Hiring by start-ups requires strategic thinking. The employees are the people who create the company’s DNA, affect its product, and decide if it will succeed. After the founders come up with an idea and raise money, hiring is inevitable. Most start-ups do not undertake an organized hiring process, and usually rush to hire, committing an original sin. They err by hiring before they decide on their DNA.
Four experts in human resources convened to support the winners of the “Globes” and Bank Hapoalim (TASE: POLI) smartup2 competition when it comes to expanding the companies: Explore.Dream.Discover. CEO Duby Lachovitz; AOL Israel CEO Hanan Laschover; Nielsen Innovate operations manager Or Shinhertz; and Ethosia Human Resources and Michal Weiler, a specialist in senior placements in Israel and abroad.
The hiring experts emphasize the importance of organized thought before hiring. They say that a start-up should define its identity, values, and vision before hiring. The hiring strategy will be derived from this and a profile of suitable employees for this kind of company will be built, as its entrepreneurs define it. The hiring advisers will make the entrepreneurs sit down and redirect the projector inward, before rushing off to find the brightest programmers.
“I would advise a start-up to carefully examine its team and what needs to be strengthened, and what will require more work by the employees in future and to reinforce that,” says Lachovitz.
Shinhertz adds, “A new start-up should keep a small and efficient team because of its lean budget, while also keeping diverse skills. The venture’s first employees hired are often paid less than prevailing terms in the industry, receiving an ownership stake or options instead. Therefore, all the initial employees can be considered as founders, even if they are not the entrepreneurs. As with every partnership, it is important to carefully choose your partners for the road and make sure that each person’s skills complement the others, in terms of technology, business, and administration.”
Laschover stresses the investment in the initial hiring, saying, “First check that there is a real need for the position, and then define the requirements and responsibilities. Advertise the job in the right channels, filter the CVs and interviewees, and interview with a professional manager and other team members and relevant persons who might have an opinion on the candidate, checking recommendations is very important, as well as the job offer and the terms.”
Haste makes waste
After defining the company’s identification and officers, you should get underway. At this point, start-ups face a constant problem - financing. The experts agree that the money has to come before hiring employees.
“The time to hire is when there is money,” says Lachovitz. “Always look forward and adjust to the next horizon. If there is an improvement in the product, then adjust the hiring to the current quarter or the next.”
“The timing of hiring and the number of employees depends on the start-up’s financing,” agrees Shinhertz. “Rapid hiring without thinking is liable to result in a lack of tasks for employees at various stages. It is therefore important to plan the tasks in advance and calculate when it is worthwhile hiring an employee and when to outsource.”
“Globes”: How do you get the right people?
Weiler: “That’s the hard part. Even if the entrepreneurs have an outstanding idea and they have money, they are competing in the market with scores of start-ups that are also trying to hire the best minds. Every start-up will have difficulty in attracting and tempting top talent engineers. For each company, I will set a strategy and what we’ll offer candidates. Above all, how to offer advantages to potential candidates. There is no difference between marketing the product to customers and marketing the company to potential candidates.”
Shinhertz emphasizes the need for preliminary checks of the candidates. “When examining an employee, it is important to talk with his previous employers and colleagues, as well as subordinates. It is also important not to be satisfied with the recommendations submitted by the candidate, but to try and contact other people who know his skills. It is advisable that more than one person separately interview the candidate, for both the skills test and the personal interview,” he says.
“Many start-ups hire employees while walking down the hall. It’s a norm, and they think it’s expected of them,” says Weiler. “No one thinks to stop for a moment and ask questions. The atmosphere of urgency and rushing to the market sometimes results in hiring people who can’t do the job, creating an unnecessary revolving door.
“To prevent mistakes in hiring, it is important to only start the process after the product’s initial characterizations have been set, from which the professional and personal profiles of the employees are derived, employees who are suitable to the DNA that the enterprise wants to achieve.”
“New start-ups do not compromise on the skills of their first employees - the technology staff who are responsible for the core concept and the patents - as well as the business development people who are supposed to prepare the company’s business model. Hire the right number of core staff to fit the tasks and in line with the company’s wherewithal. Afterwards, increase the technology team to expand the development effort to reach the beta stage and create proof of concept. The second stage is to back up the enterprise accumulated knowhow, among other things. Later, as the financial situation allow, hire QA and/or delivery staff. Usually, after the seed stage, no more than five people are hired in addition to the entrepreneurs. After meeting the development targets, and if the company holds a series A financing round, most of the support staff is hired: testers, integration engineers, product managers, sales staff, and technical support.”
Lachovitz says, “It is important that the hiring process is coordinated with all the parties, such as the board of directors and investors, and to try and do it consensually. Don’t be ashamed to seek advice. It’s very important to get recommendations from more than one person. For hiring lower ranking employees, I usually test their knowledge of the field.”
Laschover says, “The most important thing is to check the necessity of the position. Sometimes there are periods of pressure that are liable to unrealistic needs for the position. Especially for start-ups, it is important to examine areas of responsibility of each of the partners and employees and to make sure that you’re ready to hire another employee.”
Friends bring friends
How many people should be hired?
Lachovitz: “On the basis of the immediate budget and tasks. Do not hire too many people and have hidden unemployment. Hire a few and wait.”
Laschover: “There is no magic number. Each company needs to hire has many people as it can. However, there are two guiding principles for hiring: the employee’s contribution to the company’s success is critical; and the venture must meet its financial commitments to its employees and investors.”
“Should a placement firm be used at the outset?:
Lachovitz: “As far as I am concerned, the best thing is for friends to bring friends. Later, an investor or manager’s previous friends or entrepreneurs can bring someone with experience, and various placement assistants down the chain.”
Laschover: “A start-up, especially during the initial stages, should seek the help of social ties to hire new employees who fit the enterprise’s identity. Start-ups usually have employees with a rich technology basis from elite army units, which facilitates finding excellent human capital through direct hiring. Nonetheless, if this turns out to be difficult, of course placement companies can be used.”
Laschover concludes, “Over the years, my hiring philosophy has been based on an article I read many years ago. ‘There are two things I look for when seeking an employee: to be smart and to do the work. Beyond that, personal chemistry is critical, especially at a small company. It is important to remember that when you make a mistake, and you will, you must know how to fire, and fast.’”
Published by Globes [online], Israel business news - www.globes-online.com - on August 7, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014