How I Did It…
Kevin Ryan is the founder and CEO of Gilt Groupe.
Gilt Groupe’s CEO on Building a Team of A Players
by Kevin Ryan
PHOTOGRAPHY: GETTY IMAGES
Companies always say employees are their most valuable asset. Kevin Ryan thinks that few of them act accordingly. He believes a CEO’s most important job is managing talent.
hen I think about starting a business, my view is that the idea itself is worth between zero and very little. Most new companies already have competitors when they launch—and if they don’t, they soon will. DoubleClick, where I was CEO from 1996 to 2005, had dozens of competitors within a year of its founding. Gilt Groupe wasn’t the rst ash sales company, and Google was by no means the rst search engine to come along. Why have these businesses succeeded? It’s not the idea—it’s the people. Execution is what matters, and execution relies on human talent. Every company
thinks it’s doing a good job of managing its people. They all say, “People are our most important asset.” But most companies don’t really act that way. Here’s a simple test: Ask the CEO if he or she spends more time on recruiting and managing people than on any other activity. For me, the answer has always been yes. That’s a radical statement, so let me qualify it a bit. I don’t think this test applies at a small company—say, 20 people—where the CEO may be doing a lot of the sales or directly overseeing operations. But at businesses that employ more than 50 people, the best use of a CEO’s time is to bring in
January–February 2012 Harvard Business Review 43
How i DiD it
Gilt Groupe at a Glance
unbelievable people, manage them well, and make sure the company builds and maintains an A-caliber team. Here’s another test of a company’s devotion to its talent: Is your head of HR one of the most important people in the company? I spend as much time with our head of HR as I do with our chief financial officer—and I’d never consider having the head of HR report to anybody but the CEO. That role is truly strategic, and the person in it needs a seat at the table. It’s clear to the people who work with me that I’m thinking about our talent most of the time. When we sit down for meetings, I frequently ask managers to review every one of their direct reports with me. I want continual updates. I also insist that as the CEO, I can talk with anyone in the company at any time. Some managers prefer that executives check with them before talking with their people. That’s not going to happen here. I want to get to know our employees better and to assess their talent and potential. I also want to know if they have difficulties with a manager. I am evaluating talent all the time.
The company was founded in 2007 as an invitationonly flash sale site. Since then Gilt Groupe has begun allowing the public to sign up and has expanded its business dramatically. Members are notified by e-mail of deep discounts on designer clothing, and these offers are available only while supplies last.
EmployEES: 850 REvEnuE: Estimated at more than $500 million mEmbERS: 3.5 million FunDing: $174 million HEADquARtERS: New York’s Silicon Alley globAl REAcH: Currently expanding into 90 countries bRAnD ExtEnSionS: Jetsetter (vacation travel) Gilt Taste (artisanal food and wines) Park & Bond (men’s apparel and accessories) Gilt City (local services and experiences)
Addition by Subtraction
Part of building a great team is learning to recognize when individuals aren’t working out and then letting them go. In general, managers are not rigorous enough about this. That’s a problem, because often the only way to make room for better players is to get the weaker players to leave the organization. Of course, it’s essential for people to feel that the process is fair. But you have to be comfortable having a conversation with a low-performing employee that goes something like this: “You rank 10th out of 10 in performance. You’re probably...
References: The Gilt Groupe CEO says not to rely only on names supplied by a candidate. Instead, leverage your network to ﬁnd mutual contacts who can provide candid feedback. And don’t rely on recruiters to conduct the reference check. Make some calls yourself. Once Ryan ﬁnds someone who’ll speak honestly, he asks these questions: Would you hire this person again? If so, why and in what capacity? If not, why not?
named Kevin phoned me. He said he was calling on behalf of someone I didn’t know, a close friend of his, who was thinking of hiring another person who had worked for me. The hiring manager had asked Kevin to get the real story from me. If I didn’t know the person making the call, I’d have given a lukewarm response similar to the one on the previous day. But this was a longtime friend asking for my candid opinion. I gave it simply: “Don’t hire him.” When you check references, you want to have a conversation as frank as that. It can take real effort to nd someone who’ll be straight with you, but it’s worth it. We don’t always get this right. For one hire, an outside recruiter that helped with the search had checked some of the references. Ordinarily we try to do this ourselves. The man didn’t work out—it was just a bad t. After he left, I ran into a couple of people I knew: one who had worked for the guy at another company and one who’d done business with him as a banker. I hadn’t realized that either of them knew him. They told me what they thought of him—which jibed exactly with our negative experience. Sometimes you don’t hear an honest assessment until it’s too late. Recruiting is so important that we intentionally overinvest in it. We have 10 full-time recruiters on our sta —a lot for a company our size. We also frequently use external search rms, especially for senior positions. Sometimes a company will leave a low-performing person in a job because managers feel there’s a shortage of time or energy to recruit his replacement. I don’t want to be in that position. As the CEO, I can’t be involved in every hire we make. We hired 65 people last June—and interviewing every customersupport person would have been a bad use of my time. Even so, I interview many more people than CEOs usually do. I probably interview at least one person every workday. I also make it clear to my senior people that if they’re making an important hire, I’m willing to call the person as part of the pitch. People love hearing from the CEO: “Steve, I haven’t met you yet, but everyone thinks
46 Harvard Business Review January–February 2012
How would you describe the candidate’s ability to innovate, manage, lead, deal with ambiguity, get things done, inﬂuence others? What were some of the best things this person accomplished? What could he or she have done better? In what type of culture, environment, and role can you see this person excelling? In what type of role is he or she unlikely to be successful? Would you describe the candidate as a leader, a strategist, an executer, a collaborator, a thinker, or something else? Can you give me some examples to support your description? Do Do people enjoy working with the candidate, didate, and would former coworkers want want to work with him or her again? In In what areas does the candidate need to to improve?
you’re amazing. Is there anything I can do to help with your decision? Can I y out to meet you?” They always say no, but the fact that you’ve o ered shows you care. Recruiting is similar to sales, and sometimes the CEO’s involvement makes a di erence. People talk about certain rules of thumb in talent management. One is that the great people in any company are usually underpaid. That’s generally true, and you should skew your compensation system with per-
I tell my team, If good people are leaving your group, that’s your responsibility.
formance pay to better reward them. Another is that A-level people generally hire other A-level people, but B-level people hire C-level people. I think that’s true, too, but for a reason other than the usual one. B players hire C players not because they feel threatened by more-talented people but because most people don’t want to work for a mediocre boss. Think about it: Have you ever heard someone say, “I just got o ered a job. The person I’ll be working for isn’t very impressive, but I’m going to take it anyway”? That’s not something talented people generally do. Another piece of conventional wisdom is that people leave jobs mainly because they don’t like their managers. That’s also true. We did exit interviews when people left DoubleClick, and they were almost always leaving because of a manager. I talk about this with our team at Gilt all the time: If good people are leaving your group, that’s your responsibility. I want all our senior people focused on that issue. It’s especially important in the internet space, where good people are in high demand and have many choices. I think, too, that the hardest quality to find in a new hire is the ability to bring things to closure. Some people don’t realize that analysis is useful only if it results in a decision and implementation. Of all the duties facing a CEO, obsessing over talent provides the biggest return. Making sure that the environment is good, that people are learning, and that they know we’re investing in them every day— I’m constantly thinking about that, yet I still don’t feel I’m doing enough. If CEOs did absolutely nothing but act as chief talent o cers, I believe, there’s a reasonable chance their companies would perform better. HBR Reprint R A
Harvard Business Review Notice of Use Restrictions, May 2009 Harvard Business Review and Harvard Business Publishing Newsletter content on EBSCOhost is licensed for the private individual use of authorized EBSCOhost users. It is not intended for use as assigned course material in academic institutions nor as corporate learning or training materials in businesses. Academic licensees may not use this content in electronic reserves, electronic course packs, persistent linking from syllabi or by any other means of incorporating the content into course resources. Business licensees may not host this content on learning management systems or use persistent linking or other means to incorporate the content into learning management systems. Harvard Business Publishing will be pleased to grant permission to make this content available through such means. For rates and permission, contact email@example.com.
Please join StudyMode to read the full document