How one startup learned the hard way not to wing it when hiring

For startups, bringing on new employees can be a make-or-break decision. A good hire can inspire others to be more productive and bring the company more revenue. On the flipside, a toxic employee will not only be a waste of time and money, they will bring everyone around them down. It’s important to hire the right people who fit.

Many entrepreneurs’ first hires tend to be people they know or worked with. That may work when a company is just starting out, but not when it’s scaling up.There need to be systems in place to find not only the right talent, but the right talent for the company. Jonathan Wasserstrum, co-founder and CEO of real estate company SquareFoot, talks about his experience with a bad hire, and how his business fixed its hiring process in the Q&A below.

Tell me what your company does.

We are a new kind of commercial real estate company that blends traditional brokerage and modern solutions for office space.

At what point did you scale up, and what did that growth look like?

We’ve doubled the size of our team each of the past two years. In early 2017, during our company’s sixth year of operation, we went from 15 to 30 people. What changed? We started finding product-market fit. We had clients who needed help, so we had to quickly crank up our brokerage, and we started to find a groove with our marketing team. Because of the demand we were seeing, we also invested in our online presence and our in-person experience.

What went wrong when you scaled up?

Because we hadn’t done much hiring at all in our first several years, we weren’t well-versed in the practices and norms. I was more guilty than anyone else on staff of winging it in the interview process, asking people irrelevant questions such as what books they look to read. It didn’t really give us any insight into whether they could or could not perform well in the open role. It was more of a guess.

How bad did things get?

Because we didn't have a formal process in place for hiring, or really know what we were looking for until they sat in front of us, we made one crucial misstep with someone we brought on. He checked off all of the boxes we had, but we neglected to screen for behavior. Within days of his starting date at our company, it was clear that he wasn't getting along with the rest of the team and that it wouldn't get better any time soon. He stayed with our company for only a few months, before we had to agree to part ways. From that, we realized that behavior analysis was essential, too, to make sure that we were building the team with the right people, not just subject matter experts or experienced veterans.

How did you fix the issue?

I was spending more time in interviews with candidates, screening more people, thinking about additional headcount and how they’d fit into the mix, and more. I knew that if we were going to fill these roles and to execute on our vision, we’d have to put more rigidity into the process. So we took a step back and asked for the first time how to scale the process, to give both a best-in-class recruiting experience for prospective candidates and help us hire the right people.

We invested pretty heavily in the first half of 2018 to make this process smoother and more predictable. We invested in an applicant tracker system to enable managers and others to coordinate candidate visits and to share thoughts and feedback in a more uniform way. In addition, we had a stronger long-term sense of which roles would be common ones for us to fill, and then worked to standardize what those people would look like, where we’d find them, and what they could expect once they walked into our doors.

Our criteria for candidates now tie back to our company's key pillars: being intellectually curious, taking ownership, going the extra mile, and working together. We work these areas into the interview process by asking questions that align with our declared values. We want to hire people who have the answers, but also who are amenable to backing down politely and respectfully when others suggest alternative ideas.

It's not that we got better at understanding who was or wasn't respectful or compassionate or kind. It's that we adjusted to value and prioritize those qualities in our process more so than we had before. We had to walk the walk on the values we hold dear, and to bring aboard those who matched what we sought to do and to be.

We’ve hired dozens of brokers since then, and we continue to invest in growing that portion of our business. They are critical to our success, and we know better now than we did two years ago that people are interviewing you as much as you are interviewing them.

Where did you get the idea for the fix?

We realized we couldn’t continue the old way. It worked when we were 15 people, but it couldn’t meet our needs at 30 or more people. We had to reimagine and rejigger what we did for the good of the company. As the CEO, I want to be involved wherever possible in helping to build out the team, whether sketching for open roles or interviewing people myself for key hires. Those are the conversations I like to have. We had to fix the underlying system and process in order to maintain the enthusiasm we had about the growth we were embarking on.

What do things look like now that you’ve corrected the problem?

We have a smooth process for both candidates and for hiring managers. Whenever possible, we have all members of a department interview candidates so we can get a consensus before extending an offer. With some departments, because of size, that’s not nearly as possible. So we do, in select cases, ask people from other departments to come in and meet interested candidates to ensure that they will fit into the mix.

Sometimes it can take a few months to extend an offer, but we have a stronger sense of what we’re looking for, even for new roles we’re filling for the first time. We want to be thoughtful about who and what we’re looking for, while being open to other candidates and prospects that come our way. These days, we are privileged to have wonderful dedicated in-house recruiters who can do the initial searching and screening. This has eased up the burden on the backend that we all used to have to carry and share the load.

What did you learn from this experience that other business leaders need to know?

At every growth stage, executives must determine whether what worked in the past will continue to guide you in the future. Not only is recruiting and hiring on that list, it’s arguably the most important aspect to prioritize. The quality of the talent we’re bringing in today is incredible compared to what we had at our disposal a few short years ago. I am learning from my team every day.

Business leaders would be wise to, at the very least once a year, be open to changing up how things operate at their companies, even if it means letting go of some of the old ways of doing things or rethinking the company’s culture. Just because you’re adjusting doesn’t mean anything is wrong. It’s the CEOs who are willing to make these changes at various stages who see their companies get bigger and take on more market share as a result. If you’re stuck in the old ways of doing things, you won’t possibly be able to grow.

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Scaled Up is a weekly interview series by Inverse with entrepreneurs. They share how almost everything went wrong while growing their business — and how they fixed it.