Strategy: Mark Zuckerberg shares the hiring rule he says separates good companies from great ones

Facebook CEO Mark Zuckerberg explains the rule that allowed him to hire people of the caliber of his COO Sheryl Sandberg.

Hiring Sheryl Sandberg was one of the smartest business decisions Facebook CEO Mark Zuckerberg ever made.

Sandberg joined in March 2008 at a time when Facebook was ready to scale and needed the acumen she developed in her role as the head of Google's advertisting arm as well as the chief of staff to Treasury Secretary Larry Summers.

Facebook would end 2008 with 450 employees, $272 million in revenue, at a loss of $56 million; last year Facebook had more than 17,000 employees and brought in $27.6 billion in revenue, with $10.2 billion in net income.

In an episode of LinkedIn cofounder and chairman Reid Hoffman's podcast "Masters of Scale," Zuckerberg told Hoffman that his experience with Sandberg taught him that the "single most important thing" when it comes to scaling into a massively successful business is having founders surround themselves with the best people they can find.

"And when I look at my friends who are running other good companies, the single biggest difference that I see in whether the companies end up becoming really great and reaching their potential or just pretty good is whether they're comfortable and really self-confident enough to have people who are stronger than them around them," Zuckerberg said.

He created a test for himself for any direct hire he needed to make. "I've adopted this hiring rule, which is that you should never hire someone to work for you unless you would work for them in an alternate universe," he said. "Which doesn't mean that you should give them your job, but if the tables were turned and you were looking for a job, would you be comfortable with working for this person? And I basically think that if the answer to that question is no, then you’re doing something expedient but you’re not doing something as well as you can on that."

To clarify, you don't need to be hiring the world's most qualified interns — the rule applies to high-level positions reporting to the top. The point is that to be effective leaders, founders, and CEOs need to learn to set aside their egos and hire people they admire.

Zuckerberg took his time with hiring Sandberg. After they met at a Christmas party in December 2007, he would meet regularly with Sandberg and talk for hours about his vision for Facebook and what she thought she could add to it. After a few months, Zuckerberg decided Sandberg passed the test.

"There are all of these things, for example, that Sheryl is much stronger than me at, and that makes me better and makes Facebook better," he said. "I am not afraid or threatened by that. I value that."

You can listen to the full episode of "Masters of Scale" on Stitcher or wherever you get podcasts.

Facebook CEO Mark Zuckerberg explains the rule that allowed him to hire people of the caliber of his COO Sheryl Sandberg. Read Full Story