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. The 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 experience). It’s because they don’t understand and take into account that the needs and complexities of their company are rapidly changing, and therefore the talent 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 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 crisis work you need done 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are totally inadequate to build your team and if you depend on these criteria alone, you will build a team that is obsolete within six months.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 employees they hired last year when the company was seeing explosive growth? Why do executives try to hire the same profile when the company was 12 people working in one room?
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 startup, bringing in new hires, training them, and then dismissing them causes way more friction than most growing companies can survive.
The following framework is a summary of an assessment I do when I start working with a company. There are many layers to this model (fund raising, organizational structure, product, board leadership, financial controls, branding, etc.), but we’ll focus here on the team & recruiting issues.
I often use the child / parent 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 ("parenting")? 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 as the company grows and evolves.
Now that leadership is thinking of the startup as an evolving organism with evolving needs, they can apply that mindset 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 to look forward. It is NOT hiring only for the crisis the company is facing today, or whatever was causing panic last week. This changes how you define roles, write Job Descriptions, set salaries, and 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 and is scaling rapidly, 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. ("He was the sixth person in the company, we can't let him go.") This just sets the employee and the company up for failure and makes for a much more painful separation later on.
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. My rule of thumb is after 200 employees, you can begin to hire people who need to be trained to do their jobs.
Training employees puts a drain on speed and productivity. 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. More importantly, new employees that need oversight and a lot of guidance take up valuable executive/manager time and bandwidth. Every hire needs to hit the ground running with minimal direction.
Monitor your less experienced leaders in this area if they are hiring for positions on their teams. Younger managers, with a few exceptions, are still building their professional confidence. This means that they may not hire the best possible person for a job with capabilities above their own, but are most comfortable hiring people just below their skill level. This is not something nefarious or underhanded, and it's mostly done unconsciously, but it is reality. It's human nature. Many senior executives do this as well.
People who have professional confidence and are well grounded in the value they add will hire the best person they can possibly get into the company. Managers who are not at that level of confidence will find a reason to pass over people who may threaten their "expertise" in the company. You can recognize this when your less-experienced manager comes to you and tries to convince you to hire a candidate that seems a little too junior to you, but your manager promised to train the new person. They will argue something along the lines of training the new person to do it "our way". The main responsibility is on the more senior startup leader to push back, say no, and ask the manager to keep looking.
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 THE BAD HIRES THE MOMENT YOU KNOW IT: Everyone makes bad hiring decisions. I would say an 80% successful hire record is good. 85% is wildly successful. It’s OK to stick with someone until you know for sure that 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. Don't try to make them fit because they are a good person and you want them to work out. They are not going to suddenly become right for the job, and keeping them around creates tremendous friction for your team. Making a bad hire is not faulty leadership. Keeping someone on after you know they are not a good fit is. 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 team, 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 a couple of 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. Hire people who will fill your existing "skill holes".
CHECK REFERENCES AND INTERVIEW MORE THAN YOU THINK YOU SHOULD: 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, friends of friends, or LinkIn. 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 senior 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. If anyone has questions, meet with the candidate again.
IDENTIFY THE 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. You will never hire someone with no weaknesses, so the next best position is to hire them fully aware of their weaknesses. 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 technical skills and experience are the basic criteria for hiring, 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 GO: 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” out of a deep and beautiful sense of loyalty to early employees, but these "graduations" 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.
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