Startups Suck at Hiring: Guidelines to Get It Right
There are some things that startups naturally do well – innovate, pivot quickly, get a lot done with minimal resources, etc. And there are some things that most of them do poorly, the most damaging of which is hiring.
Although this article is written in the context of startup companies, the lessons apply to all companies, large and small. Thy problems described here are just less impactful on bigger companies. The impact of hiring missteps for startups however can be fatal.
This doesn't happen because startup founders are bad at interviewing (some are, some aren’t, depending on their past work experience). It’s because they don’t understand and take into account that the complexity and maturity of their company is rapidly changing, and therefore the talents needs are changing as well. They hire like that did in the past and don't change their hiring to meet their evolving needs. They also hire for what is causing them to panic today rather than looking forward to what the company will need from this role over the next few years. You should never hire for the the job you need filled RIGHT NOW. That's what consultants are for.
I usually see hiring in startups guided by three simple factors:
Does he/she have the experience for the required job?
Will he/she fit the culture?
Is he/she willing to put in startup hours for a startup salary?
These criteria are totally inadequate to build your team and if you depend on these criteria alone, you will build a team that is obsolete within six months.
A startup is constantly growing and evolving, and usually at a very fast pace. What the company needs from management is also growing and evolving. Hiring based on the above simple criteria without any consideration given to your growth path ensures that the team you build will only meet immediate needs. That team will be obsolete and a misfit within a couple of months.
Think about it this way. The parenting required when a child is 2 is very different than the parenting required when a child is 10, and again at 16, and again at 21. The leadership needs of the company likewise change and evolve as your company matures. Why do executives try to hire the same kind of leaders they hired last year? Last month?
Of course, startup executives don't realize they hired a team that is viable for six months, so they claim the new team members are "not up for the job" of a "mis-hire" and fire them. They claim the "company outgrew the employee" then make the same hiring mistakes again. This is what I see way too often in the startup world, and it sets very good professionals up for failure. For the growing startup, it causes way more friction than most companies can survive.
The following framework is a summary of an assessment I do when I start working with a startup. There are many layers to this model (fund raising, organizational structure, product, board leadership, financial controls, customer relationship, etc.), but we’ll focus here on the team & recruiting issues.
I often use the child example when I take an executive team through this exercise. What age is the company today? What kind of parenting is needed? How long before the company reaches the next level and needs a different kind of leadership? It's a complex process that takes the multiple conversations, but it helps the leadership team map their current maturity level, and it helps them see the longer arc they will be traveling as they grow and evolve.
Now that leadership is thinking of the startup as an evolving organism with evolving needs, they can apply that to hiring the right team. Clearly, the governing idea is to hire for what your company needs in the current moment, of course, but also looking forward. It is NOT hiring only for the crisis the company is facing today, or whatever was causing panic last month. This changes how you define roles and how you prioritize your hiring. Now let’s build better guidelines for hiring.
Suggested Hiring Guidelines for Early to Mid-Stage Companies:
Upgrade the generalists: In the earliest stages, companies hire generalists who can get many things done. This serves the company well at that point in time. Once the company moves into high growth, you’ll need specialists with deep experience in specific practice areas – marketing, sales, product development, design, finance, etc. This means that some of the generalists may need to “graduate”, or move on to their next opportunity. If you can find roles for them great, but in most startups, resources and job slots are limited. Do NOT try to fit the generalists into specific roles where they don't have the necessary expertise out of loyalty because they were early employees. This just sets the employee and the company up for failure and makes for a much more painful separation later.
No hires that need to be trained: This sounds obvious, but most startups I work with make this mistake because they want to save money by getting the lowest salaried hires they can. Don’t hire anyone that needs to be trained or that needs close mentoring until your company is mature. Training employees puts a drain on speed and productivity. More importantly, you’re working with limited resources (meaning head count) and you need to get maximum work and progress out of every person in the building. Every hire needs to hit the ground running with minimal direction.
Hire people you know: Hire people that you or your team members have worked with before. You may miss out on the occasional unknown superstar, but a bad hire creates a HUGE and unsustainable drag in the earlier two stages of a company’s maturity. By hiring people you have worked with before, you’ll avoid the bad hires.
Get rid of bad hires the moment you know it: Everyone makes bad hiring decisions. It’s OK to stick with someone until you know for sure if you’ve made a bad hire, and it's OK to admit to the bad hire. The moment you know, it is critical that you move that person out immediately. Don’t drag your feet. They are not going to suddenly become right for the job, and keeping them around creates tremendous friction for your team. Just do it.
Hire people who are NOT like you: I know, you love the people you work with and the culture you’ve created, and you want to protect and perpetuate it. However, if you keep hiring people just like you and your existing staff, you’re going to create a lop-sided organization with huge “skills holes”. I’ve worked with companies that are all tech & product people without a business person in the building, or all charismatic sales people without a pragmatic, grounded “get it done” person to be seen. I can't tell you how painful it is to walk into a company of all 20-somethings who are reinventing every wheel and making simple mistakes all over again because they didn't want to slow innovation by hiring the old farts into the company. It’s takes a lot of time and money to correct these situations, and most startups close down because they run out of those two things - time and money. Hire people who will respect and energize your culture, but who are not copies of you and your existing team.
Check references and interview a LOT: It’s not enough to call the names that the candidate gives you. Dig a little deeper. Find people who know these candidate, through other team members or LinkedIn, and make additional calls. Also, have the candidates interview with multiple team members and gather everyone's input, especially for top level positions. Make it a real team effort. Someone coming in at an entry level may do one to three interviews in a single day. When interviewing potential executives, they should go through 5 to 10 interviews and/or dinners over a period of weeks or months with at least the full executive team, and hopefully with respected employees at all levels of the organization.
Identify a candidate's weaknesses: Candidates are very good at telling you what they do well. Your goal is to uncover the person's limitations. There are no perfect candidates. We all have our weaknesses and limitations and to expect that someone can do their job perfectly is setting them, and you, up for failure. If you have some awareness of a person’s challenges and limitations on the day they start, that’s a win.
Hire for personality too: Of course, the basic criteria for hiring are a candidate’s technical skills and experience. But also hire the personalities you need. This is where tests and assessments can be helpful – Meyers-Briggs, DiSC, Enneagram or others. There are many that work. Look for traits that are going to compliment and fill out your existing team. If you have a team full of dreamers and charmers (i.e. Meyers-Briggs E/Ps), hire some grounded no-BS types (i.e. Meyers-Briggs T/Js). If you have a team of all analytical types, hire some big idea dreamers. If you have all aggressive type A people, hire some soft-skill mavens and nurturers.
Prune the team as you grow: Hiring is only one part of building the best team possible. The other part is letting people go. I certainly don’t want to address this very difficult subject in a callous way, but startups are highly volatile and quickly evolving entities. Startup founders always fight making their first “graduations”, but they are as important as new hires for the company to grow up. To think that the dream team that is optimal in the "Proof" stage of company maturity will be the exact same dream team for the "Growth" stage is naïve at best. As the company grows and shifts to a different set of challenges, product needs, investor expectations and customers, the organization also needs different skills to guide and lead the business.
Discuss this model of company maturity and evolving leadership needs with your team. Try to find your “You are here” spot. Get consensus about where you’ve been on this timeline and where you’re going. Then you can get a better understanding of who you need to add to the team to take you to the next level of success.