A Framework for Hiring and Managing Employees

A Framework for Hiring and Managing Employees post image

If you are reading this post elsewhere, click here to see the video presentation (~15 minutes).

How do you know when it’s time to hire somebody? 

Until recently, I’ve never had a consistent rule-of-thumb for knowing when to hire. Every single time it was a one-off call– often based on hope or hubris.

There are few questions in my career that have been so consistently complex. Even seasoned business owners seem to find hiring decisions laced with anxiety. As Felix Dennis quips in the excellent How to Get Rich, “overhead walks on two legs.” 

A new approach…

My gut feeling approach to hiring was challenged recently when we brought on a new team member. I recounted the story on this episode of the Lifestyle Business Podcast. We had taken the lessons from a book called Work the System to heart and wrote down– in detail– how to execute the processes that delivered value to our customers.

Those processes helped us to look at a small bundle of standard operating procedures (SOPs), figure out about how much they cost us to execute, and then say (for example): we should hire somebody to execute SOPs #1, 2, and 3, assuming their salary is in x range. We felt empowered to step back and take an objective look at our business. Should we automate this with software? Should we hire a consultant to do this stuff? Should we be doing it at all? 

If you don’t give the job to somebody else, it’ll be yours.

The system I created for my new small business was inspired mostly by Sam Carpenter’s Work the SystemI very much recommend you read the book if you plan on doing this. You could also take a look at Gerber’s The E-Myth Revistedalthough it’s a bit redundant after reading Work the System. 

The punchline– most small business owners are above-average at their craft. Baking cakes, getting #1 rankings for websites, designing logos, writing sales pages, etc. The problem comes when those business owners conflate their sought-after skill set with the skill set of entrepreneurship.

One of the best ways to go from “small biz owner” to “entrepreneur” is to get good at building systems.

For many of us our most powerful points of leverage will come from building SOPs from scratch, day by day, spreadsheet by spreadsheet.

Outlined in the video you’ll see some of the following benefits we’ve seen in our business:

  • Increased precision. Our conversations and the actions we take are more elegant. Why are we doing this? When are we doing this? What precisely do we do? How much does it cost us?
  • Increased modularity. It’s much easier to outsource elements of our business, hire new team members and train them, or to leverage ourselves out of lower value tasks.
  • Added legacy to our conversations. Every important decision, principle, and process in our business is recorded on our live document so our conversations build out assets for our business. We see business failures as failures of process, and that give us an opportunity to address those problems in a positive way.
  • Reduced email volume and removes some of the need for project management software. 

An example of a Standard Operating Document (SOD).

You can see it here.

Screen Shot 2013-05-21 at 6.48.37 PM

Want to implement the Strategic Operating Document (SOD) in your business?

The biggest issue I have not addressed in this post is how to get team buy-in and compliance. Many of our listeners have had challenges in this regard. In general, it’s very important to use systems your team already uses. They are unlikely to implement this stuff if it means more work. In our case, Google docs for the win!

We are currently applying this system to our larger company and are finding a few more challenges (but more upside!). Hopefully we’ll have more to report on that shortly. These are live documents and we continue to evolve how we work with them on a day to day basis.



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Published on 05.22.13
  • http://www.linchpin.net/ Damian Thompson

    Love your work sir, dug the video, you are soooo multimedia ;)

  • http://www.tropicalmba.com Dan

    Cheers DT!

  • http://www.linchpin.net/ Damian Thompson

    De nada. Now can i ask you the question you fear the most?

    When’s the next Tropical Talk Friday brother? You are surrounded by all those brilliant DCers in the Hoch, take a mic with you to your next shisha sesh…


  • http://www.tropicalmba.com Dan

    Good point brother! We are working to get our priorities straight :D

  • Hutch

    Thanks Dan! This is perfect timing for me.

  • http://www.tropicalmba.com Dan

    Cheers sir, let me know how it goes.

  • http://ianrobinson.net/ Ian

    What. Amazing. Timing.

    I just sat down to struggle through the creative process of building an SOD for Freedom Podcasting. Then your e-mail fell into my inbox and you just saved me heaps of time. How do we get access your podcasting SOPs! LoL

    I really appreciate you making this available. Lifestyle Business Podcast has done amazing things for me and I’m really grateful for the work you do! Thank You!

  • http://ianrobinson.net/ Ian

    I’d love some feedback on this. Though I’ve been thinking about it for ages, I just wrote it out.

    Freedom Podcasting Mission Statement:

    Our mission is to produce and publish high quality podcast products that help media producers efficiently spread their valuable messages/ideas.

    Advancements in technology (e.g. iTunes, smartphones, inexpensive recording equipment) have created a space in which high-quality, media on demand can replace the old, inefficient, interruption focused mass media system.

    We believe that media on demand is more valuable to both the consumers and the producers in this new media marketplace. Our mission is to improve the probability of success for those who want to create valuable products in this space.

  • http://www.theredhoodie.com/ Rob Lund

    This is a great screencast. When you guys went through the topic of creating an SOD and SOPs on the Lifestyle Business Podcast it was hard to grasp exactly what you were talking about. The addition of this screencast is super helpful. Definitely ‘meat and potatoes.”

  • Pehr Hedström

    Good stuff Dan, this is awesome.

  • Alan Perlman

    Epic. Been looking for another systems push. In dire need of best practices and loving this post right now. Thanks!

  • http://ecommercedouble.com/ Dave Huss

    Been procrastinating on writing my paid traffic consulting SOD for a while now. Just knocked out a big chunk of it in an hour, thanks for the screencast Dan.

  • http://www.facebook.com/profile.php?id=6701810 Steven Moody

    Great impetus to update my doc, I like the order. One thing I added (c/o Rockefeller) is my sandbox: clarification on what the current market is. Nestled between Mission and Principles, this allows the Mission to remain unchanged.

  • Homeliss

    The author is giving away “Work the System” for free on his website as pdf or audiobook. If you have a habit of buying every book Dan and Ian recommend, then this is excellent news!

  • http://www.tropicalmba.com Dan

    Great tip thank you for that !!!

  • http://www.tropicalmba.com Dan

    Fascinating. Sandbox doesn’t immediately register with me… looking forward to taking a peak at yours.

  • http://www.tropicalmba.com Dan

    Rock on man this would be the cat’s pajamas for your business! One of the things we were kicking around last night is that not only can you determine a cost for your SOPs, but you can also determine the retail value of them! So you can flip the SOPs into their related benefits and it’s a ready made sales letter.

  • http://www.tropicalmba.com Dan

    Cheers thank you Alan.

  • http://www.tropicalmba.com Dan

    Thanks Pehr hope it works out !

  • http://www.tropicalmba.com Dan

    Cheers Rob! It was pretty easy to do and I don’t have to put my mug on camera, so maybe we’ll do more of this stuff when we are talking about these types of things.

  • http://www.tropicalmba.com Dan

    You got it Ian.

  • http://www.tropicalmba.com Dan

    This works for sure! I think it might make sense to flesh out what you mean by “high quality.” What is it and how do you aim to get more quality branding messaging into the world?

  • Mike Gilliland

    Dan, I totally love this post! I’ve been obsessed with this book ever since we first read it. I even made an Infographic about it. Check it: http://www.timelapsestrategies.com/timelapse-game-changers-work-the-system-by-sam-carpenter/

  • http://www.tropicalmba.com Dan

    Cheers Mike thanks for that, cheers for the link.

  • Liam Riles

    Wow mate, epic post. I think lots of people wait too long to do this and when the finally sit down to document their SOPs, it becomes bleedingly obviously where the inefficiencies and superfluous crap is. I’ll be sure to do this early on.

  • http://www.tropicalmba.com Dan

    Cheers Liam, appreciate that. RE: Inefficiencies that’s one of the biggest upsides of doing this, is looking at precisely what your biz does and asking yourself/team ‘why do we do this?’ can we improve it etc….

  • Shane

    This is brilliant! Thanks for posting this, Dan!

    Just out of interest: do you feel like Gdocs is the ideal tool for creating SOPs and SODs or do you sometimes wish you had something better suited for the task?

  • http://www.tropicalmba.com Dan

    Hey Shane thank you for that!

    I do think GDOCS works well for smaller management teams, it seems like our larger company is running into some issues and is looking into WIKI type solutions but I’ve got no info on that yet… hopefully i Can run a follow-up.

    My publishing company is 3 MGMT team members + contractors and we see no limitations to GDOCS and think it could easily scale to 10 people.

  • Shane

    Thanks for the reply! I was asking mainly because I saw a potential product in this, right away.

    I’ve done zero market research on this, but my gut feeling is that a system specifically made for creating and managing this kind of documentation for teams could make for an interesting product or service.

  • http://www.tropicalmba.com Dan

    I agree with that gut feel… Might be a few out there but nothing that’s caught IMers imagination, plus as the market matures so will the need for systems

  • Joss

    Such great timing – I just took on my first assistant and was puzzling over the best way to organise collaboration. This just sets everything up perfectly. Thanks!

  • http://www.tropicalmba.com Dan

    Cheers thanks Joss! Best of luck!

  • Ant

    Hey Dan,

    Excellent post, just a quick question.

    Just a quick q.

    Do you know anywhere with “templates” of SOP’s for generic roles like “support staff”, etc?

    Obviously they would need to heavily customized to your own company/product/services..

    Thanks a bunch dan

  • http://www.tropicalmba.com Dan

    Hey Ant that’s a great question, would be awesome to create one that’s for sure! There’s nothing that I know of..

  • Josh Stanton

    I’m not going to lie, I think my life just changed after watching this video. In my mind I instantaneously went from baller to faller (fake baller).

  • mandiellefson

    Hey Ant,

    What kind of tasks are you looking for the support staff to handle? I might have something.

  • mandiellefson

    Work the System has one, but it looks pretty dated and clunky to me. I really like what you have done here Dan. Really great!

  • Ant

    Hey there Mandy! My support staff deal with online products/services so anything on those lines :)

  • mandiellefson

    Ant, I am not sure I know of any templates along those lines. I do a lot of SOPs and would be happy to hop on Skype for 15 minutes to help you outline something. I always love having another perspective when I put mine together. From there you can find all sorts of resources to pop in here and there, then clean up as you go. Ping me on Linkedin if you want. http://www.linkedin.com/in/mandiellefson

  • http://www.tropicalmba.com/ Dan


  • Ian O’Brien

    I might be wrong but I think there are some example docs linked to on the work the system site and http://www.centratel.com/ (the TAS that the author owns) both under resources. Dan using a live Gdoc and having ongoing discuss points is a great idea! – Ian

  • http://younghustler.quora.com/ Michael J. Sieler Jr.

    After listening to the SOP podcast, I had a systems orgasm. I’m not ashamed to admit it either. Life changing stuff here. Thank you for introducing me to systems and Sam Carpenters work.

    For the last 3 days, I’ve been working my ass off to listen to all your podcasts. I have them on 1.5x speed and I’m almost in the 30’s. It’s so exciting listening to you guys progress from a very amateur sounding podcast to you guys kicking ass in the Philippines.

    Keep up the fantastic work Dan, Ian, and everyone at the Tropical MBA!

  • http://www.tropicalmba.com/ Dan Andrews

    HELLS YEAH… thanks so much for that Michael, we read your comment on our last podcast!! Wish you the best in your business !

  • http://younghustler.quora.com/ Michael J. Sieler Jr.

    Yeah Buddy! :)

    Man… I just had the best/worst day yesterday. First the good news: In less than a week, I’ve flown through the first 50 podcasts. Bad news: My external hard drive decided to stop working, and I don’t have access to the rest of the podcasts :/

    Do you all have any recommendations for a cloud based data storage site/program/software? (Forgive me if you’ve answered this already later podcasts.).

    Thanks guys!

  • http://www.tropicalmba.com/ Dan Andrews

    I just toss up all my documents on Dropbox, like everything but my MP3s are just in Dropbox!

  • Ethan

    Great stuff as always, Dan! I’m excited to implement some of this stuff to make our processes and meetings more efficient. Thanks!!

  • http://www.tropicalmba.com/ Dan Andrews

    thank you Ethan!

  • http://WPCurve.com/ Kyle Gray

    Hey Dan,

    This is one of my favorite posts of all time on your blog. It’s value still shines though after two years. I’ll be referencing it soon.

    I have been researching and found that Sam Carpenter is giving away Work The System for free in PDF or audio on his site http://www.workthesystem.com

    If you’re still getting a lot of traffic here it might be good to update you link to point to the free download instead of Amazon and save people who are inspired by this post a few bucks to go buy an extra coffee or two.

  • http://www.tropicalmba.com/ Dan Andrews

    cheers Kyle thanks for that!

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