A vital part of building a venture is always looking ahead (in addition to fighting fires on the ground). Startups that do not lose track of the big picture are often better prepared for grand events like expansions in the team and therefore hiring needs. If you’re looking to expand your team after the close of the round, proactively working with your recruitment partner is essential to making this happen. Forfeit the thought that attracting A players to your team will be a fast walk in the park. In an analysis of 101 failed start-ups, 23% reported their business failed because they had the wrong team. Developing a team that is committed to the organization’s vision is central to the success of your business, a wonderful symphony takes a variety of instruments and skillsets to be composed.
“A company is only as good as its people. The hard part is actually building the team that will embody your company culture and propels you forward.” – Kathryn Minshew, CEO, and co-founder of The Muse.
So here are the 5 core tips to take when planning your team’s growth:
Tip 1 – Start with the right estimates
Scope the market or ask your recruitment partner to study and share their estimates on A-level talent salary in your niche. Relying on the standard reports from agencies will often give you a bottom line of the average, so it is twice as important to get these numbers right as well as the expected benefits package. In our own survey, we found that 38% of the respondents were unable to secure top talent due to inadequate compensation and benefits. Realistic estimates allow you to pitch for the right funding amount and this, in turn, allows you to hire top players to build the competitive product.
Tip 2 – Plan in advance
You need the time to approach, interview, hire, and onboard the new talent. With notice periods for senior roles being closer to 6 months rather than 3, it is likely that the absolute fastest you will be lucky to get the person to your team is 4 months (and that is considering that you have correctly defined whom you wish to hire, your recruitment process is optimized, and candidate agrees to your offer).
Tip 3 – Let friends stay friends
It is a romantic vision to arrive at the business idea and build a venture with your friend. Yet building and scaling your startup is stressful, time-intensive, requires a diverse skill set, and the right people to lead in areas where you might be lacking time or expertise. Friendship and building a venture together are two separate diagonals, do not mix them up.
Tip 4 – Define the mission of the role
The number one mistake ventures make is not defining who they need to hire and what a new hire needs to accomplish in their role. In reality, one needs to look beyond the standard job descriptions and job ads to attract the leading talent. With 73% of talent being passive candidates, the chances that the right person will float into your team by him/herself are rather slim. As an example, at YZ Talents we use the custom approach with a scorecard and 4-stage interview technique to make sure the candidates we recommend are of the best fit.
Tip 5 – Your reputation matters
In a survey by HBR 84% of surveyed said they’d leave their job if offered the chance to work for a company with a stronger reputation. In a niche where talent is scarce and things can be easily googled, the result of a wrong approach to the talent market can cost you a competitive advantage in product, team, and financing. In your efforts to expand the team, make sure your representation is proper, not to harm your company’s reputation now or in the future.
Hiring late or mis-hiring
A delay in hiring and failing to fill key roles can very much result in costing you the competitive position, users, your next financing round, and, ultimately, your venture. The business commitment may surpass your human capabilities when you grow, overseeing the growth and proactively hiring the person may well ensure the sanity of your team members and save you from burnout. According to Reeve Associates, in certain sectors, a 3-month delay in recruitment for just one role can lead to a lost opportunity of $95k rising to $190k after a 6-month delay.
Hiring the wrong person is equally costly. To put things into perspective, the average cost of the mis-hire can range between 5-15 x the annual salary of a candidate. And that is just a financial cost, a lost market opportunity can be worth many more millions, so do not rush into filling the role just for the sake of filling it.
Timeline – the when
The period before the next raise is the time when you should be considering both the short and long-term business goals and what your hiring needs will be, in order to achieve these objectives. This is a critical time when a business needs support from a recruitment partner that is both client and candidate-focused – recognizing their client’s unique expertise in their field whilst also recognizing the specific type of candidate the team will be looking for. In an ideal situation, this process should commence at least 2 months prior to you closing the next round of financing.
The Harvard Business Review reported in May 2019, that the majority of people who took a new job the previous year weren’t actively looking for one. In fact, the top 10% of talent never actually applies for a role, they get proactively approached by recruiters. Your recruiter will be ‘hunting’ down that one individual, or team of individuals, who will be able to skyrocket your business to the next level. So, if you’re considering the next step in the expansion of your business, don’t sit back and wait for it to happen.
From the perspective of the Studios
The fluidity of the venture studio model and the unpredictable nature of ventures that will scale past the testing pushes me to the conclusion that at the very early stages of the venture building process, the multifunctional shared resources team is the best option for exploration work and prototype testing. With the time-bound testing and considering the low code/ no code built prototypes, we can achieve a faster time to market initially and smooth out the transition between the temporary product and permanent product. Once you establish the profile that will lead the venture to the next round and the team composition to support that growth, the matter of “who” and “when” of hiring gains clarity. Remember, for candidates and hiring teams alike, the biggest paradoxical mismatch is not knowing what they want and need.