Contractors · Hiring

What's your take on effective ROI from early contractors?

Mike Whit JavaScript, Data, Automation

Last updated on May 21st, 2020

I'm in a position where I can comfortably hire. However, I have struggled to find a good resource on hiring those initial 1099 contractors / freelancers.

Here's what wisdom I can impart:

1a) you're gonna pay a cost typically to find someone.. cost is the risk / money / time in finding the right person (assumes you might hire / fire)

1b) you've got to have the attitude to eat the cost to find the right person

1c) generally you should have monthly operating profit >10x what you're gonna pay someone each month

1d) you should mentally think exactly this: "if i lost 1/3rd of the money i'd pay a contractor in a given month would i care?" and adjust your budget accordingly

2a) generally people seeking work just want to pay their monthly bills and

2b) generally you're gonna get <50% of someone's attention if you can't pay for their entire cost of living plus taxes

I know that's a super basic set of guidances, but I think I can go further into current thinking. This is about the limits of my knowledge on this stuff:

3a) there's a ton of variance in skilled labor

3b) you can write a perfect spec and even a person is skilled can not be skilled at executing your specific spec

3c) notwithstanding risk on someone's inability to deliver, at worst you're going to result with a throwaway prototype which further realizes some "vision".. you have to accept this reality even when spending more than $5,000

3d) you probably have to pay market rate if you want anything "engineered", i.e. you can throw some range of inputs at their product and always get the output you expect.

All of the sub-points under 3 lead me to my sub-points for 4:

4a) early on, your best bet is to hire unskilled labor

4b) unskilled labor will generally !@#$ up some portions of the work, so..

4c) unskilled labor requires more repetition of work and

4d) sometimes you gain by inventing repetition where it didn't previously exist

Two example roles I'm seeking currently are a) someone to help me build funnels and b) a personal assistant. Notably with the personal assistant, I found myself realizing that I had to perform work to devise enough work to keep the work for the PA routine and low-effort mentally to figure out. It's counter-intuitive, but I had to devise tasks like, "go on these social media channels and promote the product" which basically amounts to them interacting on social media; this work is something I think can be low-risk but requires considerable setup on my part.

I think everyone's ideal person is there exactly when you need them to solve whatever task you need done. In some of my earlier failures, I think I expected too much when I wasn't paying for someone's full cost of living. I think I expected skilled labor to perform well with a perfect spec even though I paid them below market. I think with unskilled labor, I overestimated their ability to think critically.

Anyway, would welcome some outside eyes on my list and certainly would welcome additional points!

Paul Garcia marketing exec & business advisor

May 23rd, 2020

Your view of the labor market is a pretty cold approach: people only work for money, and no one really wants to do what they're asked. Let me put it a different way. You find what you look for.

If you believe that people suck, you're going to find sucky people.

Welcome to leadership. Every employee requires some degree of personal satisfaction to feel good about following your example. It's your job to learn how to personally motivate each person in your company, even if you're not good at it. It's not their fault they don't share your style. It's your fault that you chose people whose style is not a fit for yours, and that you haven't given them a path to success.

There are no real absolutes with people. A lot is broken about hiring people, mainly that a resume only communicates what someone asked them to do, not what they're capable of or interested in. This is what interviews are supposed to reveal, however most bosses are terrible interviewers.

Let me explain something even more basic about workers than your observations of behavior.

There are 4 key criteria for job satisfaction.

1) location (where do you want to work)

2) industry (what type of product or service do you want to represent)

3) Title and responsibilities

4) Career success and goals (how do you like to be rewarded)

If you can satisfy all four criteria, your employee will be completely satisfied and be loyal for a decade or more. With each criteria not met, your employee will be less and less likely to stay with you and be motivated to drive success for the business.

Yes, besides meeting people's basic needs so they're not starving, you have to understand how they like to be rewarded. Some people care about the money, some about their rank, some about being able to make a difference, some about accolades or thanks, etc. Appreciation in the right way does exactly what the word means, increases their value.

I'm sorry you have to supervise your employees. You're the boss. That's to be expected. Same goes with training. And everything else, which is also your responsibility. Hopefully you're hiring people who are smarter than you and that challenge you to continue growing. Hopefully you're continuing to grow and improve your own skills.

No one masters all six the fundamental business skills by themselves, in fact, no one ever masters more than two. You will always need the support of others, whether employees, contractors, advisors, partners, or even family. Don't feel badly, just keep improving.

Your observations about labor read as superficial. They probably feel that your respect is hard to earn as a result, and are less likely to take initiative as a consequence. Try working on your ability to lead by example, and really spend time understanding what PERSONALLY motivates each employee. It will help you tremendously when shaping your team(s).

Paul Garcia marketing exec & business advisor

May 27th, 2020

@Mike, you're correct in that we can't know the psychology behind how you arrived at your opinions or what experiences have colored your perception. My posts are far from riffs. While they may repeat things I have written before, that's because most people on discussion boards are in and out. They don't look for previous answers to questions similar to theirs. And yes, I'm not sure why you'd expect a discussion board to be getting to know you deeply. A lot of assumptions happen on both sides, that's to be expected. Most questions never get any further explanation when someone asks for more clarification.

That said, to answer your one question back to me, motivation plays a lesser part for contractors, but only because they're inherently temporary. You can't tell a contractor how to get the job done or when to work, because both of those factors turn them into employees by definition under labor laws. So they have already motivated themselves with freedom from supervision and money. While you can have a great personal relationship or a more business-only relationship with a contractor, if they're getting the work done by the time it's required, ya don't really have anything you can say about them. And if you're not causing them distress, there's no expectation that you need to manage them differently or better.

As for my reference points, you can see some by looking at my CFL Advisor profile. Besides founding and operating 4 companies in my career, and over decades hiring and training hundreds of employees, I have been a paid executive advisor to over five dozen other companies. My "riffs" aren't unfounded. Sure they reflect my distilled experience and beliefs, but you'd expect that from an advisor.

David M

May 27th, 2020

Good luck Mike. You are going to need it.

David M

May 24th, 2020

Paul, well said on all points. Nothing more I can add except that when I read this my thought was, "This guy may have a financially successful business but there is so much wrong with his overall approach to employees, no competent passionate and motivated employee would ever want to work for this guy for very long even if the money was right..(and it appears that it isnt) if this is what is communicated in the interview." People forget that everyone has a dream, hopes, and desires...every employee has their own story they are working on, and the successful CEO's understand this. I give you credit for taking the time to address the many issues with the post. Always room for any leader to grow, and there is a LOT of growth needed here, or a different perspective/mentality/approach. It is a cluster, but if a CEO of a company I met with communicated like this I would probably say, "You clearly think you are smarter than you really are, and that the people you depend on are not as smart as you should give them credit for. Hire one of them to be the CEO and send them my way and then we can talk." lol

David M

May 25th, 2020

Mike, you have yet again illustrated where you need to focus...not on business not on employees but on communication. As Paul pointed out, you have a very cold approach, and what I alluded to was the overall negative and demeaning tone your post had which your response does as well. I will also add in highly unprofessional. If you can work on a more positive approach and attitude, you will find CoFounders Lab may be of help. But currently your style of communication may be better served on Facebook or LinkedIn. Good luck.

David M

May 27th, 2020

Mike, Again with the unprofessional and unnecessary rhetoric. I said something you didn't like. Confront it professionally, address it and then correct. If you resort to snarky quips with players in any industry they will slam the door shut on you because they don't have time for the nonsense. Calling someone Dave or Mickey or Bud as an attempt to get under their skin will accomplish nothing, zero, nor trying to stir up emotion by making baseless accusations against how one was reared as a child. Successful people do not get riled up by false accusations because it is pretty common understanding that that is what unsuccessful people do...they act on emotion. It is just plain adolescent. I have had people who manage the finances for families worth 30B dollars meet with me and question what I was capable of, say something that hit a nerve. Rather than regress to profane and quite frankly silly attempts to insult them as you attempted with me, I stood my ground and said "You are wrong. But if I gave that impression it was not my intent." If they kept pressing, I would press back, but I never dropped my professionalism. And in the end...I have them in my rolodex because they saw I was someone who didn't get my feelings hurt when they hit a nerve. And most people with a lot of experience have been through it enough to know how to professionally make someone think twice about taking shots at them. No one, and I mean literally no one is going to respond positively to you if you can't take some honest criticism. If you feel it is wrong illustrate why it is wrong, rather than just confirming the criticism was justified by coming back with a childish attempt to put the person in their place. I questioned your skills as a CEO. Rather than prove something different, you just confirmed you have thin skin and cant take a critique. Next time someone does so, simply say "Look what I wrote was misinterpreted by you. I assure you I am not like that." You didn't do it here. You wanted something worthwhile from my comment. Internalize this and think about it, because it could save you from losing the contact you one day need that could be the difference in your company being worth millions, or you pounding a wall and wondering why no one supports your effort and vision. Best of luck.

Mike Whit JavaScript, Data, Automation

May 27th, 2020

Thanks Paul for leaving a response that isn't borderline insulting. So I am very familiar with the contractor law. Contractor or not, my trick with developers (for instance) is to basically become friends with them. It sounds counter-intuitive, but there's so much nuance to grab within tech and you need to build a good rapport with them. I haven't ever pulled the trigger and done the whole $8-10k/month burn with a contracting shop, as for that price-point I figure I'd be somewhere in the middle to bottom of their stack.

Sorry that there was confusion about the word, "riff". I wouldn't have meant that to detract that your expertise is coming from somewhere. I was more trying to fend off the other guy throwing insults basically.

In terms of motivation, I'm fairly de-motivated to participate in this forum at all at this point. I've been doing entrepreneurial stuff for a handful of years and somewhat know most of the advice that seems like it's getting doled out.

We're still not really getting to any conversation about ROI from workers. You likewise did give me some 100-level advice, just to be fair. I used the word riffing in a variety of other places in just this thread, so you know it wasn't personal.

This thread otherwise is just a trainwreck because someone took a dump all over it. Thanks for responding but I'm just not sure I want to engage this any longer.

Mike Whit JavaScript, Data, Automation

May 23rd, 2020

I have to reflect on this one Paul!

Welcome to leadership. Every employee requires some degree of personal satisfaction to feel good about following your example. It's your job to learn how to personally motivate each person in your company, even if you're not good at it. It's not their fault they don't share your style. It's your fault that you chose people whose style is not a fit for yours, and that you haven't given them a path to success.

Usually when I interview (to respond to your latter remarks), I want to uncover someone's drive and work ethic. Some people I suppose prefer to do this by grinding an interviewee on the job role they're getting hired for (I wonder if there are some legal reasons for this likewise).

Trying to take the rest of your feedback in stride, since I wonder how much some of it applies to me. I will likely hire a remote workforce once I acquire more capital. I'm not talking about hiring employees here, though. How much does motivation play a role when dealing with contractors?

Being in the engineering department, we somewhat delegate outcomes to what the computer likes. Computers are unemotional, and they are black and white. At best, the ship sails. Usually, it crashes and burns. We reflect this dynamic in our values (as engineers). We survive by being aloof and by being sarcastic (to weather the high failure rate and to increase our patience/focus).

Engineering leadership is a bit different, as are engineers.

I'm not sure though that my remarks are superficial. I somewhat scripted out a set of rules by which you can reliably apply to hiring. Playing someone's psychologist with work can work, but is unrelated to work. Let me put it in the language of a friend who owns a hair salon: she says she always takes her new staff out for drinks and sees how drunk she can gets them. From there, she tries to figure out how deep their bottom goes and what their vices are, i.e. is it men? drugs? financial stuff? family issues? You can imagine that every field has a different archetype and so for the type of people she has available to hire this is what comes her way. She then makes the call if she can support that person or if they're going to be too off the handle.

That's about as much as I can banter and riff based on your response.

Mike Whit JavaScript, Data, Automation

Last updated on May 24th, 2020

Not following the logic Dave of why you'd bother responding here. You hated my post, found it too presumptive.. arrived at the conclusion that I don't leave enough "gap" for human relations and you feel like this forum is a decent place to contend that? You must have concluded, "if that's how this guy thinks about HR, he must be a real jerk and treat anyone he hires exactly like this, and this must be the reasons for his [presumed] failures." It's like.. alright -- say you couldn't get past the amount of content. For you, it must have completely blindsided that I came asking a question. I admitted once that I was at the limits of my knowledge. I have a believable reason to be seeking knowledge. Yet, here ironically, you feel like there's some gain to praise Paul and really just assume you understand exactly his intent like he was softly criticizing me rather than half-way aligning with my post but taking on a totally different angle.

Like.. I came asking for help and it's borderline absurd that I have to step back and look at the basic conduct going on here. Where is the place for criticism when someone is showing up to learn? You understand there's no cost? It's not like I'm hiring someone and then firing them next week because I have my cards missing from the deck.

To me, it came off more like Paul was riffing. It had some value to reflect on, leading others isn't a strength for me, and it seemed like Paul at least made some assessment that I might be one of those dudes that is better off doing his thing and then personally connecting with colleagues separate from the work. Paul's post is still a far cry from the value you get actually connecting with others -- or better, receiving 1:1 coaching. He has no idea who I am.

The sucky part is that instead of people riffing about ideas, it's riffing about "how can this guy be so off the mark?"

In the world of business, most efforts are team efforts. You hope early on when starting a business to draw from communities of people pursuing their business. In communities like this (especially where it's not face to face), it seems like you often find dysfunctional and hyper-competitive people instead. This could be due to the low barrier-to-entry. I'm a competitive guy, but here and in another post I made I feel like I'm drawing competitiveness from others. We're not in the same market so it's a head-scratcher.

In the land social media, Dave your post is called a !@#$-post. It's like you were wiping your butt because you had issue with your business, your family, your wife / brother-in-law, and then you came here to air it out. Please, don't do that at my expense. When you're driving on the road, sure by all means be a jerk. However, it takes a lot to try to start a business and so if you can't respect that often a person has to press their limits.. what business are you actually conducting?

All you're doing bud is showing me another data point that the quality of conversation in this community is not high. Sure, you passively mention the idea of growth, but you're not trying to engage the post.

Mike Whit JavaScript, Data, Automation

Last updated on May 25th, 2020

David, are you like sensitive? Were you coddled growing up? You're remarking about a "demeaning" tone. How do you get that from my questions about hiring?

Did it just rub you wrong that I make a calculated decision about HR? Is this why you're quick to concur a presumption about Paul's intent that you should never measure human output because you instead want a coddling environment to lift up people's hopes and dreams? I think your responses have been imbalanced to strongly bias for wanting more touchy / feely remarks about HR.

What's so cold about a monetary transaction exchanged for services? You could pick up a business textbook to distinguish between skilled and unskilled labor. What else did I say that has a basis in the content of my post and not what you merely inferred? You lost me when you made this remark which I think most people would read as you saying, "this guy is a joke": It is a cluster, but if a CEO of a company I met with communicated like this I would probably say, "You clearly think you are smarter than you really are, and that the people you depend on are not as smart as you should give them credit for. Hire one of them to be the CEO and send them my way and then we can talk." lol

Do you know what I think is unprofessional about this? Let me explain: A bank teller might get paid $15/h. They will carry a "professional" tone and achieve not much. Here, you've wiped your own butthole over an internet thread and contributed nothing but a demonstrated attempt to hijack a thread. Your outputs net a loss of time. Why are you doing that?

Professionally, I think you're just sliming your time sink because you have some personal issues and you're detracting from a bonafide business question with a bunch of slander.

Maybe you should be a life coach and make it your sales strategy to tell every technical person who earns more money than you that they lack social skills and you can help them out for $150/h. I don't think it'd work on me, but I think there's market of suppliers doing that.

That's my two cents on the matter. I'll throw my punches around if someone wants to waste my time in business. The market is a busy place and focus is the scarcity. When you have an internet full of numbskulls such as yourself, I think my communication strategy is effective on the internet. My alternative is that I assess this community cannot achieve value for me if its natural balance amounts to people like you "contributing" such a level of distraction. It's not more complicated.