Category Archives: Business

My friend Auren Hoffman has an awesome post advising organizations how to make a job offer. Anyone who’s in the business of hiring should read this. His starting premise is that "fit" matters with employees and therefore companies should try their hardest to communicate the company culture and allow the potential hire to decide whether such fit exists. Hence you don’t want to oversell; rather, you want to encourage the potential hire to opt-out if he has any doubts. Excerpts below. My favorite is the last one: make an offer slightly below market (to ensure that he really loves the company and isn’t just motivated by pay) and then give raises to pay him above market.

First, don’t use the offer as an opportunity to sell the candidate. Try to be honest and open with each candidate. Tell them your goal for all employees is for them to love their jobs and that they should not take the job if they have doubts. You’ve only been able evaluate the person for a dozen hours – but the candidate has known herself all her life. She will be a much better judge if she fits the culture.

Next, be completely honest about the culture. At Rapleaf, we take at least 15 minutes to spell out, in detail, the company culture. Tell them your organization’s quirks and what is expected of employees. Some of the many things that are particular to Rapleaf that we tell all candidates: 

We’re frugal. We’ll wait until we’re very profitable before we pay for fancy   dinners.

• We give each other a good dose of constructive criticism. We happily give and take criticism. We want to better ourselves and the   others around us.
• We do not value our own ideas more than those ideas   generated by our teammates.
• We work long hours. We believe great things are accomplished 5% inspiration and 95%   perspiration.
• We believe the perfect is the enemy of the good. This means we focus on getting things   done, not on building the most perfect system. We strongly believe in rapid iteration.

Really talk through the culture during the offer. If you want your employees to work long hours, you better tell them that is expected before they accept the offer.  Conversely, if you believe strongly in a 40-hour workweek, tell the candidate because many people are looking to change the world and they want to work with people who really make the company mission a priority.  

The essential take-away is not to sugar-coat the experience. Be completely honest.

Then, tell the candidate your concerns about them. Tell them what you like about them and what they will need to improve upon to be a productive employee. And tell them not to take the job if they don’t think they can make those improvements. This is the toughest thing for a hiring manager to do but it is important because it really sets the expectations. 

Fourth, don’t give candidates a long time to make a decision. Two days is fair. If they don’t know they want to work for you in two days, then they should probably turn down your job offer.

And give a salary that is a bit below market. You want to make sure candidates REALLY want to work at your company. Then you should make sure you take care of your employees and give them frequent raises so they end up being paid above market. This way you get the both worlds – employees who are really excited about the company and who are happy that they are appreciated by management (because of the frequent raises).

The former, says Richard Posner, in this excerpt from his post:

There is also an echo of the traditional but erroneous suspicion of speculation as an activity that does not create social wealth but merely shifts it around. That is incorrect. Speculation aligns prices (whether commodity prices or the prices of companies) with values and so creates more accurate signals for production and investment. It is a vital economic service. That is not to say that speculators "deserve" higher incomes than ditch diggers. Desert doesn’t enter. Incomes are determined by supply and demand.

I was in New York all last week and met some interesting people. Here’s one of the best nuggets I heard from a hedge fund portfolio manager:

I think, in the end, you gotta specialize in something. You need to know an industry and know everyone else in the industry, and how you’re different and better than the other guys. If you’re looking around the table and you don’t know who the sucker is — who’s off-base in their thinking — then it means you’re the sucker.

The general idea of knowing how you stack up against your competition — whether on a personal/career level or as a start-up — is very important.

 A subtle but powerful insight from Jeff Bezos, founder of Amazon.com, via this Q&A in Portfolio:

One of your big initiatives, a search engine called A9, fell flat. What happened? If you decide that you’re going to do only the things you know are going to work, you’re going to leave a lot of opportunity on the table. Companies are rarely criticized for the things that they failed to try. But they are, many times, criticized for things they tried and failed at.

 

Did you ever get criticized for some­thing you tried that worked out? When we pioneered customer reviews, it was incredibly controversial. I got letters from publishers saying, “You don’t understand your business. You make money when you sell things. Take down those negative customer reviews.” We’ve never done anything of real value that wasn’t at least a little bit controversial when we did it. But if you want to be a pioneer, you have to be comfortable being misunderstood.