Aside from setting the vision for the venture, there isn’t anything I can think of that’s more important for a founder than recruiting talent. But you will need an exciting, compelling and unique vision to attract top talent. So if you lack that vision go back to square zero and start again. Once you have it, here’s the process.
- Organizational design. Before you start hiring you need to decide the design of your venture. Your business model will have a lot to do with your design. For example, if your business model is to build an app and sell it quickly you won’t need a sales and marketing team, probably not a CFO. Just you and some software engineers. Conversely if you plan to sell enterprise software, you will probably need a field sales force, possibly inside sales reps, a customer support organization, etc. So first determine your business model, which will then determine your organizational design and staffing requirements. Yesterday’s hierarchical design, based on the military, has given way to a much flatter organization. Study the companies you admire to help develop your own design.
- Strategy. How do you plan to recruit? By far the best way is to use your network to find co-founders and initial key hires. But once you grow the venture past that group your budget for talent acquisition will largely determine your strategy. If you are VC-backed you will be able to afford executive recruiters (firms you pay up to a third of the recruit’s first year salary) for positions like VP of Sales and contingency recruiters (firms you pay only for performance, more in the range of 20%) for engineers. What are your priorities? The saying goes, “hire slowly, fire quickly.” And it’s true, so recruiting talent is a time consuming process. If you are also raising capital you now have two full time jobs. Advertising, social media and of course LinkedIn, are much less costly than using recruiters. The web is rife with new online recruiting firms, ask your fellow entrepreneurs who they are using. Develop a recruiting plan, budget and schedule – just as you would for developing a product.
- Talent tracking. If you have followed my advice and developed yourself into a talent tracker you’ll have a headstart when it comes time to recruit. If not, I hope you have a good network.
- Process. I made it my practice to interview every employee for every startup. I believe that recruiting is too important to delegate. At the same time, it is important to involve your team in hiring. It is a good idea to find out who on your team is especially good at interviewing and finding talent and involve them in the interview process, even if the candidate won’t report into their team. As Alan Kay said, “Perspective is worth 80 IQ points,” and you want as much perspective on new hires as possible. Your team should come up with a key set of questions that you make sure you ask and comparing notes after each round of interviewing is important. Multiple rounds are a must. I found that at least three was a good number. The first culled out those who didn’t fit. The second round involved numerous staff to find finalists, and the last round was to decide between two or three finalists. You may need more rounds, but don’t go with less.
- Sell. Hiring top talent is incredibly competitive. So keep in mind that recruiting is a buy/sell process. You need to be selling the vision, the company, the team, and the position. As a startup you are going to be competing with both other startups and more established companies, so your unique selling proposition is going to be critical in convincing candidates to join you.
- The interview. Too many interviewers rely too much on resumes. However, one technique I was taught by a VC who interviewed our top execs was to use the resume to understand the candidate’s decision making process. So instead of asking the candidate what was their GPA at MIT, which has been proven to have no correlation with success in business, ask why they chose MIT instead of Caltech or Carnegie Mellon. What was their decision process for deciding on a college? On grad school? You can ask similar questions about how they chose their first job, or decided to change jobs. But I have found the best way to interview is to use the case method: give the candidate a real problem the company is facing or has faced and get their answer in real time. For example, for a marketing exec: should you be pricing low for maximum value, high for the greatest gross margin or somewhere in between? Not only will you learn how a candidate thinks on their feet, you might get some help on a real issue you are tussling with.
- Judge the questions as much as the answers. I have found without fail that the smartest, most engaged people ask the best questions. So make sure you provide your candidates ample opportunity to ask questions and judge those questions carefully.
- Homework. Giving candidate’s an assignment to complete as part of the interviewing process has become much more common since I started doing it decades ago. You have to be careful that you don’t give the candidate the impression you are simply trying to get free consulting. But like the real time business issue question, give them a real problem the company is facing, has faced or might face and have them come back with a 5 minute presentation on how they would solve the problem. This will also give you a good idea of how the candidate presents, as well as solves problems.
- It’s all about fit. Candidates not only need to fit your job qualifications and team needs, they need to fit into your corporate culture. You do have one, right? If not, like vision, go back to the drawing board with your team, elucidate your values, write down your guiding principles, and by your actions build your culture. If you have done a good job of that it won’t be hard to know if a candidate fits your hard-driving sales driven culture, like Oracle or your customer-centric like Amazon.
- Reference checking. Read my post Reference checking – a skill that founders need to develop. Reserve reference checking only for your finalist. It’s unfair to candidates to “wear out” their references if you aren’t truly convinced they are a fit for your venture.
No one bats a thousand in recruiting, but that doesn’t mean you shouldn’t try. There are dozens if not hundreds of books on recruiting, not to speak of blogs and web sites. You can find some helpful posts in the Talent section of this blog. But keep in mind, you must have the foundation in place: vision, business model, organizational design, strategy, and corporate culture before you start the hiring process or you will be headed for either a lot of bad hires, losing star candidates or both.