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Sales Machine
January 20, 2012 1:40 PM

How to hire like Warren Buffett

By
Tom Searcy
Topics
Marketing

Warren Buffett, chairman of Berkshire Hathaway, in July 2011.

(Credit: Scott Olson/Getty Images)
Warren Buffett has said that when he is looking at his leaders for companies, he evaluates three categories of characteristics:

-- Intelligence

-- Energy

-- Integrity

His fundamental belief is that if a person has 2 of these, the lack of the third can kill a business. Do the fast math on the negative side of the equation:

-- Low integrity, high energy and high intelligence and you have a smart, fast-moving thief

-- Low energy, high intelligence and integrity and you have a shop keeper, not an engine of growth

-- Low intelligence, high energy and integrity and you have strong functionary, but not a great problem solver or visionary

As you look at potential hires, how are you assessing these three categories of characteristics? Behavioral questions are good and standardized tests can be insightful. I like both and use both in my selection processes. In addition, I like exercises and assignments in interviews to provide a clearer picture. Here are some ideas to consider adding to your selection process:

How to find out intelligence -- Tests, puzzles and games are good ways to learn about a person's practical intelligence.

Problem Solving -- Give a candidate five flashlights, one working and four not working. Ask the candidate to take what is available and make as many working flashlights in a 90 second period of time as the candidate can. The point of the exercise is not necessarily how many flashlights that they can get working. It is to see how they solve the problem with a limited amount of instructions and a short time frame.

Strategy -- I know a Sr. VP who won't hire anyone who can't beat him at least one out of three in "Connect Four." Simple game of strategy, easy test. If the job requires thinking ahead as well as responding to change and adjusting approach, this works.

Ingenuity -- A summer intern wanted a job, working full time for my company upon graduation. When we were in London on client assignment, I handed him $100 and a list of specialty items to pick up. They were diverse enough that they could not be picked up in the neighborhood. I told him he had to get the items and be back in 2 hours if he wanted the job. (Side note; He'd never been to London, ridden a subway or exchanged money before). He did well.

You can create your own approaches. My point is that testing and talking only tells you so much. Stretch your approach to get to the real answers.

How to find energy --

Physical -- What physical regimens does the person have? Athletic, eating, meditating? Many jobs require energy and it is great to know the capacity and endurance of your candidates.

Mental -- Ask a candidate to prepare and give you a 10 minute presentation on a relevant topic. Examples include a case study of a past success, a service to sell or a resolution to a common business problem. After they have given it, ask them to take 2 minutes to prepare and re-give the presentation, but in only 5 minutes. After they have given it the second time, have them prepare for 1 minute and then give the presentation in 1 minute.

How to find integrity --

Liars, thieves and the morally deficient are often hard to identify through the interview process. Typically, extensive reference review and digital research can give you a picture. If the person is mission critical and officer level, a full dossier prepared by an investigative service can be of great benefit. No, I'm not kidding.

When you are hiring key people, the cost of mistakes can be terminal to your business. Dig hard to get the answers you need to feel confident that your best candidates have the necessary energy, intelligence and integrity to succeed.


Add a Comment
by ambrking January 26, 2012 9:06 PM EST
Wonderful article Tom. Hiring can be a tricky part however these tips can help narrow down who should be and shouldn't be hired. I like how you discussed these tips and make it easy to understand.
Reply to this comment
by Omhnative January 26, 2012 7:38 PM EST
The original Buffett quote was "ambition, intelligence and integrity.". I liked that version better.
Reply to this comment
by DianeDP100 January 26, 2012 4:51 PM EST
Intelligence, energy and integrity are crucial, I agree, but I believe you left out one thing that can absolutely make-or-break a leader's stewardship. That is, creativity. Problems come and rear their ugly tentacles at all times. C-suite folks cannot be staking out the territory without noticing the imminence of these problems. The question is who moves creatively to push past and break through the problems. More than once, I have seen the number one quality to differentiate a good move from a move where the customers go absolutely wild is creativity of the strategy, and the swiftness of its execution. Energy feeds into swiftness, but intelligence does not necessarily feed into creativity. Folks have an innate creativity, but many do not exercise this muscle, or do not bring to the table 110% of their capability. I would advise to look for a leader who does, when hiring. This is the Steve Jobs & Pixar school of Empire-Building. Diane Dolinsky-Pickar from Mojo40.com
Reply to this comment
by TexasRICH6 January 26, 2012 4:49 PM EST
Where does passion for what they do? This is beyond energy.
Where does skills & competencies come in? I assume he looks at their performance record.
Where does alignment with vision, mission, values enter? The smarts, honesty and energy needs to be focused toward the committed purpose.
Reply to this comment
by Lillysuzzanne January 24, 2012 7:56 PM EST
Yes, you can test all day and clever people are really good at tests. Sometimes you might want something more than a clever person...like real intelligence, those that dream and have visions and ideas. I looked up "Connect 4" and played a few rounds...geez. big deal. That's supposed to tell you the person you are considering is bright and has a heart?? If someone pulled that out on me...IN A JOB INTERVIEW...I would excuse myself and not look back.
Reply to this comment
by Stewart Knox January 25, 2012 5:50 AM EST
I agree totally with this comment and thought this article went down hill after the Warren Buffet section. Like you, if asked to play connect 4 by a prospective employer - I would definately walk as I couldn't work for a nut job. In fact many of the suggestions in the article I would consider insulting. Did you write this article as a joke?
by adeangulo January 22, 2012 11:24 AM EST
These statistics are impressive, but I dare say you seem to claim the tribal knowledge of six degrees of separation. In the recruiting industry the most successful of us are the million dollar biller's. If anyone who says they are billing more than a million dollars they are most likely referring to their team. In a good year a million dollar biller will place between 30 and 50 candidates. Over your 25 year career, without any economic downturns, that equates to around a 1,000 people, or less. I bring this up because I take exception to 25,000 or so potential hires you claim to have influenced. Also, the fact that you know many executive recruiters, does not make you a recruiter anymore than me recruiting and placing several VP's of engineering makes me a VP, Engineering.

That being said, hiring the right people is a complex process of finding not just the right fit for the client company, but also the candidate. This ensures a long-term and productive relationship between the company and their new employee.

Intelligence, energy and integrity are only a few basic attributes that every hiring manager wants in a new hire, not just you and Warren Buffet. These are right up there with being able to pass a drug screen and background check. In 17 years no hiring manager has ever told me that they wanted to hire a slothful idiot with a criminal record. My hiring managers are looking for exceptional high performers, at a minimum, and they usually want high potential candidates who are the top 3% of the high performers.

Beyond this basic requirement is usually a long list of other comparative attributes, minimum and preferred qualifications. Accurate hiring requires clearly knowing the nature and level of all critical skills required to do the job successfully. This may require multiple level selection testing and criterion, depending upon the job. If it is a position that is critical to the business, or involving customer contact, then you need to throw everything except the kitchen sink at them.

Just a thought from your friendly recruiter.
Reply to this comment
by TomSearcy January 22, 2012 4:08 PM EST
Thanks for the exchange and for coming back to me with your thoughts. Hiring is, as you point out, a very complex process with many nuances. I'm grateful for the dialogue and your input.

Best,

Tom Searcy
by adeangulo January 21, 2012 5:47 PM EST
Mr. Searcy, don't quit your day job as a sales trainer. Your advice on hiring is shallow and trite. You certainly have a right to your opinion, and can do what ever you wish in your own company (assuming you do not violate Federal and State regulations). However, if you are going to speak as consultant and "expert" in a public forum, you need to have a deeper understanding of the subject than a few anecdotal stories.

I can say as an executive recruiter that I am not qualified to give sales training advice, even though sales is a big part of our business; however, after 17 years in the business, I am an expert in the recruiting and hiring exceptional people, and I know bad advice when I see it.
Reply to this comment
by TomSearcy January 22, 2012 5:49 AM EST
Thank you for your response. I am certain you are an expert from your 17 years in the business. You have chosen to give the critique, but little commentary from that experience to assist the reader.

My only experience comes from the over 25,000 people the companies I have personally managed have hired. I have had the pleasure of working with over a dozen executive recruiters and have interviewed several dozen other firms. Several of the firms we contracted were absolutely instrumental in the success of my companies.This makes me a 25 year year user of the services and a frequent practitioner of interviewing processes and techniques. This experience doesn't make me an expert, but it does make me more than casually informed.

A blog is a commentary on an idea- not a book or a complete treatise on a topic. The use of recruiters, tests, interviewing panels and other techniques are important parts of a process. I think those are fairly well-known and not particularly great fodder for a blog post. I recommend re-reading the post and seeing if there aren't some ideas you can tailor in your processes to assist in helping clients make better decisions. The most recent rate of failure of new hires in management positions as defined by the people who hired the candidates was over 35%. This quoted to me by an executive recruiter. I think adding a few ideas to the mix of other current best practices can help.
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