On this episode, Josh speaks with Daniel Chait, CEO of Greenhouse and author of the book "Talent Makers: How the Best Organizations Win Through Structured and Inclusive Hiring". They discuss the best ways to hire for your company.
Daniel Chait is co-author, with Jon Stross, of TALENT MAKERS. Chait is CEO and co-founder of Greenhouse. Before Greenhouse, he co-founded Lab49, a global firm providing technology consulting solutions for investment banks.
Chait is a frequent speaker on the topics of recruiting and entrepreneurship, and a guest lecturer at business schools and conferences. Daniel graduated from the University of Michigan with a degree in Computer Engineering in 1995.
In today's episode you will learn about:
• How to create a structured hiring process that works every time
• Why it’s critical to align the roles of the hiring manager, recruiter, and interviewer
• How to turn hiring into a competitive advantage
• How to base hiring decisions on data and evidence
Narrator: Welcome to Cracking the Cash Flow Code where you'll learn what it takes to create enough cash to fill the four buckets of profit. You'll learn what it takes to have enough cash for a great lifestyle, have enough cash for when emergency strikes, fully fund a growth program, and fund your retirement program. When you do this, you will have a sale‑ready company that will allow you to keep or sell your business. This allows you to do what you want with your business, when you want, in the way you want.
In Cracking the Cash Flow Code, we focus on the four areas of business that let you take your successful business and make it economically and personally sustainable. Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he's learned through his 40 years of owning, running, planning, and thinking about what it takes to make a successful business sustainable and allow you to be free of cash flow worries.
Josh Patrick: Hey, how are you today? This is Josh Patrick and you're at Cracking the Cash Flow Code. And we're with Daniel Chait. How do you pronounce your last name, Daniel?
Josh: Chait. That was close. That was close.
Daniel: The easy way.
Josh: And he is the CEO of Greenhouse.io. He has a very impressive CV. He's way smarter than I am. And he is an expert on hiring. And that's what we're going to talk about. He has a new book out which is called Talent Makers. And I'm sure you're going to want to download it, or buy it, or get it from Amazon, or wherever you get your books from, read it, learn, and become a hiring ninja.
So, let's bring Daniel on.
Hey, Daniel, how are you today?
Daniel: Hey, good to see you.
Josh: As usual, I have a little bit of technical problems. If you’ve ever been podcasting, and you get to 300 episodes, where we are, and you don't have at least one hiccup a month, you're not trying hard enough. That's all there is to it.
Daniel: [laughs] I mean, we're all podcasters now, right? My eight year old is on Zoom all day, you know, so.
Josh: Yeah, that's basically it. It's sort of like that but, hopefully, we'll have our kids back in real schools soon.
At any rate, you started off with one of the things which I think is really interesting and important to talk about. And you're a hiring expert. Am I correct in that?
Daniel: That's what the book says. Yes.
Josh: Oh, okay. Well, then, we'll have to compare notes on what works.
Josh: But the first thing which I think is really interesting is you have here how to create a structured hiring process that works every time. So, let's start there. What would your structured hiring process look like?
Daniel: That's a great question. I mean, I think, you know, the key thing that most companies need to do in order to get better at hiring is to bring a structured process to the table. What we mean by that is, basically, you need to be able to plan out your hire before you make it.
So, what happens in most companies, you grab somebody off of their desk, you say, “Hey, there's a candidate that you need to go meet.” Hop onto Zoom or go interview or meet them. And this poor person who spends all day in marketing, or engineering, or sales, or whatever do goes like, “Okay. I'm going to go meet this candidate,” spend an hour with them, probably just make up some questions that are duplicative, or that have already been asked, or maybe that are illegal, not really remember all the answers, and then go back and try to make a really important decision. And that sort of chaos creates huge problems. It's a terrible experience for the candidates. Your employees hate it. It adds no value. All your biases come into effect.
And so, by bringing in structure, you basically plan out ahead of time what are the criteria that make a great hire for this particular role? What are the skills and attributes that we need to look for? Where are we going to look and how are we going to source for the candidate? Who's going to do what parts of the interview? And what is everyone going to be asked?
And then, you ask the same questions of every candidate, so you’re comparing apples to apples and give a fair and repeatable process. And then, you basically get together at the end. And what you have instead is a well‑organized portfolio of data. And you can look at that data to make really smart and informed decisions really quickly. And so, the difference between a structured hiring process and what most companies see typically is a huge competitive advantage.
Josh: Yeah. So, when you use a structured hiring process, it doesn't matter what it looks like.
Daniel: Well, of course, it matters what it looks like. I would say every hire is not necessarily identical, right? If you're looking for, I don't know, a vice‑president of marketing, and someone else is looking for a barista, you know, they may follow very different processes. You may have whole different ways you're looking for candidates, different ways you're going to assess them and qualify them. But the basic idea that you should make a map of what you're looking for. You should follow that map for each and every candidate. And then, you should follow where the data leads you to make smart decisions that are unbiased. That's the same across any type of hire. Of course, we highly specialize to which hire you're making for your company and for your roles, if that makes sense.
Josh: Okay, you have a different structures for different jobs but, when it comes to the process, what kind of training do you need to do with the people who are actually doing the interviewing?
Daniel: You know, I think training can help but, ultimately, what we see is that the companies that get graded hiring, they systematize hiring across the organization. In fact, we've mapped out, across thousands of companies, a sort of hiring maturity curve, if you will. A way to look at yourself, your organization, and quickly determine “Are we sort of chaotic, where you never really know what you're going to get when you make a hire?” Are we inconsistent, where, hey, there's one person in recruiting who does a great job and they're a hero. That person’s out sick that day, kind of, hiring falls apart. Or are you really systematic about it, where you can really manufacture a great experience where you can systematically make great decisions?
Of course, the best companies become strategic. The best companies, if you think about their hiring maturity model, get to that level, and we talk about this in the book, where hiring is a differentiation for them, where they know that part of how they compete and win, as a business, part of what makes them special is their ability to convince the best people in the world to come work at their organization. And that's really the big difference that we're trying to get out with Talent Makers.
Josh: Mm-hmm. So, when you're going through the hiring-- or you're setting up your hiring process, what would the steps be that you might want to take?
Daniel: The first thing is to understand where you're starting from. I talked about the hiring maturity curve. If you're a company where you're inconsistent, you know, or you've got some hires that work well but it's not something you can repeat. Then, in your mind, you're trying to get from inconsistent to systematic. And so, in order to do that, what you really need to do is you need to build those plans and get them implemented across more than one hire at a time which means you need to work on the actual process itself.
When you think about, when we open up a new role, Is there a kickoff meeting? Who attends that meeting? And then, how do we put that structure in the hands of the people doing all the recruiting? Mostly, it's not people in the HR department, by the way. Mostly, hiring happens all throughout the organization. And so, how do you actually arm your interviewers and your hiring managers with the guides and with the kits that they need to go into the field and show up in that call with that candidate actually asking questions for the job.
That's a great place to start is, is just to think about, “Can we get some structure and can we get some consistency in place?” If you've already got those things, you may be thinking at a more elevated level about data, and insights, and analytics. You may be thinking about building a cutting‑edge technology stack - there are hundreds or thousands of recruiting technologies out there, and bringing those things to bear. So, this is a journey that companies go through. And, you know, you can make progress from, really, wherever you are in that journey.
Josh: Yeah. So, let's go to a real world example, just for fun. I'm a blue‑collar construction company, and I need to go out and I want to hire myself electricians. What would the process look like to hire great electricians for my company?
Daniel: So, it's interesting that you phrase it as, “Hey, I'm a blue‑collar company. I need an electrician.” I think some people may hear that and they may think, “Well, you know, an electrician’s an electrician. Can you plug the wires in? And, you know, do you have the requisite certifications?”
And, certainly, for a lot of jobs, you need those certifications or, you know, you need those checkboxes to be covered. But in most businesses-- and even most businesses that are hiring that type of job, there's a lot more to it that makes the difference between an okay electrician and an outstanding electrician because, let's face it, if you've ever done a home renovation and you've had electrical work done, if that goes badly, it can ruin your life. I mean, it can set you out of your house. It can create financial problems. It can be stressful. And a great service provider will be something that you'll tell your friends about, that you'll come back for more work. And that means dollars and bottom line to the business.
And so, what I would say is, the first thing you need to do, if you're hiring those electricians, is you start off by building out “What are the requirements that we actually need if this is going to be the best electrician we've ever hired?” And, certainly, you want to have the right underwriters, lab certificates, and these things. But you also want to know, “Is this someone going to be customer‑centric? Is this someone that's going to be out there in the field, and agile, and solving problems, and thinking about the customer? Is this someone that's going to be responsive to changing needs and able to work through those things? Whatever those may be. And the better you can hone in on like “What are the real things that matter to us?”, the more likely you are to find those attributes in the candidates that you interview.
And then, the key thing, we talked about in this the book, we have this idea, it’s right in chapter seven, around making informed decisions, is interview every candidate according to that scorecard. So, if I need people that are great problem solvers, I want to put to them some problem‑solving experience during the interview process. And I can tell you from my own, you know, experience that I've never interviewed an electrician but, you know, I've interviewed nannies. I've interviewed, you know, office managers. And when you ask a question like, you know, “Tell me about a time when you solved a problem that wasn't part of your job description.” You get wildly different kinds of answers.
Josh: I have to stop you right there because you just asked the perfect interview question which is, “Tell me about a time yada, yada, yada” because what you're doing, instead of asking this closed‑ended question which everybody seems to ask in the hiring process, you're allowing the interviewee to tell you a story. And, in my experience, when people tell me stories, they start telling me the truth. When I ask them these closed‑ended questions, they're going to tell me what they think I want to hear.
Daniel: That's right. I mean, lots of studies have shown that, that if you ask people hypothetical questions, or sort of, you know, as you say, closed‑ended questions. You know, if you say, “How do you handle, you know, an unhappy customer?” Well, anyone can give you what sounds like the right answer to that question. “Well, I'm going to listen to their concerns and I'm going to give a good solution.” Of course, you know, no one's going to say, “I'll brush off the customer.”
But if you phrase it as a story about yourself, “Tell me about a time when you had an unhappy customer,” and you turn that into an advocate, you know, now you have to dig deep into your own experience and think about how you did that. And then, as an interviewer, I now have the opportunity to follow up with you and say, “Why do you think you had that approach? What was it about your background that prepared you to do that? What would you have done better?” And so on. And so, you can really dig in and understand a lot more of who they are so.
Look, interviewing is a whole science and a whole art in and of itself. I think what's interesting is, if you've ever hired someone or been hired, you've been through an interview process, and most interview processes are terrible. Most people hate doing them. Most people hate preparing to be interviewed. And most of the questions that most of us ask are like we never get any feedback on it. We don't have our boss there. It’s not part of our job review. And so, you kind of do it in isolation and you don't really get any feedback as to whether you're doing it well or not.
And I think, at companies that have a culture of hiring, where you've got a senior leader who pays attention, not an HR job that they put in a box, but I'm talking the CEO, the senior executives of the company are talking about hiring and they're making space for hiring conversations every day. Those types of companies are very different than others. And that's increasingly who's able to win for talent.
Josh: I would agree with that. One of the things we ask people and I'm interested in your opinion on this, is when they're writing the job description, don't write a standard job description. Start off with what your values are, and talk about your values, and list them out, and what your clarifying statements are. And then, instead of having a usual laundry list of things you need to do for the job, write down no more than five success factors. And success factors mean, what has to appear for you to know the person has been successful at their job?
Daniel: So, you sound like someone that has a lot of experience reading job descriptions. I can tell you, I've read thousands of them. And the first thing that jumps out at me is your typical job descriptions is many things, all mushed together--
Daniel: --and we're to realize what those are and separate them out. And one of the things that it is, primarily, is it's an advertisement. It's a marketing piece. You put it on your website so that the people who read it recognize themselves, “Oh, I should apply for that job.” And so, it gets them interested. It lets them know a little about who you are as an organization. It helps them qualify themselves against that job. So, I think all the advice you gave is great.
The other thing many of them are is a plan. And you can see it often right there on the website, companies mush those two together. And they put, in the document that gets posted on their website, their own ideas of their plan of how they're going to interview people. So, they put 37 bullet points in there about different skills you have to have, and different programming language you need to know, or kinds of companies you need to work at or whatever. None of that's relevant to the reader. They're not going to read most of it. It's not going to help anyone. It just looks like noise.
And so, I would say, if you say it was at the job description. The first question is, why are you using it? And if it's something that you're meaning to put as a posting, on your careers page, for people to apply, think from the customer standpoint of, “What are they reading? What are they looking for? And how do you keep that short, and relevant, and meaningful to the reader?” And then, also, you should spend time building that plan. And you should share that plan internally with your team, so they know who are interviewing and who's going to play what role in the interview process and what their criteria really are.
Josh: You know, I see a lot of times, when I'm looking at websites, which I do all the time because I'm just curious about the language that people use when they're talking to their customers. They usually talk about the stuff they do and not the problems they solve. And I think that the same is true with, when you're hiring, is that you're hiring someone to solve a problem. And your hiring system needs to say, “Okay, what's the problem that we're trying to solve that this person’s going to help with?” and write your job description based on that.
I call it success factors. Other people might call it other things, but when I'm coaching you and I don't like performance reviews either. I think they're awful. I do like what I call performance coaching which is where you have the success factors. And then, we look and say, “How are you doing on these success factors? What can I do to help you?” And when I'm hiring, I want to find out how they're going to help me fulfill their success factors so our company is better? That's one of the things we do.
Daniel: Yeah, you know, I think there’s a lot of wisdom in that. I think what you see-- what I find so frustrating and relevant to the point you just made is, you know, so much of what happens in hiring is really just cut and pasted. Most organizations, you know, don't have that clear of a point of view about what is their own strategy for making hires and for making sure that they connect with the best talent. And so, they sort of offload it to their HR people who, let's face it, are overworked and much more focused on filling seats in many cases versus on building a great company.
And so, they take a job description. They Google, “Hey, do you want to hire an electrician?” I'm going to go Google electrician job description and cut and paste it on our website. Job accomplished, right? That happens over, and over, and over again at millions of companies around the world. And most leaders don't recognize that failure because they assume the HR people are doing what HR people do. I'm doing what I do.
And we wrote this book, Talent Makers, to give leaders the playbook for how they can take their companies and turn it into a great hiring organization. And the truth of the matter is, it first starts with that leader taking charge of the process and putting in a point of view and saying, “It's important to me that we get the best talent. And we're not just going to cut and paste stuff.” And then, whether they say, “Okay. We're going to use this methodology or that methodology,” you're already way ahead of the game because you have a point of view of it all.
Josh: So, one of the things I like to do is-- and you sort of-- you hit on this a bit, is I call the technical skills which are the things you need to bring to the party, the certification and all that sort of stuff. That's table stakes. You don't get past that unless you have the table stakes. But once I know you have the table stakes, I'm ignoring it because, in my experience, that's not what makes great employees. What makes great employees is how well do they exhibit the values that you hold dear at your company, which are your core values, and how much are they willing to do the activities that are required for success in that job? And, by the way, I stole this stuff from Robert Half on hiring, about 35 years ago.
Daniel: You know, the truth-- I mean, you're kind of laughing, but the truth is, you know, you don't need to be so cutting edge. There's not some secret formula, you know, that exists, that's like some magic. A lot of it is basic stuff. And a lot of it is, you know, to your point, you know, the old adage of hire for strengths instead of lack of weakness.
So, there's a lot of existing wisdom out there. And I think the challenge for organizations is, if you have that point of view, how do you put that into place across an organization, where other people may have a different point of view or may not have a point of view at all and all of them have a role to play in hiring if you're going to build a great company?
So, any of us can have our own idea of what a great hire makes. And those ideas may be great ones but, if you're going to build a winning organization, you need to have a way - you need to have a framework for putting those ideas into practice in a repeatable way.
And I would say it's so very similar to other types of disciplines. So, if you think about sales or manufacturing, you know, nobody would be happy with an organization where one sales rep had a great way that they’ve figured out how to sell, you know, but the company itself doesn't have a sales approach or a sales playbook, right? Or no manufacturing company could get away with each individual figuring out, “How am I going to screw together, you know, the laptop, you know, and I have my favorite way of doing it?”
And yet, for companies that are manufacturing human capital, which is most companies, you know, so often, chaos is the norm and they don't realize that there's a better way. And so, helping people move up that maturity curve and get to a place where their organization has a capability to be great at hiring and it's not an idea in my head. That's a real lightbulb moment for most people.
Josh: Well, you mentioned something a while ago which is, at least, the way I heard it and I may have heard it wrong, is the HR department should not be your hiring people, the rest of your company should. And my experience is you should never let an HR department hire anybody. You should train your people to use your system because they're the experts on what they need and not the HR people.
Daniel: Yeah. And the HR people are wonderful. I'm an HR. At my previous job, before I started Greenhouse, I was global head of HR. So, I like-- I love recruiting. I love HR. They're my people.
But the key is that you have to know what your role to play is. And I've talked to thousands of recruiting and talent acquisition specialists. And what they tell me is they don't get the partnership from the business leaders. The business leaders will throw it over the wall is what you hear. “I don't have a seat at the table.” You know, it's a sense of disconnection, right? It's like, you know, business people say all the time, “Oh, recruiting or HR doesn't know what I need.” And that's true.
What should happen is, when they show up and they say, “Hey, you're opening up a role. Tell me about the role. What are the skills that are going to matter to you? What are the, in your terminology, factors of success?” That success factor is another company in our space, so I'm not going to allocate it necessarily to them. But “What are the key criteria that you're looking to hire for?” you know. And if you really do partner with your recruiting team, to give them the insight that they need, then they're empowered to go out and do what they're specialists at which is knowing every nook and cranny of the talent market, right, running the process, knowing which technologies and tools, you know, to bring into the play, helping collaborate from around your organization, and focus on the candidates. And so, that's their job.
And I think, in the best organizations, there is a great partnership. And there's a playbook. If you're a leader, and you want that kind of partnership [inaudible 00:20:49]. You think, “Oh, my recruiters don't know what they're doing” or “I don't know why my jobs never seem to get filled well.” You know, we talk about that in the book that, as a leader, you have a job to play in creating that partnership. And when you get it right, it is probably the single best secret weapon in business, when you’re willing to hire the right person at the right time, whenever you need to.
Josh: So, you're talking about internal recruiters, not external recruiters, am I correct?
Daniel: Yeah. We're basically talking about how a company can become great at hiring. And so, your external recruiters may be part of that. But the book is primarily for people inside of businesses looking to grow them.
Josh: Yep, yep.
Well, Daniel, unfortunately, we are out of time.
Daniel: I assume he had solved all of hiring in about 20 minutes, right?
Josh: No. Actually, I wanted to go down the rabbit hole of external recruiters, but we don't have time for that today. So, it might be another day that we do that.
Josh: So, Daniel, where do people find you? Where do they find your books, in case they're not watching on YouTube or Facebook, where we have it up on the screen? But how would people get your book? And where would they find you if they wanted to do so?
I have two things I'd like you to do. Normally, most podcast hosts have one thing to do, but I ignore that role. I have two things. The first one is please, please, please, please, please, wherever you're listening to this podcast, go and give us an honest rating review. If you love the show, say you love it. If you hate it, which I hope you don't do, you can tell us that too, but just give an honest review.
And the second thing I would like you to do is, well, this is kind of a wiseguy project I started about 25 years ago and did. And it was based off a friend of mine saying where he had this thing called the periodic table of estate planning elements which are all the estate planning things you could do to make your life better if you were in the estate planning process. I said, “Well, that's pretty cool. I bet I can steal it.” And I did. And I stole it. And I made it into the periodic table of business planning elements which are tactics and strategies you can use to make your business become economically and personally sustainable. Really easy to get. You just go to www.stage2planning.com/periodic and that's the number 2. www.stage2planning.com/periodic and we'll have it on its way to you.
So, this is Josh Patrick. We're with Daniel Chaith. And you're at Cracking the Cash Flow Code. Thanks a lot for stopping by. I hope to see you back here really soon.
Narrator: You've been listening to Cracking the Cash Flow Code where we ask the question, “What would it take for your business to still be around a hundred years from now?”
If you've liked what you've heard and want more information, please contact Josh Patrick at 802-846-1264 extension 102, or visit us on our website at www.sustainablebusiness.co, or you can send Josh an email at firstname.lastname@example.org.
Thanks for listening and we hope to see you at Cracking the Cash Flow Code in the near future.