How To Avoid Making A "Mis-Hire"
Eben Pagan teaches how to build and manage virtual teams effectively, covering the trade-offs of remote work, compensation strategies based on ROI, and his proven hiring methodology. He introduces the concept of a 'virtual bench' and Brad Smart's tandem top grading interview technique for avoiding mis-hires.
Teachings 9
Virtual teams require accepting trade-offs: you lose human broadband communication and spontaneous interactions, but gain access to better talent at lower costs and clearer performance visibility
Eben explains that smart people value not commuting and working from home so much that 'some people would rather make half the money and just call their own shots'
Pay people exactly what they're worth based on ROI calculation - if someone wants $100,000 but they're worth $1 million to you, do the math and pay them appropriately
Eben gives specific example: 'if someone shows up and says I want $100,000 a year and they're worth a million a year to you, take out your calculator'
Web design compensation varies drastically based on complexity and value - from $10/hour for simple tasks to $100/hour for important projects within the same business
Eben shares: 'we've got people that work on web designs that make $50 or $100 an hour and we probably have people that are making $10 an hour that are working on some web design things'
Use tandem top grading interviews where two people interview simultaneously - one asks questions while the other takes notes, allowing deeper focus on responses and pattern detection
Eben hired Brad Smart personally to train his management team, and explains these interviews 'typically last two to four hours' and help identify patterns the interviewee doesn't even know exist
Look for behavioral patterns throughout someone's entire work history during interviews - people often leave jobs for the same reasons repeatedly without realizing it
Eben explains the interview process: 'they won't realize that every time they left a job it was for the same reason and it was a bad one and they won't realize that they're placing blame on the company for screwing them every time but you'll hear it'
Build a 'virtual bench' through a 3-6 month osmosis process of getting to know potential hires through conversations and relationship building before formal hiring
Eben reveals: 'I'll bet you that the average amount of time it takes us to hire someone is three to six months from when we meet them lot of conversations a lot of getting to know them building relationship'
Test potential hires with small paid projects during the getting-to-know period - give them a 10-hour project at their hourly rate to evaluate their work quality
Eben gives specific example: 'if they charge $25 an hour for web design you can say okay great here's a 10-hour project here's 250 bucks do it... was that worth 250 bucks did they get the job done'
Accept training investment risk for significant hires - budget for 3 months of onboarding costs because meaningful players can't be productive in just a few days
Eben contrasts: 'we can train a customer service person in a few days and then they're up and running' but 'when you're talking about significant players in your business you understand you can't just have them up and running in a few days'
Calculate hiring ROI risk-to-reward ratios - willing to risk $12,000 in training costs for a 50% probability of generating an extra $50,000 monthly return
Eben shares his specific calculation: 'I'm willing to risk the 12 Grand in order to have a 50% probability of making an extra 50 Grand a month because that thing is working'
Quotable Moments 4
“pay them what they're worth”
— Eben Pagan“some people would rather make half the money and just call their own shots”
— Eben Pagan“they won't realize that every time they left a job it was for the same reason and it was a bad one”
— Eben Pagan“it's all about the return on investment it all comes back to what's the ROI it's a business remember”
— Eben Pagan
How to conduct a tandem top grading interview
A systematic approach to interviewing candidates using two interviewers to identify behavioral patterns
- 1
Set up the team
Have two people interview one candidate - one asks questions, the other takes notes
- 2
Go through complete work history
Ask about every job from high school onwards: how they got it, what they did, successes, failures, and why they left
- 3
Listen for patterns
Look for recurring themes in why they left jobs or placed blame that they may not realize exist
- 4
Allow sufficient time
Plan for 2-4 hours to thoroughly explore their background and identify behavioral patterns
Questions Answered
How should I pay virtual team members
“pay them what they're worth if they're worth it pay them do the math if a person shows up and says I want $100,000 a year and they're not worth it then don't pay it to them and if someone shows up and says I want $100,000 a year and they're worth a million a year to you you know take out your calculator”
— Eben Pagan▶ 1:33
Pay people exactly what they're worth based on ROI calculation. If someone wants $100,000 but creates $1 million in value, do the math and pay accordingly rather than using arbitrary pay scales.
What is a tandem top grading interview
“a tandem top grading interview is when two people interview someone at once one person's asking the questions and the other person is taking notes this way the question asker is just keyed to the responses and they can delve in and probe”
— Eben Pagan▶ 4:09
It's an interview technique where two people interview one candidate simultaneously - one person asks questions while the other takes notes. This allows the questioner to focus on responses and probe deeper while ensuring detailed documentation.
How long should the hiring process take
“I'll bet you that the average amount of time it takes us to hire someone is three to six months from when we meet them lot of conversations a lot of getting to know them building relationship”
— Eben Pagan▶ 6:14
Build relationships with potential hires over 3-6 months through conversations and small projects before making formal hiring decisions. This 'virtual bench' approach helps you really get to know candidates.
What are the disadvantages of virtual teams
“you're going to lose the human broadband connection of body language which is most of communication you're going to lose the ability to just walk in and say you know what let's all get together and sit around and talk Bond have water cooler type conversations”
— Eben Pagan
You lose human broadband communication including body language, spontaneous conversations, and the ability to quickly gather everyone for discussions. However, these trade-offs come with benefits like access to better talent.
How do you test potential hires before hiring them
“give people projects ask them to come help with a project and if they're a star it usually works for them and it works for you because they want to get to know the people on your team and see what you're all about”
— Eben Pagan▶ 6:45
Give them small paid projects during the relationship-building phase. For example, if they charge $25/hour, give them a 10-hour project for $250 to evaluate their work quality and delivery.
Expert: Brad Smart
Creator of tandem top grading interview methodology
Summary
The Trade-offs of Virtual Teams
Eben explains that virtual teams require accepting both losses and gains. While you lose human connection and spontaneous collaboration, you gain access to better talent who value flexibility and clearer visibility into actual results.
ROI-Based Compensation Strategy
Rather than using arbitrary pay scales, Eben teaches paying people exactly what they're worth based on mathematical calculation of their value to the business. He gives examples of web designers earning vastly different rates based on project complexity.
The Virtual Bench and Tandem Interview Process
Eben reveals his systematic hiring methodology including the 'virtual bench' concept of building relationships over 3-6 months and Brad Smart's tandem top grading interview technique for identifying behavioral patterns candidates don't realize exist.
Managing Training Investment Risk
For significant hires, Eben advises accepting 3-month training costs as necessary investment, calculating specific ROI ratios like risking $12,000 for a 50% chance of generating $50,000 monthly returns.
Counterpoint
Claim: “There should be standard pay scales for different types of positions like web designers”
Reframe: Pay people exactly what they're worth based on the value they create for your business, not arbitrary industry standards
Eben explains his company has web designers making $10/hour and others making $100/hour based on the complexity and value of their work
Claim: “Hire people quickly when you need them to fill positions”
Reframe: Build relationships with potential hires over 3-6 months through a 'virtual bench' process before making hiring decisions
Eben reveals their average hiring timeline is 3-6 months with lots of conversations and relationship building
Key Points 9
Virtual teams require accepting trade-offs: you lose human broadband communication and spontaneous interactions, but gain access to better talent at lower costs and clearer performance visibility
Pay people exactly what they're worth based on ROI calculation - if someone wants $100,000 but they're worth $1 million to you, do the math and pay them appropriately
▶ 1:33Web design compensation varies drastically based on complexity and value - from $10/hour for simple tasks to $100/hour for important projects within the same business
▶ 2:33Use tandem top grading interviews where two people interview simultaneously - one asks questions while the other takes notes, allowing deeper focus on responses and pattern detection
▶ 4:09Look for behavioral patterns throughout someone's entire work history during interviews - people often leave jobs for the same reasons repeatedly without realizing it
▶ 4:40Build a 'virtual bench' through a 3-6 month osmosis process of getting to know potential hires through conversations and relationship building before formal hiring
▶ 6:14Test potential hires with small paid projects during the getting-to-know period - give them a 10-hour project at their hourly rate to evaluate their work quality
▶ 6:45Accept training investment risk for significant hires - budget for 3 months of onboarding costs because meaningful players can't be productive in just a few days
▶ 7:49Calculate hiring ROI risk-to-reward ratios - willing to risk $12,000 in training costs for a 50% probability of generating an extra $50,000 monthly return
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Topics
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