I used to be a job candidate. I used to meticulously prepare my resume: making sure to emphasize my “accomplishments” instead of my duties, aligning all that needed to be aligned, balancing white space on the page. I used to wait nervously for that phone call to come in. (And I’m sure I will be a job candidate once again.)
I hate looking for a job.
For the price of registering a company in Ghana and some working capital, however, I’ve turned the tables and become a “boss”. At the start of the year, I wishfully thought I could do a better job hiring staff.
Several months later, I have learned that hiring the right people is very difficult.
My company is a start-up. By definition, anyone I hire should be able to do everything for less than what an established company can pay. Just kidding. Not really. As an entrepreneur, I want to surround myself with intelligent, motivated, reliable, and honest people. They should be eager to learn, willing to work hard, and who “plays well with others.” Interests and incentives should be aligned so that we are all moving in the same direction.
I’m going to give away the ending: I hate looking for staff. Almost as much as I hate looking for a job.
Search Costs are High
There are only a handful of ways to search for staff: post a job, seek referrals, poach from the competition. Posting a job seems to be the easiest because you are assured to receive a response. Unfortunately, nothing guarantees that the candidates will be good. You and your staff will spend at least a day or two perusing, ranking, then scheduling candidates for interviews.
Interviewing is Like Dating
Interviewing and hiring staff is analogous to finding your next boyfriend/girlfriend — except harder. From a handful of meetings, you must decide whether you want to spend your budget and stake your reputation on this candidate. In those meetings, the other person has an incentive to conceal his/her faults and accentuate the positive. And you won’t know if the person is qualified nor a good fit for several months.
At least in a relationship, the interests of the parties are mutual. Both people are looking for compatibility. Does he make me laugh? Is she a bore? Is he promiscuous? Can she cook? Moreover, those meetings tend to be much longer than a 30-60 minute job interview. You can ask almost any question you like. In the States’s job interviews, it’s illegal to ask, “Do you have children?” “Are you married?” “Do you have a boyfriend?”
In Ghana, there aren’t really rules. I ask those inappropriate questions because I want to determine if the person is motivated. A female candidate who has a sugar daddy is not going to need a salary as much as someone who is dating her college sweetheart. The former probably gives her more money in a month than my company can or is willing to. One person needs a job; the other goes to work to fill the hours in a day.
Moreover, the “children” or dependency question can indicate how motivated someone will be. For instance, Emmanuel, our previous driver, had four children, a wife, a sister-in-law, her husband, and a friend who he was supporting. That’s nine people. Is it a coincidence that he never talked back and he never got into an accident. All the subsequent single drivers somehow managed to hit someone or get hit while they were with us.
Thus, interviewing is like dating except more difficult. At least in dating, both sides’ have similar goals. In the workplace, however, one side will earn a salary to support his/her livelihood while the other receives “labor” whose quality is not easily measured.
Extending the dating metaphor to marriage, I find that only when you are stuck with the person do you learn whether he/she performs as advertised. Within a matter of weeks, you will know if the person has the skills and experience that he claimed he had.
Intelligence and “Talent” are Overrated
From adolescence to your early twenties, you are measured based on how well you take tests. Testing well leads to good grades; good grades and good scores lead to admittance to good schools. It’s assumed that those who graduate from top schools are either naturally intelligent, hard-working, or a combination of both. Furthermore, it’s assumed that these qualities will translate to high performance in the workplace.
I find this last assumption to be flawed because work is not like school. This may be seem obvious but it’s clear that many companies, e.g. Google, McKinsey, Goldman Sachs, hospitals, use quality of school and grades as proxies for workplace success. Some companies basically pool human capital to provide services so they need especially bright people. Most companies, however, are process-driven so raw intelligence is not as critical.
I bring all of this up because I find all Ghanaian universities to be wanting. No educational system is perfect but I find the Ghanaian system highly skewed toward the wealthy. In Ghana, there is no such thing as financial aid nor grants.
God has not bestowed intelligence only on the children of the rich. Thus, I’m sure many bright people never enter senior high school nor attend the best universities because they cannot afford to do so. Compounding the situation, graduates of the “best” schools feel entitled to command the highest starting salaries. Thus, in Ghana, the link between top honors in school and high performance in the workplace seems tenuous.
My company is process-driven. We promise a service for a monthly price. Our people do not provide anything particularly value-added because the product itself is of top quality. The only thing our people do is not lie — we tell you when we can deliver and when we cannot. (Ghanaians love to say “meiba” or “I’m coming” when they are not.) Thus, I don’t need the valedictorian; instead, I need someone who understands timeliness and service.
After a year of hiring and firing, these are qualities I seek in my employees (in order):
- Plays Well with others
- Communication Skills
Assuming you can find the right person for a reasonable price, I find that the principal-agent issue to be the major impediment to maximum labor productivity. Wikipedia describes, “the principal–agent problem or agency dilemma concerns the difficulties in motivating one party (the “agent“), to act in the best interests of another (the “principal“) rather than in his own interests.” In other words, it’s hard to get someone to work as hard as you — the owner — would. Your staff gets a salary no matter what; you participate in all profits (and losses) that the company generates.
Before the financial crisis, large investment banks avoided this problem because they basically treated their employees like shareholders (actually call option holders) and their shareholders like bondholders. Internet start-ups also diminish the effects of principal-agent because they provide their staff with lots of long-term company options.
In Ghana, principal-agent primary shows itself in a handful of ways. First, staff productivity seems to fall incrementally over time. People just become less fearful of losing their job the longer they stay. As an owner, you have to accept that people will work slower than you because their downside and upside are limited. Furthermore, the search costs involved in hiring and training someone provides your staff some protection from being sacked.
I try to provide incentives to eke out extra productivity from my staff. Recently, I offered to give a 100 cedi bonus to anyone who can type 30 wpm by the end of the year. Currently, most people type at around 12-18 wpm. I also imposed a daily 5 cedi penalty for tardiness. The staff makes about 25 cedis per day so being late can add up.
Second, most people lack initiative. Even with bonuses and incentives, some people cannot perform… (Ok, maybe these people got to go.)
Third, the staff does not have your interests too close to heart. They do the minimum necessary not to get sacked. As my auntie says, they are counting the days until pay day. What’s dangerous is when their disinterest or laziness actually impedes growth. These people must go. Since I don’t run an assembly line, I find that I need to break down tasks into small pieces because the staff’s logic and my logic often are not the same.
Principal-agent problems are everywhere so it’s something everyone constantly battles.