The Startup Hiring Equation
“The cost of hiring someone bad is so much greater than missing out on someone good” — Joe Kraus, partner, Google Ventures
Every company for which we recruit has a special set of requirements and a unique story of its inception. Large organizations like Unilever sell differently than giant fast-food places like McDonald’s. Google had its own special place in job seekers mind for its environment, contrary to the numerous startups in the Indian market which have their own set of challenges that require thoughtful maneuvering if hiring is to be successful. Defining successful hiring for startups can be tricky as the dynamics of this league of organizations is ever changing. Like me, those of you out there who have hired for startups know that even though a candidate might fit the bill in terms of qualifications, they still might not be the right DNA to be the right fit.
With this in mind we would like to structure this article in order to address the three different groups who are part of this equation- i.e. – a) what startups want, b) what a prospective employee wants and c) what contribution a Recruitment Partner makes in to both ‘parties’.
Certain people thrive well in a startup atmosphere, while the unpredictability can drive other top-notch workers off-track. Finding the right blend of ingredients in the perfect startup worker for any COO/Founder is not easy but all of them know the key attributes that make up the recipe for the perfect startup employee:
- Passion – While skills are needed, passion is an absolute must. For entry-level positions especially, passion is one of the most important ingredients. I found employees without sincere passion and a belief in what the company is hoping to achieve, are likely to abandon the ship when the going gets tough.
- Specific Skills – Deploying assessment tests to ensure candidates are as knowledgeable as they are passionate can be helpful. Different tests and assessments are especially helpful for recruiting technical talent. For leadership hiring personality based Test such as MBTI and FIRO-B aid in the understanding of operational side of leaders.
- Flexibility – As a young and growing company, it’s important everyone has a “let’s make things better” attitude and gets whatever has to be done, done. Startup life is rarely 9-to-5 and often involves donning a few extra hats not mentioned in the static job description. A COO we met recently said “We need to ensure the people we hire are willing to jump in on the ground floor, roll up their sleeves, and get working”.
- Intrapreneurship- an Intrapreneur is someone who has an entrepreneurial spirit and uses these innovative ideas to make your company a better place. A recent survey discovering 58 percent of managers of top companies were willing to support employees who wanted to capitalize on new business opportunities within the company.
- Trustworthiness – The people you hire for your startup are the building-blocks of your company culture, so hiring people you can trust is essential. You need to be able to rely on these employees to get the job done and to go over-and-above when necessary to make sure your company keeps moving smoothly.
Candidates with these five attributes are likely to add to the value, innovation, and enthusiasm a startup company needs to thrive. But what do these candidates want from a startup in return? Let’s address a few points here:
- Start doing “Real” work: Startups actually push you to identify and focus on what’s absolutely critical; forcing you to think more creatively about how you approach projects and create value. And best of all, you often get to see results first-hand which you usually don’t in large hierarchical setups.
- Learning and Responsibility: A candidate ideally learns more in the first two months in a startup than he/she does in other mature organization. The reason for this is that everyone in a startup is expected to wear multiple hats. A startup forces you to adopt new skills and responsibilities to make up for the small-sized taking on the huge challenges of building an empire. In startups, fast learning can also lead to increased responsibility and multiple opportunities to both utilize and accelerate talents and knowledge.
- Culture Change and Building: Everyone wants to work in a place where talented people come together and make work fun (work doesn’t feel like work). There’s nothing more rewarding than feeling excited to come into the office in the morning to tackle the next challenge the world has thrown at you. Entering a larger organization usually means that you’ll be stepping into a predetermined culture, set with existing practices, customs and values. Joining a startup means that you can directly contribute to the creation and growth of the business culture, offering ideas and practices that can help shape the working philosophy of the company.
- Innovation: A change to work with a passionate an enthusiastic team can spark inspiration on every level, leading to truly innovative ideas and developments that every bright talent wants. Being part of an entrepreneurial team is also a wonderful way to learn how to innovate. Entrepreneurs are great people to learn from — they identify a problem and need to find a new efficient way to solve it.
- Starting Your Own Venture: Joining a startup gives you the opportunity to start learning what it takes to be your own boss. While they take personal and financial sacrifice, startups pay you back in opportunities and knowledge on how to take charge of your own venture.
Having said all this lets start off with some thoughts on why hiring the right people is hard, and hiring for a startup is even harder:
- The conventional methods for finding the right candidates (resumes, interviews, skills tests, etc.) are of limited use and effectiveness.
- Large companies can (and often do) use “pattern matching” whereby they hire new employees that are similar to existing employees that have done really well. However, in a startup, there are too few employees to really “match” against, and if you do it too well, you end up cloning the founders too much.
- Startups generally have to use creative compensation (like using some form of equity) because they cannot afford, in most cases, to pay fair market value for a candidate completely in salary and bonuses (i.e. cash). Many potential recruits don’t understand the nuances of owning equity in a startup. So this means not only does the candidate have to be exceptional, they also have to be sold on taking less salary than they likely would have made working for a big company.
- Since startup teams are small, team chemistry becomes critically important, so wavelengths should match between all the people working in a startup.
- Startups usually cannot provide the mentoring and career growth that is common in established organizations. There often is no training budget, no mentor, no career plan and no clear path to anything. It’s generally chaos. This game is not for everyone – and certainly not for the faint of heart.
- Startup founders tend to “oversell” their companies to new recruits. As such, it is easy for new employees to suffer “buyer’s remorse” once they’ve been on the inside for a little while. This can lead to low morale and high attrition – which is almost surely to damage a startup when it can least afford it.
The key startup lesson in all of this is to never underestimate the power of working for a startup organization. Startups can equip you with invaluable hands-on tools and experience, growing your skills, knowledge and even responsibilities rapidly – and that’s something that’s difficult to come by in a medium or larger-sized organization. The Founder’s vision, passion, experience and far sightedness can save an organization from all the hiring problems. A correct, experienced correct Recruitment Partner or a Third Partner Associate can be a great relief here. The cost incurred is nothing compared to the time and energy that is saved in hiring and replacing wrong talent. The recruitment experts should keep in mind the following when hiring for startups –
- Look for a startup or small organization experience.
- Seek out risk takers.
- Hire No “yes” people.
- Hire doers and top performers.
- Avoid Prima donnas and people who have fragile ego.
- Look for creativity.
- Seek out the evangelists.
- Look for the opportunity seeker.
- Hire minimalists.
- Find the ‘cultural fit” and First Principal people.
Candidates with the above are ideal, but a small point that has always bothered me a Recruiter is that if premier education and prior working with top notch companies a desired skill? Founders surely find this as an attractive combination, but I certainly don’t believe it to be a mandatory for a great talent. Probably on can begin by searching for this “pedigree” animal but it certainly does not guarantee the correct hire. Let’s say that maybe for a typical Executive hiring this might work (“might” as I still believe talent has nothing to do with education) but for more technical and skilled profiles one needs the specific educational qualification with experience.
Working for a startup takes a certain intestinal fortitude. You could end up being employee No. 2 of the next hot tech company, or you could end up job-hunting again in a few months. All depends on how sound a decision you took. The statistics on startup success are a little disheartening. In fact, 75 percent of new startups fail, which might have to do with the fact that 46 percent of small business new hires fail within the first 18 months. As an ethical Recruiter one can suggest the talent to find out the following:
- Background of Founders
- How long the top management team has been in charge and how well they get along.
- The source of the company’s funding and the projected growth.
- What a typical day is like.
- The plan to improve the benefits program.
- How employees progress in pay increases and whether there is a bonus or incentive pay program.
One last thought. All of us have worked in companies with rules that made little sense and leaders who simply ‘got in the way’. ‘If you are a startup, hire the right people and let them do their job’. Talent comes to a startup to experience a different work culture, if employers try to micromanage them without delivering on commitments, all efforts of hiring the right candidate get nullified very quickly.
They say in business you should think big. But when it comes to your career and development as a professional will you consider thinking “small”? A startup is a roller-coaster ride that can offer you incredible career experiences and teach you some invaluable life lessons. GO FOR IT!!!