Staffing a Startup How to Make the Best Decisions on Hiring and Lead the Venture Where You Want it to Go
Staffing a Startup: What staff does a startup need? The data does not show that solo founders do any worse than those with two or more. However, my advice is that the second member of the team should either be a co-founder, or a proxy co-founder.
By proxy co-founder I mean a person intimately concerned with you and your success. I would also say that involving two different genders in the founding team will give you a head start. I know my first business probably depended upon it.
Why do I say these things. You need to have another committed person with whom you can share your wild ideas and who can be a sounding board, as well as bringing a different perspective on the common goals. If the co-founder is a proxy partner, he/she might be a professional in your field, someone with expertise relevant to what your are about. It might be an older person who has had their edges knocked off.
Staffing a startup is very different to experiences you may have ad in recruiting for your corporate employer. The stakes are even higher, for two reasons, (a) the venture is smaller and each recruit will have a bigger influence on success; and (b) the characteristics of the individual recruit absolutely must fit the culture and purpose of the new venture.
Founders face many challenges, but startup leadership is one of the toughest, and of the leadership jobs, staffing a startup is maybe the hardest of all the tasks that you did not think about when you were dreaming of your new business. I know I did not.
Stick with the smallest number of people
Once you are confident of the founder team, then your next step in staffing a startup is to determine what kind of person/skills you cannot do without—and one that you lack. Maybe, if your business takes you away from base a lot, you need a person who can ‘hold the fort’. In any event, maintain as small as possible payroll. You may figure that you can afford to hire, but in the short term future revenue may fluctuate and you don’t want to have to miss payroll, or let people go early on.
If you are determined to have skills available or specialists who complement your own, think about whom you can recruit on a part-time basis, or as a sub-contractor. This way you can have the support without a personal and long term commitment. Allow flexible working and you’d be surprised at the talent pool of professionals, especially women with families, that you can tap if you adapt to people’s own needs as well as your own.
You can make use of lots of new services, like SAAS—software as a service; for example, you don’t need a full-time bookkeeper; you can use the cloud-based versions of Quickbooks or FreshBooks. Both have plenty of help available so that the person you have ‘office-bound’ will surely be able to cope with your bookkeeping needs until quite far into the business. If the jack or jill of all trades has no bookkeeping experience, the rudiments can be learned in a day. When I started we had such a person, who did the books and could call a specialist when she lost her way.
Do not underestimate your own ability
As a venture founder, you will most likely have a particular skill set or specialized experience. You may in consequence belittle your ability in other areas. Show some startup leadership: don’t. For example, you may be a technical wonk who invented the product your business sells, and as the entrepreneurial founder of the company you have naturally been its main salesman. Your passion has carried you along; you may even have hated sales, but people buy from you. Imagine that your co-founder is a finance person, who loves numbers and worries about social interaction. That person, nonetheless has been sucked into sales, because she knows the business backwards.
Time has passed and the two of you have begun to think that now is the time to recruit professional sales staff, because ‘we aren’t sales people’. Be careful, because you two co-founders may be the best sales people you’ve got. You may have had a rough start on the road, but being quick learners, like all good entrepreneurs, you are actually better than you think. Take a look at the Venture Founders Tool: Conscious Competence Matrix. It will show you that maybe you’ve become unconsciously competent.
You may be lured by whizz sales people from another sector similar to yours and all their sales person talk, but how are you going to get them to the same level of love of the product or understanding of the user situation?
Or maybe you’ve grown sales of your startup by hiring clones of yourselves, but now you feel that you really do need some sales management expertise. In my own experience, your ability may even not known to yourself. If you are running on a shoe-string budget and you are watching you cash flow on a daily basis, you are running some form of CRM (Customer Relationship Management) system, even one invented by you, and you are watching your sales pipeline like a hawk, you may already be exercising the some of the key skills you think you need to look for outside.
This does not mean that in staffing a startup, you should be big headed and assume that you can do everything and know best. Knowing your skill shortcomings and showing honest humility is vital. One thing is for sure is that from day one of the new venture, your rate of learning will accelerate, but founder overconfidence has been the undoing of many startups. Startup leadership does not imply bravado. Sensitive leaders are not heroes.
Growth will require you to delegate some responsibilities
In the early days, you did pretty nearly everything. Now you just can’t. So, even though you may not be willing to give up on certain things, how are you preparing the ground?
In staffing a startup, you should be devoting some energy to coaching and developing others to shoulder more responsibility, even forgiving mistakes along the way. Some entrepreneurs are benevolent autocrats and that may take them so far, but you are less likely to be able to scale the organization as such a person. Your benevolence needs to be demonstrated in your leadership, not your autocracy, though.
So, as you shed some of the work that you habitually did, how do you do it?
First, you need to have a plan, even if scribbled on a post-it note. Decide which parts of the job are most easily delegated and where there could be a ready source of potential candidates. If you were the product designer, it probably won’t be the R&D function. On the other hand production might be an area where you could delegate, and where you may already know a possible candidate.
Second, while you are not looking for a clone of yourself, there is one characteristic that will be vital. The new hire must be a learner who will be able to grow and eventually delegate, just as you did. In fact, you would do well to build a business full of learners. Then you will increase the value of your staff hugely.
Third, school yourself to let go. It has been your baby until now, so it may be difficult, but if you don’t trust the new hires, you will be hobbling them. Trust your new subordinates and practice an empowering style of leadership. If they trust you, they will loosen their own demands somewhat.
Fourth, don’t be afraid to get help. One of the best sources is likely to be going to other entrepreneurs you know and ask them how they went about getting good people… or avoiding hiring too many people too early in the life of the startup. There are many web-based recruitment services available. Do a search yourself and see if there’s one that fits your needs and style.
Develop a compensation and benefits plan
It may sound like this is something only for big corporates. It’s not. If you don’t have a plan, at least in your head, you will very quickly trip yourself up, when you start hearing people complaining about things not being ‘fair’. Also, such a plan will really set the tone for the kinds of people you want to hire progressively. When I say plan, I really mean a plan which is both generous and honorable.
Perhaps one of the hardest parts will be to figure out things beyond the basic salary that is right for the job. Here are ten issues that you will want to consider:
- the desirable culture;
- what ratio should exist between the top (not necessarily you!) and the median employee;
- how to organize, motivate and retain staff;
- is a stock ownership plan of any merit;
- would participative management styles be appropriate of desirable;
- should you use incentives (for performance or self-improvement);
- ethics, discrimination, and disputes policies;
- training and development practices;
- what compliance issues that could trip you up;
- can you benefit from using HR or hiring software—there is lots of it available.
Be clear about culture
From my experience, being very clear about the culture of the firm is key to finding people who will fit the firm. Making the wrong choices can be both costly and painful. Three years into my first startup and members of the team always referred to examples of the culture that sold them on joining the business.
It’s difficult to show off culture if it’s ‘just the way we are’. One of the ways we (crudely) referred to a significant part of our recruitment process was the group grope. This was, once we had been through the filters of resumé, interview, references, the final hurdle was a session at which all (really all, including the office junior) existing staff were invited to attend a presentation by the candidate. The candidate was only told that; no instructions, except that their presentation should demonstrate why they should join us in the chosen role. This provided an opportunity for honest dialog between the candidate and staff. It went both ways and of itself showed what we were ‘made of’.
Get the basics right
You need to get some basics right. These include:
- involve any existing staff in the search;
- have clear candidate specifications and job descriptions;
- set your guidelines for the process and structure the interviews;
- have an interview and assessment plan, or buy software as a service like lever.co;
- be clear about the assessment procedure and whether you’ll use any tools (we used the Myers-Briggs Type Indicator to help us);
- be upfront about the desired competences, especially in relation to the startup environment;
- know how you are going to get references that mean something.