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Build a Successful Business by Not Acquiring Talent

Posted: 01 May 2013 05:00 AM PDT

Sabremetrics is a concept that came about in the mid-20^th century from statisticians such as Earnshaw Cook and Bill James. It is the analytical approach to quantifying talent through in-game activity in baseball.

The concept was utilized famously by Billy Beane to rebuild the Oakland Athletics, which coined the term Moneyball.

The principle is pretty simple. Most big time free-agents get picked up because of concepts like batting average, but this is a completely flawed metric according to Sabremetrics, because who cares about how often they hit the ball, you should care how many runs they can score.

Teams that use Sabremetrics look to use math to identify personnel that can be had cheaply to build a cohesive unit, rather than go about the route of the large market teams, and simply build through big names in free agency. A similar approach has been taken by the Patriots in the NFL.

Businesses can use this concept as well, because at the end of the day every action that makes money comes from a few core places:

1) KPIs = Profits , it really is that simple. Every lead you get you get paid X, every widget you sell you get paid Y. Each visitor you get leads to Z leads so on and so forth. The actions worth their way down to the employee level, and through analytical practice you can figure out how much money a single employee will yield based on productivity.

2) Knowledge Base: There are simply some things that are more valuable to know than others in any market. In software today PHP developers with strong database skills are in demand. Knowledge base is not the same as having a degree.

3) Cultural Fit: This one is tough, and completely subjective, but for me it also may be the most important.

Here is the raw truth:

CopyPress almost completely refuses to acquire talent, we instead opt to cultivate talent.

This isn't a humblebrag. In fact, I wish we could go out and grab people at a high rate and just plug them in, we can't.

Let's first define acquired talent. To me it is someone with a large amount of experience and extensive resume looking to move to the next step in their career.

By comparison cultivated talent is a person with a thinner resume, and is looking to begin their career.

At first we too the cultivated talent approach because we simply couldn't afford the high price tag of acquired talent. We talked to many people at different positions, but it simply wasn't economical for us.

Since that point it has become a systematic necessity. One I didn't even identify until we recently brought in a few highly trained individuals whom we simply couldn't find a fit for.

The reality for us is that our system works, and works well. We do pay well once our team gets past the entry level, but they have to pay their dues, and be able to grind through our system, which has a heavy focus on the three concepts above.

KPIs

At CopyPress we break everything down into granular KPIs to see how profitable every revenue earning employee is. This in itself is an issue because how do you approach KPIs for non-revenue generating employees, i.e. bookkeepers. KPIs can be a measure of stewardship as well (what they save you instead of what they make you.)

A great example for us is our standard entry-level position at CopyPress, the Connector. A Connector is paid $13 an hour to manage relationships between publishers and creatives. They utilize 100% organic methods to find new publishers and help them get content from our creatives that will maximize traffic. A Connector is the prototypical content marketer. They must understand outreach, content, and audience.

Connectors serve several key roles for us:

1) They are helping us quantify the data we have in our software set.

2) They are helping us build a large inventory of publishers our software and enterprise clients can use for native advertising

3) They are helping us improve our creative marketplace and training

Despite all of these very different roles and tasks we found one KPI that can help us see how well a Connector is doing; new publishers contacted per day.

At the core of everything a Connector does is publisher connections. A low number of new publisher contacts can mean:

1) A connector isn't managing time well

2) A connector is going to produce a low number of new relationships

3) A connector does not understand our data mining system

4) A connector is having trouble managing ongoing relationships

Figuring out core KPIs to gauge your staff on is important. Without it you are flying blind in terms of employee value, and this is where simply "liking" an employee can cause major tactical issues.

Knowledge Base

Knowledge > degrees.

This is 100% a motto to live by for CopyPress. For very skilled positions such as development we always run through a contractor stage with a new employee to test a project. I really don't care what your resume says I want to see what you know.

Further I want to know what you are willing to learn. Some of the best people we have are self-taught on our projects, and I will take this person over someone using poor experience from past employment.

For 80% of the positions we hire for we train within CopyPress. Even on our contractor level we train, and this is simply because we know our system works, and knowledge is power. For these positions I look for core elements to serve as a foundation, but nothing in particular.

For this 80% our KPIs and culture guide our gauge of talent, but we are looking for people with broad knowledge such as creative writing, editing, public relations, etc.

Cultural Fit

Every company's culture is unique.

I read a great essay recently about how a cultural fit simply means adding to the status quo, and that is a great read on the situation. The reason this is not the case for us is because we live and die by accountability from our KPI obsession. However, if this was not the case we would just hire a bunch of people we want to hangout with.

Our culture is guided by some core principles:

1) Humility

2) Community

3) The Customer Always Comes First

4) Commitment to Learning and Testing

5) Quality Above Profits

6) Impossible Does Not Exist

7) Our Team is Our Family

Based on these ideals I have found a great number of people are true fits for our system, but three distinct types of people seem to excel for us.

1) Applicants with an athletic background

2) Applicants with a musical background

3) Applicants with a military background

4) Applicants with extensive volunteer experience

This isn't to say this is the case with all of our amazing team. Kyle Zipp, one of our Product Managers, has come from none of these places. However, I have found amazing people from these areas more than not. My theory is that with each you are trained to strive for more, work within a team, and be willing to put the good of all above the good of one.

When I sit down and look at a resume I scan for hints at these concepts. These type of applicants intrigue me more than fancy schools and degrees.

The Importance of the System

I think it is important to note that you can find all of the awesome talent in the world, but if the system is flawed you will fail.

Our system works, because it is based on accountability.

1) We hire based on knowledge base and cultural fit.

2) We put the individuals through training and a strict 90 day trial

3) We analyze KPIs

4) Based on results we either part ways or put you on a two year growth plan

When we recently conducted interviews with some outside talent I had to make a tough decision to stick to this system or make concessions. We stuck to it. It may have cost us some talent, but what we are finding through this experiment in organizational strategy is that putting the whole ahead of the individual is delivering surprising results.

I strongly believe you couldn't just begin to hire cheap employees that used to play basketball in high school and look to grow a profitable company from it. However, I will tell you that if you can strike the right balance of analytical talent measurement and systematic talent development you will be able to crush your operating costs comparable to your competition. But if you don't hire the kid that played high school basketball send him my way.

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