In the early days of a startup, new hires have a tremendous impact on the tone, direction and prospects for success of your enterprise. Say you have three co-founders, and you decide to bring in one new person. If Google, say, were to make a proportional increase in its headcount, it would need to hire over 15,000 new people.
Entrepreneurs therefore rightly sweat the process of recruiting and hiring new people. Here's a quick list of the most common early-phase recruiting & hiring mistakes I've seen in startups I've encountered (including a few mistakes I've made myself). This is a "countdown" list, so the mistakes go from least to most serious.
- Waiting until you need more people. Startup entrepreneurs need to be in recruit-mode all the time -- in much the same way, and for the same reasons, that they need to be in sales-mode all the time. Building a list of potential recruits for any number of possible roles should be an ongoing process.
- No process. Yes of course, you're a startup, you're a scrappy insurgency, process is for big companies. I feel you. I'm not saying you need some big honking Intranet for managing the hiring process in the early days and months, but a basic checklist won't kill you, right? Something simple like this: recruiting - interviews - verification - negotiation - hiring - orientation. A simple roadmap helps things go faster, so you can go back that much sooner to working on your Facebook-killing iPhone app or what-have-you.
There are two additional benefits to having a simple workflow in place for recruiting and hiring. First, it puts the best face on your organization. You want interviewees to walk away with a positive view of your startup even if you don't hire them -- you never know if the person you just gently turned down might introduce you to your next customer or potential hire. Second, the simplest of checklists helps ensure similar treatment of all candidates -- a legal requirement in some countries, and an ethical imperative everywhere.
- Too much process. Workflows borrowed from large-company Human Resources departments can be dangerously inappropriate for rapid-growth small businesses. Tying recruitment and new-hire start dates to specific milestones -- a beta release of an app, or a large marketing campaign -- makes decent sense. But more often, the alignment and fortuitous timing of someone you want to hire being available and eager to start, combined with adequate funding to hire that person, will trump any strategic-plan or scheduling consideration.
- Paying too much for a senior / high-value hire. Very young or first-time startup founders often fall prey to this one. In their eagerness to add gray-hair gravitas to the management team, or ceding to pressure from investors & advisers who tell them they need more adult supervision, young founders will offer senior hires a higher-cash, lower-equity mix (or worse, higher-cash and higher-equity) than what they offer to others. If a prospective hire can't accept the same risk/reward ratio as others on your team, you need to ask yourself (better yet, ask them) why they want to work for a startup. Similarly, paying a premium for a "high-value" hire (someone whose mere presence in the roster increases the valuation of the company) is interesting in very limited circumstances, for example, if you anticipate selling your company in the very near future. Building a sustainable business, gaining and keeping customers, and developing your core product/service, all will boost your valuation more significantly and reliably in the long run than adding rock stars to the management team.
- Hiring your friends. The issue here isn't nepotism (a general problem in hiring that doesn't affect startups more than other businesses). By definition, you can only hire people you know. But those you know when you first start your business, your friends especially, are likely to have backgrounds, educations, and assumptions about the world very similar to yours. This makes it less likely that they will be able to challenge your ideas, or you, theirs. A good map of your startup's world -- its competitive ecosystems, its technical and operational challenges, etc. -- will come more readily from a diverse core team with different backgrounds and life experiences. By all means keep your talented friends in your maybe-hire list. The existing basis of trust you have with them is a great asset. But do all that you can to push them to the bottom of that list, and make every effort to meet new people outside of your conventional social circles in your recruiting efforts (see also my remarks above about always-recruiting mode).
- Hiring geniuses. They're super-smart, they've got patents and PhD's coming out of their ears and nostrils. Of course you want to hire them. And of course, dear reader, you've already figured out that I've framed this "big hiring mistake" in deliberately controversial terms. But it comes down to this: the smartest, most capable people do not always make for the smartest, most capable teams. To put it another way, the Genius Team is not always -- indeed, hardly ever is -- a team of geniuses. In my own hiring process, "team fit" is the top consideration. Someone who can do their own job adequately, but also helps, supports and empowers other team members to do their jobs better, is greatly preferable to someone who does their own work brilliantly but doesn't help improve the collective effort.
You're not trying to hire the best people. You're trying to build the best team.This has been, in my experience, the most difficult challenge in recruiting for startups, but it will never happen if you don't try.
- Not vetting. This is the worst, most common, and (because it's so easily avoided) most tragic hiring mistake I've encountered in my 27 years in the startup trenches. ADP, the big paycheck-processing service in the US, has a background-check subsidiary that found false claims in 53% of the résumés it was asked to verify (2012 data). So a little paranoia is justified. A startup may not have the time, human or financial resources to run background checks. But common sense goes a long way. If someone claims to be fluent in German, get someone to speak with them in German for two minutes. If a software developer claims to know Java, grab 50 lines of Java code and ask them to explain what it does. (Aside re: hiring software developers: with human languages, many people can read better than they write. With software source code, it is often the exact opposite). Send one email or make one phone call to a previous employer, if only to confirm your candidate did work for the firm. A very small effort before you offer someone a job can reduce the risk of much agony later.
- Recruit all the time
- Hire when (anticipated) need meets opportunity
- No planning and too much planning, both to be avoided
- If you find a great addition to your team, forget the plan & grab 'em!
- Seek candidates as far outside your social circles as you can reach
- Smart teams ≠ teams of smart people
- Trust recruits after you hire them, until then verify!
As with everything I write, and for that matter, everything on the Web and in print, YMMV (Your Mileage May Vary). There is no right answer, but it helps to ask the right questions. Please let me know your thoughts in the comments.