Momentum Podcast: 789
The Most Important Hire You Can Make Part 1
by Alex Charfen
There's this pendulum swing that happens to entrepreneurs. Most entrepreneurs wait way too long to get help with the things they need. It is hard to ask for help, get support, and get what they need to move forward.
On the other hand, once you start to grow your business and bring in talented team members, there is something that happens where entrepreneurs hire too much.
In this podcast, I will share with you the reason entrepreneurs hire too much and the mistakes and pitfalls you should avoid.
This is part 1 of The Most Important Hire You Can Make. Tune in 4/8/22 for Part 2.
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Full Audio Transcript
This is the Momentum podcast. So if you follow me for any period of time, you know that one of the things that I'm super passionate about helping entrepreneurial entrepreneurs do is building a team so they don't feel like they have to do it all themselves well. That being said, the topic of today's information, this discussion may actually surprise you because the topic is the most important hire you can make. And here's the most important hire you can make. I'm going to answer it for you. Like this is the most important hire any entrepreneur can make. It's the one that you don't have to. I'm Alex Charfen, and this is the Momentum podcast made for empire builders, game changers, trailblazers, shot takers, record breakers, world makers and creators of all kinds, those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Sure, we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny. We define it. We don't understand defeat because you only lose if you stop and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority. The few who are willing to hallucinate there could be a better future. And instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters, clearly the most important people in the world because entrepreneurs are the only source of consistent, positive human evolution and we always will be. Now, I want to make it clear that I believe most entrepreneurs wait way too long to get help. Most entrepreneurs are kind of slow to hire in the beginning. Most entrepreneurs could do so much better in their careers if they got help earlier, especially if they got help for themselves like a EAA or a VA. Somebody who's getting stuff off of their plate. However, there is this pendulum that swings with entrepreneurs in hiring, and it swings often from I don't want to get help. I don't want to hire anybody. You know, I'm having a hard time even working with one person to when an entrepreneur learns how to start working with people. Here's what can often happen. You start hiring people that you don't need. And so I think this is actually going to be content that I record here in two parts because first, I want to talk about the issue, like why does this happen? Why is it that entrepreneurs hire people that they don't need? Because it sounds like it sounds like something that we would never do. It sounds like something you should never do. And by the way, it is something you should never do when you have too many people on your team. There's this I'll tell you a story about this. It's actually kind of funny. So years ago, probably I would say that you were probably around 2013, 2012 and 2013. So Cadey and I had won the Inc five hundred twenty first fastest growing company in the country in 2011. In 2012, we repeated. And I remember my friend Dennis Welch, who is a publicist and helps with both PR and has worked with Gallup and done all kinds of other stuff, was working with the author of a book called Waging War on Complexity Costs. I'm going to say it again for you again. Let me say the title for you again waging war on complexity costs. And I remember he came into the office one day, Dennis. I used to hang out a lot back then and he was talking to me and Travis Brodin, who at the time was like our CTO and CEO. He kind of did a lot of both of those roles. And Dennis or Dennis brought up this book Raging War on Compact Complexity Cost, and he said, Hey, I can get you guys a copy of you want. And I was laughing. I'm like, Dennis, that sounds like the most boring, most difficult to read. Book I've ever heard of in Travis is like, No, I think I want to read it. I actually want to read it. Please, Dennis, give me a copy. So to make a long story short, Travis gets Dennis a copy, and I'm kind of laughing at him. Like, because it sounds like it's going to be a boring book. But I'm also supportive of them because if it's going to help the business, I want them to read it. And it Travis comes in probably, maybe two or three weeks after getting the book, and he's like, Alex, this is such a good book, and I'm like, Do I have to read it? He goes, No and honest. In all honesty, I'm like in the back of my mind, I'm thinking great because it sounded so boring. But here's what Travis explained. It's like that the whole book was the more complex a business or any program any process gets, the more cost there is. And so when you have one person on your team and you're managing one individual, there's a very low cost, low cost of management. There's a very low cost of like telling that person what you what you need them to do. Now you had a second person and now you're actually paying because there's two people there. You have to have more time spent with both of them. Now let's think about that, not just in a company. Let's look at a department, a single person department where one person is doing everything. That's a pretty efficient department. There's not a lot of cost in management and communication and telling people what's going on and telling people what's happening. Now let's take a two person department. Maybe there's two people, one of them's a supervisor. They're helping the second one to understand what they have to do. There's not a lot of costs there, but you are paying for a supervisory cost. Now we add a third person. We've exponentially increased that supervisory cost. Now that person is is managing two people, not one. Now let's add a third person, a fourth person, a fifth person by the time you get to five or six people. That person who's managing and supervising is going to have a very low personal output. So your cost of management and supervision has gone up. And so you're not getting full productivity out of those people, you're actually getting less productivity out of the person who's managing because if they were a player manager at the beginning where they were, they were executing a lot of things and managing the other person. As you add more people, the complexity cost goes up and that person's ability to be productive goes down. And so there's a cost to adding people to your team. And I remember a Travis like drawing diagrams and showing like if you have person A and their managing person B, then there's a certain cost. But then if they're managing Person C, the cost goes up. Person D, the cost goes up. And it just made sense to me. And it's something that I've seen over and over again in entrepreneurial businesses where entrepreneurs at first are super hesitant to hire. Then they start hiring. It makes their lives easier and then they start hiring too much. And there's some reason. So I actually wrote down some reasons why entrepreneurs hire. Some hired too much. The number one is just that pendulum swing. It was really hard to hire at the beginning. Then it got easier to hire. Then people started helping, and we stopped doing the proper analysis on the company to know should we make this next hire? And instead of analyzing and going through the processes which I'm going to share in part two of the most important hire you can make, but. Instead of analyzing and going through the processes and looking at it, should we make this hire the hires made because they think that they need it or they feel like they need it or they it's worked in the past? Let's hire somebody else or they're trying to hire to solve a problem. That's that's number one is is that there's not enough analysis. It's not clear. The second one I just kind of mentioned there is hiring to solve a problem or stop pain if there's something going on in the company and there is some, some type of frustration. Oftentimes entrepreneurs will say, I'm just going to hire somebody to take care of it. I mean, hire somebody and hand it all to them. I'm going to hire somebody with experience and they're going to fix it. They're going to fix the pain. Well, unless you've done the proper analysis on who you should and shouldn't hire, if you've analyzed how the people around that person are using their time. If you if you haven't made certain that you don't need to make the hire, oftentimes you bring in somebody to solve a problem or start pain and they end up causing more. And then the next reason is oftentimes the entrepreneur and I, you know, I. I have to admit, I've done this. It's always hard to make these admissions, especially at forty nine years old, that like there was a point in my career that I hired for Ego. And I know that sounds crazy, but I watch entrepreneurs do this all the time. I watch entrepreneurs brag about the number of people on their team. And it becomes like this metric that they started measuring their success by Oh, I had 12 people in 2010, and then I had twenty four people in 2011. Then I had 50 people in 2013 or 2012. Then I had 100 people in 2013. And if that number goes down to 75, the entrepreneurs like, Oh, I'm going backwards, I'm losing, I'm not doing as well. And so oftentimes because how many people are on the team becomes a metric that is looked like looked at like a success metric, which it really shouldn't be. But sometimes it is. And it's it's more bragging rights when you're in big rooms and you're out of mastermind. When people say, hear you say, Oh, I've got 100 person team, that sounds impressive. If you've ever run a 100 person team, you know just how oppressive and difficult it really can be. And so entrepreneurs will often hire with their ego rather than conducting proper analysis to make sure that you don't hire the wrong person or not. Sorry, not the wrong person, but to make sure you don't hire a person you don't actually need because here's what happens. And it's so challenging when you hire somebody you actually don't need. Here's what happens when no one you have somebody who's underutilized in your business and underutilized people in a business are like free radicals in the body. You know what a free radical is in the body. Like I'm a biohacker. I obsess over my health. You know, I take antioxidants every day and antioxidants like vitamin C, including iron and other stuff that I say eliminates free radicals in the body. Free radicals are these molecules that bounce around the body, just screwing things up, like messing things up. They they they they are, they are actually bound by antioxidants so that they can stop hurting your body. And they literally it's like a little ping pong ball bouncing around in your body, trying to do something that your body doesn't really need done. Free radicals are not good for you. They cause tissue breakdown. They cause all types of challenges. If you have too many free radicals, anybody can get sick. Some people hypothesized too many free radicals. That's how you get cancer. And so you don't want free radicals in the body. You do not want free radicals in your company and under utilized people in your company will do a whole ton of things. So no one, as somebody is utilized, the rest of the team will realize that they will know that person's not doing enough compared to themselves or compared to the people around them. And that sanctioned incompetence. Sanctioned incompetence is that concept that I share that I think I made it up. I'm pretty sure I made it up. It's it's where you sanction someone's incompetence because, you know, they're underutilized. They're still in the position. You don't do anything about it. Everybody around you assumes it's OK. And here's what will happen with just one underutilized person on a team. Oftentimes, that person will change the work ethics of the entire department around them, or, even worse, the entire team around them. Because if you hire somebody, they're underutilized. They're not doing enough and you don't change it. Everybody goes, Oh, I must be doing too much. I'm doing more than I need to. That person's not doing anywhere near what I am, so I'm overperforming here. That's it's a free radical in your business. It starts messing has grown things up. Another thing that happens when you hire somebody that you don't actually need is that underutilized person will start trying to find things to do, and they'll start improving things that don't need improvement. They'll start meeting with people that they don't need to meet with. If you have had a team before, you're probably relating to some of what I'm saying, it's that person who just becomes frustrating and irritating. And you you can tell that you don't like your irritated with them for some reason, but you don't really know why, and it's because they're underutilized. And so when you hire, because you're not clear or you're hiring a suburb, solve a problem. And fortunately, you're hiring with your ego and you don't do the proper analysis. That person becomes a incredibly frustrating part of the team and can motivate your entire team and you're spending money you don't really need. And when we look at that whole complexity cost argument, every time you add a person to your team, you're losing some part of someone's product productivity. It's their supervisor. It's the manager is someone in the department who's going to have to help that person. The oversight of a human being actually takes time, effort and energy that that takes away what somebody can do with their own personal productivity. So every time you hire, you're increasing that complexity class that I talked about earlier. And if you want to go read, waging war on complexity costs, Dennis, what would be so proud that I was telling people about it? I actually ended up reading a few chapters of it because Travis told me it was like so good I had to. And when I read it, I learned a lot about what I'm sharing with you now. And intuitively, you know these things. But until you really like thinking about your own company and saying, Do I need every person and, you know, do I need every person that I've hired, you start seeing things in a different way. And so if you've done this, if you're in the place where you've over hired, making a correction is painful. But. It's one of the most important things to do, and you redeploy the person that you don't need and your team will come back together and they will move forward and they will figure out how to how to get things done. Now, if you're in the place where you're thinking about hiring, I want you to make sure that you conduct proper analysis around that hire so that you know you need that person before you ever bring them in the door. And in part two of the most important hire you can make. I'm going to talk about how exactly do you do that proper analysis for every hire that you bring in 100 percent of the time to make sure that you're going to have somebody who's fully utilized who because you're increasing complexity costs, they're actually worth it and they're going to help move your company forward and not be a free radical in your business, bouncing around and messing stuff up. If you're an entrepreneur and you are growing a team and you want to get more information on how to plan successfully and predictably with your team, communicate with your team so that they know what's going on and they can get out in front of you. You call your shots, they help you get there and hire in a way that is consistent and you get true believers on your team. We can help you out. And the CEO of Simple Operations dot com we recently rebranded to Simple Operations. You can go to Simple Operations dot com and sign up for a call with our team. If you're growing a team, if you're in a place where you know you can't do it all yourself, if you're on a mission to change the world and you want people around you who feel the same way you do and who are putting in the same type of time you're putting in and they're working hard and they're helping you get to where you want to go. Reach out to us, go to Simple Operations dot com. You can read our latest blog post there, and you can also sign up for a call with my team and we would love to talk to you. And on the next episode, you are going to see part two of the most important hire you can make. How do you analyze to make sure you don't hire someone who is underutilized and you don't bring free radicals into your business? Go to simple operations dot com. We look forward to hearing from you.