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The 5 workplace myths this tech CEO busted on the way to $1 billion

  • Mark Mader has grown workplace software firm Smartsheet to a reported $800 million valuation.
  • The technology CEO has learned that telling employees the truth is better than coddling them.
  • He also learned the hard way that employee IQ really does matter, no matter how hard the experts sell Emotional Quotient.

As a business leader, perhaps your most important role is building a high-performing team that will drive your company forward. Whether your organization is just starting out, growth stage or beyond, you need people who can develop innovative ideas and, more importantly, put those ideas into action.

I've been a CEO for 10 years, and along the way, I've learned some valuable lessons about how to build teams that produce results. These lessons extend from hiring, through coaching, to business execution. Based on my experience, here are five mistakes to avoid when building and nurturing the best team for the job.

1. Over-indexing on culture

Culture and values are important, and qualifications count for little if a person won't be a good fit for your organization. But don't overcompensate. Ultimately, you need talented people who possess the skills to do their jobs well or have the aptitude to acquire them. I've been guilty in the past of believing someone's incredible cultural fit could cover for their good but not great competency. One must bet on people and situations, but don't consistently ignore IQ. Emotional Quotient isn't everything.

2. Not giving direct feedback

If you need to deliver the message that an employee needs to improve or move into a different role, don't confuse the matter by initially showering them with praise. It's often tempting to soften a hard truth by first telling a person all the things they do right and what a valuable player they are. Proceed carefully, because you may be doing them a disservice. Employees need to know where they stand, and if you dilute the message, they may take away only the parts they want to hear. Challenge directly, and do it in a caring manner.

3. Focusing on output over input

Don't confuse good short-term results with the best strategy for long-term success. Your recruiting team may have hired 10 great engineers last quarter, but what creative techniques did they experiment with to produce even better results next time? Your head of sales may deliver impressive numbers, but what is she doing to get even better leads into the top of the funnel? Output metrics are critical to monitor, but understanding the activities undertaken to achieve those results is equally important to ensuring sustainable growth. If you're looking for 3X growth, you won't get it by running the same plays more quickly; you need to encourage new, innovative tactics as well.

4. Allowing a challenging job market to dictate hiring

When I look back on the early years of Smartsheet, we could have done a better job at filling a few key engineering roles sooner. The job market is often cyclical, and different roles are hard to fill at different times. Never let that stop you from moving forward and aggressively trying to hire the best. There are always good people out there; don't let a tough market intimidate you from going out and finding them.

5. Refusing to pay up for the right employee

There are certain roles where an exceptional individual can move the needle for an entire company. Be bold and step outside your normal compensation bands to hire that person. In the early years of Smartsheet, we were trying to lure away a product architect from a large competitor. As a young company, our compensation bands weren't as competitive as they are now and the individual slipped from our grasp. In hindsight, stretching ourselves to accommodate this person could have advanced our roadmap by as much as a year. Rarely do I look back on these instances and feel it wasn't worth it. There simply aren't that many people worthy of No. 1 draft-pick status, so if you have a shot at one, take it. Don't be afraid to go 30 percent out of band for a 3X boost in performance.

— By Mark Mader, CEO of Smartsheet and a member of the CNBC-YPO Chief Executive Network

About YPO

CNBC and YPO have formed an exclusive editorial partnership consisting of regional "Chief Executive Networks" in the Americas, EMEA and Asia-Pacific. These Chief Executive Networks are made up of a sample of YPO's global network of 24,000 top executives from 120 countries who are on the front lines of the economy and run companies that collectively generate $6 trillion in annual revenue.

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