Why Hiring for Fit Works at Start, But Eventually Fails You at Scale
I was DMing Wharton Professor Adam Grant before he even finished delivering the talk describing different startup hiring models and their correlation to success or failure.
“Adam, what was the research you were referring to?” I was almost afraid to look at his reply, like Indy averting his eyes when the ark is opened. This is too much for us to know! The actual research about whether culture fit hiring impacts success or not!
Adam pointed me to this research study, Organizational Blueprints for Success in High-Tech Start-Ups [pdf], by two Stanford professors, which tracked 200 companies. They categorized the 200 by their employment blueprint — what were the criteria they used for hiring.
Attachment is what binds the employees to the organization. Selection is the primary judgment criteria for how employees are hired. Coordination/Control covers how work is managed, decisions are made.
“Commitment” is what might be commonly referred to as the culture fit model and it dramatically outperformed others with regards to whether a startup failed or not.
But since the goal of a startup isn’t to “not fail,” but rather to succeed, here’s the correlation between these org models and IPO.
Commitment for the win!
BUT what happens post IPO? Of the companies that go public from each org model, what happens once they’ve “succeeded?”
Whoa, Commitment starts to seriously lag and Star outperforms (Star means hiring for sheer potential of employee).
What happens? Well, Commitment starts to calcify into stability and group think — this is who we are and the way we do things. But Star continues to bring in fresh blood able to step up and create new disruptive ideas, reinvigorate old product lines and basically maintain the attractiveness of the company for best and brightest.
Good companies choose a path but great companies change paths when necessary.