Scaling Up Business with Bill Gallagher 009: Rich Manders- How the Topgrading System Prevented Million Dollar Hiring Disasters.
Rich Manders, co-founder of iAutomation and FreeScale Coaching, is a serial entrepreneur who has sold two businesses and has overseen seven acquisitions. Rich has a deep understanding on how to optimize and grow combining enterprises and has worked with many thought leaders on business management, personal development, and negotiation.
In 1998, Rich was having problems finding and keeping talented employees for the business he was starting. Someone recommended that Rich look into a Topgrading workshop and, after a brief course on the subject, found that this system was undoubtedly the best way to hire new employees. Rich attributes Topgrading to making his business millions of dollars because it took the chaos out of hiring talent.
Due to the technical nature of the company, it took roughly two years of employee training to be brought up to full speed. This had huge costs for Rich. Not only did it take two years to test out talent, but it also cost Rich $250,000 in salary, training, and benefits before the company even knew if that one employee was a right fit for them. High stakes to say the least. Rich says during the first two years of the company, he had made five bad misfires.
Rich found that by using the Topgrading system, the people he ended up hiring were 2-3 times more productive than previous hires. The next step for Rich was to send his managers through the topgrading workshop to also improve employee productivity.
The hiring process is not fast or easy. It takes time to vet the right hires and find the right talent. Rich says it takes one full day to two full days to get through the Topgrading process.
The biggest push back Rich received was that hiring managers didn't have time to take a full day just to hire one person. Rich's counterpoint was clear, if it's costing the company $250,000 alone to fully train an employee, then taking the necessary day or two to vet the person fully is in the best interest of the company. Do it right the first time.
When Rich started the Topgrading process, he already had 20 people on staff and 5-10 million in revenue. By properly vetting new hires who were brought on board, they were able to increase their staff to 160 and generate 80 million in sales revenue by the time Rich left the business in 2013. The Topgrading system really skyrocketed their business.
Interview Links:
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Scaling Up is the best-selling book, by Verne Harnish and the team at Gazelles, on how the fastest growing companies succeed where so many others fail. My name is Bill Gallagher and I'm a certified Gazelles business coach.
We help leadership teams to get the 4 Decisions around People, Strategy, Execution, and Cash right so that they can Scale Up successfully and beat the odds of business growth success. Our 4 Decisions are all part of the Rockefeller Habits 2.0 (from the original best-selling business book, Mastering the Rockefeller Habits).