THE FIVE HABITS OF HIGHLY SUCCESSFUL

HIRING ORGS:How to Recruit for Digital Transformation

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Executive Summary

Digital transformation is upon us. Software is eating the world. To survive, organizations must make hiring a first class business activity. What can we learn from the digital giants that have already done this?

Know your values:• Define real values

• Break them down into concrete, identifiable behaviors

• Make lived values your best perk

Commit to fit:• Teach interviewers to listen

• Downplay role-related knowledge

• Prioritize true fit

Be mindful:• Source patiently

• Don’t confuse credentials with competence

• Slow down

Reward the right things:• Motivate top performers with recognition and influence

• Don’t hire a B player just to fill a role

Live your values:• Review resumes blindly

• Conduct structured interviews

• Implement the best process, and then stick to it

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IntroductionWe live in an age of digital transformation. In the 1990s, Craigslist hollowed out newspaper classified sections. In the 2000s, iPhones swept landlines away. Today, shoe companies reinvent themselves as brands that 3d print custom footwear. The impact of digitization is felt in every industry.

How can any organization compete with the digital giants—unprecedented success stories like Google, Facebook and Amazon? Those companies understand that in a time of tumultuous change, their best strategy is to hire the most aligned and adaptable people they can find. Their innovations are not only technological. The best digital companies have made hiring a first class business activity.

They’re very good at what they do, but they’re not perfect. They still struggle with superficial pattern-recognition and the urge for shallow “culture fit”. But the digital giants have learned a lot about how to hire for business success. Organizations that need to undergo their own digital transformation can learn a great deal from those who have gone before. What Google and the others have tried to implement, future rivals may yet perfect.

To recruit for digital transformation, you don’t need people with specific domain knowledge. You need people with inexhaustible curiosity, who pick up new skills with alacrity, and who are resilient in the face of difficulty and failure. You need to staff for a future you can’t predict or even imagine. The good news is, there are tried and tested ways to identify those candidates. Highly successful hiring organizations have five habits.

1. Know your values2. Commit to fit3. Be mindful4. Reward the right things5. Live your values

You can make them your own.

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1. Know your valuesIn the early 2010s, Netflix revolutionized hiring, not only for itself but for a raft of tech companies that emulated its practices. Much of Netflix’s influence can be traced to a single slide deck that’s still in use today. In it, CEO Reed Hastings and chief talent officer Patty McCord set out their expectations. “We seek excellence,” they wrote. “Values are what we value.”

The culture described in this deck is self-aware. First, Hastings and McCord tease a nice-sounding set of values: integrity, communication, respect, excellence. Then they reveal which company had those values displayed in its lobby. It was Enron. Now the kicker: “The actual company values, as opposed to the nice-sounding values, are shown by who gets rewarded, promoted, or let go.” With these words, Netflix committed itself to walking the walk.

When the deck goes on to list Netflix’s values (judgment, communication, impact, curiosity, innovation, courage, passion, honesty, selflessness), it includes specific descriptions of how each value is expected to manifest in Netflix employees. For example, here are signs of passion: You inspire others with your thirst for excellence. You care intensely about Netflix’s success. You celebrate wins. You are tenacious.

“Like every company, we try to hire well,” say Hastings and McCord. “Unlike many companies, we practice: adequate performance gets a generous severance package.” Netflix was among the first to pay its B-players to go away.

Think about what this means for Netflix employees and candidates.

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Every company talks about excellence. Netflix breaks the idea of excellence down into specifically defined values. Rather than paying Enron-style lip service, the company describes exactly how these values manifest themselves. Rather than making adherence to these values aspirational, Netflix commits itself to humanely parting with employees that aren’t meeting its standards.

This clarity of expectations proved transformational for the company. Around thorny issues like vacation policy, expensing, entertainment, gifts and travel, Netflix was able to adopt the policy: Act in Netflix’s best interest. Such a stance might seem wide open to abuse. It has not been abused, Netflix believes, because the company hires only high performers and pays them their market value. Such high performers, it maintains, are able to balance freedom and responsibility.

Similarly, Netflix’s culture enables it to dispense with most of the shallow perks often associated with Silicon Valley companies, like foosball and free sushi. As Nellie Peshkov, vice president of global talent acquisition, told the Society for Human Resource Management: “We don’t roll out a red carpet or go out of our way to make the candidate feel special. We don’t want to mislead them about what it is like to work at our company. We’re not about perks or overly rich benefits.”

The biggest promise held out to Netflix candidates is the opportunity to work with a team composed of 100% high performers. Or as McCord put it in an article for the Harvard Business Review: “Excellent colleagues trump everything else.”

Know your values:

• Define real values

• Break them down into concrete, identifiable behaviors

• Make lived values your best perk

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2. Commit to fitThe only way to build a team of excellent colleagues is to hire them. Netflix worked hard on its hiring process, including training its recruiters to work like psychologists, listening and paying attentions to clues in candidates’ answers. What they are looking for are candidates that match Netflix’s unusual, high-trust culture.

Excellence in the Netflix sense is not necessarily excellence in the Google or HBO or Nike sense. Every organization has a very specific culture and therefore, a very different set of people that will be a perfect fit. But the term “culture fit” has been so overused as to become worse than a cliche: in some cases, it is a harmful stereotype.

Culture fit on the superficial level of “I could have a beer with him” contributes to monoculture and groupthink. There’s a deeper definition, one that is rooted in an organization’s real values. Google calls it Googleyness. On the How we hire section of its site, the company explains:

We want to get a feel for what makes you, well, you. We also want to make sure this is a place you’ll thrive, so we’ll be looking for signs around your comfort with ambiguity, your bias to action and your collaborative nature.

Research shows that shared values are much stronger indicators than shared school or sports team affiliation that a given candidate will perform well in a role at the company. In his book Work Rules, Google’s former SVP of people operations, Laszlo Bock, explains further:

We want people who will thrive at Google. This isn’t a neatly defined box, but includes attributes like enjoying fun (who doesn’t?), a certain dose of intellectual humility (it’s hard to learn if you can’t admit you might be wrong), a strong measure of conscientiousness

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(we want owners, not employees), comfort with ambiguity (we don’t know how our business will evolve, and navigating Google internally requires dealing with a lot of ambiguity), and evidence that you’ve taken some courageous or interesting paths in your life.

Bock goes on to say that role-related knowledge is “By far the least important attribute we screen for.” That’s a complete inversion of traditional approaches to hiring, where domain knowledge was key.

This reflects the changing world of work. Google is not the only company that doesn’t know how its business will evolve. No organization knows what the future will bring. A fixed mindset does not lend itself to adaptability in a fast-changing world. A growth mindset, curiosity, and an aptitude for picking up new skills are far better predictors of future success.

To maintain its position at the vanguard of digital transformation, Google understands that it needs to keep hiring curious people who learn fast. Any organization that seeks to emulate Google’s success, or that finds itself competing with Google or another digital company, would do well to hire for similar values, not for role-related knowledge. True fit isn’t just blending into the crowd. It’s alignment on priorities and direction.

Commit to fit:

• Teach interviewers to listen

• Downplay role-related knowledge

• Prioritize true fit

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3. Be mindfulFacebook’s five core values are: Be Bold; Focus on Impact; Move Fast; Be Open; Build Social Value.

If you’ve followed the company for a while, you might recognize this as an iteration on an earlier motto: “Move Fast and Break Things.” At its F8 Developer conference in 2014, CEO Mark Zuckerberg modified this to “Move Fast With Stable Infra.” The five core values translate that motto beyond developers to everyone who works at Facebook.

The big change, of course, is away from breaking things. And while it might seem counterintuitive to describe a company whose third core value is “Move Fast” as in any way mindful, Facebook’s hiring process reflects the long consideration that has gone into it. Though the individual steps may be the same as at other firms—phone screen, phone interview, campus visit including 4-6 face to face interviews—the overall goal is to conclusively identify candidates with a passion for connecting the world.

This starts even before the phone screen, with mindful sourcing. The best hiring managers are patient, and build relationships. As Facebook’s director of product design, Julie Zhuo, told Firstround.com: “Sometimes we’ll reach out to a designer whose work we really like and just start a casual dialogue. That’s how you get to know people. It’s not just about: okay, do you want to work with us? Because sometimes people are working on projects they’re really excited about at the time. But if you have that connection later on when the timing is right, you can bring them in.”

Patience also pays off in resume screening, where managers try not to be oversold on credentials. “Sometimes, designers without

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traditional training possess an ingenuity that you don’t usually see,” says Zhuo. “We’re really just looking for people who have that element of extreme proactivity. Even if they did go to a great school, they should have experience stretching themselves on projects both inside and outside of the classroom. Great candidates take the initiative to experiment, design and build on their own.”

To Zhuo, the most important quality in a candidate is thoughtfulness. Similarly, her process—and that of Facebook more generally—is designed to help hiring managers slow down, look past first impressions, engage their critical faculties, probe deeply into potential candidates’ skills and values, and make strategic, evidence-based decisions.

Be mindful:

• Source patiently

• Don’t confuse credentials with competence

• Slow down

4. Reward the right thingsAmazon’s unique contribution to the culture of hiring excellence is its Bar Raiser program. A Bar Raiser is an experienced Amazon employee whose role in the hiring process is to determine whether a candidate, if hired, would be in the top 50% of Amazon employees. Bar Raisers have veto power. No matter how much the rest of the hiring team likes a particular candidate, if the Bar Raiser votes no, there is no hire.

Ann Lewis, a former Amazon employee who received Bar Raiser training, described the experience on Quora:

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The key BR goal at the time was to make sure for each position and level, all candidates were interviewed across a shared set of competencies, and within each competency, an objective set of questions were asked to assess the candidate’s skill level. In addition to conducting one of the interviews, the BR was responsible for auditing the interview loop’s coverage of competencies, for corralling interview feedback into the tracking system, and running and moderating the meeting that decided the candidate’s status at the end of the interview loop.

In other words, the Bar Raiser ensured a consistent candidate experience and made sure the entire process adhered to Amazon’s standards. The program traces back to Amazon’s 14 Leadership principles, one of which, “Hire and Develop The Best”, includes the observation that: “Leaders raise the performance bar with every hire and promotion.”

The Bar Raiser program is as gruelling for the Bar Raisers as it is for the candidates. Bar Raisers may interview as many as ten candidates a week. Allowing two to three hours for paperwork and face time with each candidate, that amounts to almost another full time job. What’s more, it’s uncompensated, and Bar Raisers are expected to remain productive in their regular gig. Yet with a few caveats around the possible abuse of veto power, employees generally admire and support the program.

Why do Bar Raisers take this burden on? For the honor, and the sense of purpose. To be asked to be a Bar Raiser is considered significant recognition of a person’s achievements at Amazon. To raise the bar is to give every existing and future employee the confidence that they belong to an organization that’s committed to excellence.

Reward the right things:

• Motivate top performers with recognition and influence

• Don’t hire a B player just to fill a role

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5. Live your valuesAuthenticity can’t be faked. Netflix, Google, Facebook, and Amazon interview thousands of very smart people each year. Their reputations as great hiring organizations depend on consistent execution at scale, over time. Though simple to describe, none of these lessons learned is easy to implement or to stick to.

Any organization that aspires to hire very well must, at least, try to implement these lessons. They must proactively source candidates. They must screen resumes without allowing a fancy credential to dazzle them to a candidate’s faults, or the lack of one to let them overlook a great candidate. They must give every candidate the same structured interview consisting of behavioral questions designed to tease out values alignment. And they must ensure that hiring decisions are made by engaging the slow brain, prioritizing evidence over first impressions or haste.

If you don’t do this you can’t credibly claim to hire only the best. The digital giants pioneered innovation in data-driven recruitment. Their processes are proven to generate good outcomes. Only even stricter adherence to these processes—embedded software to nudge hiring managers in the right direction, say—can produce better results.

Live your values:

• Review resumes blindly

• Conduct structured interviews

• Implement the best process, and then stick to it