7 Secrets for Hiring Great Employees

The most successful bosses share their secret hiring techniques.

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Over the years, I've interviewed hundreds of successful managers about everything from corporate strategy to managing the occasional nutcase.

Perhaps the most useful among these conversations have been the ones where we discussed exactly how to hire great employees.

Based on those conversations, here are the seven rules every hiring manager should memorize:

1. If you don't know exactly who you're looking to hire, it's stupid to actually hire somebody.

2. Interview candidates even when you're not hiring so that you know who to call when you are.

3. Never hire somebody who wants the job. Instead hire somebody who will be good at it.

4. When it comes to hiring (and getting work done), two "5s" do not equal a "10" on a scale of 1 to 10.

5. A history of success in an unrelated field is more valuable than a resume full of experience.

6. People accept jobs because they like companies and leave because they dislike managers.

7. Never be afraid to hire somebody smarter or better-looking than you.

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Geoffrey James writes the Sales Source column on Inc.com, the world's most visited sales-oriented blog. His newly published book is Business to Business Selling: Power Words and Strategies From the World's Top Sales Experts. @Sales_Source

10 Office Designs That Foster Creativity

Let your team pick personalized coffee mugs, items on their desks, and how they create. "Some people create with crayons, some with computers, some have got to get up and write on the wall. If you go into a conference room with white boards and watch, there are certain people who unless forced will never write on the wall. They're either not comfortable with their handwriting, or their body image, or they don't like turning their back on people. But if you paper on the table, they start doodling," Kuske says.

Is My Company Really Worth More Than The New York Times?

Evernote CEO Phil Libin ponders his company's billion-dollar valuation.

From left to right: Courtesy Evernote, Courtesy 3ammo/Flickr

Evernote is not valued at $1 billion because our business is worth $1 billion today but because it could be worth $100 billion in a few years.

My company, Evernote, recently raised a round of funding that valued the business at a little more than $1 billion. There's been a lot of talk lately about the valuations of Internet start-ups and whether they're really worth the prices they're commanding. Unfortunately, much of the discussion seems to be confused about the basic facts. So, as someone fortunate enough to be the CEO of a company that's just become a member of the Billion-Dollar Club, I'd like to try to clear things up a bit.

A billion dollars is a big number, so a natural way to think about the valuation is to compare it with that of a well-known public company, such as The New York Times Company. It's a great, famous, and long-lasting company. By many measures, its namesake publication is the most successful and important newspaper in the United States and a world leader in both traditional and electronic media. I've been reading The New York Times every day for about 25 years. It's not an exaggeration to say that I love The New York Times. Around the time of our financing, in the beginning of May, The New York Times had a market cap of approximately $950 million. Does that mean Evernote is worth more than The New York Times? I was frankly a little shocked when I thought of the question. It feels like there's something wrong with the world to even ask.

Luckily, though this kind of comparison might be natural, it's not very useful. The valuations of mature public companies and quickly growing private start-ups mean very different things. Here's why: The valuation of a public company represents a rough consensus among a large number of supposedly equally well-informed buyers and sellers. When companies are financed privately, however, there is usually only one seller (the company) and one buyer who sets the price (usually the lead investor). That means that a private valuation is not a consensus at all, but rather the highest price to which a single buyer will agree.

So, if a company wants to jack up the valuation, all it has to do is find the craziest investor who's willing to pay much more than anyone else. That might sound good, and a lot of hot start-ups are quick to avail themselves of the multitude of crazy people with fat wallets. However, there's a problem with this that entrepreneurs should consider: If you take money from a crazy person, you'll get a crazy person as your boss. And soon, your boss will be an angry crazy person, when that unjustifiable valuation crumbles under the weight of eventual reality. That's why we never chased the highest possible valuation at Evernote. We've been lucky enough to be able to start with the investors we thought would provide the best long-term strategic value and find the right deal that works for everyone.

Besides finding crazy investors, there are other ways to inflate valuations. Public company valuations are usually determined by common stock. Common shares are shares that anyone can buy or sell, and they're all the same when it comes to price, voting rights, and other privileges. Not so with valuations at start-ups. Most start-up investors buy preferred shares from the company, while founders and employees get common stock. Comparing common stock valuations with preferred stock valuations is tricky.

Preferred shares are usually better than common shares, because they have some additional benefits, or preferences. For example, one typical preference guarantees that, if the company is ever bought or goes public, the investors get their money back first, before the common shareholders get a return. Sometimes, the preferred shareholders are even guaranteed that they'll get their money back multiple times over before common shareholders get anything.

Other preferences include the right to accrued dividends, guaranteed seats on the board of directors, antidilution protection in the event that the company loses value, and veto power over important business transactions.

These benefits make preferred shares more expensive than common stock. How much more? That depends heavily on the details, but I've seen start-up company common stock discounted as much as 90 percent.

Some simple preferences are fair to both sides. After all, most start-up common shareholders (the founders and employees) will draw salaries for years, even if the company eventually goes bankrupt and the investors get nothing. So, a little protection for the investors makes sense.

However, manipulating preferences gives the start-up entrepreneur another ill-advised tool for maximizing valuation in a private financing. By agreeing to give the investors increasingly generous preferences, you can get them to pay more. Not happy with your valuation? Give the investors a guaranteed way to get more stock for free in the future, and they'll pay more for the stock up front.

This is a temptation that many entrepreneurs feel, but it's a temptation best avoided. Excessive preferences can quickly create a conflict of interest between the founders and the investors if the company stumbles a little. These conflicts rarely end up favoring the entrepreneur. And the start-up world is littered with founders who made nothing when their companies were sold, because they gave too many preferences to early investors.

So, if we had looked for crazy investors and given them extreme preferences, Evernote could have had an even higher valuation than the one we have today. But is it still worth more than The New York Times? There's one more thing to consider.

The valuation of any company is an estimate of the present value of all expected future profits, discounted for risk, inflation, and other factors. Thus, the other key difference in how mature public companies and quickly growing start-ups are valued lies in how much emphasis is placed on expectations of future growth.

Most public companies have relatively predictable levels of growth, so their valuations are heavily based on the current values of their businesses. In other words, few investors expect The New York Times's profits to grow tenfold in the next few years. Just as important, if the company does start to grow quickly (as of September, the company's market cap had climbed to about $1.4 billion), investors will be able to buy and sell the stock at any time. So the market tends to wait to see sustained evidence of growth before rewarding the company. That's why public companies that can produce that evidence consistently, like Apple, are worth such astronomical figures--and why public companies that make a mistake in setting expectations, like Facebook, are quickly punished.

A hot private start-up, on the other hand, is in a completely different position. Investors do expect the business to grow by 10 times, or even 100 or 1,000 times. Plus, the opportunities to buy stock in that start-up may be hard to come by. A venture capitalist who likes a company but decides to pass on investing one day may not get another chance. There are prominent investors who passed on Evernote at a valuation of $10 million and couldn't get in four years later at $1 billion. As a CEO and a small investor, I've seen this from both sides several times.

Because of this, start-up investors have to be much more aggressive in identifying and betting on future success. That's very difficult, which is why the average return on VC funds is pretty low. But the small number of people who do it right can literally change the world.

Simply stated: Evernote is not valued at $1 billion because our current business is worth a billion dollars today but because there is a good chance that it will be worth $100 billion in a few years.

So, is Evernote really worth more than The New York Times? It's hard to give a precise answer for all the reasons above, so let me answer personally, and from the heart: not today. But if we work hard, keep making an excellent product that millions of users will fall in love with, and continue to build the business on the same trajectory we've been on for the past four years, I think we will eventually be worth much more. And our investors agree.

 

Phil Libin is the co-founder and CEO of Evernote, a Redwood City, California-based software company. In 2011, Evernote was Inc.'s Company of the Year. @PLibin

Think Your Way to Success

The spin that you put on objective reality largely determines whether you succeed or fail.

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In sales (as in everything else in the business world), your success hinges on how effectively you envision yourself, your firm and your customers.

When habitually put a negative emotional spin on objective facts, it's like piling weights on your shoulder before a footrace.

By contrast, if you put a positive emotion spin on those same facts, you'll be freer to see opportunities and possibilities that others might miss.

Here's an example:

• The Reality: You're competing against a more established firm.
• Negative Spin: "Why would customers buy from a lesser-known company?"
• Result: You approach customers like a supplicant, ready to be rejected.
• Positive Spin: "Customers will see us as new and innovative."
• Result: You exhibit and inspire confidence in your offering.

Please note that we're taking about the SAME reality. What's different is the way that you're interpreting that reality and, by extension, the results that you'll get. Here are some other examples:

• The Reality: You're an introvert among extroverts.
• Negative Spin: "I'm so quiet that people seem to ignore me."
• Result: You become resentful and sound bitter when you do speak.
• Positive Spin: "I'm valuable to the team because I think before I speak."
• Result: You wait until it's the right time time, then speak your mind.

• The Reality: You failed to achieve an important goal.
• Negative Spin: "!*#% &$!"
• Result: You're in a foul mood all day and everyone knows it.
• Positive Spin: "This is only a speedbump in my road to success."
• Result: You shrug and figure out something useful to do.

• The Reality: Your team is too small for the workload.
• Negative Spin: "We're stretched so thin we're going to snap!"
• Result: You find reasons that you're going to fail.
• Positive Spin: "We don't have any bureaucracy to weigh us down."
• Result: You look for ways to make it work for you.

• The Reality: You lack experience selling to top execs.
• Negative Spin: "Why would a CEO want to talk with ME?"
• Result: When you finally get inside a corner office, you babble.
• Positive Spin: "I can offer any CEO a fresh perspective."
• Result: The CEO "picks up" that you're worth a listen.

• The Reality: A customer yells at you over the phone and then hangs up.
• Negative Spin: "That customer hates me and rejected me."
• Result: You feel awful so you flub the next 10 calls.
• Positive Spin: "I'm glad I don't have to talk to HIM any more!"
• Result: You laugh and move on.

• The Reality: The competition has a lower price.
• Negative Spin: "Our product costs so much it will be hard to sell."
• Result: You nervously anticipate price objections.
• Positive Spin: "Customers know that the best products cost more."
• Result: You concentrate on proving that you've got the best product.

Get it? Great! Now here's the fun part. I'm going to tell you exactly how to make a positive spin into a mental habit.

1. Make a decision to edit your interpretations for at least three days.

2. Whenever something happens that irritates or worries you, write down the intepretation you just had (your automatic negative spin).

3. Immediately write down a better interpretation of the event (your desired positive spin).

4. SCRATCH OUT THE NEGATIVE STATEMENT.  I mean totally scribble over it, like a little kid eradicating a picture of a scary bug. The act of physically assaulting the crystalization of the negative though is primal. It gets right to your gut.

The first day the process will seem a bit awkward. The second day it will seem easier. By the end of the third day, your positive "editing" of events will become automatic.

Seriously, I'm giving you a huge gift by telling you how to do this. Don't squander the opportunity.

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Geoffrey James writes the Sales Source column on Inc.com, the world's most visited sales-oriented blog. His newly published book is Business to Business Selling: Power Words and Strategies From the World's Top Sales Experts. @Sales_Source

How Shutterstock Went From Zero to IPO

Jon Oringer had created a dozen tech start-ups before buying one $800 camera to seed his own stock-photo business. Now that company is worth $760 million.

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Jon Oringer founded Shutterstock in 2003, after creating a dozen tech companies that each fizzled after a few months.

After a summer of lackluster tech IPOs, the stock-image company Shutterstock's initial public offering in October stunned the market. It was the first New York tech firm to go public in two years, and raised $76.5 million--well above what was expected--at its debut. The service offers more than 20 million photographs from 35,000 approved image-contributors, and sells about two images each second to customers who subscribe at $249 a month. Shutterstock's market cap was recently more than $760 million. That has a lot to do with serial tech entrepreneur Jon Oringer, who founded the company in 2003 with just an idea and an $800 camera. Oringer--who today reportedly owns 57% of Shutterstock--spoke with Inc.'s Christine Lagorio earlier this year about how he bootstrapped the company without outside funding.

Let's talk about the very beginning. When did you start working on Shutterstock?
I started in 2003 by shooting 100,000 images--everything I could find--over about six months. I grabbed a Canon Digital Rebel, which was $800 at the time. I culled the images down to 30,000 and put them on the website. I needed to seed it somehow.

Did you have help or investment?
I funded it myself. That's because I started out of my own need for a product that didn't exist. I've never taken venture capital for any of the dozen or so companies I've started, including SurfSecret Software, one of the first pop-up blockers on the Internet. I was always looking for images, and they were $500 or I had to call people to get the rights. 

How did you turn 30,000 photos into a business?
It was pretty much a company right away. People were buying my images. Since digital cameras were coming down in price, and digital SLRs were being put in everyday peoples' hands, I knew they could become professional photographers eventually. At the time I was trying to go with a sort of old media model, of trying to collect and put up as much content as I could, and buy photos from other photographers.

What was it like in the early years?
The whole "have an idea, run out, and find money" model was never how I wanted to do it. I didn't want to get outside money, so I was doing everything myself. That was my way to learn. I needed photographers, so I became a photographer. The first customer service e-mails that came in, I answered those myself. I programmed the site in Perl. A lot of those experiences from early on still inform the decisions I make today.

I wasn't eating ramen, but it was close. I was spending more money on the business than myself, but I was spending my own money at least. The first server stack was built in my apartment in Gramercy Park [in New York City]. A little trick: In the winter you don't need the heaters any more if you have, like, 10 servers. But once they were blowing out the circuit breakers in the basement, I knew I needed to expand. And around then the demand was so big that I couldn't fulfill it.

How did you cope with that?
I knew I had to take a risk. The big change that happened was when I started getting other photographers interested in contributing their own content. I turned my one contributor account into an entire upload system for anyone. So I opened up Shutterstock to the entire world, and created a contributor community. Anyone could give stock photography a shot. 

And they stuck around?
We were paying our photographers right away. We started with the subscription product, which we still have today. The idea is that the buyer can download 25 images a day for $249 a month. The seller gets between 25 cents and a few dollars a download, depending on the type of account they have. The trick to the way I started this was to put yourself in the shoes of both the content creator and the buyer. Whatever business you're creating, you sort of need to know exactly what the customer is thinking.

Was there any moment you were uncertain whether your pricing model would work?
I knew this leap could either put me out of business or create the perfect marketplace model. This kind of model had never been created before. This was an all-you-can-eat model on one side, and contributors on the other side that needed to get paid at the right rate per image.

And you never got a cash infusion?
Not in the beginning. Eventually we took a small [private equity] round in 2007. It wasn't because we needed it (the company pretty much funds itself). It was just a risk-offsetting move, plus, I was looking for a smart investor to help me scale up the management team and build out the processes for growing a 40-person company to a 200-person company. 

What's your biggest challenge now?
There are a few. For me personally, we are at 200 employees right now, and keeping the culture the same has been a particular challenge. At a certain point you can't interact with all these people, and it's hard to keep that fun hacking kind of culture going. You have to constantly fight against the bureaucracy. 

What's next?
We are expanding in a lot of different directions. We are functional in 10 languages now; we answer the phone in all 10 languages. We translate the images. We continue to look for pain points for our customers or contributors. We are working on new ways for people to find the images they want. Do you want a high-contrast photo? A photo with three people in it? We're playing with all those types of things. We're a tech company more than an image company. 

 

Christine Lagorio is a writer, editor, and reporter whose work has appeared in The New York Times, The Washington Post, The San Francisco Chronicle, The Village Voice, and The Believer, among other publications. She is executive editor of Inc.com. @Lagorio

David Tisch: How to Launch a Great Start-up

Location, Location: The Best Place to Launch Your Company2:46

NYC TechStars managing director David Tisch on the eternal question: Silicon Valley vs. New York, Boston, Boulder or...?

How to Use Accounting as Strategy

Accounting isn't just a necessary evil; sometimes the methods used can be a key part of your business strategy.

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Dear Jeff,

I'm starting a business and I know very little accounting. Does it make a difference which type of inventory accounting method I use? Or does it all work out the same?

-- Name withheld by request

A lot depends on the nature of your business. In some cases accounting methods can actually be part of your business strategy; inventory accounting is one of those methods.

Background first. There are four basic inventory accounting methods:

• Specific identification
• Weighted average
• First-in, first-out (FIFO)
• Last-in, first-out (LIFO)

Specific identification carries items on your books at their actual cost. Specific identification is typically used for major (meaning expensive) commodities like cars, jewelry, or sophisticated equipment. That's fine if you have 20 Rolexes in your display case... but it's not so convenient if you carry hundreds or thousands of products.

Weighted average is typically used when products are physically indistinguishable or easily substituted, like commodities. Under the weighted average method every unit in inventory is priced using an average of the cost of all items in inventory. Say you buy 20 barrels of oil at $100, 20 barrels at $110, and 20 barrels at $120; your average cost is $110. Under the weighted average method when you sell a barrel of oil you assume your cost was $110, regardless of what you actually paid for that individual barrel.

Since most businesses don't mostly carry expensive items or commodities, most businesses use LIFO or FIFO inventory accounting.

Under FIFO the assumption is that the oldest inventory is used first. (In many businesses that is in fact what happens, regardless of the accounting method.) As a result, the ending inventory is valued on your balance sheet at a cost closest to the current cost since prices tend increase over time. The cost of goods sold is based on a lower cost since older and therefore cheaper items are assumed to be the items sold.

Under LIFO the assumption is that the last items purchased are the items sold, meaning the more expensive items were used. The cost of goods sold is therefore relatively higher and the value of goods remaining on the balance sheet is lower since those are older items purchased at a lower price. (Again, assuming that prices have increased over time.) Under LIFO your profits are lower compared to FIFO accounting.

So where does business strategy come into play? If you feel your inventory costs are likely to remain stable or increase, the LIFO approach probably makes sense. Companies that use LIFO inventory valuations are typically those with relatively large inventories and increasing costs because LIFO typically results in lower profit levels, lower taxes, and as a result higher cash flow.

Think of LIFO accounting as providing a deferred tax advantage. On the flip side, LIFO also results in a weaker balance sheet since the value of your inventory is lower.

FIFO inventory accounting provides more accurate inventory valuations since the assumption is the items remaining in inventory were purchased at more recent--and typically higher--prices. Under FIFO the value of inventory is higher compared to LIFO.

So let's break it down.

If you sell products--as a retailer or a manufacturer--and the cost of your supplies or products tends to increase over time (and what doesn't cost more over time?) using LIFO will typically result in lower taxable income compared to the FIFO.

But keep in mind that if you need to maintain a relatively strong balance sheet--to qualify for loans, to satisfy investors, or to impress analysts--FIFO may be the way to go.

So with all that said: Talk to your accountant. Explain the nature of your business and your short- and long-term goals.

Then pick one and move on to another "accounting strategy" that's a lot more important: Generating revenue and making profits.

Jeff Haden learned much of what he knows about business and technology as he worked his way up in the manufacturing industry. Everything else he picks up from ghostwriting books for some of the smartest leaders he knows in business. @jeff_haden

As Your Company Grows, Think Small

A new survey finds the happiest employees work at companies with fewer than 100 employees. What can you learn from that?

Happy employees are productive employees. So what makes people happy at work?

A new survey, designed by a consulting group led by Zappos' co-founder Tony Hsieh, may have the answers:

Small Companies

The survey of some 11,000 employees found the happiest employees work in companies with fewer than 100 employees. This didn't surprise me and probably doesn't surprise you. In small companies, everyone knows that they make an impact, that they matter.

Authority

Supervisors are 27% happier than supervisees. This may be because we are inherently status-seeking creatures; it may also be because supervisors have more autonomy than those they supervise. Truly great bosses of course share that autonomy widely; the bad ones hoard it.

Service

Employees involved in providing service or care are 75% more likely to be happy than those who lack any kind of customer relationship. This speaks to the inherently social nature of work but it also suggests that we do, fundamentally, like to feel we are helping others.

Many of us who run small businesses won't be surprised by these statistics. We know firsthand that what we offer our employees is a community where they make a difference, places where they can be responsible.

But the data pose a hard question too: If your company is bigger than 100 people, how do you create the same level of engagement and happiness that the smaller businesses do?

Much of the answer lies in giving power away. In smaller businesses, employees are trusted because they have to be--there's no spare capacity for too much oversight. That freedom is incredibly productive and, in my experience, very rarely abused. Instead of competing for bonuses, incentives, or recognition, people work because seeing the immediate impact of their contribution is reward enough. Nothing motivates people more than the developing sense of their own value and capacity.

In bigger companies, this internal motivation is often distracted or drowned out by process, procedure, targets, and incentives. The individual starts to feel insignificant, compliant rather than creative. But this is not inevitable if they're given freedom and trusted to use it well. Interestingly, the hallmark of a great big business is how small you can make it feel.

Margaret Heffernan is an entrepreneur and author. She has been chief executive of InfoMation Corporation, ZineZone Corporation, and iCAST Corporation. In 2011, she published her third book, Willful Blindness. @M_Heffernan

Horror Story From the Hiring Desk

Who knows what terror lurks out there in the land of potential hires. Follow our CEO heroine as she learns valuable hiring lessons in this 2-part Halloween tale.

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As we begin our dark and spooky tale, you the reader should know that there are at least three frightening acts of hiring danger in the story below. They are not for the faint of heart and you may have experienced these horrors personally. If so please alert your fellow hirers so all can learn to prepare from these tales of terror.

Lucinda Slate was just about to leave the office of her company, Slate and associates. She had spent a long day sorting through resumes trying to find the perfect new hire. It was frustrating. They needed a new Office Manager soon. With all their growth, things were getting disorganized. Another two weeks without a hire and the wheels would start to come off the bus, so she posted a simple ad that would attract people.

All of the resumes started to look the same. As if they had all used the same online template. There was no substance, no personality. Just the same business jargon trying to make useless tasks sound like important accomplishments. Finally she finished the stack and was ready to go home.

Lucinda wasn't thrilled with the few selections she had made, but at least she was done with the dull and painful task of reading page after page of people's exaggerations. They all started to blend in her brain. She needed to stop. She could see the autumn leaves blowing outside her window and wanted to head home before the incoming storm started making the roads wet and slippery. It was dark and quiet outside her office door. She was pretty sure everyone else had already left.

As Lucinda packed up she felt a cold chill on the back of her neck. Suddenly she heard a loud knock. Startled Lucinda flipped around to see the door fly open. Lucinda screamed! There in the doorway was her worst nightmare! It was Steve, her associate holding a huge stack of more resumes. Lucinda dropped her things, took the stack, sat down and quietly sobbed as she began the tedious task of sorting through the new resumes and cover letters. If only she had a simple way to attract and identify worthy and compatible candidates.

Lucinda entered the conference room. It was particularly dark outside that day which left the room with a sad gray tone from the large windows. Lined up outside are the few candidates she hopes will be worthy from the resumes she sorted the previous week.  Lucinda was anxious from the need to get someone on board.

One by one the applicants come into the conference room and spend time with Lucinda. Hoping to convince the best of the bunch to like Slate and Associates, she turns on her charm and aggressively sells each of them on working at the company. They stare at her like zombies as she feeds them her brains verbally. They can smell Lucinda's desperation and get excited at the prospect of the job that sounds perfect. All the applicants leave pleased at how easy their interviews went.

With the interviews over, Lucinda went back to her office to decide on the candidates. She slowly laid out each of the three resumes on the desk and checked her notes. Suddenly a strange feeling came over her. She felt queasy. The blood drained out of her face as if sucked out by a vampire. She shrieked as she stared at her notes and realized what had happened. She was so intent on selling the candidates on the company, she never really paid attention to what they had to say and now had no real thoughts on which person to hire. "Oh My God!" She thought. What if she missed the tell tale signs of a bad employee?!? What if she hires the wrong person who destroys the company?

Lucinda had decided upon Slate's new Office Manager Rosemary because she seemed attractive, confident and eager to please. Her references all had glowing reviews, in fact they all sounded similar. It was a bit odd. Rosemary seemed so perfect...so hypnotic.... yet something seemed a bit amiss....she seemed almost TOO perfect. Still Lucinda needed the Office Manager fast. So she hired Rosemary figuring she could give her 90 days to see how it went. After all, how much damage could she do in a few months? Little does Lucinda know that a storm is brewing.

Is Rosemary the cause? Will she tame the wild Slate office or create chaos in the shadows? Will Lucinda gain control of her hiring hassles? Have you identified the acts of danger?  Tune in Tuesday for the chilling conclusion and the lessons to be learned from the tales of hiring horror.

An Inc. 500 entrepreneur with a more than $1 billion sales and marketing track record, Kevin Daum is the best-selling author of Video Marketing for Dummies. @awesomeroar

5 Cheap Ways to Motivate Employees

Sometimes the right kind of recognition works better than a higher salary.

How do you get people excited about work without paying them more money? It turns out that it's relatively easy, as long as you understand why money works as a motivator.

In fact, nobody works simply to get money. Nobody. Why would anyone want a collection of identical engraving of dead presidents?

Furthermore, once you get past the minimum "food, clothing and shelter" level, nobody works in order to buy more stuff. Nobody.

The only reason that people use extra money to buy "stuff" is because they believe that owning it and using that "stuff" will make them happy.

In short, once you get beyond the survival level, the only reason money works as a motivator is that people see money as a vehicle for feeling good.

That's why it's easy to motivate people without paying them more. All you need do is figure out how to make them feel good when they're working!

The way you do this is to create opportunities that both recognize good performance and connect employees to each other and to the larger purpose of your firm.

Here's how:

1. Let employees reward other employees.

Whenever an employee accomplished a major goal, allow that employee to formally recognize the employee in another group who provided the most assistance in achieving that goal.

For example, in one company whenever somebody made a big sale, the successful salesperson could choose somebody in sales support spin (in the presence of both teams) a "prize wheel" prominently displayed in the lobby.

Even if the prizes are relatively small (maybe with one really big prize), it both provides extra motivation (i.e. recognition) for both top performers and for the often unsung people who support them. Plus it's fun.

2. Hold weekly "Quality Assurance" meetings.

The term "Quality Assurance" (aka Q.A.) comes from the world of high tech and is something of an inside joke. The typical Q.A. meeting is always held on Friday, at around 5:30pm, ideally in the back room of a local restaurant/bar.

Employees (and especially managers) sit where they want, order what they want, and pay for themselves or others, as they choose. What inevitably happens is that the discussion turns to work and people naturally get "looser" as the evening wears on.

Not only does this ensure better communications between employees in different groups, over time it creates a sense that everyone is not just working with colleagues, but with personal friends.

3. Give perks for performance not position.

Most companies have visible perks, like favored parking spaces and catered offsite meetings, that are typically reserved for managers and executives.

If you provide perks like this based upon position in the company, you're motivating people to vie for that position, a goal that few will attain and which may not be an appropriate career path for them.

On the other hand, if those perks are earned through individual performance, you're motivating people to excel at the job in front of them, regardless of whether they're likely to ever become a manager.

4. Make work more like a game.

Management consultants, who are always ready to make a simple idea more complex, have started calling this "gamification." What it means in plain language is setting up a point system and displaying the results where everyone can see them.

Sales groups, of course, have been doing this kind of thing for decades, but now companies are beginning to apply the same concept to other activities. For example, if you're managing a group of programmers, you might award points based on how well their software passes a suite of quality tests.

Experience says that the most effective "gamification" strategies involve competition between groups rather than individuals. Otherwise, you can accidentally end up motivating employees to grandstand and steal credit.

5. Connect employees with happy customers.

People feel better about themselves, and therefore happier, when they can see that what they do is making a positive difference in the world.

However, employees who don't work directly with customers are usually unable to see the end result of their labors, and those who DO work with customers (like in customer support) only get to hear complaints.

Therefore, if you know a really happy customer, ask them either to visit your facility or record a video that thanks your team for their efforts and explains how what the team accomplished has made a difference in that customer's life.

Like this post? If so, sign up for the free Sales Source newsletter.

Geoffrey James writes the Sales Source column on Inc.com, the world's most visited sales-oriented blog. His newly published book is Business to Business Selling: Power Words and Strategies From the World's Top Sales Experts. @Sales_Source

Are Online Ads Getting Too Expensive?

A recent report suggests the days of cheap online advertising are dwindling. But a look at the numbers reveals a more complicated picture.

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Are the days of cheap online advertising dwindling?

A recent New York Times report by Darren Dahl called "Small Players Seek an Alternative to the Expense of Pay-Per-Click" indicated that pay-per-click costs are on the rise, leaving small businesses wondering how to deal with the increases.

Time to panic? Not yet. First, get a better sense of what it actually going on, and then adapt your marketing strategy to it.

The Times story is built around the single case of vacation rental entrepreneur Tom Telford who saw his pay-per-click costs more than double between 2001 and today, although sales from the ads did not rise to match. The paper then provided quotes from experts that sounded as though they could have had multiple meanings.

Dahl points to competition as the reason for the rise in cost-per-click (CPC) rates, citing significant growth in the number of paid clicks that Google has seen, year over year. That might be true, though there are other possible explanations.

More people use search on the Internet, which means more exposure to ads. Ads themselves may be getting better at bringing in people. And there are many more ads, often from large companies that better know how to write an ad and craft an offer that will bring in consumers.

Consider other factors, as well. Prices in general have risen over the last decade because of inflation. If you look at annual inflation rates over that time, you could have expected prices to rise by more than 40% for no other reason.

Another reason to question the report is to remember that Google's average cost-per-click revenue is falling. In its most recent earnings announcement, the average figure was down 3% from the previous quarter and 15% year-over-year. Clearly not everyone's cost per click has gone up.

It could be that competition has driven up the price of keywords that are in greater demand. Here's a table from Internet marketing consultancy Hochman Consultants based on a mix of 50 of their customers. The group may not be representative of the country as a whole, Hochman points out, but the data is interesting:

There are a number of things happening. One is that CPC has come close to tripling between 2005 and 2011, even as click-through rates have dropped. The increase in CPC could be because more companies compete for the best-pulling set of keyword matches to offset falling click-through. And the mushrooming of the invalid click rate would drive up the overall costs of campaigns, even if there was no increase in CPC.

In other words, depending on the audience you're trying to reach, you could either be seeing skyrocketing costs or your CPC might be dropping. And yet, even if CPC drops, you might find the cost of campaigns increasing because of invalid clicks.

What to do? Get smart about how you conduct online marketing. As a recent survey shows, many small businesses market on social media without paying, primarily using Facebook, Google+, and Twitter. See what return an investment of time in building a presence can provide. Use SEO more carefully, as well, to attract unpaid traffic to your website.

If you are going to place paid online advertising, then consider where the best value might be. The Wall Street Journal quotes the chief marketing officer of digital marketing software firm Kenshoo noting that its clients get a 30% better return on Yahoo/Bing network ads than Google.

When it comes to online marketing, these days you have to take a close look at the numbers people throw around, do some testing, and be a skeptic. But if you do, you can find the balance of spending and activity that best benefits your business.

Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He is a blogger for CBS MoneyWatch and InsideInvestorRelations.com. @ErikSherman

13 Tips for Starting Up in a New Industry

Don't be afraid to explore foreign territory. We asked successful young entrepreneurs for their most poignant pieces of advice for founders starting up in an unfamiliar industry.

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The Young Entrepreneur Council asked 13 successful young entrepreneurs for their best tips for starting a new business in an unfamiliar industry. Here are their best answers.

1. Don't Be Afraid to Ask Questions

If you're new to an industry, don't cower at networking events or do the "smile-and-nod" when you're speaking to someone with deep industry expertise. Instead, use every interaction as an opportunity to learn. People will be excited to answer your questions--while you may worry that your queries will come off as ignorant, most likely, the other person will interpret them as engaged interest! --Doreen Bloch, Poshly

2. Study Top Direct Response Advertisers

Find the top direct response advertisers--the companies spending money every month--in your industry and study their ad copy. Respond to the ads and document their entire sales process. The top advertisers have already figured out the best method(s) to generate leads and sales and maximize lifetime value, so start with what's working for them. 
--Phil Frost, Main Street ROI

3. Find a Mentor

A mentor is pretty much your most powerful asset in any new industry. By finding a mentor willing to work with you, you can learn from their mistakes, accelerate your growth using their knowledge, insight and strategies, and get pre-qualified introductions to big players in your space. 
--Travis Steffen, WorkoutBOX

4. Leverage your Fresh Perspective

Get rid of all preconceived notions and fully immerse yourself in every aspect of the industry to gain a true understanding of the market and opportunities. Take advantage of the fact that you're not biased and that you bring a fresh perspective and viewpoint, potentially providing you with a strong competitive advantage. --John Berkowitz, Yodle

5. Talk to Customers and Partners Every day

In any start-up, you don't know what you don't know. This is especially true when you're entering an unfamiliar industry. Get started through research, studying the compeition and talking to mentors. But in order to refine your business and make sure that you are providing great value, you must chat with your customers every day. Figure out their greatest pain points and deliver against them. --Aaron Schwartz, Modify Watches

6. Presume Ignorance

If you're starting up in an unfamiliar industry, do not presume that you know the answers. In fact, assume the opposite and open yourself up to learning. Talk to as many people in the industry as possible, ask lots of questions, get to know key players and connectors, and marinate in this new knowledge. 
--David Ehrenberg, Early Growth Financial Services

7. Reconsider Whether It's the Right Industry

There are pros to tackling an industry you're unfamiliar with (fresh perspective, for example), but mostly, it's cons. Without an understanding of how an industry works, who matters in the space, and what competition already exists, succeeding in entrepreneurship just becomes more impossible (though, hey, don't let that stop you!). --Derek Flanzraich, Greatist

8. Attend a Trade Show...

There is usually a national or international trade show or conference in every industry, where the "who's who" all gather in one place. This is an event that you should be at. You'll have the chance to learn the lay of the land, meet hundreds of people in person and learn about what's new in your industry. It's also a great place to form new partnerships. Bring lots of business cards! --Luke Burgis, ActivPrayer

9...And Meet Your Match There!

Go to a trade show or networking event of the industry and notice who seems to have a strong presence, who knows everyone, and who is everyone talking about. Become friendly and close with that person, if they will let you. You can cut off a lot of trial and error time with the expert guidance! 
--Andrew Bachman, Scambook.com

10. Hire a Trustworthy Lawyer

A few years ago I started my first business after over 10 years of working for non-profits. I found myself so lost. I was signing documents and agreeing to things left and right. Because I didn't have my own personal lawyer or legal team advising me, I agreed to some of the dumbest terms in the history of the world and it eventually came back to bite me in the ass. I'll never do that again. --Shaun King, HopeMob

11. The Devil Is in the Details

Make sure that you try and plan as much as you can, but don't let it get you so bogged down that you don't actually do something. Know that there will be something you miss, accept that, and move forward. 
--Jordan Guernsey, Molding Box

  

12. Learn Why Others Have Failed

People naturally want to emulate success by analyzing successful business models, but I think it's more important to learn from companies that failed. There can be thousands of factors that contribute to business success, but when a business fails, it's often easy to pinpoint the the reasons...and avoid making the same mistakes yourself. 
--Nick Reese, Elite Health Blends

13. Accept Help from the Experienced

Reach out to your advisors. They want to help you in your new adventure, and it is your responsibility to let them. 
--Caroline Ghosn, The Levo League

 

 

 

The Young Entrepreneur Council is an invitation-only nonprofit organization composed of the world's most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program. @TheYEC

15 Perfect Sales Conversation Starters

Use these 15 questions to discover whether a prospect will buy from you before you waste time on the opportunity.

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During initial conversations with a potential customer, your most important job is to find out:

A. Does this prospect really need my offering?
B. Does this prospect have money to buy my offering?
C. How would this prospect spend that money?

If you don't get answers to A and B early in the sales cycle, you run the risk of spending your valuable time developing an opportunity that's actually a dead end. And if you don't get an answer to C, the opportunity will probably get bogged down before the money can be spent.

To discover this essential information, start conversations that allow the prospect to "hold forth" on how the prospect's firm does business. Here are 15 ways to get such conversations up and rolling, based upon material the sales uber-guru Barry Rhein sent me a while back:

Assess Needs

• What can you tell me about your organization... and yourself?
• What do you like about what you're currently doing?
• What don't you like about your current situation?
• What would you like to be enhanced or improved?
• What other options are you looking at?

Budget Allocations

• What can you tell me about your priorities?
• What prompted you to start this project now?
• How do projects like this usually get funded?
• How do you handle budget considerations?
• How much support does this have at the executive level?

Confirm the Buying Process

• How will you be evaluating different options?
• What can you tell me about your decision-making process?
• How will the funding for the project be cost justified?
• What can you tell me about the people involved in the process?
• What obstacles might get in the way of moving this forward?

Here's how to use these conversation starters:

1. Cut and paste them into a document.
2. Add enough space between them so that you can take notes.
3. Introduce the conversation starters early in the discussion.
4. As you get answers, fill the blank spaces with your notes.

When there are no more blank spaces, you'll not be certain that you're not wasting your time and you'll know how to turn the opportunity into a win as quickly as possible.

Like this post? If so, sign up for the free Sales Source newsletter.

Geoffrey James writes the Sales Source column on Inc.com, the world's most visited sales-oriented blog. His newly published book is Business to Business Selling: Power Words and Strategies From the World's Top Sales Experts. @Sales_Source

The Big Deal About Facebook Gifts

It's not about the flowers. It's about the data. How Facebook is taking over the world of social commerce.

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When Facebook bought Karma, one of the leading gift sites, it was clear that Facebook Gifts was just around the corner. Given Facebook's tools and resources, they have the potential to make gift-giving more rewarding for both giver and recipient. Remember that the excellence of a gift lies in its appropriateness, not simply in its value.

What's less obvious is that, from Facebook's perspective, the dollars generated from gift purchases may be nowhere near as valuable the data these purchases generate. Facebook will get purchase decision data from each gift, which is just the start. The connections each gift establishes between two or more Facebook users form another layer of data. Each gift will create opportunities for follow-on sales and service and cross-marketing. Plus, recipients will fill out their own addresses - information Facebook doesn't necessarily have right now - making it easier to tie all this new data to existing information that's already available. What Facebook is aggregating is data, data and more data, with virtually no acquisition cost and high degrees of precision and accuracy.

Personal data is the oil of the digital age, and Facebook increasingly owns the primary pump.

Socially-informed commerce has been around for a while, but we're at a major inflection point. That's because of hyper-personalization and precise and cost-effective targeting. We've long known that if you give a consumer too many choices, they are far more likely to buy nothing than if you give them a limited and more relevant set of choices. Now new companies such as Local Offer Network are developing tools that deliver 'exactly right' offers to consumers the very first time they visit a site.

But Facebook's involvement potentially takes us somewhere new. Consider that when a Facebook 'friend' recommends that you take an action online, the impact, as compared to a simple ad solicitation, is major. You're 15% more likely to download something and 8% more likely to buy something. If and when you do buy, the average order size is 22% larger.  That's a lotta lift.

Facebook Gifts heralds a seismic shift from a relatively simple social graph to a deeper interest graph. Because we, and Facebook in particular, have pretty much cracked the code on personal data and demographics, the next hurdle is pretty clear: 'Tell me what you're interested in and what you pay attention to, and I will tell you who you are.' Online, you need to be where your targets and customers are, and a relevant part of their world, or else you're nowhere. This is where both Instagram and Pinterest loom large.

As we see better and better tools to interpret, identify, and categorize visual materials, we will see more and more emphasis on and influence of the players who are successfully aggregating these huge treasure troves of visual information. These days, a picture is worth about a million words--if it's the right picture.

Howard A. Tullman is president & CEO of Tribeca Flashpoint Media Arts Academy. He is also the general managing partner for Chicago High Tech Investors. Over the last 40 years, he has founded more than a dozen high-tech companies. @tullman

How to Know When You Need a Change

Highlights: Constant Change Is Just Part of the Job1:09

Entrepreneurs Alexis Maybank, Heidi Messer and Melinda Emerson talk about the challenges to growth from their start-up experience.

Guy Kawasaki: 'Why I'd Love to Pay More Taxes'

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How I Did It: Tim Gimbell, The LaSalle Network

 

World's Simplest Management Secret

Forget what you learned in those management books. There's really only one way to ensure that everyone on your team excels.

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Management books have it all wrong. They all try to tell you how to manage "people."

It's impossible to manage "people"; it's only possible to manage individuals. And because individuals differ from one another, what works with one individual may not work with somebody else.

Some individuals thrive on public praise; others feel uncomfortable when singled out.

Some individuals are all about the money; others thrive on challenging assignments.

Some individuals need mentoring; others find advice to be grating.

The trick is to manage individuals the way that THEY want to be managed, rather than the way that YOU'd prefer to be managed.

The only way to do this is to ASK.

In your first (or next) meeting with each direct report ask:

• How do you prefer to be managed?
• What can I do to help you excel?
• What types of management annoy you?

Listen (really listen) to the response and then, as far as you are able, adapt your coaching, motivation, compensation, and so forth to match that individual's needs.

BTW, a savvy employee won't wait for you to ask; he or she will tell you outright what works. When this happens, you're crazy not to take that employee's advice!

Unfortunately, most individuals aren't that bold, which is why it's up to you to find out how to get the best out of them.

And you'll never get that out of a management book.

There is no one-size-fits-all in a world where everyone is unique.

Like this post? If so, sign up for the free Sales Source newsletter.

Geoffrey James writes the Sales Source column on Inc.com, the world's most visited sales-oriented blog. His newly published book is Business to Business Selling: Power Words and Strategies From the World's Top Sales Experts. @Sales_Source

4 Reasons to Skip the Cloud

You can run much of your business in the cloud. But there are four things you might want to keep within the four walls of your office.

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Just about every day, I get a pitch from a company that makes a cloud service. A new storage site that competes with Dropbox, a video collaboration tool that runs online. While some business owners have always looked askew at anything not housed within the four walls of their company, many are moving to the cloud-- specially when it comes to email storage and contact tracking. Yet, I've found there are still several instances where the cloud just doesn't make sense from a business standpoint.

1. Large storage archives

After writing some 8,000 articles in almost 11 years, I've amassed quite a file collection. I have many gigabytes worth of photos, video libraries, documents, and everything in between. Storing this in the cloud makes sense in a way, because of the low cost and easy access. But in practical terms, it's easier to use a local storage drive in my office. If I stored this info on Dropbox, I'd have to tweak my settings constantly to make sure I'm not downloading a 15GB video file on every computer I own. More importantly, I don't really need easy access to most of these files. Plus many storage drives let you access the archive remotely anyway, which is more like a reverse cloud.

2. Printing

HP has offered cloud printing for some time. I previewed this feature in HP's lab many years ago, long before it ever made it into the guts of an inkjet. I suppose the idea could make sense for those who travel constantly: You print a document to the cloud, and then the doc is there waiting for you in the printer when you return. And being able to print from an iPad is handy. The problem is that, the only time I ever need a printed document is RIGHT NOW. I don't need one when I am in the airport. I do make use of the Chrome e-print extension on a regular basis, however.

3. Music

This is mostly a personal preference, but I have decided to take a break from music stored in the cloud. Services like Spotify and MOG are certainly handy, and you'll pay much less for the privilege to stream any track at will. When I travel on business, there are too many instances when I don't have access to the Internet, so I prefer a local archive. But the real reason has to do with quality. I tend to be an audiophile when it comes to music, sampling at the highest rate possible when I burn a CD. You can listen to Muse or Bruce Springsteen in the cloud, but they sound muddy and distorted. Movies retain their fidelity (Vudu's HDX format is much better than DVD) but require a fast connection.

4. Word Processing

I wish my word processing app was running in the cloud. (Every document I work on is instantly uploaded to the cloud for access from any computer.) Instead, I'm using a desktop app because Google Docs and similar word processing apps on the Web have not yet matched the feature set. Google Docs is getting close: The pop-up spellchecker is nearly flawless and there's a paint format tool. Unfortunately, the cloud versions just don't have extensive features, like mail merge. I can't seem to find a cloud app that both stores my documents and provides rich templates and high-end features. And, even the new Word 2013 preview is a download--it's only partly cloud-enabled.

John Brandon is a contributing editor at Inc. magazine and writes the Tech Trends column in every issue. He also writes the Tech Report column for Inc.com. @jmbrandonbb

Pay Employees What They Want

Want productive, efficient, and committed employees? Take money off the table and you'll see what they're really made of.

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If you want employees who are passionate, productive--and do whatever it takes for your company--pay them what they ask for.

Employees spend a major part of their lives at work. They should be there because they love their jobs and not because they get paid to come in.

That's the reason why, at Ciplex, we don't give bonuses, don't have reviews tied to raises, and, simply, do not use money as a motivator. We take money off the table--from the hiring process to daily operations. In return, we have the most enthusiastic, dedicated employees, who truly give a $%*# about our company. In fact, they often get offers for higher-paying jobs and turn them down.

Here are steps every employer needs to take to make sure money isn't an employee's incentive to work hard:

1. Take money out of the equation from the get-go.

During the first interview, ask potential hires what they need in a salary, rather than dictate what you have to offer. Don't negotiate a salary or try to force an employee to take a lower amount than he needs. If you do, that person will always be thinking about money, looking out for other jobs that pay more, and will never be fully dedicated to what you're trying to accomplish.

2. Ask for specific salary requirements.

A potential hire might say she needs $50,000 a year. Don't end the conversation there. Follow up with: 'What would be the salary amount another company could offer that would make you consider taking an interview or leaving us?' You want to be fully aware of an employee's money motivations before you commit.  

I have an employee who makes $60,000 a year. Since he started working for me, he received three job offers to make $80,000 a year, but he turned them all down. He's not driven by a higher dollar amount than I'm paying him. I made sure he earns enough at my company to pay his bills, and he's passionate about what he's doing at Ciplex.

3. Make sure current employees aren't motivated by money.

I've asked every employee at my company to break down his monthly bills. I find out what each employee needs to pay his mortgage, rent, utilities, cell phone--even Netflix bills.

People generally think of salaries annually, but no one pays bills annually. So it's not effective or meaningful to talk about an annual $60,000 or $70,000 salary. Learn what your employee's expenses are on a monthly basis--and be sure you cover that.

4. If you can't offer what an employee needs, part ways.

An employee might say she needs more money on a monthly basis than what you're able to pay her. If that's the case, the employee will always be looking for more opportunities for financial advancement--rather than fully dedicated to your company.

If the amount of money an employee needs to live a happy life is above what you can offer, she's probably not the right employee for you, and that's OK.

5. Never bring money back into the equation.

Don't give bonuses or pay someone more for working extra hours or on Saturday. You want to incentivize employees to work hard through other methods like generous praise, lunches on the company or staff parties, no undue criticism or corrections. Here are other ways I motivate employees more than money could.

Ilya Pozin founded his first company, Ciplex, at age 17. The digital marketing and creative agency caters to small businesses and start-ups. @ilyaNeverSleeps

How to Bust a Bad Mood

Woke up on the wrong side of the bed? Psychologists suggest a simple fix.

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Sometimes it's just one of those days.

Your employee called in sick and you're swamped, your toddler threw a tantrum (and her yogurt on the ceiling), and even the drab weather is conspiring to depress you. Whatever the causes, your temper is short and your mood is black. Is there nothing you can do to turn around a day that's looking bleak?

Put down the brownie, the bottle of wine, or your AmEx card and forget the sort of indulgent fixes you're likely to regret later. Instead take the advice of psychologists. There's a simpler and healthier way to bust your bad mood, according to recent post on PsyBlog reporting on new research.

For the study scientists asked participants how they would like to order hypothetical good and bad events. For instance, if you had to lose a $250 gift certificate and have a good night out with friends, in which order would you like those events to occur and with how much time to elapse between them? They also measured participants' general levels of happiness.

What they found wasn't super shocking, but it does hold a simple but powerful truth for your next grumpy day. First and perhaps least surprising was the fact that most people opted to get bad events out of the way first--that's just eating the salad first and saving the cake for last (sorry salad, we love you, but you're no chocolate mousse).

More interesting and useful was the correlation the researchers found between folks who opted to experience a positive event immediately after a negative one and those who were generally happier. PsyBlog reports:

The researchers found that people who reported being happier showed a stronger tendency to use a positive social event, like meeting up with a close friend, right after losing some money. They seemed to have the potentially happy habit of using socializing more quickly after their loss to fix their bad moods.

Happier people also tended to use socializing as a buffer against negative events, no matter what they were. In contrast less happy people tended to use positive financial events as buffers against negative events, rather than social ones.

Those days when everything seems to be going wrong may be the ones where you have the least enthusiasm for planning a get together with friends. But the lesson of this research is that the way to bust your bad mood and improve your level of happiness generally is to power through that reluctance, pick up the phone and arrange to see a friend.

And don't expect money spent or cheesecake to turn around a terrible day. Research shows they simply don't work.

Looking for other tips to turn around a day that looks to be heading south? The Happiness Project author Gretchen Rubin offers 13 on her blog, including doing something nice for someone else, soothing yourself by organizing a mess and that old standby, exercise, which is a classic for a reason.

How do you turn around a terrible day? 

 

Jessica Stillman is a freelance writer based in London with interests in unconventional career paths, generational differences, and the future of work. She has blogged for CBS MoneyWatch, GigaOM, and Brazen Careerist. @EntryLevelRebel

The Undercover Interview Technique

Want real insight into a job candidate's fit? Try adding the undercover interview to your hiring tool kit.

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Interviews can provide great insight. But do you know what a potential new hire is really thinking?

Sometimes you don't. That's why the undercover interview can be a great tool.

Here's how it works. Most interviews include some form of tour, even if the tour is just a quick stroll around the office area. Handle that tour correctly and you might learn a lot more than you ever imagined about a candidate's motivations, interests, and fit for your business.

For example, years ago I was in charge of manufacturing. My boss had just finished interviewing a candidate for a management position and was about to show him around the plant when some crisis (there always seemed to be a crisis) came up.

I happened to be in the hall. My boss saw me and said, "Jeff, can you show Tom (not his real name) around? He's interviewing for the opening we have in customer service. Great! Thanks!"

And off he strode to slay another dragon.

By accident I slipped under Tom's "how important is this person in the organization?" radar, a device many job candidates employ.

He didn't know my role. My boss didn't introduce me by title, and I didn't introduce myself that way either because I wasn't into titles. When Tom asked I said, "I work in the manufacturing area," because that's what I always said.

And Tom couldn't tell what my role was by my clothing. Even though all the other managers dressed "professionally," I had shifted my personal dress code to jeans and polo shirts: I spent 90% of my time on the floor, liked to get involved, liked to get dirty... okay, who am I kidding.

I hated khakis and had found business reasons not to wear them--plus, when you out-perform you aren't always required to conform.

So Tom assumed I was just a shop floor guy. Within minutes he said things and asked questions he never would have had if he knew my role in the company.

I learned:

• He was asked to resign from two previous jobs but it definitely wasn't his fault. His bosses created conflict by constantly holding him back.
• He felt focusing on productivity--both professionally and personally--stifled creativity. "I'm an ideas guy. I'm not hands-on."
• He wanted to know if there were policies against dating employees, especially those that might report to him.
• He asked how often he would have to interact with my boss since he already could tell my boss was a jerk.

My boss had planned to hire Tom until I told him about our tour. "Wow. I had no clue. He was great in my interviews," he said. " How did you get all that out of him?"

"I didn't," I replied. "He just told me."

Here's why the undercover tour works:

• Some candidates put on a great show for the CEO... but they don't try nearly as hard if they think a person is beneath them. Think of it as the waiter test: If you want insight into how a person treats people, take them to lunch. How they interact the waiter is a much better indication of their interpersonal skills than how interact with you.
• Some candidates want to know the "inside scoop" about the company (which is fair enough since interviews are a two-way process). They will often ask the undercover tour guide questions they will never ask you, giving you better insight into their perspectives and agendas.
• Some otherwise great candidates simply don't perform well in interviews. A tour conducted by someone other than you gives those people the chance to relax and show their true (and often positive) colors.

Next time you have an open position, give it a try. Choose someone in your organization whose opinion you trust. Don't introduce them by title, and tell them to be relatively vague about their role in the organization if asked.

When you finish your formal interview, just say to the candidate, "(Jeff) is going to show you around so you can see what we do. Take all the time you need, and I'll see you when you're done."

Sneaky? Not really. The more you know about the candidates the better hiring decision you can make. Plus you get a second opinion about a candidate from a person you trust.

The undercover tour is just another way to give potential new hires a chance to show they are a great fit for the position and your business. Most will shine. Some will not.

Either way, you get to make a better hiring decision.

Isn't that the ultimate goal of every good hiring process?

Jeff Haden learned much of what he knows about business and technology as he worked his way up in the manufacturing industry. Everything else he picks up from ghostwriting books for some of the smartest leaders he knows in business. @jeff_haden

Husband-Wife Team: When Work & Home Collide

America's fastest growers by state, industry, metro, and much more.