January 21, 2025 • 53 mins
Today we’re diving into why building and scaling a business—and achieving more freedom and free time—starts with the “who” in your business.
Our guest, Dr. Geoff Smart, is the Chairman and Founder of ghSMART, a leadership advisory firm specializing in helping companies make high-impact hiring and leadership decisions. With over $100 million in revenue, ghSMART’s hiring strategies are in high demand because they deliver results.
If you’ve ever wondered, “Who is the world’s expert on hiring?”—just ask ChatGPT, and Geoff Smart’s name will surely come up. He’s the New York Times bestselling author of Who, Leadocracy, and Power Score: Your Formula for Leadership Success.
Geoff’s mission is to help leaders amplify their positive impact on the world. His expertise has been featured in The Wall Street Journal and BusinessWeek, and he’s a regular contributor to Psychology Today.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Anne McGinty (00:08):
Welcome to how I Built my Small Business.
I'm Anne McGinty, your host,and today we're diving into why
building and scaling a businessand achieving more freedom and
free time starts with the who inyour business, starts with the
who in your business.
(00:28):
Our guest, dr Jeff Smart, isthe chairman and founder of GH
Smart, a leadership advisoryfirm specializing in helping
companies make high-impacthiring and leadership decisions.
With over $100 million inrevenue, gh Smart's hiring
strategies are in high demandbecause they deliver results.
If you've ever wondered who'sthe world's expert on hiring,
(00:50):
just ask ChatGPT and JeffSmart's name will surely come up
.
He's the New York Timesbestselling author of who,
leadocracy and PowerScore yourFormula for Leadership Success.
Jeff's mission is to helpleaders amplify their positive
impact on the world.
(01:10):
His expertise has been featuredin the Wall Street Journal and
Businessweek and he's a regularcontributor to Psychology Today.
You can find a link through tohis business in the episode's
description.
You can find a link through tohis business in the episode's
description.
Before we dive in.
If you enjoy today's episode,please share it with someone who
(01:32):
could benefit from the insightsand stories.
I'm an indie show and yoursupport helps me reach and
inspire more listeners.
Let's get started.
Thank you to our listeners forbeing here today.
Jeff, thanks for coming on theshow.
Geoff Smart (01:50):
It's a great pleasure to be here, Anne.
Anne McGinty (01:52):
To lay some groundwork for understanding
your expertise for anybody thatis listening in.
How did you first?
Geoff Smart (02:04):
develop your perspective on identifying and
nurturing effective leaders.
So it's a super long story.
Let me do the short version ofit.
It's kind of like I'm a dentistand my parents were dentists
and there's a version ofdentistry that I sort of leaned
into.
That's basically what happened.
So my father was an industrialpsychologist whatever that is,
that's like a businesspsychologist so he had his own
(02:26):
practice.
My mom was a speech pathologist, so both of them were sort of
in the helping profession and so, honestly, that was just like a
big, helpful start where I wasaware of.
There's this whole field outthere where human beings are
helping other human beingsperform well in the workplace,
and so that's where it came from.
And if I didn't mention that,you know all the remaining
(02:49):
choices I made in my career youknow you'd miss the origin.
Anne McGinty (02:53):
Okay, and so you've been doing this now for
how long?
30 years?
Geoff Smart (02:59):
The company I founded, gh Smart.
We celebrate our 30-yearanniversary next June of 2025.
Anne McGinty (03:06):
Congratulations, thanks.
So what do you see as thebiggest mistakes that businesses
make when it comes to hiring?
Geoff Smart (03:14):
Ooh, okay, all right.
So the mistakes that businessesmake, like your listeners, like
small media businesses, allright.
Number one is not spendingenough time on it.
Let's see here I'll tell youthree answers to your question.
Then I'm going to give you amind blowing, inspirational
story of Rob Waldron, who is asmall business person who is
struggling with hiring.
The private equity person whowas talking about the difference
(03:46):
in mindset.
When you're in the business andyou're chasing customers and
product and operations andexecution and finance, you're
doing everything.
And where's the time left overfor focusing on the people part,
the talent part.
So problem one is notallocating enough time to the
talent hiring, firing,developing your teams of time to
(04:07):
the talent hiring firing,developing your teams.
Number two is doing it wrong.
So how many classes in highschool did you take on hiring?
Anne, zero, and how aboutcollege?
Zero and like okay.
So it's nobody's fault thatalmost everybody is terrible at
hiring.
But I'm telling you as theself-proclaimed world expert on
(04:28):
hiring everybody's terrible atit.
They do it wrong.
So why do they struggle?
They struggle because they askhypothetical questions in
interviews how would you do this?
How would you do that?
Well, the listeners can't seeI'm pulling a big red textbook
off my bookshelf behind me, theHandbook of Industrial and
Organizational Psychology, whichfor 50 years has been saying
(04:50):
hey, you hiring managers, stopasking people hypothetical
questions, because they give youhypothetical answers in
interviews and they don't helpyou predict what someone's
likely to do.
So, number one they don't putenough time into the talent part
.
Number two is they use faultymethods for making hiring
decisions.
(05:10):
You know hypothetical questions, just one.
Gut feel is another one.
Ooh, what's wrong with gut feel?
There are even some, I think,books on hiring that that really
encourage you to listen to yourgut when you hire.
It's like, no, don't listen toyour gut, your gut is biased.
Your gut has, you know, allsorts of weird psychology around
it.
Tell you what?
Don't listen to your gut whenyou're hiring.
Like that's not the way thatyou're supposed to collect data
(05:31):
and objectively evaluatecandidates.
What are other things?
Oh yeah, someone else.
This entrepreneur at an MITentrepreneurship conference once
told me he likes to stress outthe candidate during an
interview and I was like, well,tell me more.
And he said, well, we have avery challenging culture.
So I like to replicate or sortof simulate our challenging
(05:53):
culture during interviews to seeif they can handle it.
And so he does the old likesell me a pen.
Or actually, this is literallytrue.
He told me that he used to pickup the resume of the candidate
in front of them and say I don'tsee anything on this that makes
me want to hire you.
Prove me wrong.
Anne McGinty (06:11):
Oh my gosh.
Geoff Smart (06:12):
Aggressive and, unfortunately, not a useful way
to interview people because, asit turns out, people don't like
to be intimidated duringinterviews.
So there are a hundred bad waysto interview and those of us out
there in the in the worldeconomy who've never really been
trained on this stuff use allthe all the bad ways to
interview and hire and, as aresult, we have a 50% error rate
(06:36):
in hiring.
If you survey your listenersand say, hey, just reflect for a
moment on your last few hireswho have been with you, for you
know over the last two, threeyears or so, how many of them
would you say you weren'tsurprised.
They performed as advertisedand you're happy that you hired
them.
The number is 50%.
It just is across regions,across SIC codes, across
(06:56):
industries.
And what I learned from readingall the psychology stuff in my
PhD program in psychology onthis topic and then practicing
it and refining it over the lastthree decades, is you can
achieve a 90% hiring successrate if you follow a couple of
best practices it's actuallyfour best practices but if you
(07:18):
don't follow them, you're doomedto a 50% success rate.
Anne McGinty (07:22):
Okay.
So then, how can we, as smalland medium business owners, how
can we fix this bad hiring thatwe're doing?
Geoff Smart (07:31):
You do what Rob Waldron did.
So now I don't talk aboutclients or people whose
confidential stories they sharewith us, except if they give us
permission, and Rob gave mepermission to tell his story.
So check this out.
He was stuck at a $13 millionvaluation for his business.
Not bad, they made educationmaterials like for students and
(07:52):
teachers and parents.
$13 million, $13 million, $13million, $13 million.
And what Rob would tell you ishe was chasing all the what
issues in his business, but whathe wasn't doing is solving the
who issues right.
And so he listened to someonein our company give a keynote
speech about 10 years ago sayingstop chasing the what and
(08:13):
really allocate more time tosolving the who.
So he said all he did to changehis leadership approach.
His management approach was togo from spending less than 5% of
his time on hiring anddeveloping his teams to spending
about a quarter of his time onit.
So that's a lot of time.
25% of your time, that's a lotof time, right, that's a lot of
time.
(08:34):
And listen to what happened tohis business Cause I asked him
and he actually he sought me outas giving a keynote speech.
He was in the audience.
He was like hey, come over here.
Before I went on stage, shetold me a story right there and
he said all I did was reallyfocus on what are the two or
three key hires I need to bemaking right now.
And rather than looking at oneor two or three candidates, I'd
look at dozens of candidates andI'd get referrals.
(08:56):
And he practiced the fourmethods that you and I are
definitely going to talk abouton this podcast.
So he followed the correctapproach to hiring.
He spent the right amount oftime on it and his $13 million
business turned into $30 million, turned into $500 million,
turned into a billion, turnedinto a $5.2 billion business
(09:17):
over a decade.
And I said, well, come on, whatelse happened in the business?
He said I didn't do anythingdifferent other than change from
not really focusing on thetalent part to really making it
a major allocation of how Ispend my time, and then just
getting the next two or threekey hires right has made all the
difference in the world.
Anne McGinty (09:34):
Okay.
So what is the magic here?
What is the formula that youtaught him?
Geoff Smart (09:39):
Yeah, well, here it is so.
So we already talked about whatnot to do, right, don't ask the
hypothetical questions.
Don't like not spend any timeon it.
Right, don't intimidatecandidates.
Okay, so here's what to do.
You do these four things andthe four things are called
scorecard source, select andsell.
(10:03):
So these four steps in goodhiring it starts with a
scorecard where I don't know.
I'm an entrepreneur, right, Ifounded my company.
I'm a little bit ADD.
For sure, entrepreneurs don'tlike to sit down and to think
for 20 minutes about what arethe outcomes you expect this
person to achieve in this role.
What are the you know,adjectives or competencies you
(10:27):
would use to describe, like kindof the ideal candidate for this
role?
So step one is sit down andtalk to your team but, like,
really do a little bit of likeZen reflection on you know, what
is it that you really need thisperson to accomplish in this
role?
And that becomes the scorecard.
It's the set of criteria you'reusing to evaluate candidates.
You have to do that Like.
(10:48):
Success in hiring begins with ascorecard.
Step two that's when you startsourcing candidates.
So a big, big, big, big mistakeentrepreneurs make I'm talking
to you and entrepreneur businessstarters out there is.
You hire your cousin to be headof marketing and then, oh yeah,
your next door neighbor is likeyour product person.
(11:09):
Knock it off with the hiring.
The warm bodies who happen tobe around you, okay, knock it
off with that.
That is your business is tooimportant to just hire whoever's
just around you.
Like, stop that.
Sourcing looks at its best lookslike this.
I hired a CFO a year ago.
We engaged a search firm thatwe looked at 150 candidates like
(11:33):
for real and we picked thisamazing CFO.
So that's what good looks likewhen you're sourcing is.
You get your colleagues.
Everyone's looking for talent.
Maybe you have search peoplehelping you, maybe you don't,
maybe you're all over, you knowonline.
So, basically, going with fistsof fury to source as many great
, diverse candidates from allbackgrounds.
(11:54):
Get a huge pile of candidatesthat you're considering.
That's like step two, not like,oh, this person I know really
well, I imagine they'd be goodin this role.
No, get a big list of folks.
Step three is called the selectstep and this gets a little bit
more nuanced, where there aregood interviews and bad
interviews.
The world's greatest interviewis we feature in our book.
(12:18):
Who this book?
Who has been the top sellingbook on hiring in the world for
the last 16 years.
So our book is number one.
It's oh yeah, it just came outat the Ukrainian edition.
Look at that, it's in Mandarin,it's in Portuguese, like anyway
.
So this is literally that.
If you ask ChatGPT my kid didthis yesterday what's the top
(12:39):
selling book on hiring in theworld?
Who?
The?
A method for hiring by smartand street is number one.
So in it we describe theinterviews.
If you want to learn more aboutit, we just share it.
Like, here are the interviews.
But basically the bestinterview takes a candidate like
a finalist candidate, likesomeone you're pretty sure you
want to hire.
That's when you wheel out thisheavy duty interview and you
(13:00):
basically just walk them througheach of the chapters of their
career and you talk abouthighlights and accomplishments.
You talk about low points andthings that didn't go well For
each job they've had.
You're asking them what werethey hired to do?
What did they accomplishthey're most proud of?
What were some examples ofmistakes or things that didn't
go well?
Who did they work with and thisis a great one, watch this what
(13:23):
was your boss's name in thatjob?
And then they tell you and thenshow them you're writing the
boss's name down Ooh, susanJackson.
And then ask them to spell theboss's name.
How do you spell Jackson?
And they'll say J-A-C-K-S-O-N.
And then write it down Great.
And then you say oh, at somepoint in this process we might
(13:44):
ask for your help setting upsome reference calls, if that's
okay.
And then the candidate sayslike, yeah, that's fine.
And then you say great, when wetalk with Susan Jackson, what's
she going to say were your bigstrengths and weaknesses when
you work together?
And now the person's reallymotivated to give you some
pretty good information, becausethere's some accountability to
it, because you're going to talkto their boss and they're going
(14:05):
to tell you stuff.
So that's like a little bit ofa deep dive on step three of
four, the select step.
Step four of four is called thesell step and as entrepreneurs,
we have to sell like heck toland the A caliber talent that
you want to bring into yourbusiness.
Because, guess what?
They're already gainfullyemployed somewhere, doing well,
making money and making impactand treating their colleagues
(14:27):
well somewhere else.
So you have to really put thesell on them in order to get
them to say yes to joining yoursmaller company.
Anne McGinty (14:36):
And does this process work regardless of the
size of the business, so smallto large corporations?
Geoff Smart (14:42):
Yeah, it really does.
And like, now that I've toldyou the four steps, like, which
step would you take out for asmall or large corporation?
Like the part where you figureout the criteria that matter.
No, that's pretty important.
The part where you like go geta bunch of candidates, like it's
.
It's a very scalable process.
So if in my firm we, we we doCEO succession projects for some
of the biggest companies in theworld, this totally works.
(15:05):
And when we're hiring alandscape oh, you used to have
your lighting business, right Ithought of you because I met
with the lighting guy last night.
He's going to, like, you know,put holiday lights in our house.
You know, my wife and I had aset of criteria.
We're like, hey, here's what wewant them to deliver, here's
the price point we're lookingfor, here's the kind of
creativity we want.
(15:25):
And we have like a littlescorecard and we've got some
referrals.
And then we're talking aboutprevious jobs these people have
done.
And so, yeah, I mean prettymuch picking anybody to do
anything.
These four steps are useful.
And, yeah, so I give most of mytalks.
I don't love public speaking.
I'm not constantly like outthere giving talks.
I really love the business thatwe're building.
(15:48):
So I'm mostly a behind thescenes founder, but when I'm on
stages it's mostly for small,medium businesses and those
owners are saying like, hey,we're having a hard time hiring
great talent, like you know,give me some guidance.
And so, yeah, this stuffdefinitely works for teeny, tiny
companies with like one personor the biggest companies in the
(16:08):
world.
We also have done this forstate governments.
We've served special operations, military people,
nanotechnology researchers.
I mean I can't think of acontext in which these four
principles for good hiring likekind of wouldn't work.
Anne McGinty (16:22):
These four principles for good hiring like
kind of wouldn't work.
And what about a position likeskilled trades or line workers
or sales teams, for example?
Yeah, Does top grading workeffectively in these situations?
Geoff Smart (16:40):
Well, sure.
So to me, like unskilled trades, do they show up, do they?
You know, like there's likecriteria that matter, right, and
some people are great and somepeople are not great.
So the goal is to hire thegreat ones For skilled trades,
absolutely, there's a huge range.
It definitely works for that.
Salespeople my gosh,salespeople are good at BSing
their way through interviews.
Let's say there are a hundredsalespeople for a role.
Half of them are like belowaverage in their performance,
(17:01):
right, and like the other halfare like the top half.
So your trick is to try tofigure out who the not only top
half are, but like the top 10%in a given talent pool who are
willing to work for the sameamount of money.
You know there's a massiverange and performance and who
you're going to hire.
I was interviewing the salesmanager who used to work at
Oracle selling software and andhe told me yeah, you know, I did
(17:25):
great in that last job.
I was named president's club.
And then I naturally asked himwell, what percent of your peer
group made president's club thatyear?
And he said, well, nine, about95%.
And so I'm thinking, oh great,buddy, you're in the top 95% of
your peer group.
So salespeople are, you knowthey get to gap.
So here's three great follow-upquestions.
If you're in the top 95% ofyour peer group, so salespeople
are, you know they get the gap.
(17:45):
So here's three great follow-upquestions if you're picking
salespeople One and as you'retalking about, you know, sales
jobs they've had ask them, it'scalled the three Ps.
What were your results relativeto your peer group, you know,
did he perform in the top 10%,bottom 10%, somewhere in the
middle?
So versus peer group?
Number two would be versus plan.
Oh, you sold, you know, 1.3million last year.
(18:09):
Okay, well, what was the plan?
You know, if the plan was 500Kand they did 1.3, like that's
great, right.
Or if the plan was 6 millionand they did 1.3, that's like
really bad.
So find out the plan, find outwhat their actuals are.
And then the third one youdon't always need to have all
three Ps, but it's like previousyear performance.
So like if some business, youknow, product group, you know
(18:36):
did 2 million in revenue theyear before you joined it and
then they did 1.5 the year afteryou joined it and 1.1 the year
after that, that's bad.
If that same group did 2million before you joined it and
then, under your leadership, itwent to 1.5 to 3 to 6, that's
good.
So to me, it's all aboutgetting the data of what they've
actually accomplished andgetting examples of it, getting
the real numbers, verifying itwith references.
(18:56):
That's what good hiring lookslike.
Anne McGinty (18:59):
And let's say that there is a company that has the
100 salespeople on their teamand those half are
underperforming.
What advice would you give tothe leaders of that company who
are dealing with theunderperformers on their team?
Geoff Smart (19:12):
Well, this is a very controversial question
you're asking.
I'll tell you what I think andalso tell you where the range of
opinions is on this topic.
I think and we practice this atGH Smart, we like practice what
we preach here internally Ithink it's great to give people
very honest feedback, give thema lot of feedback, give them
more feedback than they evenwant to hear so they really
(19:33):
understand where they stand,really be clear on expectations,
really be clear on steps thatthey could do in order to
perform at the target level.
And then, if you do all that,people will be like you know
what and I really appreciateyou're having these sessions
with me and you've been givingme all this feedback and
coaching I don't think I can getthere.
In fact, I don't even believein the product that much.
(19:55):
I don't feel like I want tosell at the target level.
I'm going to go do somethingelse.
And then you say, oh, okay,well, you know, take your time
finding something, you know youcan work, you could take some
time off, and then they go findsomething else.
And to me that's like beautiful, frictionless capitalism where,
yes, you have a high bar forperformance, but if you give
(20:16):
people honesty and supportivefeedback and coaching.
At some point most of them willjust punch out if they, you
know, if they realize they'renot going to be successful.
So that's good for folks whodon't get the memo.
I had a very early colleague inGH Smart's journey where they
weren't making clients happy andat the end of the day, like you
(20:36):
got to make clients happy right.
So clients were complainingshe's not giving me the
attention I need, it takes toolong to get work products back,
and so I'm giving this colleagueperformance feedback and she
just like kind of was actinglike that's not my problem, you
know, it's the client's problem.
They're unreasonable, you knowthat kind of thing.
And so you know, at some pointyou do have to take action on
(20:56):
someone who, like doesn't getthe message, even though you've
given them tons of feedback andsupport to try to help them be
successful.
The number one regret the lastI don't know thousand managers
we've advised or worked withwill tell you is waiting too
long to remove a low performingcolleague.
And I'm telling you, if thatperson's also culturally toxic
(21:17):
and is like being mean to peopleor mistreating juniors or doing
anything bad, that's likecultural deep.
That is very, very costly.
You got to have those chatswith the people pronto and get
them out of the organization.
We're a very nice firm.
I'm really happy Our glass doorrating is the highest of any
top firm in our industry out oflike 70,000 companies in
(21:40):
consulting Like.
We're a very nice, supportive,friendly place.
That said, if someone's likenot living the values and being
disrespectful, we will give themquick warnings and then out
they go.
If they're doing like hashtagme too stuff, they get vaporized
before they even like leave theroom in which they like
committed the offense.
That's literally true.
So if there's like valuesabusers at your company, get
(22:04):
them out pronto, pronto, pronto.
Maybe not even a whole lot ofcoaching and feedback, because
it's just so costly to thosearound.
Or someone strugglingtechnically, get them some more
training.
Or if they're strugglingperformance wise, but they're
living the values you know, youinvest in them.
You try to help them besuccessful.
Anne McGinty (22:21):
Have you as well.
There's a few differentquestions I want to ask you, but
in the 30 years that you'vebeen doing this, has anything
changed dramatically from themethodology that you originally
created to now?
Geoff Smart (22:33):
Yeah, two things.
So we didn't create themethodology 30 years ago.
We just started consulting andthen this book really codified
it 16 years ago, and so I'llspeak to from when we published
this till now.
Two things are different.
One is basically like just theglobalization of talent markets
(22:53):
and the importance of havingdiverse folks with different
language backgrounds andcultural awareness and people
from, like, all backgrounds.
That's a more deliberate,important thing to do now,
clearly, than I think we hadlanguage for or best practices
around, you know, 15 or 20 yearsago.
So that's one.
The second thing is digitaltech, you know, is a huge deal
(23:16):
right and there's a lot of timewasting.
That can happen if you misusetechnology to try to do good
hiring and management of yourcolleagues.
But it's pretty awesome.
I was on a chat board yesterdayin consulting where top
performers out of really goodfirms share their thoughts about
(23:39):
what they like and they don'tlike about their employers.
It's called Fishbowl.
A candidate we're trying tohire told me about it.
I was like, all right, I'mgoing to check it out.
You can be anonymous if youwant or if you're really brave,
you can actually be yourself inthese things.
You post questions or yourespond to other people's
thoughts and all that kind ofjazz.
That's like pretty important.
I have personally sourced about10 amazing colleague candidates
(24:03):
in this last year by just beingpresent in digital platforms
like that that you know thatwasn't the case 15 years ago.
So I'd say those two things thefirst one is is the importance
of and the like kind of explicitvalue of building diverse teams
is like number one and the useof technology is number two.
All the rest of this stuff kindof holds.
(24:24):
Otherwise, this book still isthe top seller every week on
Amazon.
It's not outdated yet.
You know, cause like the coremethod really works.
But I'd say if we were to likerewrite the book today, we would
have more chapters or moreexplicit best practice sharing
on those two topics.
Anne McGinty (24:41):
And maybe some stories.
That is incredible.
And your company now, like Ithink I read correctly, you've
grown your company to over 100million in revenue.
Is that correct?
Geoff Smart (24:51):
Yes, yes, we went from zero at the founding, where
it was just me and delusions ofgrandeur, to, yeah, I think
we're at 110 million, trailing12 months, with about 23 in
pre-tax profit, no debt, and theculture is really good and
we're we're doing well.
It's like not easy, you know.
It's like nothing's ever easywhen you're growing a business,
(25:14):
but we're having a lot of funwith it.
So, yeah, I don't know, doesthat make us a medium sized
business?
So I was just happy we surviveda year.
I think, like what you know,one in 10 new ventures survive
even a year and maybe it'sliterally as low as like one in
a thousand make it, you know, 29years.
So we feel very proud and happyto be alive and kicking and we
have growth goals.
(25:34):
We're still, you know, we'restill hustling, we're getting
clients and growing in newmarkets and inventing new
products and services, all thewhile trying to keep our culture
really positive.
Anne McGinty (25:44):
So this might be a bit of a loaded question
because it could be a very longanswer, but how did you, in the
course of I don't know when theexponential growth took place,
but how did you in that timeframe, grow your company to 110?
Geoff Smart (26:01):
Yeah, by hiring a great number two.
So I grew the firm zero to 10million in revenue as the
president and CEO, as the personrunning the meetings, that kind
of thing.
I kind of burned out in the2009 financial crisis, where our
revenue was off 20%, I think,and, like everyone's freaking
out for their jobs and you knowit was hard Clients weren't
(26:23):
spending any money.
I got us through that.
It wasn't on a podcast, but itwas in like an EO or YPO type
speech where someone was talkingabout the difference between
working in your business versusworking on your business and a
light bulb just went on andsirens sounded and I was like,
wait a second, I can work on thebusiness without working in the
(26:46):
business.
You know, I was carrying a 20client load, like I'm, I was in
it, in it, in it.
And then I looked around in 09and we all were like, okay, who
wants to run this thing?
I was like I don't need to runthis, like I'm a proud founder
and sort of chairman here, butif someone else wants to step up
and run it, like a show ofhands.
And so we picked Randy Street,the coauthor on the who book.
(27:09):
So we had worked really welltogether on the who book and he
is an engineer by training.
He's a Harvard MBA.
He worked at Bain for like 10years.
He ran a company.
He had operating chops, as wewould say, not just consulting
skills and so he became thepresident and managing partner
in 2010.
And he 10X'd the business overthe next 10, 11 years.
(27:32):
So I mean it wasn't like how didI do it?
Oh, I picked Randy, randy didit.
I mean it was like literallylike that simple.
I would highly recommend toyour listeners, highly, highly,
highly recommend.
For gosh sake, find someone tohelp run your business.
Maybe it's a muscular CFO whocould play the role of COO.
Maybe it's like you do what Idid hire a president to run the
(27:55):
day-to-day, really run thebusiness, run the meetings,
create budgets and strategiesthat you can approve.
And Randy did such a good jobof training me on how to be a
good founder while havingprofessional management running
the business.
He's like, hey, whatever infoyou need, let's get the cadence
of you know, do you want monthlydashboards and we can chat
(28:16):
quarterly.
I'm like what do you need?
But, by the way, here's thescary part he said that I was no
longer invited to come tomanagement meetings.
Anne McGinty (28:26):
How'd you handle that?
Geoff Smart (28:28):
I felt like what?
I am so smart and wise and I'vegot all the vision of being the
founder.
What do you mean?
You don't want me coming tomanagement meetings.
And he said oh no, it's simple.
Like, if you're in the room, Ican't manage the business Right.
So he's like so why don't younot come to management meetings?
I'll manage the business, butyou and I can meet whenever we
want.
And, by the way, let's come upwith a good scorecard for your
(28:52):
chairman lane and role.
I'm like what do you want tospend your time on?
He was so amazing by helping mefigure out what I'm good at and
to create basically, my own jobdescription and to stay in that
lane while he managed thebusiness.
And it was.
You know, a lot of small mediumbusinesses owners are like oh,
you know no one.
I wouldn't trust anyone else torun the business, and that's
(29:14):
probably true because theirhiring process stinks.
They shouldn't trust otherpeople to run their business.
But if they improve theirhiring process and they really
find some excellent talent, forgosh sake.
I shall now quote WarrenBuffett, who said hire well and
manage little, and just thinkabout that for a moment.
That guy's seen tons ofsuccessful and unsuccessful
(29:36):
small to medium and then largerbusinesses.
But there's something to it.
If you really hire well andyou're willing to delegate and
you're willing to make bets onpeople and then stay in your
lane and let them do their jobs,you can scale.
In fact, I dare almost suggestthat's the only way to scale,
because if you're hanging on toeverything and you're the
decision bottleneck, oh great,you're going to have a $5
(29:58):
million revenue business forever.
But if you get good at like Robdid, the next couple of key
hires, make them hire theamazing person in those
functional areas or thoseimportant key areas and give
them room to operate.
Align on goals, be clear aboutwhat you want them to do, but be
pretty flexible on how they areto do it.
(30:19):
I'm a big like work fromanywhere fan too.
Like you know.
Don't micromanage your starperformers or they will leave.
But if you align on goals, youhave a great culture.
You're willing to delegate andlet people have room to operate.
You reward and incent when theyreally do well so they can
share in the upside.
You're good.
(30:39):
You're going to be golden.
As a small business owner.
You're going to find yourselfsuddenly a medium business owner
.
Anne McGinty (30:45):
With all of that freedom, do you trust that the
employees, the team, will justperform as expected?
Yeah, okay.
Geoff Smart (30:53):
Yeah Well, remember , we're like really good at
hiring, so we make mistakes.
We fire about I don't know 3%of the people in our firm per
year.
It's not a big number, butwe'll make mistakes.
People will come in and we'llbe like, oh no, and then we'll
coach them and then get them out.
So, but the people who stay,we're pretty clear on what their
(31:15):
job expectations are.
We're pretty good at measuringstuff.
So everyone has the same data.
We know if people are doingwell or not doing well and, yeah
, we trust them to do the workto an absurd level, like we have
Harvard Business School casestudies written about our
freedom culture by this person.
Professor Ashley Willans atHarvard Business School wrote a
(31:35):
book called Time Smart.
Your listeners can't see Iactually have it right here.
It's called Time Smart.
Of course, I love the titlebecause my name is Jeff Smart
and the name of this book isTime Smart.
But she studies.
It says how to reclaim yourtime and live a happier life.
So she studies what makespeople happy in the workplace
and, spoiler alert, freedommakes people happy in the
workplace and, spoiler alert,freedom makes people happy in
(31:56):
the workplace when you havefreedom to choose and you have
control over your time, you'reway happier than if you're
living in a more coerciveenvironment.
And so we, we live that to suchan absurd degree that that book
author, that like bestsellingauthor, literally wrote a 30
page case on GH smart as anexample of what a freedom was a
(32:16):
time.
Smart culture looks like, and itstarts with having clear
expectations, hiring well, butthen really letting people
figure it out on how to get thework done when and how they best
can.
So I just dropped my daughter'soff at, didn't drop them, took
them to gymnastics.
I have four-year-old twin girls.
I'm talking to our investmentbankers.
(32:38):
We're going to do a transaction, you know, like minutes later
and so.
And then I pop in here and I'mtalking to you.
Like you know, taking advantageof modern communications to
hire people and give them a lotmore freedom to do their work
when and how they want is, Ithink, a magical formula for
success today that smallbusiness owners really should
(32:58):
take advantage of, because a lotof these big companies that are
doing mandatory, you know, backto the office are losing great
talent and they're looking forplaces where they could go,
perform and have more freedom.
Anne McGinty (33:10):
So in your company , as you grew so rapidly, I
don't know how many people doyou have working for your
company now.
Geoff Smart (33:16):
We have 185 people in our company now in five
countries.
We're in the US UK, germany,canada and Australia.
Anne McGinty (33:24):
How have you gone about maintaining your company's
culture being so spread out andalso having grown like that?
Geoff Smart (33:32):
I think there's five ways to maintain your
culture.
We've written four books as afirm we published.
They're all bestsellers.
We for sure should write a bookon culture.
We haven't yet, but I'll giveyou my secret sauce here.
There are five things yourlisteners can do to manage their
culture, to, like create theculture that they think is going
to, you know, win the day.
(33:53):
The five things are who youhire, right, like, hire people
who naturally do the culture youwant, right?
That's like that's actually theeasiest way to.
I mean, if you want to have anice culture, hire nice people.
If you want to have a, I don'tknow, it's like it's literally
that simple.
So that's one clearexpectations.
Hey, here's, here's what weneed you to do.
Here's what's okay or not okayas far as ways of working, that
(34:15):
kind of thing.
Three is incentive alignment,which is like, just like at our
firm, people developing otherpeople into good consultants and
good partners is important, andif we didn't pay people to do
that, they wouldn't do it.
But instead we're like oh, yourbonus is like heavily dependent
(34:35):
on are you developing yourcolleagues?
Are you helping people learnand grow, that kind of thing,
right?
So you have to reward peoplefor it.
Training give folks training sothey can know how to do
whatever the key elements ofyour culture are.
And then the last one.
I don't have a good name for it.
I call it like structures, butjust the idea of like who's
meeting when, what's the orgchart?
Look like all that.
(34:56):
So if you're basically like, ohyeah, we need to have fast
cycle times of productdevelopment, but the product
people are over there and thesalespeople are over there, well
, don't, don't have them soseparate and have them more
working together in the sameroom, you know sort of, or on
the same Zoom calls or meetingmore often.
So the five things to build theculture you want and we've done
these in spades who you hire,what you tell them you expect,
(35:19):
how you incent them and pay themfor doing the culture you want
training and structures, that'sit.
And if your culture stinks,you're probably not really using
one or more of those levers inorder to get the culture that
you want.
It's also who you fire.
When we have fired people whoweren't living our values
(35:43):
although it's a sad day andwe're like, oh man, I wish we
could have helped that personnot be such a culture destroyer
but when we've done that overthe years, the very next day
everybody sighs a big sigh ofrelief and you go.
That was an important thing.
That's a very important part ofbuilding and sustaining your
culture is taking out folks whoare actively toxic in that
culture.
Anne McGinty (36:03):
OK, yeah, that that I know exactly what you
mean because I've experienced itfirsthand.
And when you cut out the muck,then everybody gets lifted.
Geoff Smart (36:12):
Sometimes it's really weird.
Then everybody gets lifted.
Sometimes it's really weird.
I've had a weird experiencewhere people who were living the
values, who are being we havevalues of like generosity and
gratitude and, you know, likedeveloping others, all this kind
of stuff.
What's weird for me is whensomeone comes in, does the
culture for years sometimes likethree, four or five years and
then all of a sudden, I don'tknow, maybe they're going
(36:33):
through it or something in theirpersonal life.
Something happens wheresuddenly they're not living the
values and they don't seem likethey're ever going to be able to
go back to, you know, livingthe values and then they have to
go.
That's pretty weird.
That's rarer, though.
Usually what happens is folksare on their best behavior, they
get hired and then you end upseeing there's some, you know
some jerks in the midst and thenyou have to go deal with that.
Anne McGinty (36:54):
Yeah, so for anyone who is maybe on the
younger side and they areaspiring to become a leader,
they want to be an A performanceleader that gets hired by
someone like you or gets putinto a leadership position later
on in their career.
What skills do you think thatthey should focus on developing
early in their careers?
(37:14):
We skills do you think thatthey should focus on developing
early in their careers?
Geoff Smart (37:16):
We wrote a New York Times bestselling book called
the CEO Next Door.
I didn't write this, but one ofmy colleagues, elena, wrote it,
and Kim.
So CEO Next Door based on astudy of over 2,600 leaders.
So we worked with theUniversity of Chicago's
professors of management tocrunch the data and find these
insights.
This is not like my opinion.
(37:36):
This is like based on data.
They found four things thatreally mattered.
These are all skills that youcan build and then we had a
different study it's like adifferent cut that found three
things that matter.
So four plus three, so I gotseven things that matter.
So put these two together.
Here's what you got.
We'll go with Elena's first.
They spelled dare D-A-R-E, soshe found that leaders who
(37:58):
really worked on being decisive,like make more decisions, not
less, make faster decisions, notslower Working on being a
decisive decision makermassively correlated with
success as a business builder.
So that was one.
Two is A adaptability.
So don't fall into the trapwhere you're just like well,
that's what I always did, youknow, meanwhile market
(38:20):
conditions have changed orproduct conditions have changed,
like being able to face realityand then adapt.
That's the second thing.
Third is reliability.
If you say you're going to dosomething, like do it we're huge
in GH, smart on, we startmeetings weirdly on time.
We end them on time.
If we say we're going to dosomething two years from now,
like we do it, like we're very,very reliable, and it creates
(38:42):
trust.
It creates just like a reallyhigh competence culture if
you're super reliable.
So that's the third one.
The fourth one is E engagingfor impact.
So it's not good enough just tohave the right answer.
As a leader, having the rightanswer, oh congrats, great, you
have the right answer.
You need to like persuade otherpeople and influence and listen
(39:03):
and basically it's likepersuasive communication was the
fourth thing that matters andit's this learned skill.
I mean, you can learn how to bea more persuasive communicator.
So those are the four that cameout of that study on this.
These are kind of, I think,bigger companies managers, the
PowerScore one we looked atsmaller company managers and
there are three things that ifyou and your team are good at
(39:28):
these three things, you are 20times more likely to accomplish
your goal for that team than ifyou're not good at all three.
So it's kind of like atriathlon, swimming, biking and
running Like you actually haveto be good at all three.
You can't just be good at likeone.
But the three things are beingable to prioritize.
They spell power.
By the way, p-w-n-r Prioritizingis like what's the goal?
(39:51):
I think it's on any smallbusiness owner, like your
previous podcast person who saidyou know they were doing 8
million in revenue and he said30, we're going to do 30 and 30
million in revenue.
Setting a goal, setting theright goals, not too many goals,
but just a small number of theright goals.
I think that's basically thespirit of what good
prioritization looks like as anentrepreneur.
(40:12):
That's the P.
The W is who's on your team.
So back to the hiring and firingthing.
Learn it, you can learn it.
Read our books like listen tothis podcast, like you know.
Learning how to be good athiring and firing, to build
talented teams super importantskill to develop.
And then R is relationships,and this is kind of like
relationships focused on results.
(40:33):
So it's not just being nice toeverybody or kumbaya and
everyone's just getting along,but like nothing's getting done.
It's like how do you buildrelationships that are focused
on achieving shared goalstogether?
Like achieving results throughyour relationships is kind of
like the third habit.
And you put the three together,you're 20 times more likely to
(40:57):
achieve your goals.
Anne McGinty (40:59):
Well, that's all.
Anybody needs to study, I think.
Geoff Smart (41:03):
Yeah, and it's the CEO next door.
That's Elena's book.
It's great.
That's the DARE stuff.
And then Randy and I, who wrotethe WHO book this is our second
book Power Score, along withAlan Foster, one of our other
colleagues.
It's called your Formula forLeadership Success.
We had 15,000 people's careerswith 9 million data points that
went into this book, and thiswas big and small companies.
Anne McGinty (41:26):
Oh my goodness.
So you seem like a generallyupbeat, very optimistic, very
energetic person Over 30 years.
I'm sure you have facedsomething that is a very large
challenge or setback beyond aneconomic downturn.
Can you share anything thatyou've faced that was really
tough for you to get through?
Geoff Smart (41:47):
Sure, all right, let's see here.
So, on my highlights list of,like worst moments in business,
my assistant and I disclosedsome info to a client's
assistant that I guess theclient, as it turned out, you
know, didn't want us mentioningLike.
So, basically, I was trying tolike get a follow-up meeting
with this billionaire titan ofindustry who was a great client
(42:10):
or was about to become a greatclient, and his assistant wasn't
letting me set up a call.
She's like no.
I was like what do you mean?
No, like he requested thisfollow up call.
She's like to talk about what?
And the subject line of likewhat he wanted to talk about,
was a sensitive issue in theiroffice.
So, as it turns out, shebasically got really mad and
(42:30):
told some other people.
And then this titan of industrygot really mad and called me,
actually called my assistant.
He left a message that was likeI can't believe how you
violated our confidence and ourtrust and like I never want you
to contact me again.
You know, goodbye.
And so, like that was prettyrough.
We were like oh man, we're justtrying to offer enough info
that the gatekeeper would likelet us set up the meeting.
(42:52):
But you know we blew it becauseit was a sensitive matter.
As it turns out, that was oneAnother one.
I was too confident in ourstudy of a company and what was
good and bad about the company.
We spotted one weakness in thecompany, but here's where I made
a mistake.
Just because a company has oneglaring weakness.
We were hired to do anevaluation of this management
team.
They had a couple other glaringweaknesses too, but the one was
(43:15):
so bright we kind of took oureye off the ball and didn't see
the other ones.
So we missed.
And we were very confident inour analysis and our client
ended up really investing morein this company than they should
have and it was a completewrite-off.
The client, their multi-milliondollar investment went to zero
and we looked like you know, itwas just bananas.
(43:36):
So that one was a matter ofdoing like actually kind of poor
quality work and then making abig deal about how right we were
in this.
That influenced our client toextra invest.
That was pretty bad.
What else?
I sort of yelled at one of ourcolleagues 15 years ago who I
thought just wasn't prepared fora meeting and you know I'd like
(43:57):
missed some family stuff to beat this meeting and try to help
this colleague land a client andthe colleague like sort of
wasn't prepared and didn't dothat great job.
So, rather than be supportive,I was like in that, you know, I
can't believe you blew this kindof attitude and the guy quit,
like he and we no one quits ourfirm, like very few people quit.
So that was a case where I'veregretted being negative in my
(44:19):
feedback with a colleague.
I was like 15 years ago, so youknow, learn my last seven.
Like I don't like yell atpeople anymore, but that was an
early, an early thing.
What else is like?
I think we started and thenstopped doing digital innovation
a long time ago.
That would have been reallysmart to keep going.
We're doing a good job now.
Chatgpt, ai, predictiveanalytics the tools available
(44:43):
now are amazing for those of uswho have huge databases, right
of information, like.
So we finally like like we gotthe memo or we're on it, but for
many years there we were earlyinto, for example, like survey
data analytics technology.
Like we invented somethingcalled a feedback planet in 1999
.
It was like an automated 360degree feedback tool and it was
(45:06):
kind of hard and people calledand had tech support questions
and we just shuttered it.
I mean that could have beenlike a billion dollars.
That was like SurveyMonkey orQualtrics before SurveyMonkey or
Qualtrics.
So yeah, I'd say that's a hugeregret is not sticking with the
digital priority earlier.
And then we kind of got our acttogether about five to eight
(45:27):
years ago and not beinginternational earlier I really
liked the idea of bringing bestpractices, of hiring and
developing teams around theworld, and we're only in five
countries.
There are 200 countries, solike we're slow to get this to
spread around the world.
Those are some regrets andthings that like haven't gone
well.
I'd say Is that pretty good,good list.
Anne McGinty (45:48):
Yeah, yeah.
Well, I think your perspectiveof slow may differ from other
people's perspectives of slow.
I think you're doing prettydarn well out there, thanks.
So just as a closing questionhere, if you could go back and
talk with yourself when you werein your younger 20s, what life
wisdom would you give yourself?
Geoff Smart (46:08):
Yeah, all right.
So I think I did a good job ofcarving out plenty of time for
family.
So I think a lot of our fellowentrepreneurs who like burn the
midnight oil and really, youknow, really give it all to the
business, have great regretsaround not prioritizing either
family or friends or faithwhatever their faith may be or
(46:31):
doing like social impact, giveback.
I actually went really big onall that this whole time.
So I'm not going to give youthe like, oh, I should have like
carved out more time for familybecause, like, that's not a
regret.
So I'm sitting here trying tolike wind the clock back and I
so I have nine kids.
So we blended, my wife and I,four and three, so we blended
(46:56):
seven like the brady bunch, andthen we had two, so hence the
four-year-old twins.
So the kids are four to 23 andthey're great and the, the life
wisdom that we do give them arethings like I'll give my wife
Lauren credit for this doing thehard things to learn, like tech
or STEM or finance, or hardthings earlier is smart, because
(47:18):
you can always go less techlater, but it's hard to go more
tech later.
So I'll give my wife credit forthat one.
I think our kids have gone STEM, hard science, heavy early.
And then a couple of them havepivoted to, you know, like
consulting or whatever, ratherthan like stay in the computer
science and early.
And then a couple of them havepivoted to, you know, like
consulting or whatever, ratherthan like stay in the computer
science and stuff.
So I'd say that's one is, youdon't want to like do the easy
path when you're in your teensor twenties.
(47:39):
You want to do like the paththat's impactful and hard, I
think, but then sets you up forbeing able to have the networks
and the wisdom to choose yourown adventure later.
Oh gosh.
Other like career strategylessons, oh yeah, here's a huge
one.
I'll leave you with thisthought I cannot believe what
(47:59):
percent of high performing smallbusiness owners who turn into
medium or big business owners,what percent of them cite having
good mentors as like one of themost important things?
Mentors were super important tome.
Mentors were super important tome.
Mentors are super important topeople who build amazing things
quickly.
Yet I don't see even my ownkids to the degree I think they
(48:22):
should.
I don't see young peopleproactively searching out
mentors and kind of collectingmentors.
I'd say that'd be like the lastcareer strategy.
Advice is it's free, it's notthat scary.
Dm people on LinkedIn find out,get referred to so-and-so
Freaking.
Steve Jobs called up thefounder of Hewlett Packard, of
(48:45):
HP, to get computer parts thathe could like build something
when he was 12.
Like, weirdly, people out therewho get like a step function of
success and you're like how dothey do that?
They all have mentors givingthem advice or intros or
computer components, as it turnsout.
So I'd say, if you're young andyou're listening to Ann's
podcast, just think about whatdo you want to learn or what are
(49:07):
some jobs or industries ortypes of roles that really sound
interesting to you.
Who do you know?
And maybe you don't knowanybody, but like, use the
network you have to get to folksor just go ahead and blind DM
people on LinkedIn, call them up, email them.
You can figure out this stuffand try to recruit.
I'd say, by the time you're 20,to have like five really good
mentors who are very successfulpeople in the field you want to
(49:31):
be successful in is unbelievablypositive return on investment
of your time.
Anne McGinty (49:38):
That is great advice and one that I'm going to
pass along to my kids as well,or maybe they'll just hear it
when they listen to this.
Jeff, thank you so much.
This has been a phenomenal andhighly educational interview.
Thank you so much for takingthe time to share your expertise
with us.
Geoff Smart (49:54):
Your podcast is brilliant.
The interview was superenjoyable.
Thank you to everyone who'slistening and here's to hiring
and developing your team so youcould build your small medium
businesses into medium to biggerbusinesses that make impact,
make money and create wonderfuljobs for everybody.
Anne McGinty (50:16):
Today's key takeaways.
Many businesses fail by notallocating enough time to hiring
, relying on faulty methods likegut instincts or using
hypothetical interview questions.
Instead, focus on structured,objective hiring methods to
improve success rates.
Jeff shared his proven method,which includes scorecard source,
(50:41):
select and sell Clearly.
Define the role andexpectations.
Build a diverse and robust poolof candidates.
Build a diverse and robust poolof candidates.
Use structured,accountability-driven interviews
to predict real performance andactively attract top talent by
(51:04):
showcasing the role and companybenefits.
Dedicating more time and effortto hiring and developing the
right team can transform abusiness.
If your business is stuck ingrowth, consider spending 25% of
your time on hiring so that youcan work on your business
instead of for your business,and focus on the who instead of
(51:26):
the what.
Maintain your company's culturewhile scaling by hiring for
alignment, setting clearexpectations, incentivizing the
right behaviors, training foryour culture and establishing
effective structures.
If you're aspiring to be aleader or hired into a
(51:49):
leadership position, developcritical skills like
decisiveness, adaptability,reliability and persuasive
communication.
Also, prioritize buildingrelationships with those with
shared goals.
(52:09):
You've heard multiple timesthroughout season one this next
bit of advice, and here it isagain proactively seek out
mentors the earlier the betterwho can guide your journey.
It's free, it's not that scaryand if you establish a
(52:30):
relationship with your mentors,they can provide advice,
introductions and more.
Lastly, take on challengingpaths early.
Don't take the easy path.
It's the challenging ones thathelp you unlock your full
potential.
That's it for today.
I release episodes once a week,so come back and check it out.
(52:52):
Have a great day.
Welcome to how I Built my Small Business.
I'm Anne McGinty, your host,and today we're diving into why
building and scaling a businessand achieving more freedom and
free time starts with the who inyour business, starts with the
who in your business.
(00:28):
Our guest, dr Jeff Smart, isthe chairman and founder of GH
Smart, a leadership advisoryfirm specializing in helping
companies make high-impacthiring and leadership decisions.
With over $100 million inrevenue, gh Smart's hiring
strategies are in high demandbecause they deliver results.
If you've ever wondered who'sthe world's expert on hiring,
(00:50):
just ask ChatGPT and JeffSmart's name will surely come up
.
He's the New York Timesbestselling author of who,
leadocracy and PowerScore yourFormula for Leadership Success.
Jeff's mission is to helpleaders amplify their positive
impact on the world.
(01:10):
His expertise has been featuredin the Wall Street Journal and
Businessweek and he's a regularcontributor to Psychology Today.
You can find a link through tohis business in the episode's
description.
You can find a link through tohis business in the episode's
description.
Before we dive in.
If you enjoy today's episode,please share it with someone who
(01:32):
could benefit from the insightsand stories.
I'm an indie show and yoursupport helps me reach and
inspire more listeners.
Let's get started.
Thank you to our listeners forbeing here today.
Jeff, thanks for coming on theshow.
Geoff Smart (01:50):
It's a great pleasure to be here, Anne.
Anne McGinty (01:52):
To lay some groundwork for understanding
your expertise for anybody thatis listening in.
How did you first?
Geoff Smart (02:04):
develop your perspective on identifying and
nurturing effective leaders.
So it's a super long story.
Let me do the short version ofit.
It's kind of like I'm a dentistand my parents were dentists
and there's a version ofdentistry that I sort of leaned
into.
That's basically what happened.
So my father was an industrialpsychologist whatever that is,
that's like a businesspsychologist so he had his own
(02:26):
practice.
My mom was a speech pathologist, so both of them were sort of
in the helping profession and so, honestly, that was just like a
big, helpful start where I wasaware of.
There's this whole field outthere where human beings are
helping other human beingsperform well in the workplace,
and so that's where it came from.
And if I didn't mention that,you know all the remaining
(02:49):
choices I made in my career youknow you'd miss the origin.
Anne McGinty (02:53):
Okay, and so you've been doing this now for
how long?
30 years?
Geoff Smart (02:59):
The company I founded, gh Smart.
We celebrate our 30-yearanniversary next June of 2025.
Anne McGinty (03:06):
Congratulations, thanks.
So what do you see as thebiggest mistakes that businesses
make when it comes to hiring?
Geoff Smart (03:14):
Ooh, okay, all right.
So the mistakes that businessesmake, like your listeners, like
small media businesses, allright.
Number one is not spendingenough time on it.
Let's see here I'll tell youthree answers to your question.
Then I'm going to give you amind blowing, inspirational
story of Rob Waldron, who is asmall business person who is
struggling with hiring.
The private equity person whowas talking about the difference
(03:46):
in mindset.
When you're in the business andyou're chasing customers and
product and operations andexecution and finance, you're
doing everything.
And where's the time left overfor focusing on the people part,
the talent part.
So problem one is notallocating enough time to the
talent hiring, firing,developing your teams of time to
(04:07):
the talent hiring firing,developing your teams.
Number two is doing it wrong.
So how many classes in highschool did you take on hiring?
Anne, zero, and how aboutcollege?
Zero and like okay.
So it's nobody's fault thatalmost everybody is terrible at
hiring.
But I'm telling you as theself-proclaimed world expert on
(04:28):
hiring everybody's terrible atit.
They do it wrong.
So why do they struggle?
They struggle because they askhypothetical questions in
interviews how would you do this?
How would you do that?
Well, the listeners can't seeI'm pulling a big red textbook
off my bookshelf behind me, theHandbook of Industrial and
Organizational Psychology, whichfor 50 years has been saying
(04:50):
hey, you hiring managers, stopasking people hypothetical
questions, because they give youhypothetical answers in
interviews and they don't helpyou predict what someone's
likely to do.
So, number one they don't putenough time into the talent part
.
Number two is they use faultymethods for making hiring
decisions.
(05:10):
You know hypothetical questions, just one.
Gut feel is another one.
Ooh, what's wrong with gut feel?
There are even some, I think,books on hiring that that really
encourage you to listen to yourgut when you hire.
It's like, no, don't listen toyour gut, your gut is biased.
Your gut has, you know, allsorts of weird psychology around
it.
Tell you what?
Don't listen to your gut whenyou're hiring.
Like that's not the way thatyou're supposed to collect data
(05:31):
and objectively evaluatecandidates.
What are other things?
Oh yeah, someone else.
This entrepreneur at an MITentrepreneurship conference once
told me he likes to stress outthe candidate during an
interview and I was like, well,tell me more.
And he said, well, we have avery challenging culture.
So I like to replicate or sortof simulate our challenging
(05:53):
culture during interviews to seeif they can handle it.
And so he does the old likesell me a pen.
Or actually, this is literallytrue.
He told me that he used to pickup the resume of the candidate
in front of them and say I don'tsee anything on this that makes
me want to hire you.
Prove me wrong.
Anne McGinty (06:11):
Oh my gosh.
Geoff Smart (06:12):
Aggressive and, unfortunately, not a useful way
to interview people because, asit turns out, people don't like
to be intimidated duringinterviews.
So there are a hundred bad waysto interview and those of us out
there in the in the worldeconomy who've never really been
trained on this stuff use allthe all the bad ways to
interview and hire and, as aresult, we have a 50% error rate
(06:36):
in hiring.
If you survey your listenersand say, hey, just reflect for a
moment on your last few hireswho have been with you, for you
know over the last two, threeyears or so, how many of them
would you say you weren'tsurprised.
They performed as advertisedand you're happy that you hired
them.
The number is 50%.
It just is across regions,across SIC codes, across
(06:56):
industries.
And what I learned from readingall the psychology stuff in my
PhD program in psychology onthis topic and then practicing
it and refining it over the lastthree decades, is you can
achieve a 90% hiring successrate if you follow a couple of
best practices it's actuallyfour best practices but if you
(07:18):
don't follow them, you're doomedto a 50% success rate.
Anne McGinty (07:22):
Okay.
So then, how can we, as smalland medium business owners, how
can we fix this bad hiring thatwe're doing?
Geoff Smart (07:31):
You do what Rob Waldron did.
So now I don't talk aboutclients or people whose
confidential stories they sharewith us, except if they give us
permission, and Rob gave mepermission to tell his story.
So check this out.
He was stuck at a $13 millionvaluation for his business.
Not bad, they made educationmaterials like for students and
(07:52):
teachers and parents.
$13 million, $13 million, $13million, $13 million.
And what Rob would tell you ishe was chasing all the what
issues in his business, but whathe wasn't doing is solving the
who issues right.
And so he listened to someonein our company give a keynote
speech about 10 years ago sayingstop chasing the what and
(08:13):
really allocate more time tosolving the who.
So he said all he did to changehis leadership approach.
His management approach was togo from spending less than 5% of
his time on hiring anddeveloping his teams to spending
about a quarter of his time onit.
So that's a lot of time.
25% of your time, that's a lotof time, right, that's a lot of
time.
(08:34):
And listen to what happened tohis business Cause I asked him
and he actually he sought me outas giving a keynote speech.
He was in the audience.
He was like hey, come over here.
Before I went on stage, shetold me a story right there and
he said all I did was reallyfocus on what are the two or
three key hires I need to bemaking right now.
And rather than looking at oneor two or three candidates, I'd
look at dozens of candidates andI'd get referrals.
(08:56):
And he practiced the fourmethods that you and I are
definitely going to talk abouton this podcast.
So he followed the correctapproach to hiring.
He spent the right amount oftime on it and his $13 million
business turned into $30 million, turned into $500 million,
turned into a billion, turnedinto a $5.2 billion business
(09:17):
over a decade.
And I said, well, come on, whatelse happened in the business?
He said I didn't do anythingdifferent other than change from
not really focusing on thetalent part to really making it
a major allocation of how Ispend my time, and then just
getting the next two or threekey hires right has made all the
difference in the world.
Anne McGinty (09:34):
Okay.
So what is the magic here?
What is the formula that youtaught him?
Geoff Smart (09:39):
Yeah, well, here it is so.
So we already talked about whatnot to do, right, don't ask the
hypothetical questions.
Don't like not spend any timeon it.
Right, don't intimidatecandidates.
Okay, so here's what to do.
You do these four things andthe four things are called
scorecard source, select andsell.
(10:03):
So these four steps in goodhiring it starts with a
scorecard where I don't know.
I'm an entrepreneur, right, Ifounded my company.
I'm a little bit ADD.
For sure, entrepreneurs don'tlike to sit down and to think
for 20 minutes about what arethe outcomes you expect this
person to achieve in this role.
What are the you know,adjectives or competencies you
(10:27):
would use to describe, like kindof the ideal candidate for this
role?
So step one is sit down andtalk to your team but, like,
really do a little bit of likeZen reflection on you know, what
is it that you really need thisperson to accomplish in this
role?
And that becomes the scorecard.
It's the set of criteria you'reusing to evaluate candidates.
You have to do that Like.
(10:48):
Success in hiring begins with ascorecard.
Step two that's when you startsourcing candidates.
So a big, big, big, big mistakeentrepreneurs make I'm talking
to you and entrepreneur businessstarters out there is.
You hire your cousin to be headof marketing and then, oh yeah,
your next door neighbor is likeyour product person.
(11:09):
Knock it off with the hiring.
The warm bodies who happen tobe around you, okay, knock it
off with that.
That is your business is tooimportant to just hire whoever's
just around you.
Like, stop that.
Sourcing looks at its best lookslike this.
I hired a CFO a year ago.
We engaged a search firm thatwe looked at 150 candidates like
(11:33):
for real and we picked thisamazing CFO.
So that's what good looks likewhen you're sourcing is.
You get your colleagues.
Everyone's looking for talent.
Maybe you have search peoplehelping you, maybe you don't,
maybe you're all over, you knowonline.
So, basically, going with fistsof fury to source as many great
, diverse candidates from allbackgrounds.
(11:54):
Get a huge pile of candidatesthat you're considering.
That's like step two, not like,oh, this person I know really
well, I imagine they'd be goodin this role.
No, get a big list of folks.
Step three is called the selectstep and this gets a little bit
more nuanced, where there aregood interviews and bad
interviews.
The world's greatest interviewis we feature in our book.
(12:18):
Who this book?
Who has been the top sellingbook on hiring in the world for
the last 16 years.
So our book is number one.
It's oh yeah, it just came outat the Ukrainian edition.
Look at that, it's in Mandarin,it's in Portuguese, like anyway
.
So this is literally that.
If you ask ChatGPT my kid didthis yesterday what's the top
(12:39):
selling book on hiring in theworld?
Who?
The?
A method for hiring by smartand street is number one.
So in it we describe theinterviews.
If you want to learn more aboutit, we just share it.
Like, here are the interviews.
But basically the bestinterview takes a candidate like
a finalist candidate, likesomeone you're pretty sure you
want to hire.
That's when you wheel out thisheavy duty interview and you
(13:00):
basically just walk them througheach of the chapters of their
career and you talk abouthighlights and accomplishments.
You talk about low points andthings that didn't go well For
each job they've had.
You're asking them what werethey hired to do?
What did they accomplishthey're most proud of?
What were some examples ofmistakes or things that didn't
go well?
Who did they work with and thisis a great one, watch this what
(13:23):
was your boss's name in thatjob?
And then they tell you and thenshow them you're writing the
boss's name down Ooh, susanJackson.
And then ask them to spell theboss's name.
How do you spell Jackson?
And they'll say J-A-C-K-S-O-N.
And then write it down Great.
And then you say oh, at somepoint in this process we might
(13:44):
ask for your help setting upsome reference calls, if that's
okay.
And then the candidate sayslike, yeah, that's fine.
And then you say great, when wetalk with Susan Jackson, what's
she going to say were your bigstrengths and weaknesses when
you work together?
And now the person's reallymotivated to give you some
pretty good information, becausethere's some accountability to
it, because you're going to talkto their boss and they're going
(14:05):
to tell you stuff.
So that's like a little bit ofa deep dive on step three of
four, the select step.
Step four of four is called thesell step and as entrepreneurs,
we have to sell like heck toland the A caliber talent that
you want to bring into yourbusiness.
Because, guess what?
They're already gainfullyemployed somewhere, doing well,
making money and making impactand treating their colleagues
(14:27):
well somewhere else.
So you have to really put thesell on them in order to get
them to say yes to joining yoursmaller company.
Anne McGinty (14:36):
And does this process work regardless of the
size of the business, so smallto large corporations?
Geoff Smart (14:42):
Yeah, it really does.
And like, now that I've toldyou the four steps, like, which
step would you take out for asmall or large corporation?
Like the part where you figureout the criteria that matter.
No, that's pretty important.
The part where you like go geta bunch of candidates, like it's
.
It's a very scalable process.
So if in my firm we, we we doCEO succession projects for some
of the biggest companies in theworld, this totally works.
(15:05):
And when we're hiring alandscape oh, you used to have
your lighting business, right Ithought of you because I met
with the lighting guy last night.
He's going to, like, you know,put holiday lights in our house.
You know, my wife and I had aset of criteria.
We're like, hey, here's what wewant them to deliver, here's
the price point we're lookingfor, here's the kind of
creativity we want.
(15:25):
And we have like a littlescorecard and we've got some
referrals.
And then we're talking aboutprevious jobs these people have
done.
And so, yeah, I mean prettymuch picking anybody to do
anything.
These four steps are useful.
And, yeah, so I give most of mytalks.
I don't love public speaking.
I'm not constantly like outthere giving talks.
I really love the business thatwe're building.
(15:48):
So I'm mostly a behind thescenes founder, but when I'm on
stages it's mostly for small,medium businesses and those
owners are saying like, hey,we're having a hard time hiring
great talent, like you know,give me some guidance.
And so, yeah, this stuffdefinitely works for teeny, tiny
companies with like one personor the biggest companies in the
(16:08):
world.
We also have done this forstate governments.
We've served special operations, military people,
nanotechnology researchers.
I mean I can't think of acontext in which these four
principles for good hiring likekind of wouldn't work.
Anne McGinty (16:22):
These four principles for good hiring like
kind of wouldn't work.
And what about a position likeskilled trades or line workers
or sales teams, for example?
Yeah, Does top grading workeffectively in these situations?
Geoff Smart (16:40):
Well, sure.
So to me, like unskilled trades, do they show up, do they?
You know, like there's likecriteria that matter, right, and
some people are great and somepeople are not great.
So the goal is to hire thegreat ones For skilled trades,
absolutely, there's a huge range.
It definitely works for that.
Salespeople my gosh,salespeople are good at BSing
their way through interviews.
Let's say there are a hundredsalespeople for a role.
Half of them are like belowaverage in their performance,
(17:01):
right, and like the other halfare like the top half.
So your trick is to try tofigure out who the not only top
half are, but like the top 10%in a given talent pool who are
willing to work for the sameamount of money.
You know there's a massiverange and performance and who
you're going to hire.
I was interviewing the salesmanager who used to work at
Oracle selling software and andhe told me yeah, you know, I did
(17:25):
great in that last job.
I was named president's club.
And then I naturally asked himwell, what percent of your peer
group made president's club thatyear?
And he said, well, nine, about95%.
And so I'm thinking, oh great,buddy, you're in the top 95% of
your peer group.
So salespeople are, you knowthey get to gap.
So here's three great follow-upquestions.
If you're in the top 95% ofyour peer group, so salespeople
are, you know they get the gap.
(17:45):
So here's three great follow-upquestions if you're picking
salespeople One and as you'retalking about, you know, sales
jobs they've had ask them, it'scalled the three Ps.
What were your results relativeto your peer group, you know,
did he perform in the top 10%,bottom 10%, somewhere in the
middle?
So versus peer group?
Number two would be versus plan.
Oh, you sold, you know, 1.3million last year.
(18:09):
Okay, well, what was the plan?
You know, if the plan was 500Kand they did 1.3, like that's
great, right.
Or if the plan was 6 millionand they did 1.3, that's like
really bad.
So find out the plan, find outwhat their actuals are.
And then the third one youdon't always need to have all
three Ps, but it's like previousyear performance.
So like if some business, youknow, product group, you know
(18:36):
did 2 million in revenue theyear before you joined it and
then they did 1.5 the year afteryou joined it and 1.1 the year
after that, that's bad.
If that same group did 2million before you joined it and
then, under your leadership, itwent to 1.5 to 3 to 6, that's
good.
So to me, it's all aboutgetting the data of what they've
actually accomplished andgetting examples of it, getting
the real numbers, verifying itwith references.
(18:56):
That's what good hiring lookslike.
Anne McGinty (18:59):
And let's say that there is a company that has the
100 salespeople on their teamand those half are
underperforming.
What advice would you give tothe leaders of that company who
are dealing with theunderperformers on their team?
Geoff Smart (19:12):
Well, this is a very controversial question
you're asking.
I'll tell you what I think andalso tell you where the range of
opinions is on this topic.
I think and we practice this atGH Smart, we like practice what
we preach here internally Ithink it's great to give people
very honest feedback, give thema lot of feedback, give them
more feedback than they evenwant to hear so they really
(19:33):
understand where they stand,really be clear on expectations,
really be clear on steps thatthey could do in order to
perform at the target level.
And then, if you do all that,people will be like you know
what and I really appreciateyou're having these sessions
with me and you've been givingme all this feedback and
coaching I don't think I can getthere.
In fact, I don't even believein the product that much.
(19:55):
I don't feel like I want tosell at the target level.
I'm going to go do somethingelse.
And then you say, oh, okay,well, you know, take your time
finding something, you know youcan work, you could take some
time off, and then they go findsomething else.
And to me that's like beautiful, frictionless capitalism where,
yes, you have a high bar forperformance, but if you give
(20:16):
people honesty and supportivefeedback and coaching.
At some point most of them willjust punch out if they, you
know, if they realize they'renot going to be successful.
So that's good for folks whodon't get the memo.
I had a very early colleague inGH Smart's journey where they
weren't making clients happy andat the end of the day, like you
(20:36):
got to make clients happy right.
So clients were complainingshe's not giving me the
attention I need, it takes toolong to get work products back,
and so I'm giving this colleagueperformance feedback and she
just like kind of was actinglike that's not my problem, you
know, it's the client's problem.
They're unreasonable, you knowthat kind of thing.
And so you know, at some pointyou do have to take action on
(20:56):
someone who, like doesn't getthe message, even though you've
given them tons of feedback andsupport to try to help them be
successful.
The number one regret the lastI don't know thousand managers
we've advised or worked withwill tell you is waiting too
long to remove a low performingcolleague.
And I'm telling you, if thatperson's also culturally toxic
(21:17):
and is like being mean to peopleor mistreating juniors or doing
anything bad, that's likecultural deep.
That is very, very costly.
You got to have those chatswith the people pronto and get
them out of the organization.
We're a very nice firm.
I'm really happy Our glass doorrating is the highest of any
top firm in our industry out oflike 70,000 companies in
(21:40):
consulting Like.
We're a very nice, supportive,friendly place.
That said, if someone's likenot living the values and being
disrespectful, we will give themquick warnings and then out
they go.
If they're doing like hashtagme too stuff, they get vaporized
before they even like leave theroom in which they like
committed the offense.
That's literally true.
So if there's like valuesabusers at your company, get
(22:04):
them out pronto, pronto, pronto.
Maybe not even a whole lot ofcoaching and feedback, because
it's just so costly to thosearound.
Or someone strugglingtechnically, get them some more
training.
Or if they're strugglingperformance wise, but they're
living the values you know, youinvest in them.
You try to help them besuccessful.
Anne McGinty (22:21):
Have you as well.
There's a few differentquestions I want to ask you, but
in the 30 years that you'vebeen doing this, has anything
changed dramatically from themethodology that you originally
created to now?
Geoff Smart (22:33):
Yeah, two things.
So we didn't create themethodology 30 years ago.
We just started consulting andthen this book really codified
it 16 years ago, and so I'llspeak to from when we published
this till now.
Two things are different.
One is basically like just theglobalization of talent markets
(22:53):
and the importance of havingdiverse folks with different
language backgrounds andcultural awareness and people
from, like, all backgrounds.
That's a more deliberate,important thing to do now,
clearly, than I think we hadlanguage for or best practices
around, you know, 15 or 20 yearsago.
So that's one.
The second thing is digitaltech, you know, is a huge deal
(23:16):
right and there's a lot of timewasting.
That can happen if you misusetechnology to try to do good
hiring and management of yourcolleagues.
But it's pretty awesome.
I was on a chat board yesterdayin consulting where top
performers out of really goodfirms share their thoughts about
(23:39):
what they like and they don'tlike about their employers.
It's called Fishbowl.
A candidate we're trying tohire told me about it.
I was like, all right, I'mgoing to check it out.
You can be anonymous if youwant or if you're really brave,
you can actually be yourself inthese things.
You post questions or yourespond to other people's
thoughts and all that kind ofjazz.
That's like pretty important.
I have personally sourced about10 amazing colleague candidates
(24:03):
in this last year by just beingpresent in digital platforms
like that that you know thatwasn't the case 15 years ago.
So I'd say those two things thefirst one is is the importance
of and the like kind of explicitvalue of building diverse teams
is like number one and the useof technology is number two.
All the rest of this stuff kindof holds.
(24:24):
Otherwise, this book still isthe top seller every week on
Amazon.
It's not outdated yet.
You know, cause like the coremethod really works.
But I'd say if we were to likerewrite the book today, we would
have more chapters or moreexplicit best practice sharing
on those two topics.
Anne McGinty (24:41):
And maybe some stories.
That is incredible.
And your company now, like Ithink I read correctly, you've
grown your company to over 100million in revenue.
Is that correct?
Geoff Smart (24:51):
Yes, yes, we went from zero at the founding, where
it was just me and delusions ofgrandeur, to, yeah, I think
we're at 110 million, trailing12 months, with about 23 in
pre-tax profit, no debt, and theculture is really good and
we're we're doing well.
It's like not easy, you know.
It's like nothing's ever easywhen you're growing a business,
(25:14):
but we're having a lot of funwith it.
So, yeah, I don't know, doesthat make us a medium sized
business?
So I was just happy we surviveda year.
I think, like what you know,one in 10 new ventures survive
even a year and maybe it'sliterally as low as like one in
a thousand make it, you know, 29years.
So we feel very proud and happyto be alive and kicking and we
have growth goals.
(25:34):
We're still, you know, we'restill hustling, we're getting
clients and growing in newmarkets and inventing new
products and services, all thewhile trying to keep our culture
really positive.
Anne McGinty (25:44):
So this might be a bit of a loaded question
because it could be a very longanswer, but how did you, in the
course of I don't know when theexponential growth took place,
but how did you in that timeframe, grow your company to 110?
Geoff Smart (26:01):
Yeah, by hiring a great number two.
So I grew the firm zero to 10million in revenue as the
president and CEO, as the personrunning the meetings, that kind
of thing.
I kind of burned out in the2009 financial crisis, where our
revenue was off 20%, I think,and, like everyone's freaking
out for their jobs and you knowit was hard Clients weren't
(26:23):
spending any money.
I got us through that.
It wasn't on a podcast, but itwas in like an EO or YPO type
speech where someone was talkingabout the difference between
working in your business versusworking on your business and a
light bulb just went on andsirens sounded and I was like,
wait a second, I can work on thebusiness without working in the
(26:46):
business.
You know, I was carrying a 20client load, like I'm, I was in
it, in it, in it.
And then I looked around in 09and we all were like, okay, who
wants to run this thing?
I was like I don't need to runthis, like I'm a proud founder
and sort of chairman here, butif someone else wants to step up
and run it, like a show ofhands.
And so we picked Randy Street,the coauthor on the who book.
(27:09):
So we had worked really welltogether on the who book and he
is an engineer by training.
He's a Harvard MBA.
He worked at Bain for like 10years.
He ran a company.
He had operating chops, as wewould say, not just consulting
skills and so he became thepresident and managing partner
in 2010.
And he 10X'd the business overthe next 10, 11 years.
(27:32):
So I mean it wasn't like how didI do it?
Oh, I picked Randy, randy didit.
I mean it was like literallylike that simple.
I would highly recommend toyour listeners, highly, highly,
highly recommend.
For gosh sake, find someone tohelp run your business.
Maybe it's a muscular CFO whocould play the role of COO.
Maybe it's like you do what Idid hire a president to run the
(27:55):
day-to-day, really run thebusiness, run the meetings,
create budgets and strategiesthat you can approve.
And Randy did such a good jobof training me on how to be a
good founder while havingprofessional management running
the business.
He's like, hey, whatever infoyou need, let's get the cadence
of you know, do you want monthlydashboards and we can chat
(28:16):
quarterly.
I'm like what do you need?
But, by the way, here's thescary part he said that I was no
longer invited to come tomanagement meetings.
Anne McGinty (28:26):
How'd you handle that?
Geoff Smart (28:28):
I felt like what?
I am so smart and wise and I'vegot all the vision of being the
founder.
What do you mean?
You don't want me coming tomanagement meetings.
And he said oh no, it's simple.
Like, if you're in the room, Ican't manage the business Right.
So he's like so why don't younot come to management meetings?
I'll manage the business, butyou and I can meet whenever we
want.
And, by the way, let's come upwith a good scorecard for your
(28:52):
chairman lane and role.
I'm like what do you want tospend your time on?
He was so amazing by helping mefigure out what I'm good at and
to create basically, my own jobdescription and to stay in that
lane while he managed thebusiness.
And it was.
You know, a lot of small mediumbusinesses owners are like oh,
you know no one.
I wouldn't trust anyone else torun the business, and that's
(29:14):
probably true because theirhiring process stinks.
They shouldn't trust otherpeople to run their business.
But if they improve theirhiring process and they really
find some excellent talent, forgosh sake.
I shall now quote WarrenBuffett, who said hire well and
manage little, and just thinkabout that for a moment.
That guy's seen tons ofsuccessful and unsuccessful
(29:36):
small to medium and then largerbusinesses.
But there's something to it.
If you really hire well andyou're willing to delegate and
you're willing to make bets onpeople and then stay in your
lane and let them do their jobs,you can scale.
In fact, I dare almost suggestthat's the only way to scale,
because if you're hanging on toeverything and you're the
decision bottleneck, oh great,you're going to have a $5
(29:58):
million revenue business forever.
But if you get good at like Robdid, the next couple of key
hires, make them hire theamazing person in those
functional areas or thoseimportant key areas and give
them room to operate.
Align on goals, be clear aboutwhat you want them to do, but be
pretty flexible on how they areto do it.
(30:19):
I'm a big like work fromanywhere fan too.
Like you know.
Don't micromanage your starperformers or they will leave.
But if you align on goals, youhave a great culture.
You're willing to delegate andlet people have room to operate.
You reward and incent when theyreally do well so they can
share in the upside.
You're good.
(30:39):
You're going to be golden.
As a small business owner.
You're going to find yourselfsuddenly a medium business owner
.
Anne McGinty (30:45):
With all of that freedom, do you trust that the
employees, the team, will justperform as expected?
Yeah, okay.
Geoff Smart (30:53):
Yeah Well, remember , we're like really good at
hiring, so we make mistakes.
We fire about I don't know 3%of the people in our firm per
year.
It's not a big number, butwe'll make mistakes.
People will come in and we'llbe like, oh no, and then we'll
coach them and then get them out.
So, but the people who stay,we're pretty clear on what their
(31:15):
job expectations are.
We're pretty good at measuringstuff.
So everyone has the same data.
We know if people are doingwell or not doing well and, yeah
, we trust them to do the workto an absurd level, like we have
Harvard Business School casestudies written about our
freedom culture by this person.
Professor Ashley Willans atHarvard Business School wrote a
(31:35):
book called Time Smart.
Your listeners can't see Iactually have it right here.
It's called Time Smart.
Of course, I love the titlebecause my name is Jeff Smart
and the name of this book isTime Smart.
But she studies.
It says how to reclaim yourtime and live a happier life.
So she studies what makespeople happy in the workplace
and, spoiler alert, freedommakes people happy in the
workplace and, spoiler alert,freedom makes people happy in
(31:56):
the workplace when you havefreedom to choose and you have
control over your time, you'reway happier than if you're
living in a more coerciveenvironment.
And so we, we live that to suchan absurd degree that that book
author, that like bestsellingauthor, literally wrote a 30
page case on GH smart as anexample of what a freedom was a
(32:16):
time.
Smart culture looks like, and itstarts with having clear
expectations, hiring well, butthen really letting people
figure it out on how to get thework done when and how they best
can.
So I just dropped my daughter'soff at, didn't drop them, took
them to gymnastics.
I have four-year-old twin girls.
I'm talking to our investmentbankers.
(32:38):
We're going to do a transaction, you know, like minutes later
and so.
And then I pop in here and I'mtalking to you.
Like you know, taking advantageof modern communications to
hire people and give them a lotmore freedom to do their work
when and how they want is, Ithink, a magical formula for
success today that smallbusiness owners really should
(32:58):
take advantage of, because a lotof these big companies that are
doing mandatory, you know, backto the office are losing great
talent and they're looking forplaces where they could go,
perform and have more freedom.
Anne McGinty (33:10):
So in your company , as you grew so rapidly, I
don't know how many people doyou have working for your
company now.
Geoff Smart (33:16):
We have 185 people in our company now in five
countries.
We're in the US UK, germany,canada and Australia.
Anne McGinty (33:24):
How have you gone about maintaining your company's
culture being so spread out andalso having grown like that?
Geoff Smart (33:32):
I think there's five ways to maintain your
culture.
We've written four books as afirm we published.
They're all bestsellers.
We for sure should write a bookon culture.
We haven't yet, but I'll giveyou my secret sauce here.
There are five things yourlisteners can do to manage their
culture, to, like create theculture that they think is going
to, you know, win the day.
(33:53):
The five things are who youhire, right, like, hire people
who naturally do the culture youwant, right?
That's like that's actually theeasiest way to.
I mean, if you want to have anice culture, hire nice people.
If you want to have a, I don'tknow, it's like it's literally
that simple.
So that's one clearexpectations.
Hey, here's, here's what weneed you to do.
Here's what's okay or not okayas far as ways of working, that
(34:15):
kind of thing.
Three is incentive alignment,which is like, just like at our
firm, people developing otherpeople into good consultants and
good partners is important, andif we didn't pay people to do
that, they wouldn't do it.
But instead we're like oh, yourbonus is like heavily dependent
(34:35):
on are you developing yourcolleagues?
Are you helping people learnand grow, that kind of thing,
right?
So you have to reward peoplefor it.
Training give folks training sothey can know how to do
whatever the key elements ofyour culture are.
And then the last one.
I don't have a good name for it.
I call it like structures, butjust the idea of like who's
meeting when, what's the orgchart?
Look like all that.
(34:56):
So if you're basically like, ohyeah, we need to have fast
cycle times of productdevelopment, but the product
people are over there and thesalespeople are over there, well
, don't, don't have them soseparate and have them more
working together in the sameroom, you know sort of, or on
the same Zoom calls or meetingmore often.
So the five things to build theculture you want and we've done
these in spades who you hire,what you tell them you expect,
(35:19):
how you incent them and pay themfor doing the culture you want
training and structures, that'sit.
And if your culture stinks,you're probably not really using
one or more of those levers inorder to get the culture that
you want.
It's also who you fire.
When we have fired people whoweren't living our values
(35:43):
although it's a sad day andwe're like, oh man, I wish we
could have helped that personnot be such a culture destroyer
but when we've done that overthe years, the very next day
everybody sighs a big sigh ofrelief and you go.
That was an important thing.
That's a very important part ofbuilding and sustaining your
culture is taking out folks whoare actively toxic in that
culture.
Anne McGinty (36:03):
OK, yeah, that that I know exactly what you
mean because I've experienced itfirsthand.
And when you cut out the muck,then everybody gets lifted.
Geoff Smart (36:12):
Sometimes it's really weird.
Then everybody gets lifted.
Sometimes it's really weird.
I've had a weird experiencewhere people who were living the
values, who are being we havevalues of like generosity and
gratitude and, you know, likedeveloping others, all this kind
of stuff.
What's weird for me is whensomeone comes in, does the
culture for years sometimes likethree, four or five years and
then all of a sudden, I don'tknow, maybe they're going
(36:33):
through it or something in theirpersonal life.
Something happens wheresuddenly they're not living the
values and they don't seem likethey're ever going to be able to
go back to, you know, livingthe values and then they have to
go.
That's pretty weird.
That's rarer, though.
Usually what happens is folksare on their best behavior, they
get hired and then you end upseeing there's some, you know
some jerks in the midst and thenyou have to go deal with that.
Anne McGinty (36:54):
Yeah, so for anyone who is maybe on the
younger side and they areaspiring to become a leader,
they want to be an A performanceleader that gets hired by
someone like you or gets putinto a leadership position later
on in their career.
What skills do you think thatthey should focus on developing
early in their careers?
(37:14):
We skills do you think thatthey should focus on developing
early in their careers?
Geoff Smart (37:16):
We wrote a New York Times bestselling book called
the CEO Next Door.
I didn't write this, but one ofmy colleagues, elena, wrote it,
and Kim.
So CEO Next Door based on astudy of over 2,600 leaders.
So we worked with theUniversity of Chicago's
professors of management tocrunch the data and find these
insights.
This is not like my opinion.
(37:36):
This is like based on data.
They found four things thatreally mattered.
These are all skills that youcan build and then we had a
different study it's like adifferent cut that found three
things that matter.
So four plus three, so I gotseven things that matter.
So put these two together.
Here's what you got.
We'll go with Elena's first.
They spelled dare D-A-R-E, soshe found that leaders who
(37:58):
really worked on being decisive,like make more decisions, not
less, make faster decisions, notslower Working on being a
decisive decision makermassively correlated with
success as a business builder.
So that was one.
Two is A adaptability.
So don't fall into the trapwhere you're just like well,
that's what I always did, youknow, meanwhile market
(38:20):
conditions have changed orproduct conditions have changed,
like being able to face realityand then adapt.
That's the second thing.
Third is reliability.
If you say you're going to dosomething, like do it we're huge
in GH, smart on, we startmeetings weirdly on time.
We end them on time.
If we say we're going to dosomething two years from now,
like we do it, like we're very,very reliable, and it creates
(38:42):
trust.
It creates just like a reallyhigh competence culture if
you're super reliable.
So that's the third one.
The fourth one is E engagingfor impact.
So it's not good enough just tohave the right answer.
As a leader, having the rightanswer, oh congrats, great, you
have the right answer.
You need to like persuade otherpeople and influence and listen
(39:03):
and basically it's likepersuasive communication was the
fourth thing that matters andit's this learned skill.
I mean, you can learn how to bea more persuasive communicator.
So those are the four that cameout of that study on this.
These are kind of, I think,bigger companies managers, the
PowerScore one we looked atsmaller company managers and
there are three things that ifyou and your team are good at
(39:28):
these three things, you are 20times more likely to accomplish
your goal for that team than ifyou're not good at all three.
So it's kind of like atriathlon, swimming, biking and
running Like you actually haveto be good at all three.
You can't just be good at likeone.
But the three things are beingable to prioritize.
They spell power.
By the way, p-w-n-r Prioritizingis like what's the goal?
(39:51):
I think it's on any smallbusiness owner, like your
previous podcast person who saidyou know they were doing 8
million in revenue and he said30, we're going to do 30 and 30
million in revenue.
Setting a goal, setting theright goals, not too many goals,
but just a small number of theright goals.
I think that's basically thespirit of what good
prioritization looks like as anentrepreneur.
(40:12):
That's the P.
The W is who's on your team.
So back to the hiring and firingthing.
Learn it, you can learn it.
Read our books like listen tothis podcast, like you know.
Learning how to be good athiring and firing, to build
talented teams super importantskill to develop.
And then R is relationships,and this is kind of like
relationships focused on results.
(40:33):
So it's not just being nice toeverybody or kumbaya and
everyone's just getting along,but like nothing's getting done.
It's like how do you buildrelationships that are focused
on achieving shared goalstogether?
Like achieving results throughyour relationships is kind of
like the third habit.
And you put the three together,you're 20 times more likely to
(40:57):
achieve your goals.
Anne McGinty (40:59):
Well, that's all.
Anybody needs to study, I think.
Geoff Smart (41:03):
Yeah, and it's the CEO next door.
That's Elena's book.
It's great.
That's the DARE stuff.
And then Randy and I, who wrotethe WHO book this is our second
book Power Score, along withAlan Foster, one of our other
colleagues.
It's called your Formula forLeadership Success.
We had 15,000 people's careerswith 9 million data points that
went into this book, and thiswas big and small companies.
Anne McGinty (41:26):
Oh my goodness.
So you seem like a generallyupbeat, very optimistic, very
energetic person Over 30 years.
I'm sure you have facedsomething that is a very large
challenge or setback beyond aneconomic downturn.
Can you share anything thatyou've faced that was really
tough for you to get through?
Geoff Smart (41:47):
Sure, all right, let's see here.
So, on my highlights list of,like worst moments in business,
my assistant and I disclosedsome info to a client's
assistant that I guess theclient, as it turned out, you
know, didn't want us mentioningLike.
So, basically, I was trying tolike get a follow-up meeting
with this billionaire titan ofindustry who was a great client
(42:10):
or was about to become a greatclient, and his assistant wasn't
letting me set up a call.
She's like no.
I was like what do you mean?
No, like he requested thisfollow up call.
She's like to talk about what?
And the subject line of likewhat he wanted to talk about,
was a sensitive issue in theiroffice.
So, as it turns out, shebasically got really mad and
(42:30):
told some other people.
And then this titan of industrygot really mad and called me,
actually called my assistant.
He left a message that was likeI can't believe how you
violated our confidence and ourtrust and like I never want you
to contact me again.
You know, goodbye.
And so, like that was prettyrough.
We were like oh man, we're justtrying to offer enough info
that the gatekeeper would likelet us set up the meeting.
(42:52):
But you know we blew it becauseit was a sensitive matter.
As it turns out, that was oneAnother one.
I was too confident in ourstudy of a company and what was
good and bad about the company.
We spotted one weakness in thecompany, but here's where I made
a mistake.
Just because a company has oneglaring weakness.
We were hired to do anevaluation of this management
team.
They had a couple other glaringweaknesses too, but the one was
(43:15):
so bright we kind of took oureye off the ball and didn't see
the other ones.
So we missed.
And we were very confident inour analysis and our client
ended up really investing morein this company than they should
have and it was a completewrite-off.
The client, their multi-milliondollar investment went to zero
and we looked like you know, itwas just bananas.
(43:36):
So that one was a matter ofdoing like actually kind of poor
quality work and then making abig deal about how right we were
in this.
That influenced our client toextra invest.
That was pretty bad.
What else?
I sort of yelled at one of ourcolleagues 15 years ago who I
thought just wasn't prepared fora meeting and you know I'd like
(43:57):
missed some family stuff to beat this meeting and try to help
this colleague land a client andthe colleague like sort of
wasn't prepared and didn't dothat great job.
So, rather than be supportive,I was like in that, you know, I
can't believe you blew this kindof attitude and the guy quit,
like he and we no one quits ourfirm, like very few people quit.
So that was a case where I'veregretted being negative in my
(44:19):
feedback with a colleague.
I was like 15 years ago, so youknow, learn my last seven.
Like I don't like yell atpeople anymore, but that was an
early, an early thing.
What else is like?
I think we started and thenstopped doing digital innovation
a long time ago.
That would have been reallysmart to keep going.
We're doing a good job now.
Chatgpt, ai, predictiveanalytics the tools available
(44:43):
now are amazing for those of uswho have huge databases, right
of information, like.
So we finally like like we gotthe memo or we're on it, but for
many years there we were earlyinto, for example, like survey
data analytics technology.
Like we invented somethingcalled a feedback planet in 1999
.
It was like an automated 360degree feedback tool and it was
(45:06):
kind of hard and people calledand had tech support questions
and we just shuttered it.
I mean that could have beenlike a billion dollars.
That was like SurveyMonkey orQualtrics before SurveyMonkey or
Qualtrics.
So yeah, I'd say that's a hugeregret is not sticking with the
digital priority earlier.
And then we kind of got our acttogether about five to eight
(45:27):
years ago and not beinginternational earlier I really
liked the idea of bringing bestpractices, of hiring and
developing teams around theworld, and we're only in five
countries.
There are 200 countries, solike we're slow to get this to
spread around the world.
Those are some regrets andthings that like haven't gone
well.
I'd say Is that pretty good,good list.
Anne McGinty (45:48):
Yeah, yeah.
Well, I think your perspectiveof slow may differ from other
people's perspectives of slow.
I think you're doing prettydarn well out there, thanks.
So just as a closing questionhere, if you could go back and
talk with yourself when you werein your younger 20s, what life
wisdom would you give yourself?
Geoff Smart (46:08):
Yeah, all right.
So I think I did a good job ofcarving out plenty of time for
family.
So I think a lot of our fellowentrepreneurs who like burn the
midnight oil and really, youknow, really give it all to the
business, have great regretsaround not prioritizing either
family or friends or faithwhatever their faith may be or
(46:31):
doing like social impact, giveback.
I actually went really big onall that this whole time.
So I'm not going to give youthe like, oh, I should have like
carved out more time for familybecause, like, that's not a
regret.
So I'm sitting here trying tolike wind the clock back and I
so I have nine kids.
So we blended, my wife and I,four and three, so we blended
(46:56):
seven like the brady bunch, andthen we had two, so hence the
four-year-old twins.
So the kids are four to 23 andthey're great and the, the life
wisdom that we do give them arethings like I'll give my wife
Lauren credit for this doing thehard things to learn, like tech
or STEM or finance, or hardthings earlier is smart, because
(47:18):
you can always go less techlater, but it's hard to go more
tech later.
So I'll give my wife credit forthat one.
I think our kids have gone STEM, hard science, heavy early.
And then a couple of them havepivoted to, you know, like
consulting or whatever, ratherthan like stay in the computer
science and early.
And then a couple of them havepivoted to, you know, like
consulting or whatever, ratherthan like stay in the computer
science and stuff.
So I'd say that's one is, youdon't want to like do the easy
path when you're in your teensor twenties.
(47:39):
You want to do like the paththat's impactful and hard, I
think, but then sets you up forbeing able to have the networks
and the wisdom to choose yourown adventure later.
Oh gosh.
Other like career strategylessons, oh yeah, here's a huge
one.
I'll leave you with thisthought I cannot believe what
(47:59):
percent of high performing smallbusiness owners who turn into
medium or big business owners,what percent of them cite having
good mentors as like one of themost important things?
Mentors were super important tome.
Mentors were super important tome.
Mentors are super important topeople who build amazing things
quickly.
Yet I don't see even my ownkids to the degree I think they
(48:22):
should.
I don't see young peopleproactively searching out
mentors and kind of collectingmentors.
I'd say that'd be like the lastcareer strategy.
Advice is it's free, it's notthat scary.
Dm people on LinkedIn find out,get referred to so-and-so
Freaking.
Steve Jobs called up thefounder of Hewlett Packard, of
(48:45):
HP, to get computer parts thathe could like build something
when he was 12.
Like, weirdly, people out therewho get like a step function of
success and you're like how dothey do that?
They all have mentors givingthem advice or intros or
computer components, as it turnsout.
So I'd say, if you're young andyou're listening to Ann's
podcast, just think about whatdo you want to learn or what are
(49:07):
some jobs or industries ortypes of roles that really sound
interesting to you.
Who do you know?
And maybe you don't knowanybody, but like, use the
network you have to get to folksor just go ahead and blind DM
people on LinkedIn, call them up, email them.
You can figure out this stuffand try to recruit.
I'd say, by the time you're 20,to have like five really good
mentors who are very successfulpeople in the field you want to
(49:31):
be successful in is unbelievablypositive return on investment
of your time.
Anne McGinty (49:38):
That is great advice and one that I'm going to
pass along to my kids as well,or maybe they'll just hear it
when they listen to this.
Jeff, thank you so much.
This has been a phenomenal andhighly educational interview.
Thank you so much for takingthe time to share your expertise
with us.
Geoff Smart (49:54):
Your podcast is brilliant.
The interview was superenjoyable.
Thank you to everyone who'slistening and here's to hiring
and developing your team so youcould build your small medium
businesses into medium to biggerbusinesses that make impact,
make money and create wonderfuljobs for everybody.
Anne McGinty (50:16):
Today's key takeaways.
Many businesses fail by notallocating enough time to hiring
, relying on faulty methods likegut instincts or using
hypothetical interview questions.
Instead, focus on structured,objective hiring methods to
improve success rates.
Jeff shared his proven method,which includes scorecard source,
(50:41):
select and sell Clearly.
Define the role andexpectations.
Build a diverse and robust poolof candidates.
Build a diverse and robust poolof candidates.
Use structured,accountability-driven interviews
to predict real performance andactively attract top talent by
(51:04):
showcasing the role and companybenefits.
Dedicating more time and effortto hiring and developing the
right team can transform abusiness.
If your business is stuck ingrowth, consider spending 25% of
your time on hiring so that youcan work on your business
instead of for your business,and focus on the who instead of
(51:26):
the what.
Maintain your company's culturewhile scaling by hiring for
alignment, setting clearexpectations, incentivizing the
right behaviors, training foryour culture and establishing
effective structures.
If you're aspiring to be aleader or hired into a
(51:49):
leadership position, developcritical skills like
decisiveness, adaptability,reliability and persuasive
communication.
Also, prioritize buildingrelationships with those with
shared goals.
(52:09):
You've heard multiple timesthroughout season one this next
bit of advice, and here it isagain proactively seek out
mentors the earlier the betterwho can guide your journey.
It's free, it's not that scaryand if you establish a
(52:30):
relationship with your mentors,they can provide advice,
introductions and more.
Lastly, take on challengingpaths early.
Don't take the easy path.
It's the challenging ones thathelp you unlock your full
potential.
That's it for today.
I release episodes once a week,so come back and check it out.
(52:52):
Have a great day.
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