Hiring your man Friday.

Hiring your man Friday.

This is what we call in the business “a good problem to have”. The hiring and on-boarding of professional talent is a classic growing pains-type of problem that is faced by every entrepreneur. 

From my work in Silicon Valley, I have observed that startups in any industry go through three distinct phases of organisational growth characterised by very different needs. Stage One is all about innovation — creating that “killer product”. In this stage the strategy focuses on speed to market and the emphasis is on creating a culture of innovation by hiring and nurturing creative talent and product development skills, in an organisation that is relatively unconstrained by formal structure and roles. 

Stage Two is all about market penetration — creating as broad a footprint as possible for the product. In this stage, the strategy focuses on building awareness and creating sales channels, and the emphasis shifts to building a sales culture by hiring market developers and salespersons, and getting more sophisticated in terms of measuring and rewarding sales performance. 

Stage Three marks the “graduation” from startup to a viable business. It is entered when the company realises that it is has grown so quickly that things are getting out of control, and there is a risk of frittering away the gains it has achieved to competition that will quickly smell success and move in, sometimes with deeper pockets. The focus of this stage of growth is profit extraction. The strategy focuses on balancing the competing demands of effectiveness and efficiency — bringing costs and quality under control while maximising revenue. The secret to success in this critical third stage is recognising and managing the interrelatedness of the 3Ps of successful growth — professionalising, introduction of process, and profit extraction. 

Professionals bring expertise and experience with having “been there, done that”. The introduction of process brings greater predictability that is critical for better coordination in a growing business, and greater control over cost and quality. Finally, the emerging emphasis on profitability marks the transition from a wistful startup to a viable commercial business. Many startups fail because their leaders don’t recognise that their organisation and mindset regarding how they are structured, how roles are defined, who they hire, how they are rewarded, etc., needs to consciously make the shift from one stage of growth to the other. 

The introduction of the 3Ps of growth into a startup is always a very difficult challenge. Startups are often fired by visionary even missionary zeal, and a sense of intimacy, of being like family. That is exactly what is needed for success in Stages 1 and 2, but could also become the biggest stumbling block to success in Stage 3. The hiring and introduction of professionals will often become the lightning rod for drawing criticism from employees who are used to a “just do it” way of operating and see the professional as the one who “doesn’t get it”. The trigger for this ire is almost always the introduction of process — which is the ugly “P-word” in the world of entrepreneurs — and the increasing emphasis on cost or bottom-line considerations. 

The writer asks the question about red flags he/she should look for in a resume when hiring senior staff for the first time in a startup. The fact that he/she recognises this is going to be a challenge is a good sign. So how should we go about it? 

Success of senior staff plays out in three acts spread out over a year or so. Act One is the hiring of the right person. The entrepreneur should look for fit in terms of attitude, experience, and expertise in that order of priority. Attitude in terms of willingness to work in an environment that may be more rough and tumble than orderly. Experience of having worked in unstructured and rapidly changing situations, introducing process and discipline into it and dealing with/overcoming resistance. And expertise in the relevant functional area. There is nothing wrong with hiring someone with a big company background to work in a startup as long as they meet the selection criteria. On the other hand, selecting someone whose resume suggests a gap or lack of fit in one of the three ingredients attitude, experience, or expertise, could be risky. 

It is important, however, for the entrepreneur to recognise that success will depend not only on good hiring, but also on Acts Two and Three — on-boarding and on-going support. By definition, every startup feels different and operates differently. Any new hire that comes into senior positions will be seen and treated as an “outsider”. It will be important to anticipate this reaction and pave the way for a smooth on-boarding of the new senior hire because startups cannot afford disruptive internal conflict. Within months, as the professional starts introducing the business processes that he was hired to implement, waves of resistance are likely. This too can be managed with sufficient forethought and planning. These actions are not just important, they are critical to ensure the startup moves past its growing pains to becoming a viable business. 

Author Reference:

Rajan Srikanth 

President, Asia, 

Mercer Human Resource Consulting