Eben Pagan interviews Brad Smart about hiring A-players and the costly impact of mishires on business growth. Smart reveals that the average mishire costs companies $1.5 million and wastes 150 hours annually, while explaining proven strategies for identifying and hiring top performers.
Eben Interviews Brad Smart Hiring
Brad Smart reveals the shocking financial impact of mishires through extensive research. His study of 52 companies shows the average bad hire costs $1.5 million and wastes 150 hours annually. These aren't just numbers - they represent real productivity losses that compound over time.
Smart explains why A players and C players naturally segregate and conflict with each other. High performers seek challenge and accountability, while low performers actively undermine A players who threaten them with strategic thinking and ambitious goals. This dynamic creates organizational toxicity that must be addressed from the top down.
Smart's proven approach involves two A players conducting chronological interviews that reveal patterns of competency. By asking specific questions about past achievements and future plans, this method provides confidence in identifying high performers before they're hired.
The fundamental principle of top grading requires starting with leadership positions and cascading down. C player managers will sabotage A player employees, creating turnover and frustration. Smart emphasizes the importance of regular team evaluations and making tough decisions about team members who no longer fit growing companies.
“In the first top grading book, we have a figure of 27 times average salary... Now that came out to 15x, 15 times base. So the average mishire according to the research for these 52 companies is $1.5 million.”
— Brad Smart▶ 32:16
According to Brad Smart's research, the average mishire costs $1.5 million (15 times base salary) for positions with $100,000 average salaries, and wastes 150 hours annually in management time.
“A players hang out with A players, and C players hang out with C players. A players take responsibility, like to be around people that challenge them, like to be around challenging situations. C players like to avoid anything that's going to make them uncomfortable or challenge them in any way.”
— Brad Smart▶ 28:29
A players hang out with other A players, take responsibility, and seek challenging situations. C players avoid discomfort, prefer other C players, and actively undermine high performers because they feel threatened by their strategic thinking and ambitious goals.
“if you team up with someone else in your company, or maybe even someone outside your company who's an A player, and the two of you interview just the finalists with this chronological interview asking these questions we've just talked about... you will discern patterns that will provide insights into all sorts of relevant competencies.”
— Brad Smart▶ 27:28
Team up with another A player and conduct chronological interviews asking specific questions about past successes and future plans. Ask for specifics around achievements and use the patterns you discover to assess relevant competencies.
“the first principle of top grading, you know, Evan, is top grade from the top down. Hey, entrepreneur, if you have some C players reporting to you, don't expect that it's going to be very easy to hire A players who will report to them.”
— Brad Smart▶ 30:37
C player managers will be threatened by A player employees, leading to high turnover and frustrated high performers. You must have A players in management positions first, then they'll naturally hire other A players below them.
“one of the toughest things to do in a growth company is to honestly, realistically look at the key people on your team and do this a couple of times per year. and you think, all right, do they really function at that high performer level or not?”
— Brad Smart▶ 31:09
Evaluate key team members honestly a couple times per year to determine if the company is outgrowing them. If someone can't function at a high performer level, narrow their responsibilities so they can succeed or help them transition out.
Brad Smart's proven methodology for identifying high performers through structured interviews
Team up with an A player
Partner with another high performer in your company to conduct interviews together
Use chronological questioning
Ask candidates to walk through their career chronologically, focusing on specific achievements and challenges
Ask for specifics around successes
Dig deep into their accomplishments, asking for concrete details about how they achieved results
Inquire about future plans
Ask about their goals, self-appraisal, and vision for their career development
Look for patterns
Use the insights from both interviewers to identify patterns that reveal relevant competencies
Conduct reference checks
Follow up the interview process with thorough reference checking to validate your assessment
Team up with another A-player in your company to conduct chronological interviews asking specific questions about past successes and future plans to identify high performers
Brad Smart's top grading interview guide methodology, which involves two A-players interviewing finalists together using chronological questions to discern patterns that reveal relevant competencies
A players naturally gravitate toward other A players and challenging situations, while C players avoid discomfort and prefer hanging out with other low performers
Brad Smart's observation from working with companies including a former secretary of the treasury who confirmed that senior executives tend to ignore mishires, and documented patterns of C players undermining A players
C players are amazingly creative in undermining A players because high performers pose a threat by asking embarrassing questions in meetings and wanting to accomplish goals in half the time
Brad Smart's direct observation that C players find A players to be 'a pain in the neck' because they ask strategic questions C players haven't thought about and set ambitious timelines that expose mediocrity
Top grade from the top down because C player managers will be threatened by A player employees, leading to high turnover and frustrated high performers
Brad Smart's first principle of top grading based on his research showing that A players reporting to C players creates organizational conflict and turnover
Evaluate key team members honestly a couple times per year to determine if the company is outgrowing them, and narrow responsibilities so they can become A players again or help them transition out
Brad Smart's specific example of breaking up marketing and sales roles when someone excels at sales but lacks strategic marketing thinking, and his recommendation for regular team assessments
The average mishire wastes 150 hours annually and costs companies $1.5 million according to research from 52 companies with $100,000 average salaries
Brad Smart's survey of 500 people and study of 52 companies showing mishires cost 15 times base salary, updated from earlier research showing 27 times salary for higher-level positions
A players give you confidence about weekend deadlines by committing to do whatever it takes, while C players say they'll 'try their best' leaving you worried
Brad Smart's specific example contrasting Joe the C player who says 'I'll certainly try' versus Pete the A player who commits 'whatever it takes I will have that report for you in good shape on Monday morning'
Companies that top grade and replace C players with A players become more successful, people have more fun, and everyone works fewer hours because they're not compensating for weak performers
Brad Smart's observations from visiting client companies over years showing reduction from 70-80 hour weeks to more normal 60-hour weeks as teams improve
The toughest people decisions entrepreneurs face involve those closest to them who helped start or build the company but now drag it down
Brad Smart's acknowledgment of the emotional difficulty in removing founding team members or early employees who can no longer function at high performer levels as companies grow
Sales rep mishires cost an average of $583,000 or about 6 times base salary according to surveys of sales managers
Brad Smart's specific research surveying sales managers about the cost of sales rep mishires, providing concrete numbers for a common role
Team up with another A-player in your company to conduct chronological interviews asking specific questions about past successes and future plans to identify high performers
▶ 27:28A players naturally gravitate toward other A players and challenging situations, while C players avoid discomfort and prefer hanging out with other low performers
▶ 28:29C players are amazingly creative in undermining A players because high performers pose a threat by asking embarrassing questions in meetings and wanting to accomplish goals in half the time
▶ 30:03Top grade from the top down because C player managers will be threatened by A player employees, leading to high turnover and frustrated high performers
▶ 30:37Evaluate key team members honestly a couple times per year to determine if the company is outgrowing them, and narrow responsibilities so they can become A players again or help them transition out
▶ 31:09The average mishire wastes 150 hours annually and costs companies $1.5 million according to research from 52 companies with $100,000 average salaries
▶ 32:16A players give you confidence about weekend deadlines by committing to do whatever it takes, while C players say they'll 'try their best' leaving you worried
▶ 34:33Companies that top grade and replace C players with A players become more successful, people have more fun, and everyone works fewer hours because they're not compensating for weak performers
▶ 35:03The toughest people decisions entrepreneurs face involve those closest to them who helped start or build the company but now drag it down
▶ 35:35Sales rep mishires cost an average of $583,000 or about 6 times base salary according to surveys of sales managers
▶ 37:11Claim: “You can train and develop any employee to become a high performer with enough time and effort”
Reframe: A players and C players have fundamentally different approaches to work and challenges - A players seek out difficulty and accountability while C players avoid discomfort and undermine high performers
Claim: “Bad hires are just a minor setback that you can work around or improve with coaching”
Reframe: The average mishire costs $1.5 million and wastes 150 hours annually, making hiring decisions among the most financially critical choices entrepreneurs make
“A players hang out with A players, and C players hang out with C players. A players take responsibility, like to be around people that challenge them, like to be around challenging situations. C players like to avoid anything that's going to make them uncomfortable or challenge them in any way.”
“The C players not only like to hang out with C players go out and have a beer after work They don like those A players around They a pain in the neck”
“the first principle of top grading, you know, Evan, is top grade from the top down.”
“if you start putting pencil to paper on the costs, the financial costs and the times of having weak people reporting to you, it gives you gray hair.”
“Whereas if you have a team of high performers, you're going to have a lot more fun because you can be a lot more productive.”
How To Avoid Making A "Mis-Hire"
Discover the hiring methodology that helped Eben Pagan build a multi-million dollar virtual business and avoid costly mis-hires.
How To Avoid Potential "Blind Spots" When Interviewing
The interview technique that reveals what traditional interviews miss — using your network to uncover candidate blind spots.
Who To Hire For Critical Roles In Your Business
Discover why hiring just one C-player can destroy your entire team's performance and how A-players multiply each other's power exponentially.
Tips For Building A Team
The shocking truth: most people you hire will cost your business 20 times their annual salary when they fail.
Learning Learn
Discover why traditional learning fails entrepreneurs and how to transform your brain into a self-building computer that adapts to any situation.
Power People
Why the team members you hire will either make or break your business—and the counterintuitive hiring strategy that built Eben's multi-million dollar company.
Business Frameworks
Common Mistakes
Mis-hires cost approximately 20 times their annual salary when accounting for lost productivity, training costs, damaged relationships, and cleanup efforts
Brad Smart's research in 'Top Grading' shows that 75% of all people hired are mis-hires, and each mis-hire costs 20 times their annual salary - meaning a $50,000 employee who doesn't work out costs the business $1 million
The first people you hire should take work off your plate so you can focus more time on products and marketing as the chief entrepreneur
Eben explains that as the head moneymaker, entrepreneurs need to delegate busy work to focus on higher-order challenges that make more money for the business
Real learning only occurs when behavior changes - you must create a feedback loop between knowledge, application, and adjustment
Eben Pagan references Gregory Bateson's research through Wyatt Woodsmall showing learning requires: get an idea/model, try it in the world, see how it works, change your knowledge, try something else, repeat
Your brain literally builds itself through learning, adding more processing power, memory, and connections like a self-upgrading computer
Eben Pagan explains the brain's neuroplasticity as co-evolution between brain structure and thinking experiences, where learning physically changes neural architecture
