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Hiring is a perpetual challenge for executives, managers and leaders at companies of all sizes. Finding candidates that have the right skills at the right price and who fit with a company’s culture is rarely straightforward. For younger startups, specifically, the challenges and pitfalls can be even more pronounced.
Many fail to plan ahead for what their staffing needs will look like in relation to their strategies, roadmaps and trajectories, which often results in a lack of understanding of the roles that need filling and why, haphazard hiring practices and costly mistakes.
Meanwhile, consumer startups aren’t necessarily deemed the most attractive places to work. Workloads can be heavy, environments and cultures can be hectic and unstructured and, in many cases, candidates may not be particularly familiar with companies and their products and services.
These challenges are exacerbated by the fact that most consumer startups compete for talent with established and well-known companies, which can appeal to many candidates by offering greater stability and predictability and fewer variables and unknowns.
While a carefully thought-out and well-structured hiring process may not solve all of these problems, it can send a powerful and important signal to candidates about a company’s maturity, culture and ethos – regardless of its size or stage. More importantly, it can help drastically minimize bad decisions and costly mistakes that negatively impact all parties.
For consumer startups, effective hiring processes can be broken down into the following steps:
- Ensure internal alignment among internal stakeholders: A hiring roadmap should work alongside the company’s overall product roadmap so the right problem is solved with the right personnel, while job proposals and job vacancies are articulated to ensure the right search is conducted.
- Source candidates appropriately and conduct good interviews: Finding candidates can be difficult, however, a thoughtful process for sourcing, combined with well-organized interviews, can ensure the right candidates are brought in.
- Hire high-quality candidates: Hiring processes should ensure that candidates are tested on appropriate skills required for the job and are invited to talk about their values, cultures and backgrounds. For smaller companies, one bad hire can change the equation.
For startups, hiring requires striking a delicate balance between the right type of people, the right number of people and timing. While many founders and executives grumble about a lack of personnel inhibiting the ability of their companies to move or scale fast enough, hiring too aggressively can also cause problems of its own.
Understaffing – having too few people to do too much work – can wreak havoc on a startup’s goals. Beyond the obvious problem of a lack of bandwidth inhibiting operations and growth, it can have a more profound effect on the trajectory of a company if senior executives and founders are not afforded time and energy to concentrate on bigger-picture growth initiatives and strategic vision. Customer problems can pile up, technological improvements slow, and companies can lose momentum – all of which can negatively affect future funding and investment.
Hiring too many people can also be problematic. For example, project managers can be extremely helpful when hired at the right moment, but can be a drain on resources when brought in too early. Another common problem can be overcompensating for perceived weaknesses with too many senior, expensive people hired too quickly in an effort to shore up the bench, particularly for companies just starting out. Sometimes, problems can be solved by junior people that cost less money.
A hiring roadmap can help overcome and mitigate some of these challenges and pitfalls by forcing organizations to carefully consider their staffing needs, ensure their hiring efforts correlate closely with their broader strategies and company roadmaps and ultimately help steer far more efficient and effective hiring processes.
Here is how to ensure hiring roadmaps are effective:
- Each roadmap should be divided into six-month increments. Every six months, companies should have the minimum number of people needed for the following six months. This ensures enough time is set aside for planning for the hiring process, executing on it and onboarding.
- Hiring roadmaps should work in tandem with the company’s overall business plan. Each KPI in the business plan should correlate and correspond with hiring goals.
- Each roadmap should include two key sections: (1) Skillset: Clearly define the skillset needed and how the addition of that skillset will positively support the team, and (2) Staff workload: Determine how hiring can alleviate the existing team’s workload, thus, generating growth.This is particularly important so existing staff can do their work, and hiring isn’t just focused on the new and varied skills needed for a growing company.
- Roadmaps must always be kept up to date. Every time a new roadmap is needed, various areas of the company should be consulted in order to determine exactly where the needs are.
- Roadmaps should work for the long term, not to solve problems in the current moment. Instead of only considering problems that are happening right now, care should be taken to ensure the roadmap focuses on challenges that will exist in the longer term. This can help avoid a situation where hires are being made at lightning-fast speeds but only to fix problems as they appear, versus a strategic plan that goes hand-in-hand with the company’s growth.
Ensuring internal alignment is one of the most critical parts of the hiring process. This is particularly true for smaller companies, where it can often be assumed that the needs, skills and capabilities required are self-evident. In reality, the opposite is often true, and spending time ensuring that roles, responsibilities and goals are well-articulated can drastically decrease the chances of internal confusion.
To begin, founders and executive teams should create a job proposal that can be used to create a job vacancy or job ad. This is particularly important for early-stage companies at which hiring often takes place relatively informally. A well-constructed job proposal can ensure that, even within looser structures, specific needs are being met.
Even for the most in-sync teams and groups, there can be disagreement or confusion about what is needed from a role and what is required from the person who is chosen to fill it. Job titles, particularly, can be misleading. A vice president of growth might require completely different experiences and skill sets at one company compared with another.
Job titles should not be used as shorthand or in place of crafting a specific job proposal.
- Mission: This is the purpose of the role and why it exists. This should not be skipped. The mission should be able to communicate the need the role will address.
- Job title: This is important because it has to sound appealing but also be realistic.
- The functional requirements: What the job requires, from a technical and skills perspective. This can be educational requirements, certain software experience or any other technical skills ideal for the role.
- The non-functional requirements: This is particularly important to startups as roles are rarely simply about the skills or experience required. Does this role require someone to challenge senior thinking? Does it need someone who can go beyond the role’s functional requirements and act as a contributor to the overall business? Is this someone who can speak intelligently and provide information about competitive advantages? These kinds of so-called “soft” requirements must be outlined here.
- Outcomes: This should be the outline of what this role is expected to achieve, preferably written out over the next three, six and 12 months. This is what the role and the candidate will be measured against.
- Compensation range or plans: This can include a range, but should be specific. While many roles are flexible depending on the candidate, there should be a budget that includes equity and options, relocation packages, signing amounts or bonuses, health plans, 401K options, and other benefits (if applicable).
- Timeline: It’s important to delineate how time-sensitive this hire is. This date should not be less than three months away; the process for each role should begin two months out, plus one month added for the recruitment process itself.
- Ideal profiles and current or past companies: During discussion, specific types of candidate profiles may have come up, or certain companies that the executive team wishes to hire from, due to adjacent experience or cultural fit. For startups, which will generally be more proactive in their outreach, this can be helpful to include for the sourcing process.
Using the job proposal
The job proposal has two main purposes: (1) to ensure that alignment and approval on roles is gathered from across the organization, and (2) to ensure that the external outreach – via recruiters, job ads or just casual meetings – is working towards the same core requirements and goals.
The best way to ascertain whether the first is happening is to circulate the proposal to stakeholders within the organization. This depends on the size of the company and the role itself, but it can be helpful to ensure the proposal is sent to the founders (if they’re not the ones who created it), peers or employees of the new hire and critically, investors, advisors and mentors.
The goal of this process is to ensure that comments and feedback are gathered so the role’s requirements and responsibilities are clearly defined. This can mean that the proposal gets attention beyond the person or people who created it. Particularly in smaller companies where a role may interface with various groups, it can be helpful to gather perspectives from other team members, as well as external stakeholders.
Furthermore, once the hiring has been completed, upholding this process means that there will be a shared understanding of the outcomes and goals for the position, which can be helpful in the future.
After the job proposal has been circulated to relevant stakeholders, it should form the basis of the most important, public-facing document for the hiring process: the job vacancy, which should be used to advertise the job itself. The job proposal then becomes the foundation of the entire process – it can and should be a checkpoint of sorts, while candidates are being screened and going through the interview, and even beyond.
The job proposal can also be used to determine how new hires are doing; because it includes core requirements and measures of success, it can and should form the basis of early performance reviews and check-ins.
Job vacancies are often conflated with job proposals, but there’s a simple distinction:
- Job proposals are for internal use, to communicate requirements with internal stakeholders and to make the case for certain roles within the organization.
- Job vacancies are for external use and are designed to translate a role’s requirements and purpose to prospective candidates and the outside world.
Because startups often hire via manual outreach and/or poaching people from other companies, a written and impactful job vacancy is often foregone. A standardized job vacancy means alignment around outcomes and desired profiles and a well-pitched role. Writing things down ensures clarity and accountability.
- The mission that was in the job proposal.
- Outcomes: What the role is expected to achieve within the first few months and up to a year.
- The functional and non-functional requirements, as outlined in the job proposal.
- The hiring process: The job vacancy and outreach should include information on what candidates can expect, including, if necessary, certain testing or technical skill set interviews.
- The company and the candidate: For younger companies, it can be helpful to indicate how this role fits into the company’s overall strategy and vision, and how the candidate should view their contributions to the company if they are successful.
- What to send to the company: All companies should ask for a resume during the application process. Cover letters are generally obsolete; it’s better to ask for a more extensive memo and goals for the job after the candidate has finished interviewing.
How to pitch a company
Depending on when in the life stage of a company a hire is being made, it is highly possible that candidates may not be familiar with the company or its products and services. It’s therefore essential that companies find a way to stand out and set themselves apart from other companies and options candidates might be exploring. This is particularly important for hires in competitive areas and roles, such as engineering and marketing.
A company’s values, overall mission, and where roles fit within an organization are critical factors to articulate well. Candidates should be able to envision themselves as part of this process of growth and scaling. This should also include an indication of what makes a company different.
- Benefits and perks: Some consumer startups tout everything from unlimited PTO to health perks to an in-office fitness center. These benefits, if they exist, can help candidates get a fuller sense of what their lives would be like if they worked for this company.
- Mission and values: If a company’s product is directly related to doing good — for example, every purchase benefits someone in need — this can be important to mention.
- Founder story: If the founding team itself is interesting or unique, perhaps due to their backgrounds or experience, this can be useful to mention.
- Unique facet to the job: Does the company offer employees a percentage of their paid time for learning or charitable causes? Do they have specific programs that will enhance their employees’ lives?
- Funding and backing: For most startups, investors are a key part of the story. They can also lend credibility and weight to “who” the company is and make it feel more legitimate.
Sourcing can be one of the most time-consuming parts of the hiring process.
Startups rarely enjoy name recognition, and a job board advertisement may not be enough to entice candidates to explore roles as far as the recruitment process. Even the best-crafted job vacancies may not be able to get across the particular and unique reasons a company is different, or assuage specific concerns around money, stability or long-term benefits candidates could have.
There are a few different ways to source candidates that startups should consider; and some may wish to use all or only some of them.
Using a recruiter
Because many founding teams don’t have the time to source candidates, or simply don’t know where to begin looking for them, recruiters can be a helpful resource.
For some founders or executives, using a recruiter can feel like outsourcing a key part of their jobs. However, using a recruiter, in tandem with a well crafted job proposal, can result in casting a much wider net for potential candidates.
Effective models for working with recruiters often include:
- Contingency: The recruiter only earns money when the company hires someone. Most times, this model results in candidates being sent to multiple companies at once in the hopes of finding a fit. The fee structure is generally a percentage of the employee’s offer — it can range between 20% and 25%. This can be a good model when used in conjunction with the company’s executives and employees doing outreach on their own as well.
- Retained: This means one upfront fee with a fixed timeframe that the recruiter receives in order to land someone a job. The retainer generally is a fee plus expenses (the fee is a percentage, closer to 30%, of the first-year compensation offer).
- Hybrid model: A mix of both. Companies should expect an upfront fee of about $5,000 to $10,000 plus a percentage of the final candidate’s first-year compensation (about 20%).
Internal referral systems
Employees are often the best advocates for a company, and can be powerful communicators of a company’s vision and culture. Some may also have extensive networks from prior roles and experiences, and can therefore open up access to valuable candidates and recruiting ideas.
Research has shown that employee-referred hires can be better performers, plus, employee referral systems can be a lot cheaper than using recruiters.
Before instituting a referral program, however, it’s best to spend time upfront designing clear outcomes and processes, as well as rules around participation and rewards for those who do refer successfully.
Successful referral systems should:
Develop an overall strategy and desired goals for the referral system. Startups should spend a little bit of time thinking about why an employee referral system can work for them and what it is designed to do. For example, an outcome can be to expand the pool of technical talent, or improve how well new hires fit into an existing culture. Others can include:
- Reducing turnover in certain groups
- Ensuring more successful hires
- Faster recruiting-to-hiring times
- Better targeting of passive candidates
Having clear goals and outcomes for the referral program will ensure that leaders can decide if the program is successful and tweak it accordingly.
Create a clear process to even the playing field. Employees need to know how to refer potential candidates. They also need to know to not refer people willy-nilly to simply increase their chances of getting rewarded. Therefore, it is important to have a central place where open positions are posted. The job proposal created for each role should be available, in some form, to all employees on a regular basis; this will allow employees to peruse the requirements of the role to see if they have anyone they could refer. Next, there should be a simple way to actually refer people: a form, for example, that asks for the name of the candidate and any relevant background information, can be filled out.
At the same time, referrals should occupy a special place in the recruitment process. Even if there isn’t a specific vacancy but an employee has someone in mind, they should be able to communicate that with leadership or the founding team. Because referrals can be so precious, it is important to always keep the lines of communication open to them.
Create a rewards system. Employees refer people they know for good jobs all the time, and for many reasons. The primary rationale usually isn’t money — it’s to help someone find a job or to help the company they work for or to work with someone they like and respect. At the same time, most people expect that a referral means they get something — some kind of cash, gift card, or recognition. Companies should have a clear rewards system that is communicated to all employees: for example, the new hire must last at the job for over three months.
Create a feedback system. Hand in hand with this is open and ongoing communication for employees who refer candidates. The referring employee should be kept apprised of the process: was the person hired, were they rejected, what stage were they at? This helps to create trust within the organization. At the same time, companies may wish to consider fast-tracking referred candidates versus other candidates.
Approaching talent proactively
Many startups prefer to keep recruitment relatively tight, and rely largely on recruiters and personal outreach for sourcing candidates. Public job postings can often result in a “flood” of applications that can slow the overall process if the resources to deal with them are scarce.
Companies should consider having the founding team or key executives spend a significant amount of time on proactive outreach via online networking groups, friends and investors.
Effective tactics for approaching talent directly include:
- Keeping the subject line for emails or messages short, include the name of the company, and critically, any funding information (if applicable).
- Keep the message short and relatively informal.
- It’s best to always attach the job description so the recipient is clear on what it is the company is looking for, and also potentially could pass it around.
- If the recipient isn’t interested, teams should always ask who else they should reach out to.
Other tools and services
There are plenty of channels, tools and services that can be used to find candidates. Some are common, industry-agnostic ones, such as LinkedIn or Indeed.com. Others can be the company’s own jobs site or social channels. For certain companies, there are focused platforms, such as MarketerHire, which is for digital marketing talent.
One group that startups should also consider tapping are venture capital firms, PE firms, and other funders. These companies often have ways for portfolio companies to share knowledge and find qualified candidates.
This guide does not make specific recommendations on which channels to use because it can depend on a range of factors. However, channels can also create, as mentioned above, a flood of applicants, which can slow down the overall process. However, elements of the job proposal must be used to target and track candidates online as well.
The interview process
Once a pool of qualified candidates has been selected, the interview process can begin.
Interviews are, of course, the most important part of the process. They can also be difficult, but creating a streamlined process for everyone across a growing company to follow can help make it efficient and productive.
Where possible, resumes should be collected from every candidate asking to be considered for a role. When used correctly, they can provide a valuable screening tool, but can also be used to accelerate processes in some instances.
Effective resume screening should:
- Go beyond the title of the person. A VP of marketing isn’t the same everywhere. Use the resume to look at the outcomes and job specifications versus the title itself.
- Use the resume to get the functional requirements out of the way. If the role requires someone who knows how to write, the resume should indicate they know how to do that. If the role is looking for a technical lead, the resume should indicate the programming languages and software the candidate has expertise in. Managers shouldn’t spend time looking for “non functional requirements” in a resume. Instead, they should look for specifics like, “saw 100% growth in app adoptions,” or, “brought down customer response time by 50%.”
- Be considered as the beginning, not the end. It’s extremely difficult for ambitious, talented people, who will do well within startups, to explain all their achievements in a list of bullet points. So, while plenty of advice will say to look for people who “know how to hustle,” that’s best saved for the post-resume conversation.
- Look for gaps that don’t have obvious explanations, such as being a caregiver to children or family members or choosing to travel the world or spend time with family. If there are gaps, managers should ask why they exist, what candidates learned from that gap and why they would or wouldn’t recommend that gap to others.
Structuring the interview process
Every startup must have a thorough and well-thought-out interview process. Between two and three “rounds” are common, with each round consisting of two interviews, for a total of four to six meetings. This should be the case regardless of whether interviews are conducted virtually or not.
In the first round, the goal should be to understand the candidate’s past experience and skillset.
The first round should be a meeting with the hiring manager (the person this role will report to). For particularly young startups, this could simply mean a meeting with the founding team. Each founder, however, should meet with the candidates separately, which can mean more time is allotted. If the founders aren’t the hiring managers, they should meet with the candidate in the first round.
It’s recommended to do a “top-grading” interview first, which goes through every single experience the candidate has, including, if applicable, educational or post-graduate experience, with specific questions around what they contributed and learned from that experience. This can create a well-rounded understanding of the candidate over time.
In the second round, the goal is to understand the candidate’s professional goals, interests and passions, as well as more “non-functional” skills.
The second round can be a good time to introduce the candidate to between one and two people they would work with. This team member should be someone who will work closely with this candidate, ideally someone who has worked for the company for at least a year (if applicable) and is considered a top performer. Depending on circumstances, the framework for the interview may not be shared with this team member.
In the second round, depending on the age and size of the company, candidates can also meet with external people, such as an investor or adviser. This can be helpful for smaller companies, so there is more feedback gathered about the candidate.
One of the key contributing factors to inefficient and ineffective interview processes is unprepared interviewers. Despite hiring being universally acknowledged as one of the most important jobs for executives and founding teams, it often plays second fiddle to other more pressing issues in practice. Hiring is important, yet it’s squeezed in between various other meetings and work.
Too often, managers are handed a resume a few minutes before an interview, leaving them unprepared with what questions to ask and what to look for. What this can lead to, at best, is casual chat that doesn’t probe deeply, ask the right questions or lead to any sort of real outcome.
Another common challenge arises when executives and founding teams attempt to hire for skills they don’t possess. For example, a founder with a strategy and business background won’t, and can’t, understand the ins and outs of technical recruiting. Lastly, the unprepared interviewer shows up in other ways. In a virtual environment, distractions are plenty — and they need to be avoided.
In order to avoid these, the process should include a clear interview framework and goals. The goals will always vary according to the role, who is doing the interview and what stage the candidate is at, but each interviewer should approach the interview with a framework they adhere to.
Each framework should seek to answer the following questions:
- Does the candidate understand the role’s requirements and the overall mission and vision of the company?
- Does the candidate have the right functional and non-functional skills? This includes technical skills, communication skills and managerial and leadership skills.
- What are the candidate’s interests and passions?
- What are the candidate’s professional goals?
- Will the candidate fit into the culture of the organization?
- What about this role appeals to you?
- What key areas did you contribute to in your last role?
- When was the last time you failed?
- How do you like to be managed?
- What other companies (in your industry) do you admire? What about them do you like?
- How do they solve problems in areas they don’t know about?
- How did you prepare for this interview?
- How do you like to work?
- What makes a great workplace for you?
When interviews are complete, it can be time to whittle down the list of applicants. Once there is a “finalists” list, which can be as small as two and as large as six people, candidates should go through the critical “post-interview” testing.
This testing is often skipped but is important because it is a clear indication of the candidate’s skills. The test itself can vary based on the role, but the goal is to create an end product in the form of a product roadmap, written memo or marketing plan that can then be used to evaluate how the candidate thinks and works.
Lastly, the post-interview test should also include the creation of a memo that asks the candidate about their goals for this role if they do land the job, and what they would seek to achieve in the first month, quarter or year. The goal of this is to understand how the candidate synthesized verbal information provided during the interviews, how they’ve applied their own thinking and how they think of goal-setting.
A memo should include:
- A brief overview and description of the role.
- The key goals they would like to achieve in order to guarantee success.
- How they like to work.
Following interviews and post-interview testing, the final step is to select the candidate who will receive an offer. Because multiple people have met the candidate at various points, and there are other inputs at play, such as the referring employee (if applicable), the job memo and the take-home assignment at the end of the interview, a central “scoring sheet” should be created where each input is recorded to create a full interview report.
Each interview report should be broken down into the following sections:
- Key takeaways: These are high-level thoughts about a candidate and their suitability for the role outlined in the initial job proposal.
- Scores on key attributes: Interviewers can be asked to “rate” candidates on four or five key attributes. These attributes will vary, depending on the company and role, but should be based firmly on the needs outlined in the job proposal. A simple three-point or five-point scale is typically most effective.
- Range: This can be controversial, but one way to quickly assess experience levels of candidates is by range. Keep this simple: low, mid, mid-high, high, for example. This eliminates the trap of years of experience and focuses on the candidate’s ability.
- Take home assignment score: A score should be given to the “assignment” the candidate completed.
- Overall recommendation: Interviewers can be asked for a simple recommendation on a potential hire: no, indifferent or yes.
Checklist and next steps
Hiring is as much art as it is science. But for many companies, creating a thoughtful hiring process upfront can mean a wider and deeper pool of potential candidates, alignment across the organization on what needs to be done and perhaps critically, a hiring plan that works hand-in-hand with an overall brand vision.
Hiring for startups can be particularly difficult: People may not know the company, there may be too much to do to make hiring a priority and it may simply not be on the list of priorities for many founders or executives. But spending a little bit of time upfront in developing a process can certainly pay dividends in the long run.
Companies should ensure they have answers to the following questions prior to beginning a search:
The interview process