Startups: The Importance of Hiring Right
Startups: Hiring The Right People.
Since my background in HR and OD consulting started in 1994 in Seattle and continued once I relocated to San Diego following the “burst of the bubble” in 2001, many of my clients in the past fourteen years have been in some stage of “startup.”
More often that not, during my first conversation with the key stakeholders, the two top strategies they sought counsel for were:
1.) How do we recruit, attract, hire and retain top talent?
2.) Is our total compensation package competitive with other organizations of our size, age, revenue, and headcount?
During phase I of any startup operation, each founder, partner or investor generally hires the first 50 – 100 employees based on a pre-existing personal and/or professional relationship. While this strategy can help them build early successes, ensure loyalty, as well as hard-working employees, it always creates perceptions of favoritism, nepotism, unfair labor practices and an “us and them” paradigm down the road.
For that reason, it’s essential that Owner’s and Shareholder’s adopt some sort of formal recruiting and hiring strategy, or process, to mitigate those issues of potential liability and make certain that they are hiring “the right candidate.” The only way to guarantee that you’re sourcing and hiring the right candidates is to start the process with an accurate job description that details the essential job functions and required competencies for each position.
Next, each manager involved in the selection process should be well schooled in the art of behavioral interviewing to ensure that each new hire possesses not only the required qualifications but will also fit into the corporate culture that the founders are attempting to foster.
So, once you have the “process” in place, how do you determine who are the right people and who are the wrong people? It’s not that hard to tell. The right people are the ones that really, really want to work with you. You can tell they’re excited to be a part of the team. They actively look for problems to solve, and then solve them. This is a personality type that is very easy to spot once you know what to look for – they have fire in their eyes.
Based upon this author’s twenty-five years of experience, I advise clients to take the fired up employees any day over the more experienced but otherwise meek alternative. Skills can be learned quickly on the job (excluding certain specialized skills). But if you aren’t already the kind of person who’ll just get the job done no matter what, you’ll likely never be.
Throughout the selection process, it’s also important to look for potential problems or “warning signs” – particularly during the interview; people who care about status symbols like titles, people who resent the success of others, people who act like they’re doing you a favor by talking to you and people who want to negotiate salary endlessly but couldn’t care less about the stock options aren’t what you want.
If you hire badly, it isn’t just that employee who’s not performing. They poison the entire organization. If everyone is pushing hard to get a product out the door, but one sulking individual is passive aggressive about working late, morale drops across the company. It spreads like cancer; therefore, while startups are consistently hamstrung by a limited supply of talent, from a strategic perspective, it’s better to not hire anyone at all if you can’t find the right person.
Moreover, if you’ve got a product to launch and you’re ultimately trying to disrupt a bigger and better-funded company, it’s likely that you are going to need a superhuman effort from the team. I sincerely doubt Google’s early employees complained about the hours. Accordingly, while “work-life” balance has risen to the top of the list of considerations for many potential candidates, the vast majority of those involved with any startup operation would rather work an extra three hours per day then spend time with family or friends. For that reason, it’s not uncommon that the average age of those employed within many startups is less than 30.
The simple truth for most startups is that they cannot waste money. If they do, the likelihood of failure is increased significantly. What that means is that they must find a real cheap office to start and don’t even think about administrative assistants – that’s a luxury reserved for more mature companies that have a long track record of success. Other possible cost containment approaches could include doubling up in hotel rooms and not installing desk phones for each employee but rather give each employee a cell phone.
This belt-tightening approach would also extend to the company’s benefits package as well. For example, things like a matching 401k, pension plan, profit sharing, three or more weeks of vacation and free or inexpensive health benefits aren’t going to be part of the equation for most startups.
The rule of thumb should be to spend wisely! Thus, get your developers the hardware and software they need; pay your employee’s cell phone bills (the nice thing about reimbursing expenses is that it’s tax efficient to both the company and the employee). Also, only attend those conferences that are necessary to push the business forward.
In addition, make sure your accountants and lawyers know that you are watching every penny by referring to your cost control methods often. The likelihood of “padded bills” will be far less if you do. Although, you might consider balancing that with making sure they know that there’s upside – a successful client that raises venture capital, gets sold, enters into a lot of deals, etc. will generate fees for them down the road. Ideally, you want them to see you as a business partner and not a cash machine.
Please consider the services that Organizational Development Solutions has to offer!
Call me and let’s discuss: 773-807-8437
Mike Russell is a seasoned professional with three decades of experience in the fields of HR and OD. In addition to having a career trajectory of HR Generalist to a VP within ten years, Mike also has a long and successful background as a Consultant/Business Partner to CEO’s, Presidents and Executive Directors in both the private and non-profit communities across a wide spectrum of industries.
As the sole-proprietor and owner of Organizational Development Solutions (ODS), Mike partners with business leaders committed to insulating their organization(s) from potential liability, increasing organizational effectiveness and adding shareholder value.