When we visit companies that underperform, what surprised us most is how often they hire on a theme; where all the employees fit a particular stereotype that fits a specific image identified by those doing the hiring. So often this theme has nothing to do with the performance of the role, but fits a particular “club” criteria. Examples would include; all the employees are gamers (not a game company), or the women are good looking, or specifically the opposite, or the men are athletes, or specifically not, or come from a particular school, or even ethnic background even though English is their common language. The general thinking is that people unlike them wouldn’t fit the culture they created for the company, or what they are often saying is that they wouldn’t fit the club they created.

We know of a company in Tokyo that only hires former Microsoft employees. Not one employee worked anywhere else at the time of our visit. This guaranteed they would never find top talent who chose a different path other than Microsoft. I’ve met many impressive current and former employees at Microsoft, and I’ve met a handful that left me thinking, “really?” Their logic was that it predefined their culture and Microsoft wouldn't possibly hire any mediocre talent. Everyone I know who worked at Microsoft can point to a list of people they would never want to work with again.

What founders and CEOs often do is try and hire people who are like them and call it adhering to the company culture, rather than digging deeper into what makes an employee reach maximum performance at their company. When looking at companies that were earning a very low Glassdoor score, this characteristic came up so frequently, that I can’t help but think it’s a contributing factor to the internal problems within each of these companies.

I know of one company right now that has a manager actively hiring personal friends, which is a terrible idea in any organization. The CEO and founder doesn’t seem to understand or or possibly care about the consequences of failing to set hiring guidelines and thus, will continue to run a company with extraordinarily high turnover. Most employers don't understand the high cost of any turnover, even when justified to rebuild an organization. While it's often necessary to clean out poor performers, keep in mind these companies never think of the true cost and it impacts their bottom line and those costs are far more than the hard cost of posting resumes and interviewing candidates.

Smart people want to be around other smart people. Hard working people want to be around other hard working people. Creative people want to be around other creative people. Meanwhile, slackers love to be around other slackers. Loons love to hang around with other loons as they all seem to identify and gravitate towards their own species over time. Companies reach the point where their only option is to hire those desperate for a job.

There is only one criteria any company should consider for hiring and promoting employees and that’s talent in the role. There is no room for anything else. You hire the best and you compensate these people well and then get out of their way. This point couldn’t be better illustrated in the book, "Remote: Office Not Required" by David Heinemeier Hansson and Jason Fried, a book about building a culture of fifty employees working from thirty-seven locations and how they have built a very prolific company by adhering to a very strict criteria of hiring the best self motivated people they can find.

We know of many highly dysfunctional companies where the founder protects a small group of trusted friends who are usually promoted to a point where they are incompetent in their roles while leaving the other employees in the awkward and often frustrating position of having to work around them.

When hiring, it's important to not just look at job history but how that individual acts as a catalyst to help their coworkers become something better. We believe that smart, talented people, encourage others to be the same and to strive to become something better as a group.

We've had internal discussions lately about just the opposite, when a protected class develops that's feeds off of itself and drags down the whole group. Some CEOs are reluctant to fire because they feel as though the group worked hard and should be taken care of somehow, at the detriment of the entire company.  We strongly believe in taking care of employees who are no longer a good fit for the company, however too many companies keep them around too long and end up paying the price through a damaged culture that can't easily be repaired.

The best way to avoid all of this is to weed out those individuals who aren't rising to the demands of the role they play. First, if there is a different role in the organization, start there, and if not, you are not doing them any favors by keeping them from another company where they can shine.

The goal is always to build the best company possible. We think too often CEOs forget that they don't just represent the shareholders, they also represent the customer, the suppliers and the employees and all of that must remain in a delicate balance if the company is to run at optimum.