Week 5 Bridge2 - Hiring & Talent
When, who, and how to hire as a startup.
When?
Let’s start with the most challenging question in a startup… when do I hire this person to do that job?
In corporate, my hiring philosophy has to be both budget-conscious and future-aware. If it is an admin/entry-level position, I’m waiting until the workload is so much that my top performers begin to be bogged down in an administrative quagmire, groping for some semblance of reprieve.
Suppose it is a seasonal project with a limited scope. In that case, I might find an outsourcing firm to provide staff augmentation for a given period (more expensive in the short run, but without an FTE salary to balloon my budget).
Suppose I have a significant strategic project and need someone to spearhead the vision to be the face of the program or lead the technology implementation. In that case, I’d better get them onboarded sooner rather than later so they can start building trust with the team, get a lay of the land related to the organization, and hit the ground running when the project begins.
Budget-conscious with administrative and contracting work, future-aware for strategic hires.
In a start-up, it seems murkier. Here are the reasons why the decision is opaque:1
The budget is set by the money raised in the previous round.
The team is critical, but the pay may not be competitive to the market.
Knowledge needs to be in-house, but it may be cheaper to outsource.
How do you transfer knowledge?
How do you balance cost benefits?
1. Raising for the future
In a high-growth startup, you raise money for the future, not the present. So, your budget is based on the previous round, not the round you are growing now. So, you are limited by the present. Overhire, and you are rushed into rounds of financing that cover past decisions rather than future possibilities, which is a great way to dilute your ownership.
You want to raise capital in a position of “if this, then that,” not “because of this, I need that.”
2. Sell the upside, not the pay.
Let’s be honest: in this economy, there is risk in almost every industry. Stability is a rare selling point that comes with its own issues and political complexity (in my experience, tenured managers can create more territorial silos).
So, how are we recruiting? You’ve got to be thinking about psychographic compensation measures.
Mission & Purpose: Are you communicating the mission in a way that would attract the passionate workforce you need to accomplish the aggressive timelines and goals?
Role and Title: Does someone want a particular title, and would they reduce their salary to achieve that career milestone?
Responsibilities: Does the job allow them to flex, learn, and grow in an area they want to expand into?
Reporting Structure: Is it flatter? Want less hierarchy? Is the CEO’s door always open?
Remote work: Hybrid, flex or fully remote? If you can operate remotely, you have access to a larger talent pool.
Finding the motive and applying these opportunities may give you the edge you need to land the talent you seek.
3. Knowledge is fertilizer
I’ve said this before, and it bears repeating. Knowledge is a fertilizer — it needs to be spread to be useful. Don’t outsource your knowledge creation for too long, as it will stunt the ownership and empowerment of the team you are trying to build.
Maintaining a ship you and your team didn’t spend blood, sweat, and tears building is more difficult and expensive. It requires extrinsic incentives, that is, you pay people to care.
Who?
This is easy — you hire the people who can do the job and aren’t a**holes. Hybrid and remote work opens up the door to not being stuck in demographic echo chambers and can help create diversity.
Word of advice — Nearshore is more accessible than off-shore. Stay within one or two hours of your executive team (Wes Coast is hard for East Coast and vice versa). Argentina and Brazil are great alternatives to India and Eastern Europe, as they have the exact pay expectations, and you experience the same rhythm of the day (not spinning up when the other team is winding down).
How?
Slowly and with intention.
A small team can be thrown off by one unruly hire. A small team can also be magnified by one strategic hire.
“Culture is not what you think it is; your culture is what your employees think it is.”
- Dennis Ford, Monetize Your Culture
I’ve experienced this first-hand as a small business owner — sometimes, you are not the answer the team needs. It might come from someone else, and you might have to release the reigns to allow them to be who they are so the team can thrive.
Final Thoughts
As a startup, every round raised must provide shareholder value, every hire must provide shareholder value, and every deliverable must provide shareholder value. The value your team creates is what is leveraged in the next round of funding or opportunity to exit. Don’t hire over your skis.
Also, don’t hire your family.
Very little of this post came from the Bridge2 session besides the quote by Dennis Ford and a couple of snippets in this section. Not that there weren’t good things in the presentations; it was just a presentation that elicited more internal dialogue than external note-taking.
I have included my responses and ruminations from the presentations given above.