Your ability to recruit talent is critical to scaling a market-leading boutique. On this episode, we interview Don Goldstein, CEO of 5Q Partners and he shares how he decided to invest in an internal recruiter and its overall impact on the organization.
TRANSCRIPT
Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that are familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. My name is Greg Alexander and I’m the founder and I’ll be your host today. And on this episode we’re going to discuss recruiting and in particular how recruiting changes as you move through the three stages of a boutique process, firm grow, scale and exit in the early days. Recruiting is typically done by the founder. There’s a small number of jobs that need to be filled, and he or she can shake the tree, so to speak, and fill the spots. Then you get a little bigger, maybe into the early stages of scaling and the number of jobs to fill and the types of roles multiply. And you start using, using external recruiters. And it’s expensive, but it’s still manageable because you’re not hiring, you know, dozens or hundreds of people. Then, of course, you have a lot of success and now recruiting becomes really difficult. You’ve got to hire dozens, hundreds. In some cases, believe it or not, thousands. And using external recruiters can get very expensive. And sometimes those firms themselves aren’t built for scale. So you bring recruiting in-house and you start making it a core competency of your firm. And given that we’re in professional services where people drive in business, having a talent supply chain is mission critical. So that’s what I’m going to talk about today. And we’re very lucky. We have a great guest who’s in the middle of all this. His name is Don Goldstein, and he runs a cybersecurity firm called 5Q. Hey, Don, it’s good to see you.
Don Goldstein [00:02:11] Great to see you. Great. Thanks for having me on. Sure.
Greg Alexander [00:02:14] Would you please provide a proper introduction to the audience?
Don Goldstein [00:02:18] Sure. So I’m Don Goldstein with five Q. We are a managed security and I.T. services firm nationwide actually now. And we serve primarily the commercial and corporate real estate industry, which is vast and broad.
Greg Alexander [00:02:38] Right now, Don, we wanted you to come on today because you recently brought recruiting in-house, as I understand it. And I would love for you to explain to our members and those that are listening to this kind of how you used to do it before, how you do it now, and what what caused you to make the recent change.
Don Goldstein [00:03:01] Sure, Greg. So. When you talk about in your book. That. Personal networks are not scalable for your clients and for your new hires. That is exactly the kind of thing we ran into. So as soon as we hit a certain point there, there really wasn’t anyone else we could turn to within our network. To go find the right people we needed that had experience in the industry and so we had to look at other means to do that. Using outside recruiters can be effective, but when you’re in scale mode and hiring literally dozens of people, that becomes extremely expensive. And it also bottlenecks your people because they’re having to do a lot of the screening and interviewing. So we felt when we hit a certain point, which was right at the end of 2021, we had to make a change in the way we recruited. We were fortunate enough to find a tremendous internal recruiter. Who became available to us and started right at the beginning of December, which was exactly at the time that we were poised to scale in early 2022. So it couldn’t have come at a better time for us. And it’s been game changing, literally.
Greg Alexander [00:04:35] Okay. So this is a great use case for us. So at the risk of asking a question that might reveal sensitive information and if it does, feel free to decline. Give me an idea of the magnitude, like how many people are you hiring and what do you anticipate the hiring need to be?
Don Goldstein [00:04:56] I can give you some exact numbers.
Greg Alexander [00:04:58] Okay. Thank you.
Don Goldstein [00:04:59] So since the beginning of December 2021, so it is now been.
Greg Alexander [00:05:05] Five months.
Don Goldstein [00:05:06] Almost 45 and a half months, close to six months. We have hired 40 people. Wow. With our internal recruiter. 36 are still with us. In other words, I would say of the 40 we had four miss hires.
Greg Alexander [00:05:22] Wow.
Don Goldstein [00:05:23] Which we identified quickly and took care of quickly as soon as we identified that we had done a mishire. And that’s going to happen. Sure. In a company like ours, especially where a lot of our people are expected to travel 80 to 90% of the time. And you don’t really know until they come on board how they deal with the travel part of that. Mm hmm. So we hired 40. We dropped our cost per hire to just around $1,000 per hire or 1.3% of salary.
Greg Alexander [00:06:02] Oh, my goodness.
Don Goldstein [00:06:05] Now, included in those 40 hires were six internal referrals. Mm hmm. And how we deal with internal referrals is we give a $2,000 bonus at hire, and we give another 2000 at year one. Mm hmm. And I also want to say, in addition to those 40 new hires, the 36 we have with us and we expect to keep with us. We promoted nine people this year.
Greg Alexander [00:06:34] Wow.
Don Goldstein [00:06:36] So part of what we’ve had to do is exactly addressing the questions in your book. We’ve had to move from generalist to specialist because of the kind of work we do. The people that got us here couldn’t necessarily get us where we needed to go, and we also needed to make sure we had a manager of our employees. We had the ability to move people into those manager positions and doing it internally. Is just great for retention.
Greg Alexander [00:07:10] Yeah, no doubt. Yeah. I mean, employees love to see their peers getting promoted. They know what those peers did. They earned it. You know, it gives them hope that that might happen to them because you believe in internal promotions. I’ve got to come back to these numbers for a second because they’re astounding. So 36 out of 40. I mean, what does that 90%. You have a 90% success rate, which is. Yes, which is incredible. I mean, hiring is good as we can get at. It is still a little bit art, not all science. So that’s a huge success. Right. The the drop in hiring cost of $1,000 per hire. What was it when you were using external recruiters?
Don Goldstein [00:07:49] It was anywhere between 8 to $10000. Yeah.
Greg Alexander [00:07:53] Okay. Per hire? Yeah. So, you know, if you say 8 to 10 grand savings per hire and you hire in dozens of people, I mean that more than pays for an internal recruiter and then some.
Don Goldstein [00:08:04] Right.
Greg Alexander [00:08:05] I want to ask you a little bit about how you make the internal recruiter successful inside your firm, because first off, it’s hard to find one. And I’ll come back to that in a moment. When you find one in you, you give them this type of assignment. I mean, this is a busy person. How did you make the recruiter successful?
Don Goldstein [00:08:26] So what? Our starting point was that we have a director of h.r. Who is external. Mm hmm. We do not have a dedicated director of h.r. Interest. We have a part time person who has years and years of experience, and he could not continue to deal with the hiring piece, even using external criminals. He just couldn’t he just couldn’t keep up himself. And so working with him, we were fortunate enough that he had the ability to help us identify that person. I’m not sure we would have known enough to to realize what it took to find the right person. Mm hmm. We found someone. Who frankly, you know, we just weren’t sure if she was going to be able to pull this off for us. But what she did immediately was she leveraged external services. If you want me to name them, I can. Yeah, please. One primarily. Which was. Which is indeed. Mm hmm. Which is a great place for the kinds of I.T. and cyber people we needed to find. And she just knew how to leverage that and how to qualify people. How to position. The rules we have. Another thing that I have to point out was we have two main offices, Atlanta and Dallas. We realized during COVID, especially with people who are traveling all the time and the fact that we’re able to make remote work, work for us is that we didn’t need to worry about location anymore. As a matter of fact, having diversity of geography has helped us in many ways. So now we have employees, and I believe the last count was 17 states. And so once we took the handcuffs off of our recruiter and say, find the right people wherever they are. That just opened the doors wide for us. Mm hmm. And one of the other things. That made this successful. What? She just wasn’t looking at this from a hiring perspective. Just get a body in the door. She learned our business. She worked with our team. She understood the questions she needed to ask to qualify before she turned the candidates over to our hiring managers so she wasn’t wasting their time. Yeah, she literally was doing hundreds and hundreds. I tried to get the number. She stopped counting at some point. How many people she screened? But she was able to very successfully bring over. To our hiring managers, people that would really make the next cut. Mm hmm. So the other thing that she did was she paid very close attention to the process, very close attention to not only the hiring process, but the onboarding process. So she helped us get better in all of those areas because she really dug in and figured out what it took to be successful in not only hiring, but retaining those people and having a great experience in their first week, which just meant that that allowed us the ability to leverage our internal recruiting even more. And that referral business. The other thing I would point out. And I made this clear because it’s really part of our core values. I really wanted more diversity. On our team. Mm hmm. And I’m happy to say of those 36 hires, 50, 55% represent minorities.
Greg Alexander [00:12:28] Wow.
Don Goldstein [00:12:30] And in I.T.. That far exceeds the norm. Yeah, 25% women and other minorities. So this has also been a game changer for us because. It’s really added to the depth of knowledge and experience and just the culture of the company and it resonates with our clients as well in this industry. Commercial real estate, as you know, primarily has not been looked at that way. Yeah.
Greg Alexander [00:13:11] The numbers are just astounding. I had one tactical question since this is a teaching call and you’ve given us such great information. I was really surprised to hear and I think it’s a great idea that the recruiter owns the onboarding process. Is that true?
Don Goldstein [00:13:26] The recruiter is part is a major part of the onboarding process in terms of following up with the employees, making sure that their experience when they come on board is a good one, and then asking them once they’re onboarded, how was their experience and what could we improve on? Yeah, that, that was huge for us because we just didn’t have that before.
Greg Alexander [00:13:49] Yeah.
Don Goldstein [00:13:49] That muscle.
Greg Alexander [00:13:50] And very often there’s a handoff there. The recruiter brings them in and then hands them off to somebody who runs the onboarding process. And at times that handoff can be a little awkward and the employee doesn’t have a good experience. And you have some infant mortality, which obviously we want to we want to avoid.
Don Goldstein [00:14:05] And I can give an example of that. Great, a great example. So one of the things we would do because we wanted to get our engineers on board and billable as quickly as possible. Yeah. Day one, we would send them with their other engineers out to a site to learn our process of our assessments that we do at the properties. She came back to us and said, Don’t do that anymore. Give them that first week to get their feet on the ground. Don’t. Don’t have them travel the first week. Have a have a program in place to ease them into that. She also made a great suggestion for US cyber engineers because we have some really, really good top technical talent. To make it meaningful for them, give them homework. So when we bring on a cyber engineer that first week, we give them homework. So say we’re going to take them out and have them do cyber assessments in a property. One of the homework items we give them is assess your home network from a cyber perspective and tell us what the results are. I’m giving away a little bit of the secret sauce, but I don’t mind doing that because it’s something like that that has really resonated with our new people. They love it and the fact that we’re not putting them on the road. That was only because she came back to us and said, Stop doing that. That’s not a good way to bring your people on board the first week. Right. Give them a week to breathe.
Greg Alexander [00:15:35] The numbers are astounding across any industry, but in your space IT services cybersecurity. I mean, the job market is so hot to be able to be able to do this. The way you’re doing it is is really remarkable. I guess one last follow up tactical question, Don. What are the recruiters accountabilities? How do you measure his or her performance?
Don Goldstein [00:15:58] So she reports on a weekly basis, because we do use the EOC model and we have hiring metrics. I’ve already named a few of them. Yeah. We measure the cost of the new hire and we do that on a rolling 12 month basis and now it’s down to 1000. Once we get to December, when we have a full year, it’s going to be far less than a thousand. The other thing we measure is retention. Mm hmm. So our retention has gone from in the thirties to right at 20%. Mm hmm. Meaning attrition. 20% turnover. Yep. As opposed to in the thirties and even higher prior to that. I’m expecting to get that down to low teens. We also measure. The time to hire. One of the things that we ran into in the beginning of this year, which was unexpected because usually first quarter for us is the slowest quarter historically. This year. It was the biggest quarter we ever had. So I had more work than I had people and we were scrambling. So what we did when we brought our recruiter in was we basically said to our hiring managers. If you think this is the right person during your interview, make a verbal offer on the spot. Hmm. That’s a little risky. Mm hmm. Right. You still have to go through all of the checks. The checks after that. But what we were seeing was we do we’d have interviews. And then by the time we get to another level of interviews, that candidate was already gone. And I didn’t want that to happen. So instead of having multiple interviews, we did more team interviews so we could get it done faster. And if that team. Felt that they had the right person right then and there. They were empowered to make the offer.
Greg Alexander [00:18:05] Yeah. Another example of iterating your process. Right. And adhering to a process to hit these numbers and you’re measuring it with metrics. I mean, I could talk to you about this for hours. And of course, we’ll have a chance to to have you with the member Q&A session. But unfortunately, Don, we’re out of time this morning or this afternoon, I should say. But it was an incredible, literally incredible role model example of how to do this. And this is a hot and hot issue for lots of our members. So on behalf of the members and the membership, thank you for contributing this morning.
Don Goldstein [00:18:39] Thank you, Greg. My pleasure.
Greg Alexander [00:18:41] Okay. And for those that are interested in this topic and others like it, pick up a copy of our book, The Boutique How to Start Scale and Sell a Professional Services Firm. And if you’re interested in meeting exceptional people like Don and you’re focused on professional services, consider joining our mastermind community and you can find it at collective54.com. Thanks again, Don. Take care.
Don Goldstein [00:19:06] Thank you.
