Hi folks!

Every week, I’m sharing a practical, hands-on guide on how to run your small business better.

Today: my hiring process for amazing candidates.

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Before we dive in: This newsletter features info from our Scalable CEO Cohort, starting October 15.

As part of Scalepath membership, this 8-week program will help you master key skills — from growth strategies to financial modeling — backed by dozens of playbooks, weekly member calls, and a supportive community of small business leaders.

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The Playbook:

Most small businesses have limited resources and less than 20 employees. So if every employee is 5% of your company… you want to get this right.

But here’s the tricky thing: there are a million different ways to hire. And everybody seems to have their own tried and true method.

So when I was trying to figure out hiring, I started with the science. The data shows that structured interviews, mental ability tests, and other standardized assessments are actually a pretty good predictor of job success — but even the best method (structured interviews) is still only sort of reliable. So it’s always best practice to combine multiple methods.

(Here’s the science, and here’s a more readable article about it.)

But let’s keep it simple.

In this email, I’ll break down the basic must-do steps of any hiring process.

At the end, I’ll link you to the in-depth process I use for key hires.

You can then scale your own process up or down, depending on your time, resources, and the level you’re hiring for.

The Playbook: How to Hire

1. Assess your current and future employee needs.

Think strategically about what roles you need to hire for, and what resources you have available.

What is your business missing in terms of skills and capacity? Define the roles and functions you need to fill, in terms of skills, experience, and capacity — and what you’d expect of an A-player in that position.

Then, look at your resources. What budget do you have for compensation? What benefits do you have to offer? Are there non-monetary advantages you have to offer?
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2. Develop a job description.

This should cover all the basics:

• List of duties and responsibilities of the position.
• Required soft skills e.g. detailed oriented, independent thinker, a leader, people person, team player etc.
• Level of education, qualifications, knowledge, experience, and/or job skills required.
• Who you are as a business – you need to sell your business to prospective employees.
• If applicable, list any software, tools, or apps that will be used to perform their duties.

Then, take a few minutes to punch it up with my 8 principles for writing a killer job description.
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3. Define your application process.

I recommend setting up a dedicated email address for people to apply to so it is separate from your other mail.

It could be as simple as submitting a resume. You might have a form you want people to fill out.

Use simple but specific instructions to screen out people who are bulk-applying to jobs. It could be as simple as instructing them to email with a specific subject line.

I go one step further and ask people to submit a 1-minute video introducing themselves and explaining why they think they would be a good fit for the position. If a candidate isn’t willing to take out their phone and spend 60 seconds recording themselves, they’re probably not a good fit for me.

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TOGETHER WITH ACQUISITIONS ANONYMOUS

People often ask: what goes through your head when you’re looking at a business for sale?

Well, here’s your answer. Twice a week, we break down the best, worst, and weirdest businesses for sale.

Four experts, one business listing, 30 minutes of insight (and my incredible jokes).

​Listen on our website, or find us wherever you get your podcasts!

(Not a pod person? One-click subscribe to the AA newsletter, and we’ll send you 3 businesses for sale every week!)

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4. Brush up on regulatory requirements.

This one’s boring but necessary. Make sure you follow all legal requirements and hiring laws for your state including meeting minimum wage, workplace safety, and anti-discriminatory requirements.

Check with the Department of Labor and your State Labor Offices for details.

Or just run things by a lawyer. They can help you protect yourself with the right at-will employment rules and regulations, which vary by country, state, and jurisdiction.

You can get into trouble in this area, so get legal advice. It will save you hassle and headaches in the future.
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5. Post the job.

Cast the widest possible net. If you want to hire the best, you need to reach them.

So post your job everywhere. On your business’s website, on all your social media handles, on Indeed, Glassdoor, ZipRecruiter, college/university job boards — and share it with friends and associates, since they may know someone.

One thing to watch for: if your job description points people to a specific email or web address, most job boards will remove that information. Try formatting emails as “michael at company dot com”, and double check your postings once they’re live.
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6. Run a funnel.

As applications come in, sort candidates into “Interview”, “Maybe”, and “No” buckets.

After a set period of time (not more than a week, but could be sooner if you get lots of applicants), email the top 3 to 10 candidates with links to further assessment testing. This lets you spot top performers and find good fits for your roles.

I use Culture Index and Criteria Corp — they’re not cheap, but they’re reliable. Less expensive versions of these tools are available, but I can’t comment on them.
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7. Run interviews.

There’s so much to say about interviewing. I use a modified version of Topgrading, which is pretty in-depth.

No matter what your method, create a list of standardized questions to ask each candidate.

Here are the usuals:

• Career progression.
• Greatest strengths and weaknesses?
• Past successes and past failures?
• Specialties/areas of expertise?
• Why do you want to work here?
• Why are you applying for this particular position?
• Why are you leaving your current employer?

Behavioral/Situational Questions:

• How do you work under pressure? An example.
• How do you set goals? An example.
• Can you give an example of when you handled a challenging situation?
• Explain how you corrected a mistake that you made.
• Describe when you were in conflict with a peer and how the situation was resolved.
• Describe when you made an unpopular decision, and explain how you handled implementing it.
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9. Run reference checks.

Most reference checks tend to be too brief – they generally only confirm whether the person worked at the reference company.

Take the time to understand where candidates were strong and weak in their previous jobs. Ask about any questions that came up during the interview. See if their references confirm the impression you got.
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10. Make an offer.

Make an offer to your preferred candidate! Get a lawyer to draw up the contract, and hopefully you’re on your way.

Don’t try to nickel and dime on salary, either. A win-win situation will lead to higher job satisfaction, better morale, and an enthusiastic new team member.

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A final note: always look for A players.

Here’s the idea. For each role and compensation level, there are A Players (the top 10%), B Players (the middle 60%), and C Players (the bottom 30%).

Don’t settle for a B player! An A player will be 7-10x more productive, and will energize the rest of your team.

So if you haven’t found the rockstar for your role, don’t rush to hire a B player. It will be worth your while to go back to the drawing board and bring in more candidates.

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If you want to go deeper into building a hiring system, here’s my 3-page sample hiring process. Steal as much of it as you like!

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There’s my playbook for today!

What do you think? Hit reply and let me know.

Michael

P.S. A reminder — our new Scalable CEO Cohort starts October 15th. It’s a transformative program designed to fast-track your journey to becoming ready to lead your business to its next level of growth. Learn more and apply today!​