Overpay the Underqualified

Paying above market wages

Henry Ford did it.  In 1914, he paid his employees $5/day, when the prevailing wage was $0.25/hour.  (That’s more than double the going rate, for my readers who didn’t tote their calculator this morning.)  Among other things, it allowed his employees to afford his automobiles.

Costco‘s paying roughly 40% more than its competition today.  They believe it’s the right thing to do.

If you provide a living wage and affordable, quality health care, you’ll get the best employees, which in the long term makes business sense as well.

Few of my clients are the size of Costco, and readers can’t afford to offer employer-paid health care.  More than a few, however, have learned that shaving nickels off the payroll winds up costing more in the long run.  (We’ll talk about voluntary workplace benefits in another post.)

Overpay the under-qualified

The presumption in this exercise is that you have found someone who can do a good-enough job, and you’d rather keep that person than to have to search through that particular labor pool again in the near future.

We’ll use the federal minimum wage to make it straightforward.  Higher wages only tip the equation more in favor of higher wages…

$7.25/hour = $15,080 on a full working year.

$8.25/hour = $17,160

The difference is $2080.

Allowing the cost of replacing a worker is 30% of a year’s wages (which is the low end of the estimates), replacing a minimum wage worker can cost $4524.

Keeping that worker happy by paying $1.00 more per hour could save $2444.  (I’ll admit–I’m stretching this a bit.  You’ll make back just a little of this money by NOT paying the absent worker, but you also won’t get her work done or will have to do it yourself.  You also have to pay a bit more in employer-paid taxes on the higher wage.)

Of course, you can extend this to the point of ridiculousness, but you can find a balance point.

Underpay the over-qualified

Employers who have ready access to a highly competent labor pool sometimes work the reverse method:  hiring overqualified people to work in fairly simple and straightforward jobs.  These employers use the argument that they get so much MORE work out of the overqualified that they make up what they lose in turnover costs. You’ll see this happening in university towns, especially if the employer can offer flexible work arrangements.

You get to decide.  If the process of recruiting and interviewing is something you really dislike, make sure you do everything you can to keep your good workers happy.  Paying above-market wages may be less expensive than you thought.

Systems vs. Superstars

Systems vs. Superstars

In an older post titled Big Macs vs. the Naked Chef, Joel Spolsky wrote about the difficulty in taking high quality output from talented employees and designing systems so that “anyone” can do the work. He compares McDonald’s and the Naked Chef, which is, perhaps, pushing the outer edges of a metaphor, and comes to the following conclusion:

  1. Some things need talent to do really well.
  2. It’s hard to scale talent.
  3. One way people try to scale talent is by having the talent create rules for the untalented to follow.
  4. The quality of the resulting product is very low.

I agree with Joel (never a bad idea, overall; he’s smart and he makes more money than I do) up to the fourth point.

There are a WHOLE lot of steps between “work that only the best employees can do well” and “creating low quality output because employees followed rules to do their work.”  Agreed, I don’t want Joe Blow off the street following a rule book to perform my next knee surgery.  But I do hope the OR employees follow a checklist to make sure the operating theater is set up correctly in between patients.  (For that matter, most of medicine as we practice it in the US today is a system of rules-based scaling of talent.  Not that it’s perfect–just that medical care would be MUCH more expensive, and less effective,  if every health care worker had to invent every treatment each time a new patient entered the system.)

In his article, Joel seems to overlook the idea that he himself is no longer writing much code–that he has created a system (of sorts) that the people he hired can follow to create great products. While he may not have created an idiot-proof methodology, his employees share a way of working that allows them to not reinvent the wheel every time they do something more than once.

Quality is not the same as excellence

While I rarely eat at McDonald’s, I’m not so quick to say that their employees produce a “low quality” product. “Quality” is a big word, and strictly speaking, it usually means “conformance to specifications.” (In the productivity lexicon, it is “excellence” that is used to describe how truly great a product is.) In other words, McDonald’s serves high-quality, low-excellence food  (although their new coffee is certainly giving Starbucks a run for their money on the “excellence” front!), while the Naked Chef prepares food that is usually excellent, and sometimes lower quality.

What does this mean to you?

Chances are, you can’t afford too many superstar employees (besides yourself).  Working IN the business is the process of turning your skills and gifts into revenue.  Working ON the business is the process of scaling your talent so that a) your employees can do what you do and b) their work increases the business’ revenue.

If you can afford a superstar or two, part of their work should be to figure out how to document / design / structure / systematize what it is that they do so that someone other than themselves can do it.  Ideally, your superstar employee will want to do some part of this transfer, although, unfortunately, many of them are not really good at step-by-step documentation.  People who like “figuring things out” are often much happier if they can keep figuring NEW things out, while handing off the work they “already figured out” to someone else who likes doing the same things the same way.  (Not to plug my own work, but “documenting the hand-off” is what I do.)

Note:  If your business is tech-intensive, particularly if you hire people to create software, I highly recommend reading most of what Joel Spolsky writes / has written (he recently gave up his regular column at Inc. Magazine to Jason Fried from 37Signals.com to focus more on growing his business).  In addition, the job boards at StackOverflow are a good place to find programmers.  If your business is less NYC and more service-intensive than software product, some of what he writes about won’t be applicable to you.

Where is your business on the systems vs. superstars continuum?  Let me know in the comments.  Thanks!

Hire for Attitude

When “happy” matters, hire “happy!”

Writing for QSR Magazine online (Quick Service Restaurants), columnist George Green discussed understanding the difference between what you say your business delivers (“good food”) and what you need in order to achieve that target (“the right people”).

Plenty of quick service, franchise restaurants have a well-defined operations manual that describes how everything happens as the food moves from the cooler to the carry-out bag.  In a perfect world, the dinner you get in Des Moines will be identical to the one you get in Decatur (or Goldston and Goldsboro, to use an example closer to home).  If only executing a process was as easy as documenting it!

At some point, I’ll write more about the on-line system that Green uses to pre-screen applicants.  It’s possible to create something functionally similar, if not quite so automated, for micro businesses that are still dreaming of having franchisees.

George Green knows what a lot of new employers spend a lot of time and money learning:

… most of what our team members do is pretty simple and easy to teach. A positive outlook and happiness, however, cannot be taught.

When you identify what skills or attitudes a candidate MUST have to do your work, you need to build your selection process around finding people with those attributes.  If you’ve ever had the misfortune of stopping at a quick service restaurant where the staff didn’t get along, you know how important “hiring for happy” can be!

While “happy” may not be the decisive attitude for every position, it is important that you think about how attitude matters to a position, and also whether any attitudes are deal-breakers.  Include questions to look for both types of attitude in your interview plan.

Limits to training

Traditionally, HR advice is to “hire for attitude and train for skill,” but there is a limit on how much you can (afford to) do with training.  When George says,

Call me crazy, but I’d also rather have a rookie I can teach than someone who learned the wrong way.

you need to remember what job it is that he’s talking about–burgers or sandwiches or pizza, not accounting or paralegal or child care. Quick service restaurant franchise business models are designed to accommodate turnover that would make your head spin (between 60% and 140%) and rapid training of new employees. When you’re just starting out, you don’t have the time for much training.

For businesses with fewer than 10 employees, time spent training new employees is generally time not spent generating revenue.  More than one new employer has discovered that the money saved on a “low cost” employee was swamped by the cost of training that person to work at the level the business needed.

Understanding where your business falls on the ladder between solopreneurship / start-up and “too big for the Small Business Administration” can help you process other people’s advice about hiring and systems.  In the beginning, you generally need people who can build systems more than people who can be trained to follow systems.

What’s more important in your business–finding people with the right attitude, or a particular skill set?  Let me know in the comments!  thx

Hire for Skill

Saw this tweet come across my twitter stream today:

Skills are easier to learn than attitude and talents. Avoid employers who hire for skills. Message is “we are unwilling to invest in you.”

A bit of research indicates it’s probably a retweet from a Norm Brodsky quotation in this year’s Inc 500 issue:

“Hire for attitude not skills. Skills can be taught” – Norm Brodsky at #Inc5000

Given the current unemployment rate, not sure how many people looking for work actually have the choice of “avoiding employers who hire for skills,” frankly. But I am sure that few small businesses can afford to “buy” this advice. Skills can be taught, true, WHEN you have created a training system. Not before. And most definitely, NOT WHILE you are creating the training system, or if you are hiring someone to create the training system…


Twitter makes me do that sometimes. The MUNDanity of it is tolerable, on a good day. It’s the INanity that gets me.


In yesterday’s post, I said:

For businesses with fewer than 10 employees, time spent training new employees is generally time not spent generating revenue.  More than one new employer has discovered that the money saved on a “low cost” employee was swamped by the cost of training that person to work at the level the business needed.

The truth is, even Norm Brodsky doesn’t exactly hire for attitude only. I’ll bet my next system sale that he doesn’t hire A/P clerks who haven’t ever handled money before. Warehouse staff, maybe. (He runs a records management business that serves clients with offices in NYC.) But not the money people. In The Knack, he said he hires sales people with selling experience.

  • Howard Schultz (Starbucks) hired people who knew how to take a small food-service business to a much larger position.  (Starbucks has an excellent training program for front-line employees, but they hire demonstrated skill at HQ.)
  • Sam Walton (Wal-Mart) hired people who knew retail, and within that subset, discount retail, as he was building his empire in the midwest.

In the United States, the US Army and McDonald’s Corporation are known for their ability to take raw, unskilled “new hires” and turn them into productive members of the organization. If your training division resembles those of the Army and McDonald’s, you can, too.  Until then, hire people who already know how to do what you need them to do.  You may need to spend a little time showing a new hire exactly HOW you want that skill used in your business, but you don’t need to be teaching them the skill itself.

How has hiring “skill” vs. “attitude” worked out for you?  Let me know in the comments… thx!

Hiring Talent

Hiring Talent

Taking another shot at the overall area of “skills vs. attitude” brings me to the troublesome world of “talent.”  It’s a big place:

  • in the entertainment industry, “talent” is the guy who can play the guitar.  The driver, the source of all the money, and yet, not the person who can make the money happen on her own.
  • in conversation, we use “talented” to describe people who can do things (sing, draw, paint, win at sports) that we can’t imagine being good at
  • in HR-talk, particularly “hiring A-Team books,” “talent” is used to refer to that set of skills that some candidates are naturally good at.

Mostly, I try to avoid the word altogether.  It’s dangerous.

<vocab junkie alert ON> Relatively small (six letters), “talent” can slip into conversation as a marker carrying all sorts of associated baggage.  Big hairy words (“colloquially,” which I tried to use in this post already and couldn’t spell without the aid of spell checker) get your attention.  Actually, the bigger the word, usually, the more exacting and specific its definition.  Small words (“ran”) are the ones with the humongous dictionary definitions. <vocab alert OFF>

We think of “talent” as a natural gift, something we either have or don’t have, are born with or without.  There is still an amount of mystery surrounding how a particular person is drawn to a particular field (art, music, management), but there’s not much doubt left about what, in the end, makes someone “talented.”

Several recent books (Talent is Overrated, Talent is Never Enough, Bounce, Outliers) make the case that talent is simply skill that’s been practiced.  10,000 hours appears to be the consensus–Mozart, Tiger, Venus & Serena–people who are good at what they do have been doing it, with attention and direction, more than you have.  You, too, can swing like a pro–if you put 10,000 hours (that’s five full-time years, by the way) on the links.  Practicing–not playing.  Trying to get better at golf.

  • NOT enjoying the day (although that can happen)
  • NOT hanging out with your friends (although one hopes you like your coach)
  • NOT getting some exercise (“working out,” per se, comes in addition to the 10,000 hours, not as part of)

Back to hiring, and talent, and hiring talent

When it comes to hiring people who are gifted in areas you are not, it may be helpful to think of their “talent” as “applied practice.”  Sometimes, you simply need to hire the result of those hours–some scientists, entertainers, certainly.  But when you are looking for a team player to produce a certain result, you may want to look for the person who understands how his practice contributed to his mastery.  These people can often help your other employees improve their level of mastery through practice, too.

On  being talented at hiring

Is there another way to apply this thinking to your business?  Anyone you know who appears to be “good at hiring” is good at hiring because he or she learned.  Nobody’s born knowing “how to hire.”  It may take more than a few years, and employees, before your business has invested 10,000 total hours in hiring (10 years in business, 5 employees–that’s 100,000 hours in the business), but it could happen.  And if you approach hiring as a skill that can be learned, through practice and coaching and attention to working on the troubled bits, you’ll make progress a whole lot faster.

What have you done to learn how to hire or to improve your hiring process?  Let me know in the comments!  thx

Shackleton’s Help Wanted Ad

I’m writing on Columbus Day, and I don’t know anything about how he hired sailors for his ships.  Thinking about explorers and staffing expeditions made me think about the most famous help-wanted ad ever:

“Men wanted for hazardous journey. Low wages, bitter cold, long hours of complete darkness. Safe return doubtful. Honour and recognition in event of success.”

A little bit of research indicates the ad may, unfortunately, be fictitious.  No-one has been able to find the newspaper in which it supposedly ran.  The way the story played out, however, suggests Shackleton may have used something similar to find the crew for his epic journey.  (OTOH, he wasn’t planning on staying over the winter–that was the “safe return doubtful” bit–so why would he have mentioned “long hours of complete darkness?”  In the summer, Antarctica actually has “long hours of endless daylight.”)

Supposedly, he received over 5,000 responses, although a review of the history indicates that reporters may have confused his several trips to the south.  No-one mentions exactly how he managed to sort through 5,000 resumes.

Reading the ad more than 100 years later, having been to Antarctica (and his famous hut) myself, my response goes in two directions.

How Shackleton would write the ad today

(or rather, how Monster.com would make him run it)

People wanted for hazardous journey.  Minimum wage.  OSHA investigating working conditions.

(I need to research how the crabbers on “the world’s most dangerous jobs” get around their working conditions, which are still better than any of the polar explorations.)

How this ad can work for you today

Don’t sell.  Challenge.  At the turn of the previous century, polar exploration was the Moon Race of the day.  Everyone wanted to be a part of it.  Everyone wanted to contribute.  Getting to the pole was good, and you had to make it back alive or no-one would believe you.  5,000 applications for a minimum wage job.

Writing for AllBusiness.com, Peter Horan was struck by the power of Shackleton’s ad as well.  Although 2006 was more of an employee’s market than it is today, his point is still valid:

In my experience, great people want to do great things. The German poet Goethe admonished us to “Dream no small dreams. because they have no power to move the hearts of men.” Dream big dreams for your business and invite your employees to share them. Not just for scale and sales but for quality, innovation and service. The best people will always want to be part of your team.

If your business has a mission and a challenge and a call to change the world, let people know how important and hard your work is.  You’ll get better candidates for it.

What challenge can you include in your next help wanted ad?  Let me know in the comments–Thanks!

Confirmation bias in interviewing

Confirmation Bias in Interviewing

Confirmation bias is the practice of paying attention to data that supports your idea and ignoring data that conflicts.  People who write about statistics and gambling (pretty similar topics) almost always address confirmation bias sooner or later (see The Black Swan, Taleb, and The House Advantage, Ma, for examples).

When people tell you who they are, believe them.  Maya Angelou

One place that confirmation bias intersects with small business success is hiring.  When I found Eric Rudolph’s post about about interviewing for small business owners

first, ask good questions, and second, demand good answers,

I realized I needed to write more.

Eric’s article mostly focuses on asking good questions, and while that’s important, that’s not the point of this post.  Listening for and believing the answers you get is much more important than asking the perfect question.  OTOH, before you can believe an answer, you have to ask a question that has an answer that can be believed.

Consider this question:

Where do you want to be in five years?

What’s likely is that you’ll hear something the candidate made up, or prepared, that “sounds good”–marketing director.  Office manager.  An answer that shows ambition, perhaps a good work ethic, and sounds like something you imagine you might have said.  But “sounds good” is confirmation bias at work.  “Sounds good” means you have credited this candidate with interview points, simply because he said something that you think is a “right” answer.

How will ANY answer to “where do you want to be in five years?” provide useful information about how well a candidate will be able to answer the telephone in your office?

Now consider this question (I know, it’s a statement-not-a-question; hang with me here):

Tell me about a time when you had to take care of an angry customer.

No matter what a candidate says in reply, you have useful information.  Answers could indicate:

  • The candidate has NO experience with angry customers.
  • The candidate tosses gasoline on fires, figuratively.
  • The candidate understands customer service and how to create fans from fiascos.

If you’ve worked the Hiring is Hard system, you know I’m a big fan of behavioral interviewing.  It’s not the total solution for all business hiring problems, to be sure.  It can be important to ask about certain hypothetical situations you hope your employees will never encounter (hold ups or heart attacks at the restaurant; abused children at the day care center).  Targeted hypothetical questions are a completely different animal from wide open, dreams-and-plans type of questions.

What matters is that you think through the possible answers to the questions you are using when you interview.  What does a “good and useful” answer sound like?  (Try this at a sit-down networking meeting or mastermind group, if you have one.  See how other business people respond to your test questions.)  If you can’t identify a useful answer (that is, predictive of success on the job), it’s time to rethink the question and adjust your interview plan.

What’s your best predictive interview question?  Let me know in the comments.  Thx!


Eric Rudolf October 13, 2010 at 4:34 pm


First of all, thank you for referencing my interviewing article in your post. It’s hard to tell if you agree or disagree with my take . . . but thanks for the exposure just the same.

As a career small company guy who has hired (relatively speaking) a high number of people for a variety of positions, I (as my article states) am NOT a believer in anything resembling a ‘standard’ interview question. The free downloadable PDF I created, which can be linked to from my article, lists a number of predictive interview questions I regularly use. Here are some of my favorites:

1) Have you ever been given a project with very little direction on how to complete it? What did you do?

2) When you are given 10 things to do, and you only have time to do 3, how do you choose the 3?

3) If you were angry about something, how would I know?

4) Name one thing I could tell you about this job that would make you not want it anymore.

5) If you truly believed I was making a bad decision, and I refused to listen to you, what would you do?

6) Describe the most difficult person you ever worked with.

7) What do you do when you’re out-voted on an issue or idea?

A number of my friends, colleagues and co-workers have been using these questions for years, and believe their hires are much better as a result. And, as one person stated, “they make interviewing kind of fun.”

Enjoy your week.

– Eric –

Your business, your culture

Your business, your culture

Your employee policy manual.  Your training program.

Could this be your business, featured in the kind of stories you don’t need?

Cab driver fired for taking man to the hospital

Employees fired for chasing shoplifter

A few years ago, I was standing in line at a grocery store near the university when a man pushed a cart full of expensive food (meat, wine) at high speed right past us and out the door.  Two of the baggers shouted and started to give chase, but stopped as soon as the cart crossed the concrete apron outside the store.  They came back in and shook their heads at the manager, who shrugged and turned back to the office, presumably to write up a loss report.

When I mentioned the incident to friends later that evening, someone pointed out that the thief may have been armed.  No amount of groceries is worth an employee’s life.

What I witnessed was policy and training in action.  I’ll date myself by quoting Jimmy Buffet and The Peanut Butter Conspiracy.  What I saw at the grocery store that evening was orders of magnitude removed from what used to be celebrated in pop music.  While stealing an entire cart of food was, to me, astounding, it is a regular fact of life for a chain grocery store.  They covered the situation in their policy manual.  Their employees know the policy.  The grocery store does not end up on the wrong end of a newspaper story.

Now, I can understand that a taxi company may not want to write, “Do not attempt to save dying people” in their policy manual.  However, a quick search on “Baby born in taxi” finds 313,000 references.  (“Man dies in taxi” gets 364,000 hits, by the way.)  Clearly, life and death are not foreign to the taxi business.    Shoplifting is not foreign to anyone who makes money selling products.

Depending on the nature of your business, some potential risks and situations are much more predictable than you might want to think.  If you do business with the public, people will get sick in your business.  If you are in retail, people will steal your stuff.  When you hear of any situation that someone in your trade has ever faced, you have two possible responses:

  • Heavens, I hope that never happens to me!
  • My stars, if that happened here, what would I want my employees to do?

Guess which response makes for a better outcome?  Think it through, put your answer in your policy manual, and make sure your employees know the policy.

What situations have you addressed in your policy manual?  Let me know in the comments.  Thx!

Don’t not hire the unemployed

Old news, now–CNN found more than a few businesses providing overt instructions to recruiters about NOT hiring people who don’t currently have a job.  The reasoning, when it’s provided at all, is that businesses lay off their “performance problems” first, and protect people who are good workers.  Sometimes.  Not always.  Not even often–sometimes entire departments or divisions are cut, or go overseas (“offshore,” or “best shore,” in big business language), and everyone winds up looking for work, good and bad.

The truth is, when a business is overwhelmed with applicants, eliminating people who are not currently employed is simply a way to reduce the pile of resumes or applications that need to be reviewed.  Frankly, you’d do just as well, and avoid any chance of bad publicity, by taking every other, or every third, resume out of the pile and sending it straight into the round file.  Quicker, too.  This is another case of making sure your business is not on the wrong end of a news camera.


In October, 2010, it’s not illegal to discriminate on the basis of current employment status, at the federal level.  (I don’t track initiatives in all of the states.)  If unemployment is significantly higher in some protected classes than others in your part of the world, documenting that you don’t want to consider hiring a currently unemployed person is ill-advised.

Keep your employment karma clean

It may be that you find yourself thinking that, “I can see that these employers have a point,” in that you do think most laid-off people may have been performance problems.  It’s possible that was your experience in your last day-job, if senior management did not address productivity and performance in real time and waiting for an inevitable slowdown to clean house.

You have two opportunities to contribute to a different outcome:

The first is to keep on top of your performance management system, whatever form it takes, and not to fall into the trap of carrying underperforming employees just because it’s easier than confronting the problem.  It’s your money.

The second is to hope you never find yourself having to eat your words (or thoughts) if you have to lay off  someone good, just because the business isn’t there to carry her.

Happy Boss’ Day

Boss’s Day–Just when you thought you’d figured out all of the major gift-giving events and how to avoid them, one more finds its way onto your planner!  October 16, should you want to add it as a recurring, all-day event, and schedule something to keep you out of the office next year.   (While we’re in the gift-event-warning mode, Administrative Professionals’ Day (more syllables, but easier to punctuate) is on Wednesday of the last week in April.  One can only wonder how that date was determined.  Consider yourself notified.)

Employment agencies use Boss’s Day as a trigger for conducting “state of the workplace” employment surveys.  In 2010, I found this one, sponsored by Spherion Staffing.  They don’t paint a pretty picture.  Many workers think they could do a better job than their supervisor, but few would take their manager’s job.  Many workers think their boss is hindering their career development.  Gee.  You have to wonder why you bother  to sign the paychecks, if your workers are so miserable?

Bosses make workers unhappy, so workers claim

It gets worse–46% can’t discuss unethical workplace conditions with their manager (but then, 54% can), and 44% don’t want to talk about sensitive or confidential issues with their supervisor.  (I’ve heard two dentists tell me they would be ecstatic if they never had to handle another employee’s sensitive issue involving too much month at the end of the money!)  Clearly, 56% of workers do not feel such inhibition.

If you read on to the end, you’ll see a note about the mechanics of the survey–231 working adults, invited to participate by Monster Worldwide.  That’s the job board people, where people go who are looking for work.  Perhaps it would be more accurate to say, “231 unhappy working adults?”  People who are happy in their work don’t spend much time on Monster.com.

Is there anything you can do to improve as a manager?

Is there any useful action you can take to improve yourself in your role as “boss,” using the information in this survey?

  • Support career development, when you can. (One of these days, I’ll write a post about why it is that everyone, in almost every business, thinks he or she can do the boss’ job better than the manager.  Only a very few employees are right about that, and in big companies, they tend to get promoted before long.)
  • Be as truthful as you can about job security.  (When I read that most workers felt the boss had been less-than-truthful, I wonder–the workers, are, after all, on Monster.com.  Obviously, they had reason to distrust their job security.  While they may not be “trusting” what they were told at work, the employees were taking action based on some form of communicated information.)

There wasn’t much else in the report that a first-time manager or business owner could take action on, frankly.   If it* were easy, everyone would be doing it.

*In this case, “it” = managing employees, but the sentence works for almost any hard problem.

Happy boss’s day.