web Design since 2012 and so should you.
I use Process Street to create systems in my business and I highly recommend that you use Process Street as well.
Thank you for listening and I look forward to talking with you soon.