The Hiring Formula for Success with Lou AdlerAug 30, 2022
The Hiring Formula for Success with Lou Adler is where it’s at. Lou Adler is The Sherlock Holmes of Recruitment, CEO, and founder of The Adler Group – a consulting and training firm helping companies implement "Win-Win Hiring" programs using his Performance-based Hiring℠ system for finding and hiring exceptional talent.
Lou got a good whiff of corporate BS and turned the recruitment industry on its head. He’s been a nuclear missiles engineer, ran a manufacturing company, financial analyst for the 37th largest company in the world, director of business operations for the first handheld calculator company, and GM for an automotive manufacturer.
Lou realized that the hiring process was broken so he invented what’s now famously known as the ‘Performance-based Hiring' model. With over 40 years in the recruiting industry, Lou's company ‘The Adler Group’ has trained over 40,000 hiring managers and placed over 1500 executives for many of the fastest-growing companies with clients including Disney, General Dynamics and Paycom.
Lou is the author of “The Essential guide for Hiring and getting Hired” and the Amazon Top Ten best-seller “Hire with your Head - Performance-based hiring to build outstanding diverse teams” which has been translated into multiple languages including Korean, Japanese and Chinese.
My top take aways from this interview were:
- You've got to define the job listing as a series of performance objectives, not a list of required skills and experiences.
- You've got to source great semi-finalists through a pre-qualifying approach.
- You've got to facilitate a really powerful two-way interview to ensure that the candidate is the right fit and so that the candidate perceives the job as a really great career move and not a lateral transfer.
- You've got to close with conviction.
- Lou's most powerful interview question is -
"Hey, what is your greatest career accomplishment of all time?" That will take the candidate from their Head to their Heart. And then peel the onion.
- Lastly ask the candidate - "What recognition did you receive for that accomplishment?"
Lou Adler, James Laughlin
James Laughlin 00:00
Welcome to lead on purpose. I'm James Laughlin, former seven-time world champion, musician, and night executive coach to global leaders and high performers. In every episode, I bring you an inspiring leader or expert to help you lead your life and business on purpose. Thanks for taking the time to connect today on investing in yourself. Enjoy the show.
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James Laughlin 01:06
Let's face it, recruiting and retaining staff has been one of the most challenging things since COVID. But it's not a new thing. So, I've decided today to welcome in the Sherlock Holmes of recruitment, Lou Adler. He's arguably the world's global expert on performance-based hiring. Today you're going to learn about what the most important interview question is of all time. And we're going to talk about how to implement performance-based hiring instead of focusing on skills. If you are building a team if you're hiring people. Today's episode is an absolute must listen, enjoy the show.
James Laughlin 01:58
Lou, a massive welcome to The Lead on Purpose Podcast.
Lou Adler 02:03
Hey, happy to be here with you, James. And thank you so much for inviting me.
James Laughlin 02:06
Oh, it's a pleasure. I just, I mean, there's a couple of things I want to do to get started. And another listener is going to be asking this in the back of their minds as well. So, first things first, let's look a bit at what brought you to this point, there were a couple of really interesting things that I look back and look at your life and go wow, that's quite unique. So, a nuclear missiles engineer, how does a person become that?
Lou Adler 02:28
Well, actually how I became that is really a benign story. I do have an engineering background. I was in guidance and control systems. I went to engineering school, in upstate New York, which was really cold. And it was the middle of March which in New York that's winter. And it was my senior year in college. And I was like 55 a lot of years ago. And I get a call from somebody in Southern California. And it was Vietnam. I mean, this was the Vietnam era, and they were getting rid of deferment. So, I could have gone into Vietnam, but I would have been an engineer, so it wouldn't have been bad. But so, I get a call from somebody, no interviews at all. Mr. Adler looks like you've got a good background in engineering. How would you like to work on this program? And I wasn't really paying attention was snowing outside, and I just asked that guy, what's the temperature? And it was snowing in upstate New York, 15 degrees Fahrenheit. And he said it's 72 degrees. So, and that's whatever, you know, 20 greater. So, I stood out. And what's the offer? The salary offer I had no interview is like 10 minutes. And he told me it was a good offer pretty similar to what I had other engineering offers. Then I said, this was the key that got me to become an engineer on nuclear missiles. I said, is there a relocation package because I don't have any money to get to California? And he said, yes, we'll give you 12 cents a mile. So, I'm quickly calculating what he said is about $400. And I said, when do I get that $400? He said a day after you start. That was it. I said I'll take that offer. Now. I went home and bought a Volkswagen. And two months later, I'm driving to California. It turned out the job was working on the Minuteman missile, a nuclear-guided missile. And I didn't have much background in that. But I learned how to do it. And my first job was, when will this missile go off course and when should you blow it up? So that was my job as a 22-year-old engineer. And I took that, and, in some ways, it affects how you should do the hiring. There's a point in time when you go off course you got to just blow it up and start over. And I'll make the statement here. And obviously, I have to prove it is hiring has never blown up. It's been off course for 30 years. And yet we still try to do it faster, and we're not going to get any more accurate. So, in some way, the experiences from 50-plus years ago still affect my mindset today. Hey, if you're off course you don't, and you can't fix it, you got to blow it up and start over. So, let's talk about how we start over again. Oh, I'm sorry, James for that long story. But that was the answer.
James Laughlin 05:10
That was great. That's fascinating. I love it. And it's really interesting, because hiring. So, let's talk about recruitment and retention is such a big conversation right now. But as we chatted before we went live. It's actually been a big thing and a big challenge forever. It's not a new thing. It's not a COVID-related thing.
Lou Adler 05:30
No, definitely not. And so back in, no, go on, ask the question. And I'll tie a story together with it.
James Laughlin 05:36
I love it. So, what for the person listening right now that does want to hire the greatest person that they can hire? Like, where do they start? What's the process that they need to start thinking about?
Lou Adler 05:49
Well, of course, so I have this methodology called performance-based hiring, four parts. And I've been training managers since 1990. And as generally hiring managers, we got training recruiters afterward, but because recruiters started hiring managers, hey, you got to use this. But so let's assume I have a room of hiring managers, business leaders, and company presidents anywhere from 10 million to 500 million. And that were the groups that I spoke with. I always ask these people, hey, how many people here are going to hire a great person? How many people do you think rose their hands? Obviously, everybody? I said, well if you want to hire a great person, which is your question, you better offer a great job. And I'm looking at your job postings. They're boring. No great candidate wants a list of must-have skills, experience, and competencies that at best look like a lateral transfer. So, if you want to hire a great person, you can't offer these jobs. You're offering lateral transfers, not a great job. So, we got a change right there, how you define work. So that really is the essence of it. Everybody wants to hire a great person. But what they're trying to do is find great people who are willing to take lateral transfers, and make the decision quickly without giving a lot of thought. And hopefully, they apply and go through the demeaning process. It doesn't work that way. Great. People don't take jobs that way. So, I've sort of tried to do that process faster. Isn't doesn't make sense. So, in a nutshell, that's why I say, hey, we got to blow the system up. We want to hire a great person, you're not going to do it the way you're doing it today, by posting boring, ill-defined lateral transfers.
James Laughlin 07:24
I love that. So how do we actually create a really compelling job offer?
Lou Adler 07:32
Well, let me kind of go back to the first assignment I ever had as a recruiter. So, as you said, my first job was as an engineer on guided ballistic missiles. It was it had another job in a different missile area. Then I got a master's degree in finance, and I became a financial analyst. But then I quickly got into manufacturing and wanted to run a manufacturing company. So, I did that pretty quickly. But I hated my boss literally hated my boss, who was the Group President, I was running a little division, I was 32 years old. And I quit four times, every time he showed up, I quit because I, you know, I just butted heads. But his boss made me come back. And then eventually, I couldn't take it. So, I just quit and became a recruiter. But I had a real deep background in manufacturing, because of all the background I had in manufacturing, and automotive electronics. So, I was very comfortable in manufacturing. So, I had an assignment, my first assignment as a recruiter, which was before you were born, James 1978, the price of the company made automotive components, I was in Southern California. And he had given me a job description and had 10 years of experience that I have a manufacturing engineering, and I have a background in hyper speed, machinery and this and that, and chroming, and all this other stuff. And I said, Mike, this is not a job description. A job description doesn't have skills or experience competencies. A job description is what people do; not what people have. So, let's put the job description in the parking lot and tell me what you want the person to do in order to be successful. He said I want the person to turn around the plant. I said, how long will that take? Well, six months, 12 months to a year, I said, Fine. Let's go out in the plant and see what we have to do. We spent an hour walking through the plant, and we found eight or nine things that were wrong. We put them in priority order, and I said, Okay, I'll find someone who can do these things. Really out the manufacturing line, upgrade the procurement system, improved the labor performance and reporting system, upgrade the forecasting with a bunch of stuff that people needed to do. And we found a person three weeks later found a person could do that work, who thought that Job was a career move. I have never used the job description, listening skills, experience, and competency since that day. And I worked on 500 to 1000 assignments. I always asked the hiring manager what does this person need to do that you will not compromise on? And if we prove they can do the work, then they'll have a different mix of skills and experience, and the best people get promoted faster. They come from different backgrounds. But if they can do the work, and they see the jobs or career move, it's a win-win. You accompany get your job done properly and it can I see that isn't working, I want to do. And I think that's in a nutshell, that's the key to hiring a great person, you have to have a great job. And a great job is what the person needs to do. And that person has to see it as a worthy career move in an area where they aspire to grow and develop.
James Laughlin 10:28
I like that as a differentiator I really do. So, in this four-step process, what are the four steps that were the first part of the process?
Lou Adler 10:36
Well, the first step is to define the job as a series of performance objectives that define success. The second step is sourcing, you got to go out and find good candidates who would see that job as a career move. I can't find semifinalists, semifinalists, someone who can do that work can't do the work. They're not even in the game. Semi-Finals is also someone who has clearly been recognized for being exceptional at doing that work. Because they meet those two requirements that can do that work and are exceptional, the hiring manager will absolutely interview the candidate. On the other hand, the candidate has to see the jobs or career move, or he or she won't respond to an outbound message, or even an interest. Hey, James, would you be open to talking about this job, if it looks like a career move? Of course, I will well, it better be a true career move. So those are we pre-qualified candidates on two sides prequalifying that they can do the work and are good at doing that work. And the candidate would see the jobs or career move. So, it's a lot of prequalifying candidates before you talk to him. The third step is and then you don't need a lot of candidates if they're pre-qualified. The third step is you got to interview them properly. And the interviewer has to way, you the hiring manager have to see the candidate as capable of doing that work and fit within the organization. And the candidate has to see the job as a true career move, not just a good package on the start date, but a good package on month one, first quarter, second quarter, year one, and even year two, and then you got to close the deal because you'll never have enough money in a budget. So, you got to be a good recruiter and closer. I mean, you probably could pay more, but the candidates got to see the job as a full one- or two-year commitment. And here's why this job makes sense. That offer package is competitive. The work-life balance is appropriate. The job itself is intrinsically motivating. They fit with a company, and they can see that they're going to learn and develop and make a bigger impact. You get all those pieces, right? But it all starts with a great job. Hey, you so it's a great job, great sourcing, excellent interviewing, and good closing. You got to deliver on the promise. That's what I call this performance-based hiring
James Laughlin 12:43
That was great. And to me, that's so logical, yet so powerful.
It is logical, more people have to do it, right?
Yeah, well, that's right. Because people overcomplicate things, they add complexity, and they want to make it really difficult and drawn out. So, the interview process, what would you say is a really empowering and powerful way to interview, and what's the opposite? What does that look like?
Lou Adler 13:09
Okay, so let me go back to the first talk I ever did, to a bunch of recruiters. And I'm going to say was probably I have it my first book was called "Hire with Your Head" and the first edition came out in 1997. And I think was the year after that, somebody read the book. Hey, Lou, how would you like to speak at our recruiter's convention? I said, happy to do it. It turned out that there were 1800 people there. And it was in New York City at the Javits Center. And I was scared. So scared. I never talked to 1800 people, I was scared, there's no question. I couldn't even do it. My son was kind of going through film school. So, he kind of gave me some instructions on how to overcome the nervousness. But I opened up and I asked everybody in the room, how many of you want to hire a great person? 1000-1800 people raise their hands yelling and screaming. I said, Great. So, we had a bit of a talk. And I said, Okay, I'm now going to ask every single person in this room. One question, I'm going to interview 1800 people at the same time. I said this is a challenge if you think just talking to your candidate or interviewing all of your ones is a bigger challenge. So, I then said, and I brought a chair up here, I said, Okay, I'm going to ask you a question. I'm going to have to sit down. So, I brought the chair, and I sat down. So, I'm sitting on a chair in front of 1800 people. And I asked everybody, I want everybody here to think about the greatest accomplishment in their entire career. The one thing that if I could spend 15 minutes with each of you and ask you to tell me about the greatest career accomplishment of all time, what would you like to talk about? Well, I'm going to interview each of you now for 15 minutes. Obviously, please don't speak out loud. I'm going to ask you a series of questions. But the question was, tell me about your greatest career accomplishment. And if I can find it here, I have what I call a magic card. But this podcast is not a video. It's all audio, right?
James Laughlin 15:04
Yes, there'll be a video component over on YouTube and most of it will be on Apple and Spotify.
Lou Adler 15:08
You can show this magic card to him in the video. You can't see it. Oh, yeah. So, this is a magic card. This magic card has the most important interview question of all time. And if you go on LinkedIn and ask for the most important interview question of all time, you'll find that was my first post on LinkedIn, seven or eight years ago. 1.4 million people read it. It's the same question I asked 1800 People in 1998, or 99? Not exactly sure when. But I said, Tell me about your greatest accomplishment of all time. And then I said, imagine if I spent 15 minutes, peeling the onion, finding out why you got assigned to the project. If you volunteered, or someone assigned you if you volunteered, why? If someone assigned you why obviously do they assign you because you're good at that work? What were the challenges you face? The two or three big things you faced? What was the biggest problem you had to solve? Walk me through how you solved the problem. What was the single biggest decision you had to make? Walk me through that decision. Who was on the team with you? What was your role on the team? And how did you influence people on the team? Have you put the plan together? What did the plan look like? Did you make the plan or not make the plan? Or how did you manage to the plan? Walk me through the skills you've used and how you learn new skills. So, the idea was you really peel the onion and understand in great depth for 15 minutes what that person actually accomplished the environment in which they accomplished and the area in which they excelled. And then I finally asked at the end. So, imagine I'm sitting here on a chair with 1800 people in New York City Javits Center, which is a huge convention center. And very quietly, I say, and obviously, they're just thinking this out loud. I said, is my last question because 15 minutes is up. What kind of recognition did you get for that? And it was given this as the best thing you've ever done in your career? It should be pretty significant. And in your mind, was this recognition appropriate, given all the work you did? That's the most important interview question of all time. That's what I asked. And it was pretty; it was a pretty cool situation. I've asked it 1000s of times since then, of course, I do it on radio shows. And but it's a very important question. If the real idea is you keep on asking questions related to the job related to the performance objectives, and you start seeing a trend line of performance over time. And that really is the key, the clue. So, you compare that trend line of performance to what you want to be done. Remember, I said the job was a series of performance objectives, I compare those major accomplishments to the performance objectives. And that's the heart and soul of the interview.
James Laughlin 17:50
Wow, that's powerful, like really powerful. So, for the person that's listening right now, that's either recruiting or getting a recruitment firm to do that, what you've just heard is gold. And I would say it's all more of a gold standard like that. That's just brilliant. How have you seen interview processes done poorly?
Lou Adler 18:08
Oh, that most of them? Well, number one. There's, there are two levels of poor one is hey, I really liked to James. So, if you really liked someone, let's assume that we're talking about rugby, James's great. So, if I really liked the candidate, I go out of my way to prove that he was good. And if I hear you come back with a bad answer, isn't that don't worry about that. Tell me about this. And I seek information that confirms my original opinion. On the other hand, if I don't like you, I guess all black is a New Zealand Rugby team. That's right. So, I'm Australian, I don't like that James is no good. So, I look for facts to prove that you're incompetent. Because I got to tell somebody in HR, why I either liked you or didn't like you. So, you go out if you like someone, you go out of your way to prove whatever you believe, and both are wrong. So that's the first step. The next one is everybody believes that behavioral interviewing is the standard interview. And behavioral interviewing a lot of people I love behavioral interviewing, or behavioral interviewing, and it's fair, it's fair, where it says, hey, give me an example, James, of when you've been results-oriented. Give me an example of when you've worked with a team. And that's their traditional interviewing that people get trained, and you start peeling the onion to try to understand it. The problem with that is if you don't compare to the real job, it's you're just getting an isolated point in time if the person has been good, everybody has been results-oriented at one point in time. Everybody has been committed and worked with a team at one point in time, but can they do it in your environment at the current point in time? So, it's that they missed the timeframe. So, the worst one is just making judgments on first impressions unprepared. Going in. behavioral interviewing is a little bit better because it takes out some of that emotion. but it doesn't get into the real depth of is this person going to be competent and motivated to do the work in a situation, I actually need to be done. You're going to be perfect. I mean, I was perfect I was running a manufacturing company when I was 32 years old, and I was perfectly competent to do it, I might have been a little bit stretched. But my boss and I just clashed. So, every day he showed up, I got pissed off. The next day, I was demotivated. Luckily, he was he didn't work in the same building, or else I would have quit long ago. But if you have a boss that's demotivating you, it doesn't matter how good you are, if you have work that you can do, that you don't like to do, you're just not going to be enthused about it. So, there are a lot of variables that determine performance. And most interviewing systems don't take in those variables, the hiring manager, the work itself, and the company environment and culture.
James Laughlin 20:49
That's really very, very interesting. And the one thing I wanted to just unpack a little bit is the whole idea of confirmation bias. So, a lot of us have that and it's unconscious. But we have this confirmation bias. And we're trying to confirm our own thoughts and ideas. How can someone who's recruiting, first of all, become aware that they do have confirmation bias? And then secondly, how can they actually work around it and avoid it?
Lou Adler 21:15
Well, it's like you must have been to our class because that's the first thing we say in our class. So, we have a whole segment in our training. And if you go to higherwithyourhead.com, you'll find some training and other stuff. But we have one course, where we actually get into overcoming bias. And it starts by just asking, everybody said, how do you feel when you are first, I'll ask you this question you can answer it said, How do you feel when you first meet someone whom you really like? How do you visit? Just describe how you feel. Yeah,
James Laughlin 21:46
I feel I would feel happy. I'd feel that I wanted to be curious with them. I'd feel safe. I'd feel that there's some. There's some connection of some description that I can't even put my finger on. But that would be connected, trust.
Lou Adler 22:04
You'd feel relaxed too, right? Yeah. Yeah. This is a good person. So how do you feel when you don't like somebody, someone comes in whom you're interviewing, and you just don't like the person? How do you feel about them?
James Laughlin 22:15
Uptight and standoffish?
Lou Adler 22:18
Yeah, I mean, it's just very high. Oh, yeah. And that's actually called a friend versus foe response. It's still it's, hey, if I don't like somebody who isn't not going to be very good. And if I like them, they just kind of relax. So that's the beginning of it. So just recognizing that that's the case. We have a bunch we have like a 10-step program to overcome it. Number one is, to wait 30 minutes before you ever make a hiring decision. That's the first rule. Wait third, just asked a series of questions about pretty much what I have on my magic card here, which I'll have to show here, my magic card here. Just ask those questions have a script, semi-scripted interview, it's not perfectly scripted, but you just go through some basic steps, and use the interviewer to collect the evidence to make the decision. Don't make it during the interview. That's a rule. Recognize your biases. So, if you like somebody, recognize you're being seduced a little bit because you're relaxed, ask questions, but don't make a decision. Yes, I want to hire this person until you collect the evidence. On the other hand, if you don't like somebody has to go out of your way to prove the person's good. Just ask the same questions. Don't make a yes or no decision until at least the 30-minute mark. So now I want to kind of give you a story, which I think highlights this whole thing about unconscious bias. Well, it's conscious tonight, you got to prefer to bring it to the conscious level. So, this had to be 20 years ago, I had a candidate for a search assignment for the vice president of sales. And I had this rule and I had already written my first book hire with your head. So, I was waiting 30 minutes. And I had started teaching a lot of managers this question. So, a guy walked for his for-VP sales, selling to big some of the big stores and big box stores. I don't know if you have Costco, but at the time, it doesn't matter. You have the big department stores that were selling hardware and don't matter, but that's what it was. And this guy comes into my office, and he was a big, big guy, very, very heavy. He was five, maybe five feet tall, five and a half feet tall, and weighed 300 pounds. It was a big guy, and all of a sudden and I know a sales guy has to make a good first impression. And I was devastated because this is a very difficult search very difficult. And I've worked a couple of weeks on it and it's the first kind I had, and he sounded pretty good on the phone. So, I was kind of raw. I mean literally, I was so uptight. As you said I just feeling terrible moments configured as 25 years ago. I'm still almost feeling that same thing coming back. But after about three or four minutes, I kind of got, he was in my office. So, I had to be there. There's nothing I could do, I had to be there. And after a few minutes, I started relaxing a little bit and said, Okay, I can just suck it up for a half hour, 45 minutes, and end the interview. And I'm thinking of my client being unhappy and all this. But then I remembered, that I talked to the candidate on the phone before I brought him in. And I asked him, Tell me about your biggest accomplishment. And it was selling a new product line to a big store chain. And I remember him telling me about that. And then, I'm starting to think you know, this inside, I kind of forgot how he looked. I started just asking questions about the guy. And then somehow, we talked about college, and I said, oh, what'd you do in college, and he played football, American football. And he was a, he was a big guy. But it turned out after 30 minutes, the guy was not 5'5 and 300 pounds, who's probably 5'9-10, about 270 looked like an American football player. And it was like, fascinating, because I know, 30 minutes ago, he was heavier and shorter. So, this is how your mind plays these tricks. So, I call my client up and said, I think you got the perfect one, he was a good guy, really good guy. I tell my client on the phone, I said, but the guy is a big, big guy. And he said how big he said, He's big. He's a real big, big guy. And I'm just trying to soften my client up, I said he played football for San Diego State, which is a college United States in Southern California. So, he wouldn't have to, so I'll talk to the guy, but hope he's not too big. I mean, that was his comment. He met the guy. And he said I was great. Not that big a guy. He's a football player. So, it was interesting, how bias is so critical and how to control it, I would have lost that candidate. If I didn't go through that exercise. He was a good guy; he was an excellent guy. But we put all our biases and filters to preclude this, you just got to go out of your way to wait 30 minutes, use the interviewer to collect the evidence to determine if he's good or bad, and don't use it to exclude someone. And I think that's really the key that you have to go through here. It is important, but recognize it and a minimum, wait 30 minutes, use the integrated collection of evidence, and don't make the decision during the interview.
James Laughlin 27:16
And what I hear there Lou is your perception really shifts your reality. And when you can kind of change that perception that really changes what you see in front of you.
Lou Adler 27:28
I had I was totally wrong with it. I have a brother, who has very had a brother who was very, very heavy. So that bothered me. And I realized I put that personal bias on this candidate and was totally wrong. Who's a great guy, he was a great guy, and clients love them. And the thing is that we put our own but what's a good first impression? Well, it's my judgment. And just like they say a lot of companies say we have to have good communication skills. And so, then I don't like people with a different kind of an accent. So, I always say this, okay, I understand that communication skills are important. What does that look like on the job? Who do they have to communicate with on the job? Oh, I have to make quarterly reports to the engineering executive team. Fine, then that's the answer I've got. So, if I'm talking with someone who has a strong accent, I just say have you ever made a presentation to a group of engineering executives who have different language skills, and they said, Sure, I did it here, here, and here. So as long as it's not my interpretation of communication skills. It's what they do on the job. And I think that's the idea of performance-based job descriptions, you have to look at all that stuff is what is really like on the job to try to eliminate bias before even comes into play.
James Laughlin 28:41
And it's interesting as we talk more about that, so a few months back, I connected with Todd Corley. So, Todd started with Abercrombie. So, Abercrombie brought him in after they went through a massive systemic racism and diversity court case.
Lou Adler 28:59
Retail store, is that the retail store chain?
James Laughlin 29:03
Yep, yeah, in North America. And so, they brought him in as their very first Global Diversity Officer. And he's now with Carhartt and another American Apparel brand. And we're just talking about hiring with diversity, equity,
and inclusion as your filter. So how do we do that? When we're recruiting, and we want to recruit and give everyone a fair crack? How do we do that and make sure that those biases are not kicking in so that we, you know, if someone is a minority, a different ethnicity, how can we hire again, come back to performance, and remove all these other things that we see?
Lou Adler 29:40
Well, I think that's the issue. So, it goes back to what I said, if you define the job as years of experience, skills, and academic background, and that's your initial but you must have these things. We've already added bias to the system. It's not 10 years of experience. It's not this academic background, it's work that the person needs to do. So, by defining the work as a series of performance objectives, the idea as long as a person can do that work, he or she deserves an opportunity to, for that job, unfortunately, look at job descriptions say says must have 10 years experience doesn't say must be able to turn around a manufacturing plant. It says, must have five years of good communication skills and must be results oriented. So right away, you create anti-diverse job descriptions, by filtering people on stuff that doesn't predict performance. So, I actually, and I'm going to say it was probably 10 or 15 years ago, but certainly part of the first book, but certainly about 10 or 15 years ago, bigger companies really started using performance-based hiring. And they asked exactly the question that you asked about diversity. And I knew that the product as long as a person could do the work, he or she had the right background, didn't have to be older young black or white, green or yellow, but I had to get some legal people to agree to that. So, I had the number one labor attorney in the United States, number one labor attorney, read one of my books. And I said, David, would you just read this book and write a white paper if you agree with it or not? He said, as he read the book, he said, at first, he didn't think was going to work. And I told him if you read the book, he said, this is the most important book ever written about anti-diversity. By defining work as a series of performance objectives, you open the talent pool to everybody, older, young, black, or white, green, or yellow. Because it's colorblind is about performance. As opposed to filtering people in skills that don't exist, you can't find, hire diverse persons got 10 years to experience a degree from this college, this kind of background work for these kinds of companies if they don't exist. But if you take away, hey, a lot of diverse candidates exist doing that kind of work, you just have to reach out to them and define your jobs differently. And that's one of the big reasons why job boards, in my mind, haven't made any progress. And that's why I say if you're not getting the right answer, blow it up. Don't try to correct mid-course, this goes back to my first job as a nuclear engineer. I knew what 23 years old; I figured it out. And it was interesting that nobody else could figure it out. I figured it out because I wasn't that good. And I wasn't that narrow and deep. I was actually kind of playing around with it and said, hey, you know, you got to get the engines, you got to get the guidance system, you got to, you got to have electronics, all working together. And I kind of saw more general and they said, Okay, now we have to blow the thing up if it didn't meet this situation. But I think this goes back now to hire, being fast or doing the wrong thing doesn't make it better, blow it up and start over. And while you blow it up, you need to find work based on performance objectives, not a list of skills, experience, and competencies. That's the game changer. companies find that very reluctant to do because they've spent so much money on writing job descriptions based on competencies and skills. And yet, that's the cause of the problem, not the solution to the problem.
James Laughlin 33:04
And as we get into larger companies, hundreds and 1000s of staff. So how do we ensure when we're recruiting and hiring, that we are creating a diverse team, like a large team, hundreds to 1000s of staff? What is your experience is a great way to approach that to make sure that you've got diversity across the entire team?
Lou Adler 33:25
Well, you got to start at the- So, let's kind of take that problem. At the top level, it's a lot of talk, date, we wanted diverse teams, a bunch of bull, let's be real, frank because you do at the bottom level, every individual hiring decision is how that occurs. And if every single hiring decision is based on skills, experience, and competencies and bias during the interview, and an assessment process that is effective, it's all bull, it's not going to happen. So, you got to stay there. What's the root cause of the problem? The root cause is we write job descriptions that are not that don't open the talent pool to diversity. And then they say, well, we want to have some standards. Well, the standard is performance objectives, they got to meet a. So, until they do that, it's all talking. It's just money being spent, and people feel good thinking they're doing it, but the end result that won't happen. So far, I'm a very, supersonic of supersonic isn't I'm going to show you something I don't know if you can show a picture here. I'm going to, can you hold on I got to find my mouse here.
James Laughlin 34:29
Is anybody listening on Spotify or Apple podcast, if you want to see what's being shared, you can hop over to the YouTube channel and check it out there?
Lou Adler 34:38
There was a lot of talk about the war for talent. And at the time, the Internet was getting really big. Job boards were getting huge and becoming and everybody was saying, oh, we're going with job boards now. We don't need to pay for recruiters will hire our own internal recruiters and we will be able to hire people easily. So that was 1997-1998. And I had written a book that hired your head at that time. And the book, this talk about the war for talent was a study by McKinsey, a big consulting firm. And I said, no, it's a bunch of bull. This is nice. I want you to just say this cartoon. James was drawn in 1997 and 1998 Excuse me, a lot. And I said, no, and I didn't draw it out a cartoon is drawn, I said, you know, we've spent a lot of money on boring advertising, nobody can find jobs. We got people, poor interviewers, we got recruiters who've got too much work to do, we got bad hiring systems, we got boring, postings are boring is understatement was a can of worms. And I said, doing this, this is 1998, I made a contention doing this stuff faster, isn't going to get hiring any better. So, I've shown, and I'll just say, in 1998 $500 billion has been spent in trying to solve this problem. 500 billion, maybe more on technology and AI, and this new and all this stuff. Oh, we got it, we finally have the solution. Finally, have the solution finally have the solution. And then VCs put more and more money into it. No, you don't have the solution. Did you get the problem? If you just trying to do the wrong thing faster. And this is so the whole idea is that how do you scale it? You don't scale it by doing the wrong thing faster, you blow it up and start over again. This is the engineering when your off course you and you're of course nothing has actually made it better. So, then you got to get why are we still doing it. And this goes back to my first job as an engineer at 22 years old. Thinking being in Southern California was better than being upstate in cold winter, New York. I said, blow it up and start over. But it's easy to blow it up. You just write job descriptions that define the work a person needs to do you find semifinalists who can do that work digs deep into their accomplishments and compare them. And you give them the best career move, not necessarily the best starting package, although it could add the most money. But more important are all the factors that drive the job performance, post-hire, if you do those things, you'll be able to actually hire great people every time.
James Laughlin 37:06
That's really powerful. Thanks for sharing that image as well. I'll make sure that we share that up on our YouTube recording as well. So, for the individuals who are thinking do we do in-house recruiting, versus having a recruitment agency? Because they want to save money time, whatever? What are your thoughts? Where would you weigh in and say, you know what, from my experience, this is what you should do if you want the best results?
Lou Adler 37:32
Well, depends. If the job is a strategic position, then you got to say, Okay, I can't afford just having an average performer. And if it's a critical engineer, almost every single manager in any function, certain directors, and vice presidents, but if it's a critical position that will impact the company's success, you can't afford to compromise. Now, should you pay a fee for that? That's a different question. If you have a very good internal recruiting team that can do that work, that's fine for them to do that work. But then if you look at the internal recruiting team, if you're a recruiter, you can handle 10, or 15 assignments or 20 assignments at any one time and be very effective at it. And that's the problem. You know, recruiters were brought in to handle 15 to 20 assignments at any one time, because they thought that technology would make it easy. And that's the fundamental flaw. Technology didn't make it easy. You're just giving all these people too much work to do. So, what you've done is you've just taken an administrative job, you may have recruited administrators because what's happened is you open up the spigot, once you turn on the job posting. Let's assume that 25 years ago, before job boards, you had a job posting, you put in a newspaper, maybe you got 20 to 30 people who applied now you got three to 500 or 1000 people to apply because they just apply, apply, apply, and LinkedIn and Monster and CareerBuilder and zip recruiter, and indeed are making money like crazy. If more people applied better, we're making more money, let's have to do it. So, their job is to get more people to apply and have people change jobs. So, they push you, you go to LinkedIn, and they call me, Hey, Lou I got five jobs for you. I don't want five jobs well apply here. So, it's their job to go to these sites and get you to apply because they make more money. They're not trying to help the company they make more money by the more job postings you have. So, but again, you think about where the money is, the money isn't job postings. It's not in doing this right. And then what all the technology comes in and said, oh, we can make all this stuff more efficient for you. Why would you make this more efficient? And I've talked to a lot of people in artificial intelligence. I said you focus; the best people aren't going to apply. They're the ones that networked or knew the hiring manager. Hey, I worked with James and James knows this guy. So, I got a referral. It's a different kind of market. So, you start thinking they're automating the process. They're using technology, data, and AI to understand what works. Or they're looking at big data, they take a look at trends in the data, and they see what's happening. And it's okay let's take a look at the best people who apply and hire Well, or figure and automate that, well, that's not the best people don't apply. You're getting the worst. I don't want to say the person that terrible people. So, I don't want to say that. But the trends of people who apply it are much more circumstantial than it is predictive in terms of the future. So again, I kind of going off on a high horse here, though. But I just see the point our people making and how to scale it is they have great vision, great hope. But unless they blow the system up and start over, and start over just, they know how it works. They are just hard work to reinvent the system that's embedded in our culture, which is job boards, job postings, and all this other stuff. And I recognize that's not, but we work with mid-sized companies, let's say 500, to 2000 people where they can really make a change. I'm actually right now we're actually working with some huge companies that are changing, isolated by division by division, particularly in technology companies, where they realize that, hey, these are critical positions at all levels, and they've got to do things differently. So, I think so it's changes slow. But I think people start to say, hey, performance-based hiring actually does work when you look at it from a business system.
James Laughlin 41:33
And I think, think back to something in recent years, a company that you've worked with like you know, what performance-based hiring has just been incredible. What's an example of that, that you've thought this has been such a success, and you've seen it really work well?
Lou Adler 41:46
Well, I can't, number one, I can't reveal the names of the companies, they wouldn't want to because they don't want the put competition. But it's where it's really been effective, is where I've actually been able to talk one on one with the president of the company, and the CEO. And I tell this to CEOs. I said, if you want, I just talked to one, let's say six weeks ago, was a woman who's the president of a company, a big retail midsize retail chain in the United States. And I said, Laura if you really want to implement this company-wide, you as the CEO have to make two decisions. Number one, you will not Approve a Requisition unless it's created as a performance-based job description, listing the performance objectives for the job and defining what a person needs to do over the course of the year. And number two, you don't accept a judgment, we have a forum called the quality of hire scorecard, you don't accept the hiring decision list, the whole team has reviewed this candidate and gone through the process and shared their evidence in a formal manner. You do those two bookends; they'll figure out how to get there in between. So that's where we've seen it to be very, very successful. I know I had one client, that was a about 300 million, our company the United States had tooling that was tooling and testing equipment. And I became really good friends with the President. He wrote in my first or second book, the story that I put in there, where he said, I've hired at least 20 people using Lou's process, I only made one mistake, it was because I didn't do a performance-based job description, I trusted my judgment too much. He said I'll never it never happened again. And it really so that's pretty much that's the story. The problem is, that we get it to work with individual managers who are committed to making it happen. But once you get bigger companies, they have other things going through HR isn't totally committed. They think, hey, they got to do this, whatever they're doing faster. So, it then becomes a bureaucratic nightmare to make it happen. So, our best success has been when somebody has gone through it, and really understands it. And it's, but we have had a lot of great success. So, I'm proud of that. But it certainly hasn't achieved worldwide success for every single job in the world.
James Laughlin 44:08
And what do you feel are the costs associated with a company that's not willing to hire this way? When they hire old ways, and hired based on experience what are the costs involved for that company?
Lou Adler 44:24
Well, you can look at it. Because again, you probably know you mentioned it earlier, is my background as a financial analyst. After I became an engineer, I became a financial analyst and worked for a couple of years on maybe 100 different investment projects from acquisitions or new business ventures. So, I look at one statistic that's easy to measure, and maybe I'll give it as a story. Now, I don't want to get that story. I'll say you can make the financial decision based on Rockhole revenue for employees. You can just look at the financial statistics and a company like, I think I'm going to say Ford might be this number. So, it's, let's say Ford Motor Company. I think the revenue per employee, and public information is $600,000 per employee. The marginal profit for that is about 40-45%. So, let's say $200-300,000, let's just say $250,000. And that's a good average number of revenue per employee and margin profit for employees for steps two to three or engineer, managers attire, rank, and file. It's lower. But so, if you're hiring an engineer each day, you know, and maybe that person's salary is 100, and 150,000 or so, well, that person should bring in another $100,000 in profit. So, if you hire a below-average engineer, it's costing you they're not even covering their salary. If you hire a great engineer, they're covering their salary two or three times so rather than getting all the financial statistics, James, one way to look at it is revenue and profit for the employee. The other one is, and this is a story from long ago, a company asked me, Lou, we don't have a budget to implement performance-based hire. So, I asked the woman I said, what do you have? What's your budget for bad hiring? What do you mean? I said, what's your budget for bad hiring? I said, what percent of the people underperforming in your company or turnover? And she said, ah, probably we have turnover about 15%. That's probably another 15% of the people who underperform. So, I said, so 30% of the people you hire are off. I said, so just tell me what, how many people did you hire? And I, it wasn't 100. But she said I'll probably let's assume she said 100. So, it's 100 people, and the average salary for all those 100 people is $150,000 UD with overhead. So that's $15 million of salary, you've paid these people, and 30% of them underperform. So, 30% of 50 million is $4.5 million of wasted money. I said you don't have a $150,000 budget to train people. He said I'll find $150,000. But was the idea that is it. So that's the way you can look at the cost of aid. Think of all the money waiting just for pure salary, and not getting things done. But then a bad hire affects everybody. Demotivates the manager demotivates the peers. So, the cost of a bad hire is more than just money, but the money is huge. So, you just take the percent of people who are underperforming 20 to 30%, who turnover and at least Japan in their salary if you just hey, here's a waste of money. So that's one way to look at it, probably two to three ways of looking at it. But it's a big number.
James Laughlin 47:48
I love that recruitment I see on one side of it, and retention on the other. So, from your experience with the companies that you've dealt with, why do people leave companies? Why do people jump ship this great resignation as they're calling it? Why do people not stay?
Lou Adler 48:06
Well, I think they don't. Okay, so let me go back and other gifts. As you can tell, I get a lot of stories. I make up stuff, but I usually prove it with facts. So, I have a search firm. I don't do the search; we just do training now. But I had a search for him from 1978. And I was a full-time recruiter for 25 years. So, in 2003 There was a point in time where for a 10-year period, where we actually tracked the people who implemented performance-based higher, it was probably seven or 800 placements. And this is where they did all the things we said, to find a job found the right people close it on a career move. So, after about I say seven or 800 placements, over a 10-year period, we calculated how many lefts after the first year, it was only 75. So, 75 out of 800 is 9%, 8%, or 9%. So, then we went back, and we talked to those people about why they underperform and not just those people, but we also talk to the managers and the candidates themselves. Half, I'd say maybe 5 of the 75 were incompetent. Most of them could do the work, they just didn't want to do the work. And half of the 75 he didn't like the hiring manager. I mean, so it was really the hiring manager. And a lot of just and I would say 30 or 40 of them didn't like the company, maybe not take half of the other remaining didn't like the company didn't like the values, but a good portion the work wasn't internally motivating to them like I so let's assume that I was an engineer and 10-year mark, and I could still do guidance systems and all that stuff. But if I didn't want to do that work anymore, the fact that I'm competent has nothing to do with it. Am I motivated to do that work? And I think that's really the issue is we hire people who are competent. To do the work because our job boards a must have this background, let's have this background, you've gone through a behavioral interview said, well, I'm results-oriented, but I'm not results-oriented doing that work in this environment. So, you got all these mishmashes of stuff coming together. But generally speaking, I would say it's not a lack of ability to do the work. It's a lack of motivation to do the work. And that relates to the hiring manager and the culture of the company. I'm going to show you another document here that I'm going to share with you. I call it up the hiring formula for success, which ties all of that together if I can find it.
James Laughlin 50:37
While you're smiling out there, just thinking about what you do, you're arguably the world's global expert on hiring. So that requires a lifetime commitment, and dedication, to understanding it to develop frameworks and methodologies around where your passion for hiring begins. And how has it How have you sustained that for so long?
Lou Adler 51:02
Well, that's a good question. I don't know that. I know. That's a really good question, I think. So. If I go back to that first job I told you about, they gave me that assignment. I was scared, I didn't think I could do it. You're 22 years old. And in fact, when I first took that job, and, the story I told you is a true story. I didn't know what the job was, I just took it goes was to California and the weather was better. And I and I know you know, The Beach Boys, I thought I misunderstood a beach boy song, which was California Girls, I thought you had to go to California to find a California girl. So that was my whole motivation, get to the warmth and find it. I mean, it was nothing to do with this job. So, I'm going to California to buy a Volkswagen to drive cross country go to California, I get in the job and meet my boss who I never interviewed. Remember, I didn't have an interview. I just took the job to get out of Vietnam and to get to California and find a California girl. Let me tell you the truth I found a California girl a year later, I met her at a bar, and we're still married. So that did work. I love it. That story, that story work. But when I took this job, he said, Oh, you're not an electrical engineer, you're a mechanical engineer. And I was a mechanical control systems engineer nonelectrical, which is, if your guidance and control system, you know what that means? It doesn't matter. My background was mechanical stuff, not electrical stuff. They said, well, you have to be here, we'll do we'll deal with it. So, I was scared. But I learned three or four or five months later, I figured it out. I just studied and figured it out. I said, ah, it's a system, you have a business, you have a system here of different parts and different components. And this is where I said, I wasn't the best electrical engineer there. I wasn't the best mechanical engineer there. I wasn't the best rocket engineer there. I didn't. But I could understand how each of these things works together and put them together. So, I understood ah, this is a system. And they couldn't believe that a 22-year-old could figure this out. Even the guys in the Air Force were giving me high fives, it's pretty cool. You figured it out. Because I wasn't good at anything. I was just good at all the pieces. So, I take that story. As I started getting into manufacturing and into business, I could see that the system is what mattered. So, when I got into hiring, in my job, as a recruiter, I got my first placement in three weeks, almost double my income. I did one income the first year, I quit a good job to become a recruiter and make nothing. I made a placement in my first week, which was 25% of what I made. I didn't make another placement for about six months. I said, Okay, this is not for me. But then I figured it out. And in the first year, I double my income. And then the second year, I said you know that I still I might have doubled my income from running a factory. I think I can do it again. If I take all the slop out of the system.
Lou Adler 54:05
So, I started studying why people make mistakes. Why does bias do this? Why does this happen? And in the second year, I'm going to tell you the money. It was a lot of money in 1970. And it is a lot of money to pay, but it was a lot of money then. I said, you know, and I got started figuring it out. Another I said, I think I can do it again. And I started trying to test different things like an NGO. What if I did this? What if I did that? What if I pulled this off? So, after a while I just said you know, it's a business system. Hiring is just like a factory. If you have bad parts, you don't keep on making bad parts and you figure you stop and figure out why the bad parts are coming out and figure out how you get better parts. Oh, the way the job is defined the way mechanics are defining the work. So, it took about three or four years to develop the concept of performance-based hiring. And that I thought was pretty cool. So, I started writing articles about it and people asked me to speak about it. So, I got excited about human nature. So here you got the technology, human nature, behavioral economics, human economics, technology, AI, all these pieces come together. So that's pretty fascinating. It's pretty cool. So then eventually, I developed a formula for hiring success, which basically says the ability to do the work. And that consists of technical skills, team skills, problem-solving skills in relation to fit, drives, motivation, because motivation, so important squared, that equals results, equals MC squared, you know, that guide sign developed that long ago, but pretty much Hey, motivation is the key. But motivation is a variable, depending on if you like the job, you like the environment, you like the culture, or you liked the manager, if any of those things fail, motivation drops to zero. And it turns that ability is not easy to measure, but it's pretty easy to measure variable is the fit, it changes every almost every day, six months, you get a new manager changes if somebody buys a company, it changes, you get assigned a different project to changes, you don't get promoted, it changes. So just because you're intrinsically a great person, if the situation changes underneath you, your performance will change. And to me, that's what we figured out is okay, I got to measure the Fit factors as part of the assessment. And that became the difference I really studied. And it was really the number one is I had to understand the hiring manager and his or her style. And when I know all of the more important, but the candidate has to be motivated to do the work and understand the pace and intensity, how to understand the culture of the company how decisions were made, and how to work well with the manager. And you still have to define the job. So, you asked me why this is fascinating. Because it's, I don't know. But I get excited about it even get excited talking to an old guy, I'm 76 years old, but I still get excited about it, and I understand it. And what I really get satisfaction with is not when a company tells me, Lou really works. It's when an individual candidate has read one of my books and calls me and says Lou, you've changed my life or read the book, and I got a real job because I really help candidates to find a job and accept and compare different offers. And that really, to me is the real value of this from a human. I don't want to go overboard on it. But that's the real value is it people look at their work is not just what they get paid. But the work they do. What how could they do it with and make the decision that way, there'll be a hell of a lot better off or a heck of a lot better off. Unfortunately, too many people overvalue what they get into a start date, not the work they're doing.
James Laughlin 57:35
Yeah, that's so what you've shared, has landed really powerfully for me. And I know there'll be a listener listening right now going well, I need to implement this level of thinking, the hiring formula for success, I'm going to share that, certainly on YouTube. And also, what I'm going to do after this, I'll make sure because there will be listeners that want to connect with you your brand. So, I'm going to make sure and put in the show notes, your LinkedIn details, and your website, to make sure people can get through and connect with you. But before we finish up, I've actually got one last question for you. And I want you to fast forward, and it's towards the end of your life. It may be your last week.
Lou Adler 58:15
Thanks a lot. I'm an old guy. So, I don't know that I like that. But keep on going with your question. We'll see if I want to answer it or not though.
James Laughlin 58:23
You've got a young person in your life that you care dearly for. And they say, hey, Lou, how can I go through my life? And lead it with a sense of purpose? How would you answer them?
Lou Adler 58:37
Yeah, that's a good question. I don't, I didn't let myself say this. I didn't grow up, thinking I wanted to become a recruiter. That was not my intent never even occurred to me. On the other hand, I talked to an old fraternity brother from college about a month or two ago. And we just thought I hadn't talked to him for 55 years. So, this has been a long time. And I just said, Andy, how are you doing? We just got connected somehow. And he told me, I said, what was your first job at a school. And he said I got on a rotation program at General Electric. And in that rotation program, I spent six months in manufacturing, six months in finance and accounting, six months in software development in six months in product design. And he said God gave me an opportunity to understand each of those functions, and to do what I wanted to do that I had a choice to get from that. They gave me an opportunity to go to a master's program, either in business or technology. And I decided to go into technology. And I think about that as an idea. I don't think they do that anymore. It was the idea that and a lot of young people I want to be on a tree, or I want to do this I want to do that. And I said no. Maybe you don't maybe you want broad exposure to a lot of things to find out what your passion is. You don't know what it is at 22, I didn't know my passion was going to be this. I didn't know it was going to be my passion was finding a California girl because of the Beach Boys, because I misunderstood the Beach Boys song that was, you know, you don't really know. And I don't and I do is certainly that job that I had in manufacturing that I quit. I really liked that job; I really wish I would have stayed in my life would have been totally different. It wasn't for that my president. So, your life has a lot of changes, but by being exposed to a lot of different things being exposed to what I would call, a professional way of doing it, and then you can decide, logically, hey, this makes sense to me or not. And I think that's probably the only advice I can give. The one piece of advice I'd probably give is I think we overrate education too much and degrees. I always thought being smart was critical. But I had an opportunity to work with literally hundreds of people who founded companies. And it was, they were all relatively smart. But what they really had was a work ethic and a desire to excel. And they wouldn't give up, they just, hey, I'm going forward with it. Regardless of the task, I'm not going to make excuses, I'm going to make it happen. And that's probably the advice I'd give. If you take on something. Don't make excuses, just get it done. And that, to me is the core element of success. I got to get it done. I'm going to commit; I made you a commitment. I'm going to live to my commitment. And I still look for that treat and candidates today. And to me, that's a universal trading success. No excuses, just get it done.
James Laughlin 1:01:27
That's outstanding. Lou, I just want to say, a heartfelt thank you for sharing your time today and for sharing your wisdom. I know there'll be so many people that have got so much from what you've shared, I'll be sure to put all of your contact details in our show notes so people can actually connect with you and your company.
Lou Adler 1:01:44
I appreciate that. And if I just say out loud if you just want to figure out the book hire with your head, if you go to hirewithyourhead.com you'll find all the stuff about the book, and you can join our book club. You don't even have to buy the book to join the book club. But we talk about a lot of these aspects in a little bit more detail at the monthly book club. So, James, I appreciate you having me hopefully this was helpful. I certainly enjoyed it as well.
James Laughlin 1:02:05
That was fantastic. Thanks a million, Lou.
James Laughlin 1:02:22
Thanks for tuning in today and investing in your own personal leadership. Please hit that subscribe button. And I'd love it if you'd leave me a rating and review. I've got some amazing guests lined up for you in the coming weeks. And leaders. It's that time to get out there and lead your life on purpose.