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According to a recent study by Gallup, companies with solid cultures see a 33% revenue growth compared to those without. Culture doesn’t manifest by happenstance; it requires a purposeful, strategic endeavor that demands meticulous planning, steadfast commitment, and, above all, the right people to carry the mission forward. Human Resources (HR) sits at this critical juncture, the decisive force shaping the organization’s culture.
In this episode, Tom Applegarth, a human resource strategist and VP of People and Culture at Preferred CFO, joins us to discuss optimizing the hiring process so HR can bring on board not just qualified candidates but culture enhancers—those game-changing individuals who can elevate an organization from merely operational to genuinely exceptional.
A Framework for Values-Based Hiring
In traditional hiring, the focus often centers on skills, qualifications, and experience. While these aspects are undeniably important, they don’t offer a holistic view of the candidate. A resume-perfect individual can still become a culture disruptor if their values clash with the organization’s. Hence, the introduction of a values-based hiring framework becomes crucial.
- Define Core Values: Lay out the values that your organization considers non-negotiable.
- Align Questions and Tests: Implement behavioral and situational questions or assessments that gauge candidates against these values.
- Incorporate Stakeholder Interviews: Involve various team members in the hiring process to assess cultural fit from different viewpoints.
- Prioritize Soft Skills: Emotional intelligence, adaptability, and strong communication skills often serve as reliable indicators of a cultural fit.
The Onboarding Connection
The hiring journey doesn’t culminate with an offer letter; instead, it transitions into the critical onboarding phase. This is the period where HR has the opportunity to solidify cultural norms and expectations. Tailored training modules, coupled with mentorship opportunities, allow new hires to internalize what the organization stands for sincerely.
Assess, Adjust, Achieve
Consistent evaluation provides critical insights into the alignment between your hiring practices and your culture-building ambitions. These checkpoints could range from formal annual reviews to casual team feedback sessions. Take cues from your existing workforce—they are the most reliable indicators of your organizational culture.
The Amplification Effect
A well-executed hiring process does more than occupy empty workstations; it amplifies the existing organizational culture. Each new hire who resonates with the company’s values catalyzes a positive culture, inspiring peers and setting off a ripple effect that boosts overall success.
Forging a Resilient and High-Achieving Work Environment
When culture assumes a central role in hiring strategies, HR transitions from a support function to a strategic asset. It’s not just about filling roles; it’s about enriching the entire organization. By aligning your human resource strategies with a robust cultural vision, you create a resilient, high-achieving, and positive work environment that stands tall through time.
The Strategic Dividend of Cultural Investment
Culture is more than just an HR undertaking—it’s a core business strategy that permeates every layer of your organization. When implemented effectively, it translates to enhanced productivity, innovation, and a fortified bottom line. By prioritizing culture in your HR practices, you’re not just building a better work environment; you’re securing a long-term strategic advantage for your organization.
Episode Summary
In this episode, Tom Applegarth, a human resource strategist and VP of People and Culture at Preferred CFO, discusses the importance of optimizing the hiring process to bring on board not just qualified candidates, but culture enhancers. He emphasizes the need for meticulous planning, commitment, and the involvement of the right people in shaping an organization’s culture. Applegarth also highlights the significance of pay and benefits, good relationships between employees and managers, and a positive workplace culture in retaining top talent. He suggests using standardized questions and assessments during the interview process to ensure a good fit between candidates and the organization’s values. Additionally, he advises job seekers to thoroughly vet potential employers and seek unbiased feedback from current or former employees before accepting a job offer.
Chris Hood (00:00):
Hey everyone. Thanks for listening. According to a recent study by Gallup, companies with solid cultures see a 33% revenue growth compared to those without, but cultures don’t just manifest themselves. They require a purposeful, strategic endeavor that demands meticulous planning, steadfast commitment, and above all the right people. Human resources sits at this critical juncture that shapes an organization’s culture. In this episode, Tom Applegarth, a human resource strategist and VP of People and culture at Preferred CFO, joins us to discuss optimizing the hiring process so HR can bring on board not just qualified candidates, but culture enhancers. Those game-changing individuals who can elevate an organization from merely operational to genuinely exceptional. My new book, customer Transformation has hit the top of the bestsellers list. Now is the time to learn how to adapt to your customer’s ever-evolving needs and revolutionize your company’s strategy to achieve customer success and business value. Available now on Amazon, Barnes and Noble or my website and to support the show, visit chris hood.com/show. Subscribe to the show on your favorite podcast platform. Follow us on social media or you can email me directly [email protected]. I’m Chris Hood and let’s get connected.
Voice Over (01:36):
Connecting Access. Granted, it’s the Chris Hood digital show where global business and technology leaders meet to discuss strategy, innovation and digital acceleration. 5, 4, 3, 2, 1. Your digital evolution starts now here’s your host, Chris Hood. Welcome to the show. Tom, would you mind introducing yourself?
Tom Applegarth (02:11):
No, my name is Tom Applegarth. I’ve been in HR my entire career for lots of companies over the last 30 years. Some big companies like Goodyear, Amaco, and then some small companies and I am currently working for Preferred CFO. We do outsourced finance, accounting, HR, and payroll work for primarily small companies. We do projects for big companies as well, but mostly we’re doing fractional work for small companies that really can’t afford seasoned veterans in those areas full-time, but can afford us on a fractional basis.
Chris Hood (02:54):
Well, it’s great to have you. Crazy as it seems. Just a couple of days ago I was having a with somebody on LinkedIn about hiring, so it’s fitting that you’re here now because I can collaborate with you to see if my mind is on the same track. Based on your experience across small and medium enterprise wide organizations, what are some of the common themes? Themes or maybe even some of the common differences that you see across human resources?
Tom Applegarth (03:23):
I think really good managers are always thinking about their team and always in hiring mode because you never know when somebody’s going to leave your team, and so I think great managers just spend a lot of time where they’re always looking for talent and when they find talent, whether or not they have a job, they either try and make room in their budget in some way, shape or form to bring on great talent or they keep in touch with that person for sometimes months or longer so that they have bench strength, whether it be internal or external to their organization that they can bring into their key roles when they open up.
Chris Hood (04:17):
Of course we know that companies and teams often get disrupted because people leave, but how do you prevent that? I mean, that’s probably the age old question that a lot of people have. I want to keep my best talent, and yet we find that we still tend to lose them.
Tom Applegarth (04:34):
Absolutely. So the first thing you need to do on kind of Maslow’s hierarchy of needs is make sure that the pay and benefits are competitive. You don’t have to pay people really, really height compensation, but you need to be competitive, and that starts with knowing what is competitive. And so participating in salary surveys, looking at that data, understanding what is competitive for each and every job in your organization is the first step, and then assuming you get that right, well, when people leave, most of the time if pay and benefits are competitive, they’re leaving because they don’t like working for their manager. People leave when they’re not getting along with their manager. And so that’s the first step is making sure that that relationship is good and training managers, helping them understand the signs and then doing surveys of employees so that you can identify where there’s groups that are unhappy and not engaged and spend time figuring out what the issue is. But the majority of the time it’s the manager. Certainly the culture of the organization plays a big role and sometimes managers are the product of the culture, and so in fact, most of the time managers are the product of the culture and so making sure that the culture is being driven and culture is driven by the top. So the CEO on down needs to spend a significant amount of their time understanding and developing and driving a positive culture in the workplace.
Chris Hood (06:34):
I couldn’t agree more on this. Managers are the product of the culture. Absolutely. Of course, there are two sides. You’ve got a relationship and that relationship has to function, be supportive, be at least professional. Unfortunately, we know that that’s not always the case. You touched on training the managers. I hate to say it, but most managers probably are too self-centered to realize that they are the problem and they’re always going to push that back down to the employee. It doesn’t mean that the employee is never at fault, but I go back to what you said, the culture is ultimately going to drive whether we maintain that toxic atmosphere within the organization that drives that wedge between that relationship. And so building the culture I think is one of the hardest things that the organization even from the top down has to focus on.
Tom Applegarth (07:33):
Absolutely. I think providing those communication and feedback mechanisms so that employees have a voice and really the smart organizations are developing leaders rather than managers. Really if you can get a team who likes their coach and will follow their coach, that’s just so much more effective than somebody who’s managing and just kind of following up on tasks and really that drives a lot of people crazy and getting the feedback from employees so you can identify, well first set the expectation of what we expect from leaders in the organization and having strong values on here’s how we treat each other because it’s not only what people get done, it’s how they get it done. The how is equally important and needs to be part of the feedback process to leaders and employees in the organization. In of course, we value what you get done, but how you get it done is equally important. And measuring that and giving people feedback on what they’re doing well and what they’re not doing well and what values they’re living and what values they’re not living well is really important.
Chris Hood (09:01):
Yeah, I agree. The measurement part is critical in this, and yet I also see a lot of organizations that will measure, they’ll take that feedback loop, but then they don’t do anything about it. They ignore the data. There is an area of human resources called people analytics. Are you familiar with that?
Tom Applegarth (09:22):
Absolutely, yes. There are a lot of great organizations that have developed some that have PhD, organizational psychologists that have developed great valid surveys where you can compare yourselves to other companies and can really dig into what are the issues in the organization and where are they occurring because it’s not going to be the same in all work groups. And so benchmarking that and then absolutely using that as a big driver on how we’re going to change in a work group as a company and addressing those then and then doing surveys on a once a year or maybe every six month basis, but you have to keep score and you have to understand, are we moving this in the right direction or not? And holding all the leaders in the organization accountable to that is one of the metrics they need to improve is those scores on those surveys is really important.
(10:37):
And then doing analytics around turnover and where’s turnover happening and getting as much data as you can out of people who are leaving the organization on why they’re leaving is another great metric you can look at. Is it mostly new people who are leaving? Is it people that have been around here for a while? Because you can identify some of your hiring processes that might be broken if you have a lot of high turnover with people that have recently joined the organization and onboarding and how you bring people into the organization and how you sell ’em on the organization. All of those things, you need to measure all of that to really identify where are our issues and how are we going to fix them.
Chris Hood (11:23):
I recently wrote a book called Customer Transformation, and in that book I dedicate an entire chapter on culture. Part of that is to compare how you treat your customers with how you treat your employees. So there’s a lot of organizations out there that are highly focused on things like churn rate, net promoter score, customer satisfaction. If we look just that like customer satisfaction, you spend all this time, money, effort to understand customer satisfaction. I argue you should be doing the exact same thing with employee satisfaction. There should be a one-to-one ratio in terms of how you are tracking externally as well as internally, do you see that happening?
Tom Applegarth (12:10):
Well, I agree with you. It’s very important and there are a lot of organizations that understand that there’s kind of three primary constituencies. There’s the owner or the investors if you’re a publicly traded company and most companies pay a lot of attention to that feedback. There’s customers as you brought up, which a lot of people pay attention to that feedback. And then there’s employees and the exceptional companies are really good at improving their relationship with all three of those groups. A lot of organizations only focus on two, and that’s a big mistake. So the organizations that are really, really successful over the long term are the ones that are paying attention not only to their investors and their customers, but their employee feedback as well and constantly trying to understand how do we improve that employee experience.
Chris Hood (13:12):
You mentioned hiring. Thank you for bringing that up because my argument and belief is that a culture is defined on day zero and we’ll call day zero the moment before you actually hire somebody. So how critical is it that during the hiring process you are focused on the culture you are trying to build?
Tom Applegarth (13:37):
It is really important. I mean, you can hire people that have the perfect experience for the role that you’re hiring and interview very well, but if they are misaligned from a value perspective and a cultural perspective, they are not going to be successful in the organization. So the first thing you need to do is make sure you have a very good selection process so that you really improve your odds of bringing people into the organization that are going to fit, and then you need that experience to be good. So if the process before they even start with you is not smooth, doesn’t help them prepare for a good first day and what you define as day zero, they’re getting off to on the wrong foot and then if their first day and their first week and their first month isn’t a good experience, it’s really hard to recover and the first impression matters in a lot of things in life, but absolutely matters as you’re bringing an employee into the organization.
Chris Hood (14:55):
So I just left Google. I spent six years there and while I was at Google, I was part of the hiring practice, so I did a lot of interviews and Google has done some really fabulous things from that perspective. There are basically four primary interviews that everyone goes through. There’s a cognitive type of interview, there’s a skills interview, and then there is one we call Googs, and Googs is all about how much are you aligned with the culture of the organization. So to your point, you could pass the skills with flying colors, you could pass the cognitive with no problem at all, but if you fail that googs, most likely not going to get the offer. Why? Because they want people who are aligned with the personalities, the types, all of that culture fit is so critical for how Google has scaled its company. I think that aligns exactly with what you’re talking about.
Tom Applegarth (15:57):
Yeah, absolutely. It’s important. It is very, very important and that’s why having more than just the manager interviewing the person is really important. Obviously the manager needs to play a role, but peers and other people that that person is going to work with need to have some input so that they can help screen for culture and so that they have ownership as that person comes into the organization, they have some people that are helping them be successful because they have ownership in that decision to bring that person on board.
Chris Hood (16:39):
We may not disagree on this, I’ll share my opinions, but this is another lesson that I learned from Google. The hiring manager is actually not involved with the hiring process at Google. They do that to remove the bias and the favoritism from the equation. The theory is is that if you have a standardized culture with standardized questions and you have individuals throughout the organization, peers or even third party that are not even in the organization that you’re hiring for, that they all understand what the culture is. There’s say a rubric score that they can define one to five and between that they understand and they are empowered to ensure that we’re maintaining that culture because far too often what you do have is I’m going to hire this person because I know this person. That’s when you potentially bring in somebody that does not align to the culture. And when you do that, then you’re opening yourself up for potential misalignment between the manager and the employee, which is what HR doesn’t like to see.
Tom Applegarth (17:57):
Yeah, I mean I think there’s for sure needs to be a process, and I don’t think that a manager should make the hiring decision on their own. And I’m a big believer in a unanimous decision, hire slow. Sometimes you need to remove mistakes quickly, but take your time in hiring. And so there needs to be a panel. There needs to be many more people than just the hiring manager involved in that process. And if any of them are saying, we shouldn’t hire this person, we shouldn’t hire this person, it should be a unanimous decision before we bring them on board.
(18:42):
Obviously Google’s been a tremendously successful company, and when you’re that successful and everybody wants to work at Google because of how successful they have been, you can probably have that type of a structure. I think most companies would struggle to get managers to buy into that concept and to get candidates to buy into that concept, right? I mean, you’ve got to be a Google type brand, which there’s not that many. I can probably count ’em on one or two hands where candidates would go to work for a company without interviewing their manager. I mean, most candidates, especially if they’re gainfully employed and they’re being recruited by an organization and they’re not opposed to moving, but they’re not actively looking and they’re not actively unhappy, they’re interviewing the organization and their hiring manager as much as the organization is interviewing them.
Chris Hood (19:50):
I think there is some balance in here. I definitely think that there is some lessons that organizations can take away and think about in terms of a use case, a strategy where you can begin to remove some of that, maybe not all of it. I think the other area that becomes really interesting is when you do wrapping it all the way back to the beginning of our conversation, when you do lose an individual, maybe unexpectedly, a lot of organizations struggle because I need somebody to fill this space. What that introduces is a level of desperation where now I’m just going to hire somebody because I have to fill this role now immediately. And oftentimes we sacrifice in areas like culture or even skillset because we just need a body.
Tom Applegarth (20:44):
I agree with that, and that’s why succession planning and your successors, if you’re a small company, your successors don’t have to be on your payroll. You just need to identify two or three or four people for all of the roles that are critical. And maybe all of the roles in the company would be ideal to where you have a plan and a list of people that you’re actively cultivating. And so somebody like Google, I’m sure they have succession planning and there’s a lot of internal candidates and so that they minimize that risk when a key role opens up, they have three or four internal candidates that they can move into that role. And so you don’t act out of desperation. Smaller companies have a little more difficult time doing that, but that’s why I always work with them to say, let’s put together a plan and where there’s holes in the plan, let’s go actively recruit.
(21:50):
Now, even though we don’t have an opening and we meet candidates and we tell ’em, Hey, we know this job, one of these jobs, there’s going to be a role for you in this organization in the next 12 or 18 months. There’s not one today, but let’s continue to talk. And so that when you have that opening that you don’t act out of desperation. And I agree with you. That’s when companies make some very bad decisions. And then I always encourage, even if you get behind the eight ball and you are desperate, the hiring manager might be desperate, but the CEO should never get desperate and realize that making a bad decision is much worse than taking the appropriate amount of time to make a great decision.
Chris Hood (22:43):
Another area you sort of touched on this is how do you fill in these gaps as part of your contingency plan, as part of your succession plan? A lot of this is based on the size of an organization, obviously a smaller company, five people, you’re going to struggle with this. I love the idea of having somebody in the wing that you could potentially reach out to and say, Hey, can you help us just part-time? Even as larger organizations, you might introduce some type of bungee system where you could actually hop into a role for a short period of time and then bungee back to your original role. So this gives the opportunity not only for you to fill critical roles in real time, but it also allows your organization employees within the organization to learn a new skillset potentially. You don’t have to just go and find the perfect match and replicate, I need somebody with this skill for this job. Go find somebody else in your organization who is a hard worker. Let them come in. It’s an opportunity to train them and get them more experience within the company. You can send them back in say, six months, but during that six months, you’re finding somebody else, and obviously they’ve got to be able to manage the other role that if they’re leaving one role. So find somebody that may be a little bit more flexible within the organization, especially if you’ve got to fill in something more critical.
Tom Applegarth (24:21):
It’s an opportunity for high potential employees who want to learn and grow. When somebody leaves the organization, they may not be able to take all of that work, but if you have five or six or seven high potentials who are really looking to learn and grow, you may be able to divide up somebody’s job on a short-term basis into four or five or six different segments that people can absorb and that people that are really interested in developing are more than happy to absorb.
Chris Hood (24:59):
Let’s go back real quick to the hiring practice. I mentioned I was having a conversation with somebody on LinkedIn and the specific topic that we were talking about were questions for the interview, and I recommended having some default standardized questions and they were suggesting, well, that’s not what I’m usually familiar with. I usually have the leeway to ask whatever I want. During that process, do you have a particular opinion about standardized questions for the interview process versus free for all questions?
Tom Applegarth (25:35):
Yeah. I think the way that the selection process is best is if you have some type of written assessment upfront that is going to give you some information so you’re not just walking into the interview cold, something about the candidate, not just their resume, but you have an assessment that oftentimes might include some cognitive ability, might include values, so you understand maybe what are some of the areas you need to probe into, see whether or not there’s a cultural fit and a value fit. And then there may be some technical abilities as well. So typically you’d have an initial interview that maybe the HR person or recruiter or somebody is doing to just make sure the person seems like they’re a good fit and then sells them on the opportunity. And then you have some type of written assessment that they take beforehand, and then they’re coming in to interview with a team, they’re going to interview with four or five or six different people.
(26:48):
And absolutely those interviews ought to be scripted. So I always like to get that team together. Let’s all look at the written feedback that we have and have the person that did that initial screening interview involved in the team meeting so that we really kind of map out, okay, what are the areas that we really want to probe into? Who’s going to probe into what? Always have a bunch of standardized questions that now we look at and say, okay, what do we think is appropriate? What are the watch out points that we’ve seen from the process that’s happened thus far? And who’s going to ask which questions? And that doesn’t mean they can’t ask another question or whatever as they go through the interview, there may be other questions that they’re interested in pursuing based on the responses they’re getting from the candidate. But just walking into an interview cold and going through your standard routine is not the way to make sure that you’re hiring people that are the best fit for the role.
Chris Hood (27:57):
I was having a conversation with somebody a couple of days ago as well. It’s a completely different conversation, and they were telling me how they were conducting an interview and two people from the team were doing the interview. One of the team members asked a question and the other team members says, well, I don’t know what to ask. That was what I was going to ask. I think to your point, scripting it out and being prepared, especially if you’re doing a team style interview, I think is critical.
Tom Applegarth (28:25):
Absolutely. And you always have to remember you are interviewing them, but really, really good candidates have lots of options, especially in this economy, and they’re interviewing you as much as you’re interviewing them.
Chris Hood (28:40):
Now, on that note though, you touched on it just a moment ago in terms of the value alignment that employees have when they are joining a company, and I’ve done it myself, I’ve, I’ve sat down, I’ve tried to assess, does this company know what they’re doing or are they basically clueless yet? We see a lot of individuals. We talk about desperation on the hiring side. There’s obviously employees who are desperate for a job and they’ll say whatever they need to say to get the job. And oftentimes that is at a sacrifice of the values. What’s the recommendation for how we as individuals should think about our personal alignment when it comes to taking a job offer?
Tom Applegarth (29:26):
Yeah, we all spend way too much time at work to not be happy where we are, and we’re never going to perform at our peak capability if we’re not happy. It’s just not going to happen. And so I think people should always take the long view and really be selective. Even if they are feeling pressure, maybe they don’t currently have a job, there’s financial pressure, there’s ways to manage your finances and maybe you do some dry boober or whatever, but before you commit to an organization, you need to make sure there’s a good fit because one of the things that I always probe into, and there’s a lot of people that are spending one or two years max at a job and they’re changing jobs every one or two years. There’s a problem there that you need to really look into as you’re bringing them into your organization. And so people need to realize that that’s one of the red flags if they’re doing that. And so you need to make sure you’re joining an organization with the right fit and you need to be assured that you have a reasonable chance of being successful in that company and happy in that company because if you’re not happy and you’re not a good cultural fit, you’re not going to be successful.
Chris Hood (31:05):
I see the hiring process today, like a good old dating app. You log in, you make a match, you hope that the relationship’s going to work. You go on your first date, maybe it’s good, maybe it’s not. We see red flags. We ignore the red flags. We get into the relationship anyway, pay attention to those red flags. Make sure that you’re happy in the relationship. Go to an organization that aligns with your basic principles and values, and then I think the rest is up to you.
Tom Applegarth (31:37):
Absolutely. And you’re going to be more successful in the long term for sure. It’s a big mistake to join a company that you haven’t thoroughly vetted. And even there’s always time when you can go through the process and when you get an offer, most companies are going to give you some time to make that decision. That’s when as a candidate, you should, if you have any outstanding questions, you should get in and call employees maybe that you don’t even know. Just start your process of going through LinkedIn, finding people talking to ’em, and network. Who do I know who knows somebody? Can you introduce me? And you can do all of that within three or four days that most companies will gladly give you some time to make a decision. And if they won’t, that may be another red flag that you really need to think about. If a company’s really trying to strong arm you into making a decision on a very short timeframe, that’s an issue.
Chris Hood (32:50):
I think that’s absolutely fabulous advice. Go find people from that company on LinkedIn, reach out to them, ask them questions, unbiased feedback about the job before you start, do your own research. Heck go look at reviews online as well. All of that is great advice. Tom, how can people find you?
Tom Applegarth (33:15):
So you can [email protected] and find me there. If you Google Tom Applegarth preferred, CFO, and then my email’s Tom [email protected],
Chris Hood (33:28):
And we’ll have that information on the blog post for this episode. Tom, I appreciate it. Great conversation.
Tom Applegarth (33:35):
Likewise. Thank you very much, Chris. I appreciate it.
Chris Hood (33:38):
And of course, thanks to all of you who are listening. If you like what you heard, please subscribe to the show on your favorite podcast platform and leave a review. Your feedback helps us improve and grow. And if you have any questions, comments, or ideas for the show, you can connect with us throughout social media and online at Chris Hood Show. And please share this episode with your friends, family, colleagues, or anyone else looking to grow their business and start their own digital evolution. Until next week, take care and stay connected.
Hey everyone. Thanks for listening. According to a recent study by Gallup, companies with solid cultures see a 33% revenue growth compared to those without, but cultures don’t just manifest themselves. They require a purposeful, strategic endeavor that demands meticulous planning, steadfast commitment, and above all the right people. Human resources sits at this critical juncture that shapes an organization’s culture. In this episode, Tom Applegarth, a human resource strategist and VP of People and culture at Preferred CFO, joins us to discuss optimizing the hiring process so HR can bring on board not just qualified candidates, but culture enhancers. Those game-changing individuals who can elevate an organization from merely operational to genuinely exceptional. My new book, customer Transformation has hit the top of the bestsellers list. Now is the time to learn how to adapt to your customer’s ever-evolving needs and revolutionize your company’s strategy to achieve customer success and business value. Available now on Amazon, Barnes and Noble or my website and to support the show, visit chris hood.com/show. Subscribe to the show on your favorite podcast platform. Follow us on social media or you can email me directly [email protected]. I’m Chris Hood and let’s get connected.
Voice Over (01:36):
Connecting Access. Granted, it’s the Chris Hood digital show where global business and technology leaders meet to discuss strategy, innovation and digital acceleration. 5, 4, 3, 2, 1. Your digital evolution starts now here’s your host, Chris Hood. Welcome to the show. Tom, would you mind introducing yourself?
Tom Applegarth (02:11):
No, my name is Tom Applegarth. I’ve been in HR my entire career for lots of companies over the last 30 years. Some big companies like Goodyear, Amaco, and then some small companies and I am currently working for Preferred CFO. We do outsourced finance, accounting, HR, and payroll work for primarily small companies. We do projects for big companies as well, but mostly we’re doing fractional work for small companies that really can’t afford seasoned veterans in those areas full-time, but can afford us on a fractional basis.
Chris Hood (02:54):
Well, it’s great to have you. Crazy as it seems. Just a couple of days ago I was having a with somebody on LinkedIn about hiring, so it’s fitting that you’re here now because I can collaborate with you to see if my mind is on the same track. Based on your experience across small and medium enterprise wide organizations, what are some of the common themes? Themes or maybe even some of the common differences that you see across human resources?
Tom Applegarth (03:23):
I think really good managers are always thinking about their team and always in hiring mode because you never know when somebody’s going to leave your team, and so I think great managers just spend a lot of time where they’re always looking for talent and when they find talent, whether or not they have a job, they either try and make room in their budget in some way, shape or form to bring on great talent or they keep in touch with that person for sometimes months or longer so that they have bench strength, whether it be internal or external to their organization that they can bring into their key roles when they open up.
Chris Hood (04:17):
Of course we know that companies and teams often get disrupted because people leave, but how do you prevent that? I mean, that’s probably the age old question that a lot of people have. I want to keep my best talent, and yet we find that we still tend to lose them.
Tom Applegarth (04:34):
Absolutely. So the first thing you need to do on kind of Maslow’s hierarchy of needs is make sure that the pay and benefits are competitive. You don’t have to pay people really, really height compensation, but you need to be competitive, and that starts with knowing what is competitive. And so participating in salary surveys, looking at that data, understanding what is competitive for each and every job in your organization is the first step, and then assuming you get that right, well, when people leave, most of the time if pay and benefits are competitive, they’re leaving because they don’t like working for their manager. People leave when they’re not getting along with their manager. And so that’s the first step is making sure that that relationship is good and training managers, helping them understand the signs and then doing surveys of employees so that you can identify where there’s groups that are unhappy and not engaged and spend time figuring out what the issue is. But the majority of the time it’s the manager. Certainly the culture of the organization plays a big role and sometimes managers are the product of the culture, and so in fact, most of the time managers are the product of the culture and so making sure that the culture is being driven and culture is driven by the top. So the CEO on down needs to spend a significant amount of their time understanding and developing and driving a positive culture in the workplace.
Chris Hood (06:34):
I couldn’t agree more on this. Managers are the product of the culture. Absolutely. Of course, there are two sides. You’ve got a relationship and that relationship has to function, be supportive, be at least professional. Unfortunately, we know that that’s not always the case. You touched on training the managers. I hate to say it, but most managers probably are too self-centered to realize that they are the problem and they’re always going to push that back down to the employee. It doesn’t mean that the employee is never at fault, but I go back to what you said, the culture is ultimately going to drive whether we maintain that toxic atmosphere within the organization that drives that wedge between that relationship. And so building the culture I think is one of the hardest things that the organization even from the top down has to focus on.
Tom Applegarth (07:33):
Absolutely. I think providing those communication and feedback mechanisms so that employees have a voice and really the smart organizations are developing leaders rather than managers. Really if you can get a team who likes their coach and will follow their coach, that’s just so much more effective than somebody who’s managing and just kind of following up on tasks and really that drives a lot of people crazy and getting the feedback from employees so you can identify, well first set the expectation of what we expect from leaders in the organization and having strong values on here’s how we treat each other because it’s not only what people get done, it’s how they get it done. The how is equally important and needs to be part of the feedback process to leaders and employees in the organization. In of course, we value what you get done, but how you get it done is equally important. And measuring that and giving people feedback on what they’re doing well and what they’re not doing well and what values they’re living and what values they’re not living well is really important.
Chris Hood (09:01):
Yeah, I agree. The measurement part is critical in this, and yet I also see a lot of organizations that will measure, they’ll take that feedback loop, but then they don’t do anything about it. They ignore the data. There is an area of human resources called people analytics. Are you familiar with that?
Tom Applegarth (09:22):
Absolutely, yes. There are a lot of great organizations that have developed some that have PhD, organizational psychologists that have developed great valid surveys where you can compare yourselves to other companies and can really dig into what are the issues in the organization and where are they occurring because it’s not going to be the same in all work groups. And so benchmarking that and then absolutely using that as a big driver on how we’re going to change in a work group as a company and addressing those then and then doing surveys on a once a year or maybe every six month basis, but you have to keep score and you have to understand, are we moving this in the right direction or not? And holding all the leaders in the organization accountable to that is one of the metrics they need to improve is those scores on those surveys is really important.
(10:37):
And then doing analytics around turnover and where’s turnover happening and getting as much data as you can out of people who are leaving the organization on why they’re leaving is another great metric you can look at. Is it mostly new people who are leaving? Is it people that have been around here for a while? Because you can identify some of your hiring processes that might be broken if you have a lot of high turnover with people that have recently joined the organization and onboarding and how you bring people into the organization and how you sell ’em on the organization. All of those things, you need to measure all of that to really identify where are our issues and how are we going to fix them.
Chris Hood (11:23):
I recently wrote a book called Customer Transformation, and in that book I dedicate an entire chapter on culture. Part of that is to compare how you treat your customers with how you treat your employees. So there’s a lot of organizations out there that are highly focused on things like churn rate, net promoter score, customer satisfaction. If we look just that like customer satisfaction, you spend all this time, money, effort to understand customer satisfaction. I argue you should be doing the exact same thing with employee satisfaction. There should be a one-to-one ratio in terms of how you are tracking externally as well as internally, do you see that happening?
Tom Applegarth (12:10):
Well, I agree with you. It’s very important and there are a lot of organizations that understand that there’s kind of three primary constituencies. There’s the owner or the investors if you’re a publicly traded company and most companies pay a lot of attention to that feedback. There’s customers as you brought up, which a lot of people pay attention to that feedback. And then there’s employees and the exceptional companies are really good at improving their relationship with all three of those groups. A lot of organizations only focus on two, and that’s a big mistake. So the organizations that are really, really successful over the long term are the ones that are paying attention not only to their investors and their customers, but their employee feedback as well and constantly trying to understand how do we improve that employee experience.
Chris Hood (13:12):
You mentioned hiring. Thank you for bringing that up because my argument and belief is that a culture is defined on day zero and we’ll call day zero the moment before you actually hire somebody. So how critical is it that during the hiring process you are focused on the culture you are trying to build?
Tom Applegarth (13:37):
It is really important. I mean, you can hire people that have the perfect experience for the role that you’re hiring and interview very well, but if they are misaligned from a value perspective and a cultural perspective, they are not going to be successful in the organization. So the first thing you need to do is make sure you have a very good selection process so that you really improve your odds of bringing people into the organization that are going to fit, and then you need that experience to be good. So if the process before they even start with you is not smooth, doesn’t help them prepare for a good first day and what you define as day zero, they’re getting off to on the wrong foot and then if their first day and their first week and their first month isn’t a good experience, it’s really hard to recover and the first impression matters in a lot of things in life, but absolutely matters as you’re bringing an employee into the organization.
Chris Hood (14:55):
So I just left Google. I spent six years there and while I was at Google, I was part of the hiring practice, so I did a lot of interviews and Google has done some really fabulous things from that perspective. There are basically four primary interviews that everyone goes through. There’s a cognitive type of interview, there’s a skills interview, and then there is one we call Googs, and Googs is all about how much are you aligned with the culture of the organization. So to your point, you could pass the skills with flying colors, you could pass the cognitive with no problem at all, but if you fail that googs, most likely not going to get the offer. Why? Because they want people who are aligned with the personalities, the types, all of that culture fit is so critical for how Google has scaled its company. I think that aligns exactly with what you’re talking about.
Tom Applegarth (15:57):
Yeah, absolutely. It’s important. It is very, very important and that’s why having more than just the manager interviewing the person is really important. Obviously the manager needs to play a role, but peers and other people that that person is going to work with need to have some input so that they can help screen for culture and so that they have ownership as that person comes into the organization, they have some people that are helping them be successful because they have ownership in that decision to bring that person on board.
Chris Hood (16:39):
We may not disagree on this, I’ll share my opinions, but this is another lesson that I learned from Google. The hiring manager is actually not involved with the hiring process at Google. They do that to remove the bias and the favoritism from the equation. The theory is is that if you have a standardized culture with standardized questions and you have individuals throughout the organization, peers or even third party that are not even in the organization that you’re hiring for, that they all understand what the culture is. There’s say a rubric score that they can define one to five and between that they understand and they are empowered to ensure that we’re maintaining that culture because far too often what you do have is I’m going to hire this person because I know this person. That’s when you potentially bring in somebody that does not align to the culture. And when you do that, then you’re opening yourself up for potential misalignment between the manager and the employee, which is what HR doesn’t like to see.
Tom Applegarth (17:57):
Yeah, I mean I think there’s for sure needs to be a process, and I don’t think that a manager should make the hiring decision on their own. And I’m a big believer in a unanimous decision, hire slow. Sometimes you need to remove mistakes quickly, but take your time in hiring. And so there needs to be a panel. There needs to be many more people than just the hiring manager involved in that process. And if any of them are saying, we shouldn’t hire this person, we shouldn’t hire this person, it should be a unanimous decision before we bring them on board.
(18:42):
Obviously Google’s been a tremendously successful company, and when you’re that successful and everybody wants to work at Google because of how successful they have been, you can probably have that type of a structure. I think most companies would struggle to get managers to buy into that concept and to get candidates to buy into that concept, right? I mean, you’ve got to be a Google type brand, which there’s not that many. I can probably count ’em on one or two hands where candidates would go to work for a company without interviewing their manager. I mean, most candidates, especially if they’re gainfully employed and they’re being recruited by an organization and they’re not opposed to moving, but they’re not actively looking and they’re not actively unhappy, they’re interviewing the organization and their hiring manager as much as the organization is interviewing them.
Chris Hood (19:50):
I think there is some balance in here. I definitely think that there is some lessons that organizations can take away and think about in terms of a use case, a strategy where you can begin to remove some of that, maybe not all of it. I think the other area that becomes really interesting is when you do wrapping it all the way back to the beginning of our conversation, when you do lose an individual, maybe unexpectedly, a lot of organizations struggle because I need somebody to fill this space. What that introduces is a level of desperation where now I’m just going to hire somebody because I have to fill this role now immediately. And oftentimes we sacrifice in areas like culture or even skillset because we just need a body.
Tom Applegarth (20:44):
I agree with that, and that’s why succession planning and your successors, if you’re a small company, your successors don’t have to be on your payroll. You just need to identify two or three or four people for all of the roles that are critical. And maybe all of the roles in the company would be ideal to where you have a plan and a list of people that you’re actively cultivating. And so somebody like Google, I’m sure they have succession planning and there’s a lot of internal candidates and so that they minimize that risk when a key role opens up, they have three or four internal candidates that they can move into that role. And so you don’t act out of desperation. Smaller companies have a little more difficult time doing that, but that’s why I always work with them to say, let’s put together a plan and where there’s holes in the plan, let’s go actively recruit.
(21:50):
Now, even though we don’t have an opening and we meet candidates and we tell ’em, Hey, we know this job, one of these jobs, there’s going to be a role for you in this organization in the next 12 or 18 months. There’s not one today, but let’s continue to talk. And so that when you have that opening that you don’t act out of desperation. And I agree with you. That’s when companies make some very bad decisions. And then I always encourage, even if you get behind the eight ball and you are desperate, the hiring manager might be desperate, but the CEO should never get desperate and realize that making a bad decision is much worse than taking the appropriate amount of time to make a great decision.
Chris Hood (22:43):
Another area you sort of touched on this is how do you fill in these gaps as part of your contingency plan, as part of your succession plan? A lot of this is based on the size of an organization, obviously a smaller company, five people, you’re going to struggle with this. I love the idea of having somebody in the wing that you could potentially reach out to and say, Hey, can you help us just part-time? Even as larger organizations, you might introduce some type of bungee system where you could actually hop into a role for a short period of time and then bungee back to your original role. So this gives the opportunity not only for you to fill critical roles in real time, but it also allows your organization employees within the organization to learn a new skillset potentially. You don’t have to just go and find the perfect match and replicate, I need somebody with this skill for this job. Go find somebody else in your organization who is a hard worker. Let them come in. It’s an opportunity to train them and get them more experience within the company. You can send them back in say, six months, but during that six months, you’re finding somebody else, and obviously they’ve got to be able to manage the other role that if they’re leaving one role. So find somebody that may be a little bit more flexible within the organization, especially if you’ve got to fill in something more critical.
Tom Applegarth (24:21):
It’s an opportunity for high potential employees who want to learn and grow. When somebody leaves the organization, they may not be able to take all of that work, but if you have five or six or seven high potentials who are really looking to learn and grow, you may be able to divide up somebody’s job on a short-term basis into four or five or six different segments that people can absorb and that people that are really interested in developing are more than happy to absorb.
Chris Hood (24:59):
Let’s go back real quick to the hiring practice. I mentioned I was having a conversation with somebody on LinkedIn and the specific topic that we were talking about were questions for the interview, and I recommended having some default standardized questions and they were suggesting, well, that’s not what I’m usually familiar with. I usually have the leeway to ask whatever I want. During that process, do you have a particular opinion about standardized questions for the interview process versus free for all questions?
Tom Applegarth (25:35):
Yeah. I think the way that the selection process is best is if you have some type of written assessment upfront that is going to give you some information so you’re not just walking into the interview cold, something about the candidate, not just their resume, but you have an assessment that oftentimes might include some cognitive ability, might include values, so you understand maybe what are some of the areas you need to probe into, see whether or not there’s a cultural fit and a value fit. And then there may be some technical abilities as well. So typically you’d have an initial interview that maybe the HR person or recruiter or somebody is doing to just make sure the person seems like they’re a good fit and then sells them on the opportunity. And then you have some type of written assessment that they take beforehand, and then they’re coming in to interview with a team, they’re going to interview with four or five or six different people.
(26:48):
And absolutely those interviews ought to be scripted. So I always like to get that team together. Let’s all look at the written feedback that we have and have the person that did that initial screening interview involved in the team meeting so that we really kind of map out, okay, what are the areas that we really want to probe into? Who’s going to probe into what? Always have a bunch of standardized questions that now we look at and say, okay, what do we think is appropriate? What are the watch out points that we’ve seen from the process that’s happened thus far? And who’s going to ask which questions? And that doesn’t mean they can’t ask another question or whatever as they go through the interview, there may be other questions that they’re interested in pursuing based on the responses they’re getting from the candidate. But just walking into an interview cold and going through your standard routine is not the way to make sure that you’re hiring people that are the best fit for the role.
Chris Hood (27:57):
I was having a conversation with somebody a couple of days ago as well. It’s a completely different conversation, and they were telling me how they were conducting an interview and two people from the team were doing the interview. One of the team members asked a question and the other team members says, well, I don’t know what to ask. That was what I was going to ask. I think to your point, scripting it out and being prepared, especially if you’re doing a team style interview, I think is critical.
Tom Applegarth (28:25):
Absolutely. And you always have to remember you are interviewing them, but really, really good candidates have lots of options, especially in this economy, and they’re interviewing you as much as you’re interviewing them.
Chris Hood (28:40):
Now, on that note though, you touched on it just a moment ago in terms of the value alignment that employees have when they are joining a company, and I’ve done it myself, I’ve, I’ve sat down, I’ve tried to assess, does this company know what they’re doing or are they basically clueless yet? We see a lot of individuals. We talk about desperation on the hiring side. There’s obviously employees who are desperate for a job and they’ll say whatever they need to say to get the job. And oftentimes that is at a sacrifice of the values. What’s the recommendation for how we as individuals should think about our personal alignment when it comes to taking a job offer?
Tom Applegarth (29:26):
Yeah, we all spend way too much time at work to not be happy where we are, and we’re never going to perform at our peak capability if we’re not happy. It’s just not going to happen. And so I think people should always take the long view and really be selective. Even if they are feeling pressure, maybe they don’t currently have a job, there’s financial pressure, there’s ways to manage your finances and maybe you do some dry boober or whatever, but before you commit to an organization, you need to make sure there’s a good fit because one of the things that I always probe into, and there’s a lot of people that are spending one or two years max at a job and they’re changing jobs every one or two years. There’s a problem there that you need to really look into as you’re bringing them into your organization. And so people need to realize that that’s one of the red flags if they’re doing that. And so you need to make sure you’re joining an organization with the right fit and you need to be assured that you have a reasonable chance of being successful in that company and happy in that company because if you’re not happy and you’re not a good cultural fit, you’re not going to be successful.
Chris Hood (31:05):
I see the hiring process today, like a good old dating app. You log in, you make a match, you hope that the relationship’s going to work. You go on your first date, maybe it’s good, maybe it’s not. We see red flags. We ignore the red flags. We get into the relationship anyway, pay attention to those red flags. Make sure that you’re happy in the relationship. Go to an organization that aligns with your basic principles and values, and then I think the rest is up to you.
Tom Applegarth (31:37):
Absolutely. And you’re going to be more successful in the long term for sure. It’s a big mistake to join a company that you haven’t thoroughly vetted. And even there’s always time when you can go through the process and when you get an offer, most companies are going to give you some time to make that decision. That’s when as a candidate, you should, if you have any outstanding questions, you should get in and call employees maybe that you don’t even know. Just start your process of going through LinkedIn, finding people talking to ’em, and network. Who do I know who knows somebody? Can you introduce me? And you can do all of that within three or four days that most companies will gladly give you some time to make a decision. And if they won’t, that may be another red flag that you really need to think about. If a company’s really trying to strong arm you into making a decision on a very short timeframe, that’s an issue.
Chris Hood (32:50):
I think that’s absolutely fabulous advice. Go find people from that company on LinkedIn, reach out to them, ask them questions, unbiased feedback about the job before you start, do your own research. Heck go look at reviews online as well. All of that is great advice. Tom, how can people find you?
Tom Applegarth (33:15):
So you can [email protected] and find me there. If you Google Tom Applegarth preferred, CFO, and then my email’s Tom [email protected],
Chris Hood (33:28):
And we’ll have that information on the blog post for this episode. Tom, I appreciate it. Great conversation.
Tom Applegarth (33:35):
Likewise. Thank you very much, Chris. I appreciate it.
Chris Hood (33:38):
And of course, thanks to all of you who are listening. If you like what you heard, please subscribe to the show on your favorite podcast platform and leave a review. Your feedback helps us improve and grow. And if you have any questions, comments, or ideas for the show, you can connect with us throughout social media and online at Chris Hood Show. And please share this episode with your friends, family, colleagues, or anyone else looking to grow their business and start their own digital evolution. Until next week, take care and stay connected.
