1. HBR.ORG How I Did It Kevin Ryan is the founder and CEO of Gilt Groupe. Gilt Groupes CEO on Building a Team of A Players by Kevin Ryan hen I think about starting a thinks its doing a good job of managing its business, my view is that the people. They all say, People are our most idea itself is worth between important asset. But most companies THE IDEA zero and very little. Most new compa- dont really act that way. Heres a simple Companies always say nies already have competitors when they test: Ask the CEO if he or she spends more employees are their launchand if they dont, they soon will. time on recruiting and managing people DoubleClick, where I was CEO from 1996 than on any other activity. For me, the an- most valuable asset. to 2005, had dozens of competitors within swer has always been yes. Kevin Ryan thinks that a year of its founding. Gilt Groupe wasnt Thats a radical statement, so let me few of them act accord-PHOTOGRAPHY: GETTY IMAGES the rst ash sales company, and Google qualify it a bit. I dont think this test applies ingly. He believes a CEOs was by no means the rst search engine to at a small companysay, 20 peoplewhere most important job is come along. Why have these businesses the CEO may be doing a lot of the sales or managing talent. succeeded? Its not the ideaits the people. directly overseeing operations. But at busi- Execution is what matters, and execution nesses that employ more than 50 people, relies on human talent. Every company the best use of a CEOs time is to bring in JanuaryFebruary 2012 Harvard Business Review 43
2. How i DiD it Gilt Groupe at a Glance The company was founded EmployEES: 850 in 2007 as an invitation- REvEnuE: Estimated at more than $500 million only flash sale site. Since mEmbERS: 3.5 millionunbelievable people, manage them well, then Gilt Groupe has begun FunDing: $174 millionand make sure the company builds and allowing the public to sign HEADquARtERS: New Yorks Silicon Alleymaintains an A-caliber team. up and has expanded its globAl REAcH: Currently expanding into 90 countries Heres another test of a companys business dramatically. bRAnD ExtEnSionS:devotion to its talent: Is your head of HR Members are notified by Jetsetter (vacation travel)one of the most important people in the e-mail of deep discounts Gilt Taste (artisanal food and wines)company? I spend as much time with our on designer clothing, and Park & Bond (mens apparel and accessories)head of HR as I do with our chief financial these offers are available Gilt City (local services and experiences)officerand Id never consider having the only while supplies last.head of HR report to anybody but the CEO.That role is truly strategic, and the personin it needs a seat at the table. Then I say, Evaluating talent isnt a pre- In this case I saw all the signs I didnt Its clear to the people who work with cise science. But its very rare that multiple want to see. At four months he hadntme that Im thinking about our talent most managers think youre 10th out of 10 when filled a couple of key roles, and a coupleof the time. When we sit down for meetings, youre really number two. Maybe youre of good people had left. We had a conver-I frequently ask managers to review every number ninemaybe. But the real point is sation. Tell us what we can do to help, Ione of their direct reports with me. I want that I want you to be successful, and I dont said. If you need us to double your recruit-continual updates. I also insist that as the think this is the right situation or career ing resources, well do that. At six monthsCEO, I can talk with anyone in the company path for you. Sometimes I say the person he still hadnt built a great team, so I said,at any time. Some managers prefer that can stay on for two months and look for a Were done. After he left, people startedexecutives check with them before talk- job at the same time, as long as he or she to come forward and tell us how demoti-ing with their people. Thats not going to maintains a good attitude and continues vating it had been to work for him and thathappen here. I want to get to know our em- to contribute. Sometimes the person feels they had come close to leaving as well.ployees better and to assess their talent and burned or negative and needs to leave right There are two lessons in that story:potential. I also want to know if they have away, with some severance. One, dont let a bad situation fester. A poordifficulties with a manager. I am evaluating I hold managers to the same standards manager can ruin morale and damage atalent all the time. when I ask them to build a team. Not long companys DNA. Two, no matter how well ago a senior person stepped into a new role. you think you know your organization, ifAddition by Subtraction I said to him, Five months from now, you you suspect somethings wrong, its prob-Part of building a great team is learning to need to have a great team. Earlier would be ably worse than you imagine. You cant letrecognize when individuals arent working better, but five months is the goal. To do those situations continue. Theyre just tooout and then letting them go. In general, that, youll need to spend the next month destructive.managers are not rigorous enough about evaluating the people you have right now.this. Thats a problem, because often the I hope theyre good. But if theyre not, well Dont Hire Himonly way to make room for better players make changes to replace them. If you need I dont think theres a science to recruiting,is to get the weaker players to leave the to promote people internally, well do that. but I do some things differently. The hir-organization. If you need to go outside, well do that. You ing process typically has three elements: Of course, its essential for people to also need to make sure you retain your best the rsum, the interview, and the refer-feel that the process is fair. But you have people. Im going to be really disturbed if ence check. Most managers overvalue theto be comfortable having a conversation I see that people we wanted to keep have rsum and interview and undervalue thewith a low-performing employee that goes started leaving your area. reference check. References matter most.something like this: You rank 10th out of10 in performance. Youre probably great,but this may not be the right job for you. Most managers overvalue the rsumWe may not be the right company for you.I know you dont want to be in a situation and interview and undervalue thewhere people think youre the lowest per-former. Sometimes we can find a position reference check. References matterin the company that is a better fit. Inevita-bly, the employee will question the judg- most. But you need to dig up peoplement: Im not really the lowest performer. who will speak candidly.44Harvard Business ReviewJanuaryFebruary 2012
3. hbr.orgIt would be a great experiment to not in-terview people at allto hire simply on TRANSFORM YOUR FUTUREthe basis of the reference checkand seewhat happened. Im pretty sure that most IN JUST SIX WEEKS.companies would make better hires if theydid that. Spending six weeks at Stanford next summer Rsums are good for establishing basicqualifications for the job, but not for much may well be the transformative experience thatelse. The primary problem with interviews denes your career. The Stanford Executiveis that its impossible to avoid being in- Program delivers new knowledge and insightsfluenced by people who are well-spoken,present well, or are attractive. All sorts of to help you drive innovation and lead change.studies show how much appearance drives For more than 60 years, top executives fromour perceptions of people. The rsum and around the world have found their futures here.interview also dont alert you to the big-gest potential problems. When someone Will you be next?doesnt succeed in a job, its generally notfor lack of the technical skillsits becauseof intangibles that dont come up in aninterview. Is he attentive to detail? Doesshe work well with others? How does hetreat his colleagues? References are reallythe only way to learn these things. The es-sential traits I look for are success and pas-sion. The truth is that successful peopleare rarely let go: Theyre hired by formerbosses in other companies. The presumption is that referencechecks arent worth much because peopleare scared to say anything negative. Thatsa valid concern, because there have beenlawsuits. But the way around it is to digup people who will speak candidly. Invari-ably, theyre people you know personally orpeople you can network to find. You cantsimply rely on the names a candidate sup-plies. Admittedly, this is hard if the personis 22 and just out of collegebut for some-one with 10 or 15 years of experience who STANFORDhas worked at two or three companies, you EXECUTIVEmust have some mutual acquaintances.Search firms do this by making a lot of calls, PROGRAMand we try to do the same thing. We also June 24 August 4, 2012look at LinkedIn profiles to find sharedcontacts. Application Deadline: A while back someone called me for April 30, 2012a reference check on a guy named Fred.I didnt know the caller, so I was very Visit stanfordsep.comguarded. I talked about Freds strengths Ways to Change by Peter Wegner (2011) to learn more.and weaknesses but emphasized that I Permanent installation at the Stanford Graduate School of Business Change lives. Change organizations. Change the world.liked him. The next day a college friend STF_SEP_HBR2-3Pg_FNL.indd 1 11/11/11 9:57 AM
4. HOW I DID IT HBR.ORG How Kevin Ryan Checks References The Gilt Groupe CEO says not to rely only on names supplied by a candidate. Instead, leverage your network to ndnamed Kevin phoned me. He said he was mutual contacts who can provide candid I tell my team, If good ?calling on behalf of someone I didnt know, feedback. And dont rely on recruiters toa close friend of his, who was thinking of conduct the reference check. Make some people are leavinghiring another person who had worked for calls yourself. Once Ryan nds someone your group, thats yourme. The hiring manager had asked Kevin toget the real story from me. If I didnt know wholl speak honestly, he asks these questions: responsibility.the person making the call, Id have givena lukewarm response similar to the one on Would you hire this person again? Ifthe previous day. But this was a longtime so, why and in what...