Are Resumes Ruining Your Hiring Process?

Entrepreneurship is hard, but the process can be simplified. You can achieve success faster, sooner, and easier. I'm Mike Michalowicz, and I'm on a mission to eradicate entrepreneurial poverty. My goal for this episode and every episode is to serve you on your journey. Let's start right now on Entrepreneurship Simplified. Hey, it's Mike Michalowicz here, and you are listening or watching Entrepreneurship simplified. The whole goal of this show is to give you tactical techniques, ways to improve your business, and have a great entrepreneurial journey. I'm joined today in quasi virtual studio with Daniel Mulvey, the founder of the All In Company. It's good to see you, Danielle.

Great to be with you, Mike.

We have we have the country covered. You're on the West Coast. I'm on the East Coast, and somewhere the interweb and the interwebs are. digital footprint is, is passing each other. And it seems like that's kind of the standard for interviewing today. No one comes to your office anymore. I, I wanna talk about recruiting. That, that's the subject for today. And maybe to set the stage, what is your perception of how recruiting is really happening or hiring is happening today compared to how we still expect it to be kind of lingering about yesteryear?

Oh my goodness. Well, it seems like most businesses, I'm just gonna call a spade a spade, are half-assing their recruitment and hiring. Yeah. So if you're half-assing your recruitment and hiring because you can't be bothered, because it's just overwhelming to you, all these things, well, guess what? When you half-ass your recruitment and hiring, you're gonna end up with a mediocre, half-ass employee. And so what the problem is, is that people are relying too much on Indeed. Indeed is not your friend. And, and resumes. And resumes, resumes are so 1950s. It doesn't matter what someone writes or what now someone can AI on a resume. It matters what they can do and what potential they can demonstrate to do what you need them to do in the job. So actions speak louder than words. And so you've, you've really gotta like just implement the 5-Star Fit Method, right? Um, when it comes to recruiting and hiring. Yeah.

Well, what I like about, and we'll talk about the 5-star fit, that, that we're taking that from the book All In. But what I believe, and I'm just, it's my own thoughts, I'm curious what you think, is the barrier of entry or the friction points in the past where you actually had to show up to the office. So the people that were making that effort had to exert a substantial amount of time to show up. So you got a better qualified candidate.

True.

Today you just do a click, you have AI create your resume and you submit it. Anyone can show up and then the interview is virtual. Is it, is that a right perception that by reducing friction, we're actually reducing the quality of the candidates applying?

For sure. For sure. For sure. And the other thing too is you have to be very wary of the personality interview.

Mm-hmm.

The candidate who demonstrates this fabulous personality, who really is telling you what you want to hear, but again, it doesn't matter what they say, it matters what they can do. So you have to be very wary of. You know, people— I've, I've even seen, I've seen when you talk about remote interviews, I've seen people have an AI going in the background. And so there the AI is listening to the interviewer's question and then they're getting fed a script of how to answer the question in real time.

That's almost unfathomable. Are you serious?

I mean, it's like, it's disgusting because You think you're being clever, you think you're being smart, candidate, but you're just gonna get a job that you hate. Like,

exactly.

The whole point is that, you know, everyone is a 5-star fit for some role.

Right.

And so, you want to be the 5-star fit for the 5-star employer, and you want that to be a perfect fit. Just because, you know, I could get hired as a bookkeeper tomorrow because I have a resume and because I have some experience, I know enough QuickBooks to be dangerous, But I would be a 3-star bookkeeper, but I could get hired tomorrow because I could come across as being, you know, the, the ideal bookkeeper for a firm and such.

Right, right. So yeah, so the facade is very easy now. Um, so I want to talk about vetting those, those folks out, but first the vernacular. So the term that was popular was A-player, you know, they're— are they an A-player or B or C? And You're challenging that framing and you're using the term 5-star fit. So can you define that and maybe why those old terms are no longer applicable?

Yeah. So an A player or a B player or a C player, I mean, those, that's, that's 1980s vernacular. That, um, you know, is a different era. That is before the internet. That is before, you know, the ability to, you know, assess candidates using, uh, objective assessments and such. And it was always subject, it was a subjective grading or a rating. It was never, Never had a rubric assigned to what made that A player, B player, or C player. And so the 5-Star Fit Method really forces you to go through and use a 5-star criteria. So what we have in the 5-star criteria is, number one, are they aligned with your core values? Because if you want people to think and act like you, then you need people who are aligned with your core values. And so that is very important to assess throughout your interview process. Even in attracting candidates, your, your core values and clarifying statements should be in your job posting because that's going to get the attention of the 5-star fit for the role. They're gonna be like, oh my gosh, I, this is, this is how I think, this is how I act. This is the employer I'm looking for. The second thing is, is that, um, you wanna make sure that the individual can fulfill the 3 to 5 key responsibilities and meet the success metrics for For the role. You need to quantify what success looks like for the role. Again, this is not subjective. This is objective. Where's the line in the sand? Where are you setting the bar as this is 5-star performance? For us, in one of my companies, we process long-term care claims, and we need people to, you know, adjudicate claims at 42 claims per day on average with a 98% procedural accuracy. If you are hitting 95%, then that's not 5-star performance.

Yeah.

So you have to quantify what you're looking for. Um, then you need to make sure that they, uh, meet the 11 universal qualities. You talk about this in your book. Um, you know, there's 11 and, and, and you've gotta set what you're looking for with each of those 11 qualities. Then you need to make sure that they have the specific aptitudes and skills for the role that you need. You have to test them. You have to have them prove that they have those skills and aptitudes. Um, and then you want to ensure that they are going to produce a 3.5x return on payroll because as we've learned in Profit First,

you, you call that the ROP, right?

Yes. Yes.

Okay. I'm sorry. I'm sorry. Keep going.

Well, you know what we, what we saw with Profit First, businesses struggling to scale at 10 or more employees, $1 million or more in real revenue, their biggest expense is what? Payroll. And if your biggest expense is dragging you down and dinging your profitability, It's likely because you have employees collecting a paycheck, not producing a 3.5x return on payroll.

Mm-hmm. So how do I set, I guess, the profile for the folks I want? Do I imagine it? Is there a, a foundational resource I go to? How's that work?

Yeah. So, I mean, you, it, it, I believe, I believe it really starts with the 3 to 5 key responsibilities for the role. And what you, what those will, what results they'll produce doing those key responsibilities. Because that really starts to tell you, this is what's going to move our business forward. This is what's going, I'm gonna hire this person to serve our customers, to grow our customer base, to, you know, what, what is it specifically that you need them to do? And so really starting there and getting really crystal clear on what they need to be spending. The 3 to 5 key responsibilities is 70 to 80% of their week. And so when you start there and you get really clear, I even like to map out and, and, and imagine what their schedule looks like for a week. You know, how are they spending their time? What are they doing? How much time are they spending? And, you know, again, all of that plays back into how you're going to get that 3.5x return because you know your business better than anyone. You know where you're wanting to take it, where you're wanting it to go. And so, you've gotta get those people in the right seats, on the right bus, going in the right direction, but you have to give 'em that direction.

Yeah. That 3.5 is just echoing in my head, 'cause I'm running the numbers in my own business. You've actually been to our offices here in New Jersey. I'm thinking of 3 people right now. Andrea, who's leading our marketing, Erin, who handles all my personal scheduling, and Kelsey, who leads the company. Those are very different functions. And I may say, we need someone else like Erin. Is it, Possible to clone employees if you already have some rock stars on board? Or how, how's that work?

Yeah, absolutely. So one way to do that is with the All-In assessment. So with the All-In assessment, um, it gives you so many reports, including are they a fit for the role, the job fit, uh, report. And what that does is it tells you their abilities, skills, Motivations and personality, and you can paint a benchmark in terms of what you're looking for in a role. So, for example, if you are looking for someone who— let's, let's use my, my claims examiners that, that, that I hire in one of my companies. And, you know, I'm not— I'm looking for someone who wants to sit at a computer all day and process claims. Not talk to anyone, not talk to beneficiaries, et cetera. So I need someone who's high in working with data and low in working with people, cuz they're not gonna talk to anyone. They're not gonna work with anyone.

If, if, if they were high in people, would that actually become a detriment or distraction in that function?

So, so what would happen is if someone is high in working with people and high in working with data and numbers, and they applied for a job took our assessment, they would actually score below our threshold. So actually, for, for the claims examiner, I'm looking for— we've set the benchmark by using our best, um, by, by using our, our, our team. They're all, they're all 5-star fits. Um, and we've painted a benchmark. And so by cloning that benchmark, now when we get applicants, they're scored against that benchmark, and people who score 80% or higher are people we consider. So someone who scores high on people when we're looking for low on people actually would fail and score below 80%, hands down. So we wouldn't even, so, so, so we objectively eliminate and filter out people by using that assessment that has helped us score against our ideal for, for the role.

That's great that you can set a benchmark with your own existing team because I think about the own, my own companies that I've had, and we have a ranking and some people are top performers and admittedly some people aren't. And I'm raising my hand here in certain roles. I was more of a detriment when I'm totally integral with myself. So what I'm hearing is an organization can, can pick great performers in your business, the 5-star fits, identify what that benchmark is around that person and use that as a standard, I guess, or evaluation for any future unknown candidates.

Yeah. Yeah. And you cut, and you can customize it for the role because Just because I don't need someone that's a claims examiner that's high in working with people, I would need that with, with someone who's a marketer or, or in other roles in the business or for, you know, um, working, uh, customer service in the phone lines, et cetera.

Tell me why Indeed, as an example, doesn't work anymore, or maybe never did.

So, um, Indeed is not your friend. Um, they are— they're, they're, they're trying to make you so dependent upon Indeed that you are only fishing in Indeed's pond. So they're trying to make things so great. They're trying to say, we've got everyone, we've got all that you need, but it's very limiting because it's only fishing in their pond. And just because you post a job on Indeed doesn't mean that it is getting seen by your ideal candidates. For example, I mean, I'm not saying don't use Indeed, but don't just go all in on Indeed. When we post a job on Indeed and our company's called Patriot RN, Indeed is feeding me nursing candidates. I'm not looking for a nurse. I'm sorry, we have RN in our job. I mean, in our, in our company name, but Indeed just does that. They, they just don't get it. So I have to, I, I fish other, other places. I do still fish in Indeed, but I cast a wide net and I fish in many places and I'm not dependent upon Indeed. The other thing about Indeed is that, um, they do, um, they do skills testing of some sort, but they only give you a profi— they're proficient. So they used to have, they used to have a higher rating, but because employers were favoring only candidates with the higher rating, Indeed cut that out. And so now it's like basically pass/fail. Well, what is passing indeed? Did

they get that right? Is it my pass?

Exactly. And they will— you have no idea. You have no clue. So how is that useful? How is that helpful?

Danielle, I was doing an Entrepreneurship Simplified podcast a little ways back, and one of the news articles we pulled up is dating apps and how dating apps— it's so interesting— often will start off specialized in a community of interest, but to get a larger swath of people, they make it generic and they're motivated to make it addictive. Meaning if it, it actually gets you someone that you, uh, romantically get involved in, you leave the app. So they don't wanna make connections. They wanna have this perpetual almost connection is how you optimize the app. And it sounds like, well, no, we're not trying to hammer on Indeed, but it sounds like there's other organizations too that it's really in their best inherent interest to keep you using it and not finding who you need to hire.

Yeah. Or, or making, making a hire that, that you shouldn't have made the hire of. I don't know if you've heard the news. Netflix has challenged their managers to go through their employees and mark the people who you wouldn't hire again. Well, if you wouldn't hire them again, you shouldn't have hired them in the first place, right?

Yeah, of course.

So what are you doing to fix that, Netflix?

Yeah.

You're just gonna keep going through this iteration of going through and accumulating people and then saying, who wouldn't we hire again? That's who we need to let go. But they're not fixing their—

And your other point is not that they're bad They're bad fits, and therefore it's, it's a failure for both sides. You shared something interesting. So identify a benchmark within your own internal organization, set the key parameters of what you're looking for, fish in multiple areas. Um, what happens when you start getting bites? What's— is there a next step you suggest?

Yeah. So when you start getting bites, ideally you've— there, all of your applicants are taking the assessment. And so, So then if someone takes the assessment and passes at 70% or higher, wherever you wanna set that benchmark at, then you look at their resume and then you eliminate candidates based off of resume red flags.

And what would be some red flags? Can you gimme some examples?

So, uh, someone who doesn't stay in a job for very long, they've had 3 jobs in the last 2 years. They have no experience. They haven't seemed to find a path. They show no potential for, for being able to do the job that you need them to do. And, you know, sometimes too, it can come down to salary. I always— and Indeed is requiring this now, and other employers, and the state of California is— where you have to post what the job is paying. So for our claims examiner position, that's an entry level. I'm looking for a recent college graduate with a math or actuarial science degree. This is an entry level job with entry level pay. less than $20 an hour. So, if I get someone who, you know, has, um, you know, is, is 10 years professional experience working in actuarial sciences of some sort, they're not going to work for $20 an hour for me. But Indeed feeds me those people.

Yeah, it feeds those people. And those people, ironically, may not be a good fit. They may have the experience, but you have to unlearn the experience to do it your way.

That's exactly true. Yes, yes. I'm not looking for people with prior insurance experience because we— it's, it's every, every insurer has just a different way of doing things. And there's different types of insurance. Yes, you're exactly right. I prefer a blank slate.

I was telling you offline, my own son went through this system. So the All-In company has this assessment process. And you didn't know he's going through it. And I didn't want to tell you until he was done. He loved the process. That was the first shocking thing because it is Far more intensive or structured. I don't know what the right word is.

It's a gauntlet. It's a gauntlet.

It's a gauntlet, but not in a negative way. A gauntlet to me sounds like someone's gonna hit you with a mace over the head. Every step of the way, he's like, I'm learning about this company. And he goes, they really are interested because they are taking this very seriously. And he became more and more serious about it. The second thing is he didn't have experience. So the original ad this company was running said, we want someone with 10 years experience, whatever it was. Because that meant a certain ability to them or propensity. He's a recent college graduate. They let him through the process. He showed through the skills that he has it. I didn't tell you this, uh, Friday, so this is a few days ago, he comes home and there's tears in his eye. I'm like, everything okay? He's like, I'm celebrating. I'm like, what's going on? He's like, the company, my manager, a guy named Ryan, called me out in front of 250 people and said, Jake knows more in 1 month than candidates we were interviewing that had 10 years experience. He's a rockstar and he gets this applause from the company. So it really benefits. I'm just sharing a story cuz it benefits the candidate, it benefits the employer, but there is this gauntlet. Why is it necessary to have so many of these different steps as opposed to just one massive test, if you will?

Because you want right fit and, and, and because you're, you know, you, you don't wanna be tempted for settling and too often people just settle. It's like, Well, they're okay. Maybe this'll work out. If you have any reservations, if you have any gut feelings that their story isn't adding up or something they said just took you the wrong way, then you're absolutely right. There are plenty of people out there. Don't ignore what, what other people are saying. You only need to hire 1 or 2 people. There is a 5-star fit out there for you, but a 5-star potential is 1 outta 7 candidates. So you're gonna need to reject 6 outta 7 to get at a potential 5-star fit. You need at least, you know, 20, 30, 40, 50 applicants for a role to really get at that truly special, really perfect 5-star fit for the role. And everyone else would be settling.

What I found is that, uh, the, the gauntlet requires you to show up again and again. It, it kind of reminds me of Woody Allen's phrase. 80% of success is showing up, something to that effect. And if there's this one concentrated interview/test, you're already there, you're present, even be virtually, but you're present and you're likely to see it through. What Jake, my son, went through was over— it was a short period. It was only over 2 weeks.

Yeah, short. Yeah. You gotta, you have to work candidates fast.

It was quick, but he had to show up and the next day he had to show up. And by the third one he said, You know what? I really decided to myself, this is what I want. It became clear to him on iteration 2 or 3. He's like, I really want this. 'Cause he clarity, I think, more on the position and the demands, and he turned the heat up. I wonder if it would've been different if it was this one shot that was an exhausting day as opposed to spread out over a little time period condensed and short.

Yeah, no, it, it definitely, it, it, it, it's a win for both sides, the employee and the employer, because the employee is active in the job market. They're talking to lots of other people, ideally, especially if they're a potential 5-star candidate. You know, people are reaching out to them, et cetera. So by giving the candidate, you know, more opportunity to get to know the company, it actually gives the candidate more confidence that this is the right fit for me and this is the job that I wanna take. And then they want it more. No one wants to be rejected. But, but, but, but everyone wants a job that they feel have psychological safety in, right? And that they feel secure in and they feel confident in. And, and, and by taking people through that process, you are, you are, you're checking those boxes.

What about this belief? And I'm guilty as charged of the quantity of, I used to say candidates, but it's not candidates, it's resumes. So it's quantity of paper. is what matters. Like, I went from, you know, 300 applicants, but now I only have 20 candidates. I, I really need those 300 people. That perception of a reduced amount of paper, um, how do you overcome that? Because some, so many people think that quantity is quality.

Well, no, I, I mean, again, you've got 300 applicants potentially, but only 20% or, or 10% completed the assessment. passed at the benchmark that you wanted, you were able to objectively filter out, you know, 90, 80, 70, 80, 90% of the candidates. Then you look at the resumes and that's when the red flags pop up. That's, yes, you know, again, a way to eliminate, uh, you know, half, half of that. Um, so again, it's just, it's filtering out. The 5-Star Fit Method is a funnel and we're filtering, filtering, filtering, filtering, filtering, but we wanna get as many fish into the sea as, as, as possible.

I love that word, the objective filtering. Uh, you don't have to interview 300 people all on equal footing. You're getting—

And you're not looking at 300 resumes either.

Yeah, that's a good point. Tell me, what is your favorite case study? And I want to kind of plant a seed. I hope you say Insight Tax because you shared this with me before and it just, it blows my mind away of how they were approaching it, which was the normal or typical, I should say. And then what the All-In Company did and The results. Do you mind? Unless there's another one you want to share, but that's my fave.

Well, they are— Insight Tax is our 2024 Member of the Year. So,

okay, okay.

They came to us end of last September in a panic and they said, we need to hire 30 tax accountants by the end of Q4. And I said, okay, no problem. And we, you know, got them on board. We built the benchmark, we got their job posted. And, um, they hired their first 17 in less than 30 days. They hired another 18 in another, you know, about 27 days. So in less than 60 days they hired, um, they hired more, 35. And then, um, and, and then they hit the ground running and, um, in one year they hired over 120 people. Wow. They more than tripled the size of their firm. And now you're saying their employee count, I haven't talked to John since, since, since, uh, ProfitCon in September. Um, but now they're, you know, well over, uh, 250, you say?

Or approaching 250? Yeah. I was talking to John, a mutual friend of ours, uh, about 3 weeks ago. He's like, yeah, we just passed the 250 mark. I'm like, oh my gosh.

So, uh, yeah. Um, it, it, when, when you have, when you have a system and when you have a process just like Profit First, why does it work? Because it's a system and a process. And, and if you follow the system and if you follow the process, it, it works. Just like I like to say why airplanes don't fall outta the sky, because the pilots follow a checklist. They don't deviate from the checklist. If you, if you take everyone through your 5-Star Fit method, if you take everyone through your gauntlet and, and score everyone the same way, then, then, then, then you'll make a great hire. And John, I wanna point out, Out of all those hires has a 93% retention rate.

Yeah. That, that's the number I was hoping you would say. It's, it's unbelievable. And that's, many of these candidates have been now over a year, right?

Yeah.

Which means, yeah, in the traditional environment, you hire people, you hire 100 people historically, you know, 30, 40 people are like, this job's not for me. And they're quitting within the first day or two.

Or most of your hires are, eh, they're okay. They're okay.

They kind of try to hide away in the business.

They're mediocre. Yeah. So you keep 'em. Well, is that okay?

You and I are gonna have to ask what his ROP is. We're gonna have to find that out. Uh, let me, I'd like you to do the plug now. So, uh, you have a little, a saying that I, I just love. You say, when your hair's on fire and you need to hire, this is when you come to All In Company. So tell me a little about what All In Company does for hiring. And how people can learn more and connect with you.

Yeah. So, um, what we do is we implement what we call the 5-Star Employee Hiring System in your organization. And, um, we have, we have, we have workshops where you kind of, we, we, we work with you to get, transform your thinking, your feeling, and how you act about your hiring. And we take you through some exercises and we really kind of get you on that path. to like make better hires as soon as you finish that workshop. Um, and then if you want to join us, we have a year-long membership where we implement you into the 5-Star Employee Hiring System. We put you on the platform, we implement the, uh, the assessments, we create the benchmarks for you. You're casting a wide net. We develop a ton of assets and customize them for you, including the 11 Universal Qualities interview packet. An aptitudes and skills interview packet, um, the 5-star job posting that attracts those, those great candidates, um, a dedicated recruitment website blueprint. So it really just is soup to nuts. It's, it's mostly done for you, but it is done with you, um, as well. Uh, we're not a, we're not a recruiting or staffing agency. It's what's so interesting is, is that, you know, we've worked obviously with a lot of, uh, Profit First professional firms, accountants, bookkeepers, et cetera. But, you know, a bookkeeper for John wouldn't be a 5-star fit bookkeeper for Casey, and a 5-star bookkeeper for Casey wouldn't be a 5-star bookkeeper for, for Cindy or, you know, Sue. The owner and the, and the company, it's very unique and it's very customized to the culture and to the fit of your organization. You know,

there's a little nasty secret in the recruiting industry that a lot of employers don't know. is when that recruiting company finds a candidate for you, they then train that candidate how to interview with you to persuade you to make the hire, because that's how they get their commission. And you avoid that problem because they're not motivated to give 5-star fits. They're motivated for you to make a hire to get their commission.

Exactly.

Danielle, this has been a blast. Thank you. What's the website people should go to?

Go to hairisonfire.com.

Ah, I didn't know you had that. hairisonfire.com. Thanks for joining me.