We learned to do this at Catalytica, Inc., a public technology company I founded in California's Silicon Valley. As a result, we grew the pharmaceutical branch of the business in less than five years from three people and no sales to nearly 2000 people and revenues of $500 million (12.5 billion Kč). We made some mistakes along the way, but we learned from them.

Establishing our core values was one of the first things we did after founding Catalytica. Called Catalytica's Ten Commandments, the values were developed in off-site meetings, involving all employees. It wasn't an easy process, but it helped us identify the qualities to look for in potential employees. Here's the end product:

Catalytica's Ten Commandments

• We practice integrity in all that we do.

• We are a learning organization that values all employees and encourages their continuous growth.

• We demand operational excellence in all that we do.

• Our work ethic reflects personal commitment and ownership.

• We share successes through performance-based rewards.

• We are market driven and focus on our customers' needs.

• All employees are involved in developing and implementing strategy.

• We strive to earn the trust of our fellow workers and all of our constituencies.

• " Our entrepreneurial attitude continuously seeks to operate better, cheaper, faster and improve on quality.

• " We have a deep sense of commitment to each other and to our customers, partners, community and families.

We agreed to never hire a person for any position who did not embrace these values. Hiring an employee is like a marriage, and you want to be sure you share the same values.

Our hiring process was complex, but effective. All candidates, whether a receptionist or vice president, were interviewed by a minimum of eight people from different areas within the company. The committee met before interviewing the candidate and developed a list of questions designed to bring out his or her personality, knowledge, social behavior and commitment to our values.

The process required two days and a dinner with three committee members and their wives. The wives knew what we were looking for in the candidate and were asked to provide feedback. Candidates were encouraged to bring their "significant other" to dinner so that we could get a better picture of the person.

Even when we weren't hiring, many employees received a budget to develop relationships with potential candidates for their departments. As a result, we always had a backlog of possibilities.

Learning from mistakes

I can vividly remember two mistakes that occurred when we didn't follow this process. In one instance, a bright professor from a top university was brought to my attention.

I was told he had a difficult personality but I pursued him anyway, thinking he was a talent who could bring significant value to our company. Over dinner, he laughed sarcastically when I showed him a copy of our values. I hired him, but six months later I asked him to leave.

In a second instance, we were looking for a vice president of marketing and came across an ideal candidate. He passed all our tests, but over dinner he drank a bit too much wine. One of our wives expressed concern but I disregarded her input and hired the man.

Several months later, I received a call from a customer complaining that our man was drinking too much and becoming verbally abusive. I called him into my office. It didn't take long to see that he was an early-stage alcoholic. I offered to pay for a recovery program and he was delighted. I told him, however, that he would be fired, no questions asked, if he took another drink while working for our company. He did well for over a year, but then I caught him drinking. I fired him immediately. His wife called me to beg for his job, and I suggested that she should throw him out of the house if she loved him and wanted to help him. She hung up the phone immediately. Several years later, both he and his wife approached me at a conference and thanked me for firing him. It was what they both needed to get a grip on the reality that they were going through a critical family crisis.

Catalytica became known throughout the industry for our compassionate "firing" process. Whenever we were considering dismissing an employee, we first tried to find a different position in the company where the person could be more effective. If we couldn't find one, we told the employee to resign and offered to provide an outplacement service to help the person find a job better suited to his or her skills and values.

Hiring and firing are two different sides of the same coin. Done with commitment and compassion, the outcome can be the difference between a good company and a great one.