The 10 rules of hiring, firing and promoting

Who to hire, who to fire, who to promote? These are among the most fundamental questions a business has to ask. Yet they are also among the most difficult to answer.

by Stanford Graduate School of Business
Last Updated: 23 Jul 2013

Is that highly educated, experienced candidate who fluffed his interview the answer to your prayers or a disaster waiting to happen? Is that underperforming middle manager simply not up to the job or has she been badly allocated? And who, out of a team of equally talented and determined (or untalented and lazy) reps, do you pick for your next head of sales?

The Stanford Business School's Centre for Entrepreneurial Studies tackled these issues at its second annual Alumni Entrepreneur Reunion, held last month. Irv Grousbeck, consulting professor and co-director of the Centre for Entrepreneurial Studies, led a discussion with around two dozen Stanford alumni. Grousbeck offered a few pieces of advice to participants, which they used as a basis for discussion and debate. The highlights, otherwise known as Grousbeck's Pearls of Personnel Wisdom, are

1. Follow the golden rule for bosses: "Everything is fine until I tell you otherwise". This means no unspoken messages. If you have something to say to an employee, tell him or her directly.

2. Work with your employees before firing them. If somebody is underperforming, put them on a watch list and explain that you want them to succeed, but that their current path is not good. Meet every two weeks and review progress, document it and get the employee to sign it. After a few months, you will either have a record of improvement or of consistent performance problems.

3. Pay up for the signature. Don't let an employee leave without signing a general release form promising not to sue. Consider upping the severance pay to achieve this.

4. Never skimp on the background check. Talk to a candidate's boss from ten years ago, his teacher at school, his neighbour, his gardener - anybody who can give you an insight into what he's really like. Tell him what you're doing, and advise him to do the same.

5. Ask the $64,000 question, but do it delicately. Instead of directly asking a referee whether the candidate is any good, try asking: "If I were going to supervise this person, what suggestions would you have for me?"

6. Pay more for A people. B players can contribute, but they're not as effective in key positions. "They're soldiers on teams run by A players," Grousbeck said.

7. Assume that employees will find out each other's salaries, and pay accordingly. Be careful when considering paying more to one employee. If the others find out - and they will - it could cost you more in the long run.

8. Learn from performance reviews. They are time-consuming and nobody enjoys them, but they can be very effective in spotting problems and improving performance.

9. Hire people who already have a job. They are more likely to work out than those between jobs.

10. Use headhunters, but beware of the unwritten rule. Headhunters are reluctant to recruit from companies where they've recently placed people, which could cut you off from huge pools of potential talent. Check who they've been working with.

Source: Professor Irv Grousbeck
Stanford Graduate School of Business

Review by: Nick Loney

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