Are you ready to scale your company? A closer look at the “when, where and how” of hiring for your company.
Ask any founder about their top three business priorities, and I guarantee one of them will be hiring the right people. And yet, despite the importance we give it (and money we spend on it — an average of $4,129 per job in the United States), it seems that we still struggle to get recruiting right, evidenced by high turnover rates and general frustration on both sides of the process.
On top of that, recent research shows that hiring is particularly critical for startups and smaller companies — but they’re the ones that are vulnerable to hiring challenges, especially during economic downturns. High-quality candidates tend to prefer the security of larger, more established firms and are even willing to make compromises for the perceived safety. As the researchers observed, “people were broadening other search criteria to include lower-paid roles, part-time jobs, and jobs in different locations and industries.”
If you’re just starting out or looking to scale, entrepreneurs cannot afford to give short shrift to their hiring process. Here, a few expert-backed strategies for hiring top-quality talent for your company.
1. Hire as you grow
As CEO of my company Jotform for nearly 16 years and counting, one of the most common questions I get from early-stage founders is: When do I make my first hire?
The answer: when you’re on the verge of scaling your company — even if it doesn’t necessarily feel like the right time to hire. Here’s why.
For early-stage founders, it’s tempting to want to handle everything yourself. But when you’re ready to grow, it’s critical to bring on new people, and in particular, a product team. As Deepika Yerragunta, head of platform products at PepsiCo, writes, at that point, “your company needs you. It’s not you and your co-founder and a handful of customers anymore. There are things that need to be taken care of — sales, marketing, customer support, employee issues — payroll, finances etc, fundraising to be taken care of.” Hiring good people will free you up to focus on the things you need to take your company to the next level.
And another maxim that has worked for me: Hire only when you have a full year’s salary for the new hire in the bank. That will keep your burn rate low and ensure your company has the bandwidth to take on a new hire for the long term.
2. Ditch traditional interviews
Though I’ve had my own company for over a decade and a half, I still remember interviewing for other people’s companies as if it were yesterday: the sweaty palms; the tense environment; the feeling like I failed to communicate just how much I had to offer. Studies consistently show that those (stressful) traditional interviews don’t effectively predict a candidate’s success in the role.
That’s why I love the idea of ditching traditional interviews, for the most part, and finding creative ways to get to really know job candidates. For example, serial entrepreneur and investor Dinesh Moorjani reports inviting candidates to participate in 48-hour hack-a-thons with his team. “The events provided a way to observe and assess candidates’ ability to work with others in the frenzied environment they would normally encounter as part of a Hatch team,” explains the Rock Center Startup Guide.
Or, you might invite a candidate to a more informal social event with members of their prospective team. The key is getting to know candidates and what they bring to the table. As Nick Weaver, CEO and co-founder of home networking company Eero, told Time magazine, “I think in the recruitment process, a lot of people are pretty transactional. And if you really take the time to get to know people, you have a materially different outcome.”
Investing the time to really connect with job candidates will pay off later.
3. Don’t overlook “imperfect” candidates
Working in a startup requires a certain level of flexibility that isn’t valued as much in larger, more traditional companies. For that reason, a seemingly “perfect” hire — the candidate with a resume that checks all of the boxes — might not be a fit for your organization.
Consider the example of Quincy Apparel. The founders lacked apparel industry experience, so they hired a few veterans, assuming they could successfully take on multiple roles. The outcome was the opposite. Harvard Business Review explains that, “accustomed to the high levels of specialization in mature apparel companies, Quincy’s employees weren’t flexible about tackling tasks outside their areas of expertise.” This was one of the factors in its eventual downfall.
On the other hand, a candidate who seems imperfect on paper might have the traits your company needs to thrive, such as flexibility, resilience, ambition and stamina.
4. Always be on the lookout
Some entrepreneurs make the mistake of only focusing on meeting new candidates when a new position opens up in their organization. But experts say you should be on the lookout for potential hires at all times.
Nowadays, top talent tends to be sought out by companies, rather than vice versa. According to Lara Hodgson, co-founder, president and CEO at Now Corp, a B2B payments company, “Almost everyone we’ve hired, we went out and found them. They didn’t find us.”
Connecting with those candidates, many of whom are not active job seekers, requires a relentless commitment to meeting potential hires, and adding them to your mental rolodex for openings down the road. So be on the lookout wherever you are: networking events, lectures and even at the local coffee shop.
5. Track the outcomes
You might be surprised to discover that most companies fail to track the outcomes of their hires — only about a third of U.S. companies report monitoring whether their hiring practices lead to good employees. As Peter Capelli writes for Harvard Business Review, “Imagine if the CEO asked how an advertising campaign had gone, and the response was ‘We have a good idea how long it took to roll out and what it cost, but we haven’t looked to see whether we’re selling more.’” Almost unthinkable.
It’s no wonder the process is so frustrating for employers and jobseekers alike if we fail to check what’s working and how we might do it better. To improve your hiring system, keep track of the outcomes of your new hires. Measure things like: where your candidates came from (applications through job boards, recruiters, internal hires, etc.); how long employees stay; and employee performance.
That way you’ll have a clearer picture of which sources tend to produce the best new hires.
Hiring might be challenging, but it’s not a mystery. Implementing a few solid practices, such as tracking results, mixing up the interview process and having an eye out for potential hires at all times, will ensure that your company is recruiting the best possible talent for your growing team.