A company becomes the people it hires. Successful startups seldom follow their original plans. Teams not only determine how risk is handled but also evolve to better utilize opportunities and address and redefine risks. Learn how to make the platitude of “hire great people” an actionable and quantifiable process.
THE ART, SCIENCE AND LABOR OF RECRUITING
Congratulations, you are now an executive at a venture-backed company! You survived the presentations, the term sheet shuffle and the due-diligence. Everyone is calling you the Founder (which is true), yet you are actually a technologist, an engineer or just a “great ideas person” with an instinct for the market. But now you have to recruit a team; perhaps, for example, a VP Marketing (maybe you have never been in a room with a real VP Marketing and don’t really know what one does or how to assess his or her capabilities!) Worse still, you might be recruiting a CEO but have never really understood what a CEO does or how to appraise one. How do you evaluate a candidate, especially for a management role that you do not have great familiarity with?
How do you find out what a candidate actually did, how they were really perceived in their previous role, and what they might be capable of? How do you ask questions about a domain you do not fully appreciate the nuances of? Essentially: How do you get beyond the answers to the truth?
No candidate is perfect, so clarity about the necessary requirements and more importantly the tradeoffs is vital. Focusing solely on functional requirements misses crucial skills. Beyond definable requirements, there’s a need to assess contribution — think of that as “value addition” and the ability to “challenge the senior team’s thinking in a cooperative way.”
Finding great candidates is challenging: it takes dedication, innovative-thinking and focus. Use all your avenues to source candidates. The best sources of candidates are usually the people that know your company and team the best — current employees and your board of directors.
Everyone knows the “right” answers to give. How do you decide if what you’re hearing is the truth, and, more importantly, the whole truth? If a candidate was involved in a success (or a failure), what was their real contribution to it? Were they just lucky (or unlucky) to be there?
There are a number of crucial areas on which you should assess potential candidates from domain knowledge and cultural fit to the ability to hire and build teams, motivation, thoughtfulness, critical thinking, values, work-style, past performance and leadership competency, just to name a few. How do you assess these key areas?
Whenever possible, get copies of performance reviews from previous jobs. Ask candidates to submit these late in the process to make sure answers are not tuned to what is already in the reviews.
Aim to conduct references with those names provided by the candidate, in addition to unsolicited references. It is often easy to ask a given reference “who would have a different or less positive view of the candidate?” or “who did not get along with / agree with them?” Ask for specific references — last boss, employee who has worked with the candidate the longest (maybe even went with them to another company), their toughest peer they worked with, etc.
Ensure a smooth recruiting process by being clear about who is responsible for making the hiring decision, what input is needed to get to a decision and how to contact unsuccessful candidates, not to mention who should be informed once a decision is made.
Once the offer is accepted it is critical that you begin to bring the person into the team. This will make dealing with counter-offers much easier and gets them excited and committed to your opportunity. Have a specific plan of who they should meet with on day one, first week, 30 days, and 60 days.
Organizational culture is not created on paper. It’s a dynamic, living organism that evolves every time you add someone new to the team. Mistakes will happen, but the team should be cohesive enough to shake them off. Be unrelenting in your quest for the best possible employees who complement each other. It’s time-consuming and often challenging but remember: the team you build is ultimately the company you build.
Some key questions that will help guide you to the heart of a candidate from job performance to domain knowledge.
GENE POOL ENGINEERING
A strong team is the most important element of a company’s ability to achieve success. The first few hires help the founders create the environment they will all work in and help drive the product development process. It is also the team that drives (and interviews) all future hires and their ideas and biases get incorporated in the team. There is always talk of startup culture, but it is the founders and their first round of hires that define that culture.
Most of the time, startups need a culture of experimentation and an attitude of “change the industry rules, not play by them” is a key requirement . Often in larger, more stable enterprises, repeating yesterday’s strategy is 90-percent of the job. In startups, there was no yesterday and one can’t use “industry rules” to cause disruption.
Entities structured with the traditional hierarchy often hire reactively, such as when an opening occurs due to attrition or poor employee performance. Consequently, firms facing market environments where change, innovation and rapid evolution take place can rush into a process that ends with a candidate to “fill the job.”
The goal of gene pool engineering is first to create a culture where multiple people engage in problem solving, and team members share best practices from previous organizations and a diverse set of backgrounds for the specific problems being addressed.
The goal of startups is to create products that disrupt an established industry with its own rules and product lines. To ensure this, the founders require diversity in their team. Not diversity in the generic sense, but diversity in specific dimensions: age, professional record, academic background, and mindset. This risk-tuned diversity manifests in the product through the reduction of time, energy and resources to achieve the first key iterations.
Systematically identify risky components and their multiple failure modes. Risks fall into the category of technical risk, where the failure of interdependent modules could result in the collapse of the product as a whole or general business risk or marketing risk, which encompasses everything else that is required to take the product to market.
To address the key risks within the company, the main tool available to a CEO or manager is the hiring of experts who have successfully solved similar problems in the past. The more varied the company background of the engineers, the more failures and solutions at disruption they will have seen. Whereas, the more inexperienced team members lack the breadth of knowledge provided by the veterans, they can offer a corresponding lack of industry biases and a fresh perspective on a problem.
The third step of gene pool engineering involves identifying the organizations across academia, the corporate world, and any other top institutions that make use of the relevant skill sets for a particular risk.
9. Step #4: List the top three or more experts at each center of excellence with relevant skill sets and recruit them
Recruiters will often place a cursory “feeler” out to one or two individuals within an organization before checking the box and moving on to another firm. This customary practice reveals two flaws that our gene pool engineering approach addresses.
By addressing a company’s largest risk factors with proven problem solvers and creating a team that welcomes the exchange of ideas and best practices and experience from different areas, a team lead is engineering an organization that has the highest probability of mitigating risk and taking advantage of upside opportunities in the face of change, innovation, risk and lack of clarity into the future.
Make the platitude of “hire great people” a more actionable and quantifiable process. Great ideas suffering from poor execution can kill companies, while less spectacular ideas coupled with phenomenal teams can quickly swing a company from troubled to a success.
Most managers complain about having to do performance reviews – so why do them? Performance reviews are not required by law. However, they are important tools to ensure you and your employees are on track re: performance expectations.
Sometimes, it just doesn’t work out. This paper guides you through the difficulty around managing terminations.
As a founder, there sometimes comes a point in your company’s growth trajectory when you need to hire a CEO or president from the outside to get to the next level. This can be an incredibly difficult decision to make, but it’s better for you to make the decision yourself than to be told by your board that they’re hiring one whether you like it or not.
Though debated among some venture investors, in my view, it is always better for a founder to grow into being a CEO. When there’s a choice, the founder’s vision, culture, and approach are usually more important than “good management” alone. While I’ll offer some insights for investors, this piece is primarily addressed to the founders themselves. I’ll start with some suggestions for buying time to learn and grow into the CEO role.