Gilt Groupes Ceo on Building a Team of a Players

How I Did It…

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Kevin Ryan is the founder and CEO of Gilt Groupe.

Gilt Groupe’s CEO on Building a Team of A Players

by Kevin Ryan
THE IDEA

PHOTOGRAPHY: GETTY IMAGES

Companies always say employees are their most valuable asset. Kevin Ryan thinks that few of them act accordingly. He believes a CEO’s most important job is managing talent.

hen I think about starting a business, my view is that the idea itself is worth between zero and very little. Most new companies already have competitors when they launch—and if they don’t, they soon will. DoubleClick, where I was CEO from 1996 to 2005, had dozens of competitors within a year of its founding. Gilt Groupe wasn’t the rst ash sales company, and Google was by no means the rst search engine to come along. Why have these businesses succeeded? It’s not the idea—it’s the people. Execution is what matters, and execution relies on human talent. Every company

thinks it’s doing a good job of managing its people. They all say, “People are our most important asset.” But most companies don’t really act that way. Here’s a simple test: Ask the CEO if he or she spends more time on recruiting and managing people than on any other activity. For me, the answer has always been yes. That’s a radical statement, so let me qualify it a bit. I don’t think this test applies at a small company—say, 20 people—where the CEO may be doing a lot of the sales or directly overseeing operations. But at businesses that employ more than 50 people, the best use of a CEO’s time is to bring in

January–February 2012 Harvard Business Review 43

How i DiD it

Gilt Groupe at a Glance unbelievable people, manage them well, and make sure the company builds and maintains an A-caliber team. Here’s another test of a company’s devotion to its talent: Is your head of HR one of the most important people in the company? I spend as much time with our head of HR as I do with our chief financial officer—and I’d never consider having the

References: The Gilt Groupe CEO says not to rely only on names supplied by a candidate. Instead, leverage your network to find mutual contacts who can provide candid feedback. And don’t rely on recruiters to conduct the reference check. Make some calls yourself. Once Ryan finds someone who’ll speak honestly, he asks these questions: Would you hire this person again? If so, why and in what capacity? If not, why not? named Kevin phoned me. He said he was calling on behalf of someone I didn’t know, a close friend of his, who was thinking of hiring another person who had worked for me. The hiring manager had asked Kevin to get the real story from me. If I didn’t know the person making the call, I’d have given a lukewarm response similar to the one on the previous day. But this was a longtime friend asking for my candid opinion. I gave it simply: “Don’t hire him.” When you check references, you want to have a conversation as frank as that. It can take real effort to nd someone who’ll be straight with you, but it’s worth it. We don’t always get this right. For one hire, an outside recruiter that helped with the search had checked some of the references. Ordinarily we try to do this ourselves. The man didn’t work out—it was just a bad t. After he left, I ran into a couple of people I knew: one who had worked for the guy at another company and one who’d done business with him as a banker. I hadn’t realized that either of them knew him. They told me what they thought of him—which jibed exactly with our negative experience. Sometimes you don’t hear an honest assessment until it’s too late. Recruiting is so important that we intentionally overinvest in it. We have 10 full-time recruiters on our sta —a lot for a company our size. We also frequently use external search rms, especially for senior positions. Sometimes a company will leave a low-performing person in a job because managers feel there’s a shortage of time or energy to recruit his replacement. I don’t want to be in that position. As the CEO, I can’t be involved in every hire we make. We hired 65 people last June—and interviewing every customersupport person would have been a bad use of my time. Even so, I interview many more people than CEOs usually do. I probably interview at least one person every workday. I also make it clear to my senior people that if they’re making an important hire, I’m willing to call the person as part of the pitch. People love hearing from the CEO: “Steve, I haven’t met you yet, but everyone thinks 46 Harvard Business Review January–February 2012 ? How would you describe the candidate’s ability to innovate, manage, lead, deal with ambiguity, get things done, influence others? What were some of the best things this person accomplished? What could he or she have done better? In what type of culture, environment, and role can you see this person excelling? In what type of role is he or she unlikely to be successful? Would you describe the candidate as a leader, a strategist, an executer, a collaborator, a thinker, or something else? Can you give me some examples to support your description? Do Do people enjoy working with the candidate, didate, and would former coworkers want want to work with him or her again? In In what areas does the candidate need to to improve? you’re amazing. Is there anything I can do to help with your decision? Can I y out to meet you?” They always say no, but the fact that you’ve o ered shows you care. Recruiting is similar to sales, and sometimes the CEO’s involvement makes a di erence. People talk about certain rules of thumb in talent management. One is that the great people in any company are usually underpaid. That’s generally true, and you should skew your compensation system with per- I tell my team, If good people are leaving your group, that’s your responsibility. formance pay to better reward them. Another is that A-level people generally hire other A-level people, but B-level people hire C-level people. I think that’s true, too, but for a reason other than the usual one. B players hire C players not because they feel threatened by more-talented people but because most people don’t want to work for a mediocre boss. Think about it: Have you ever heard someone say, “I just got o ered a job. The person I’ll be working for isn’t very impressive, but I’m going to take it anyway”? That’s not something talented people generally do. Another piece of conventional wisdom is that people leave jobs mainly because they don’t like their managers. That’s also true. We did exit interviews when people left DoubleClick, and they were almost always leaving because of a manager. I talk about this with our team at Gilt all the time: If good people are leaving your group, that’s your responsibility. I want all our senior people focused on that issue. It’s especially important in the internet space, where good people are in high demand and have many choices. I think, too, that the hardest quality to find in a new hire is the ability to bring things to closure. Some people don’t realize that analysis is useful only if it results in a decision and implementation. Of all the duties facing a CEO, obsessing over talent provides the biggest return. Making sure that the environment is good, that people are learning, and that they know we’re investing in them every day— I’m constantly thinking about that, yet I still don’t feel I’m doing enough. If CEOs did absolutely nothing but act as chief talent o cers, I believe, there’s a reasonable chance their companies would perform better. 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