He hired only the best blacksmiths, carpenters, and shovelers. Before long, however, a clever magician lured them away. Alone again, the builder brooded bitterly over his mistake. Best Defense: Put Systems Before Celebrities.

Labors Lost

If you focus only on superstars, hiring and retaining key personnel can drive you out of business in a hurry.

By Matthew Power

business is built on systems, not people," insists E-Myth's DuRoff. "For example, if you have a project manager position to fill, and you're people-dependent, you're hiring based on experience--looking for the best, the most talented person. But you're in competition with every other company in the area, and you may come up short.

"The opposite approach," he explains, "is to develop systems for project management--what needs to be done, how we do it here, systems for scheduling, ordering, etc. Then you don't need the all-star player, because systems allow ordinary people to produce extraordinary results."

Fatal FlawsContents

"There's some truth to that," says Trellis. "We hire for aptitude and attitude over experience and education. Experience brings its own baggage, and education means I don't know who taught you. You must have a good system."

But what about creative expression, making room for each person's unique artistic genius?

"You can't systemize Picasso," DuRoff concedes. "There's always room for the one-man boutique. I wouldn't touch that. But what you can do is create systems so that Picasso can do what he does best during the day. You have someone cooking his meals, someone else doing the laundry."

People need to be involved in a company where there's a game they feel like playing," DuRoff contends. "That means creating agendas--holding regular meetings. Great companies don't let up for a second."

Hiring-Cost Blues

Employee turnover can be one of the costliest aspects of running a business. Here's where hiring costs typically go:


Percentageof total

Bottom Line:Time and Money

Relocation fees 32.9%

Average time, exempt hire

60 days
Recruiters 24.3%
Employment agencies 19.9% Average exempt external-hire cost (agency) $8,676
Advertising 18.4%
Travel 2.7% Average exempt internal-hire cost (H.R. dept.) $15,008
Referral bonuses 1.8%

Hiring costs add up: A survey of 991 managers by the Saratoga Institute, (based in Ft. Lauderdale, Fla.), found that companies often misallocate hiring funds and fail to track the effectiveness of their current hiring strategies.

Source: Barbara Davidson, Workforce, January 2001