The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

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What Is 'Performance-Based Hiring'?

Hiring is a tricky business, and there’s no foolproof method to find, attract, and retain star employees and contractors. Performance-Based Hiring is a method of ensuring the people you hire are fit for the job before you hire them.

Mistakes in hiring are almost always expensive, and a bad hire can cost you precious time and money, and your team’s limited energy and patience.

The “golden rule” of hiring: the best predictor of future behavior is past performance.

If you look for past performance and evaluate a candidate’s work first-hand, you’ll make much better hires.

Here's a simple, effective hiring process:

  1. Publicize you’re looking for help.
  2. Use a basic “acid test” for skill.
  3. Ask candidates to show you past projects they’re proud of.
  4. Check references. “Would you work with the candidate again?”
  5. Give promising candidates a short-turnaround project or consulting engagement.

Josh Kaufman Explains 'Performance-Based Hiring'

What if you need to build a team? What if you’re responsible for recruiting new employees as your company grows? How do you attract and retain the best employees you can find?

Hiring is a tricky business, and there’s no foolproof method to find, attract, and retain star employees and contractors. Mistakes in hiring are almost always expensive, and a bad hire can cost you precious time and money, and your team’s limited energy and patience.

Good employees and contractors are not necessarily the people who have the fanciest resume, or perform the best in a phone screen or interview: the best hires are people who get things done and work well with other members of your team. Ideally, you’re looking for an individual who will contribute valuable work, who’s excited about the opportunity, and who you’ll enjoy working with every day.

Here’s the golden rule of hiring: the best predictor of future behavior is past performance. If you want to hire people who will perform well for you in the months and years to come, you need to look for people who have performed well in the past. That means digging deep into what the applicant has accomplished, as well as giving each serious candidate a short-term opportunity to work with you before committing to a longer-term engagement.

The first step is hiring is to publicize that you’re looking for help. For most companies, announcing the job typically involves writing a job description, which is either published in a public format or used by a recruiter to search private networks. Either way, don’t write the job description like an advertisement: you want to describe what the applicant will actually do on a day to day basis if they work for you, with as much unembellished detail as you can share. You’re looking for people who are attracted to the work, and it’s difficult for applicants to determine whether or not they’ll be a good fit unless you describe exactly what the job involves.

Next, identify a basic “acid test” to screen applicants. In weak employment markets, new job postings tend to be overwhelmed with applicants, many of whom are poor candidates. You’ll need a way to identify the most promising candidates as quickly as possible. Screening by degree or GPA is common but ineffective, since these they don’t tell you anything about the candidate’s current level of skill. In the application, ask a few basic questions that require a certain amount of specialized knowledge in the field to answer. The most promising candidates will be easy to identify.

Once you’ve identified a few promising candidates, ask each one to show you examples of two or three of their best projects to date. These projects don’t have to be directly related to the job in question, but they should be work that the applicant is proud of and that they believe highlights their skills. The idea is to see examples of what the candidate has accomplished to date, which makes it easier to gauge their relative level of experience and work ethic. If a candidate claims that they have “five years of experience” in product development, but can’t show you something they’ve created, that’s a red flag.

Checking references at this point is a good use of time. Along with the examples, request the names and contact information of people they worked with in the process. When you contact a candidate’s references, your questions should be simple: would they work with the candidate again? If they hesitate or talk around the question, it’s a “no.” If you can’t reach a reference when you call, leave a message, and ask them to contact you if the candidate is extraordinary. If they are, you’ll receive a return call. If they aren’t, you won’t.

Finally, give promising candidates a short-turnaround project or scenario to see how they think, work, and communicate first-hand. Small projects tend to work best for skilled technical employees, while scenarios work best for candidates who will be responsible for product creation, marketing, sales, business development, finance, and management roles. The outcome of the assignment should be a deliverable of some kind: a report, a pitch, an asset, or a process.

Don’t put the candidate in an artificial environment: they should be free to use whatever tools or resources they’re comfortable using. They should be free to contact you if they have questions. On completion of the project, bring the candidate in to meet you and present their results. This presentation replaces the interview.

The purpose of the project or scenario is to evaluate the candidate’s actual work in a realistic environment. What does the candidate focus on first? What do they notice, and what do they miss? How do they explain their choices and recommendations? How do they respond when you ask questions or disagree with a conclusion?

Assignments like these should be short, requiring no more than a few hours of work. Respect your applicants: your hiring should not be a cover to extract free work from applicants. If you’d prefer to use longer projects to evaluate a candidate, you can always hire them as a part-time consultant, then bring them on full-time if you’re pleased with their work.

This general hiring process is a straightforward, effective way to discover and evaluate promising employees and contractors. It’s important to note that this process doesn’t rely on resumes or traditional interviews, which only really test for how well the candidate writes a resume and performs in an interview. If you look for past performance and evaluate a candidate’s work first-hand, you’ll make much better hires.

Questions About 'Performance-Based Hiring'


"When all is said and done, a lot more is said than done."

Lou Holtz, professional American football coach and sportscaster


From Chapter 8:

Working With Others


https://personalmba.com/performance-based-hiring/



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The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

Buy the book:


About Josh Kaufman

Josh Kaufman is an acclaimed business, learning, and skill acquisition expert. He is the author of two international bestsellers: The Personal MBA and The First 20 Hours. Josh's research and writing have helped millions of people worldwide learn the fundamentals of modern business.

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