Setting Up Hiring Processes at Your Startup
Hiring is the #1 challenge faced by startups. Talent is critical for growth, but startups have limited resources and therefore cannot match the perks, stability and cash compensation offered by larger companies. Additionally, startups often have limited resources (time, money, software, infrastructure) to leverage when making early hires.
Brex has put together a helpful guide for overcoming these obstacles when making early hires at your startup.
Finding Candidates - The Power of Referral
Sourcing is a big challenge for most early stage companies. LinkedIn messages and targeted emails very rarely work, especially if your company has a limited online presence or is still in stealth mode (check out the number of companies in stealth here). The most efficient way to source candidates during the early stages of a startup’s lifecycle is through referrals from your own network and that of your co-founders, investors, and employees. To take advantage of your hidden network, a good exercise is to sit down with each one of these stakeholders for an hour and go over their entire LinkedIn and Facebook connections list looking for potential candidates. In doing so, you source a much longer list than anticipated.
Developing word-of-mouth among potential candidates is also important. You want potential candidates to hear about what you are doing. This is hard without a strong online presence or distribution, but a good strategy to ensure people talk about your company is focus on platforms most visible to people who care about your industry, technology or the problem you are solving. These platforms could include online or offline meetups, sub-Reddit threads, Slack channels, Facebook groups or other online communities that are relevant to the mission of your startup. As the word of mouth grows, you are more likely to get inbounds via LinkedIn, email and AngelList.
Establishing a Recruiting Process
After creating a pool of potential candidates, you will need to develop a seamless process to move candidates through your pipeline and ultimately hire them. This system can take shape in something as simple as a spreadsheet, or you can purchase a tracking system early to automate some of the manual work. While it may seem that the urgency of hiring should trump any need to properly categorize and document candidate feedback, you must absolutely not compromise this process along the way. Categorizing and documenting candidates properly ensures your startup looks professional and organized – which is critical in competitive hiring markets. Without careful tracking, you will not be able to avoid mistakes like reaching out a second time to a candidate that already said no, or forgetting to schedule follow up interviews. These mistakes counter the positive word of mouth you are spending so much effort to produce.
Additionally, you are building your startup for the long term and recruiting will always be a crucial part of your company’s success. Therefore, if a very good candidate declined today, he or she might be interested in a few months, post-further-traction or when a new role opens up in the future. You need to keep careful records today in order to know when to reach out again and in what capacity. Investing in process now will yield future benefits.
A well-organized recruiting process is also essential in that it ensues someone’s first interaction with – and thus impression of – your company is positive. As a result, the high standards you uphold for your product execution must be manifested in your recruiting process as well. Make sure that you are communicating clearly and using a tone that is consistent with your brand. Be as fast as you can with the follow-up and always notify the candidate about your team’s decisions and next steps - even if you decide to move in a different direction. Ending a process without communication can leave a very bad impression on candidates.
Don’t Fear Agencies
Many startup founders and early employees are cost-sensitive and want to keep as many processes in-house as possible. This is a good instinct, but during this critical recruiting process, it is smart to engage outside agencies. Most agencies have an engagement model in which they only get paid if the hire is made – this eliminates almost any downside of working with them. If you find a great person you will not regret paying for him or her. Retained search models, where you pay regardless of success typically do not make sense for cost-sensitive startups.
Use Your Network to Help Close :
"We often suggest that companies include a third party as part of their recruiting process. This is particularly important for early stage companies that may have limited traction and online presence. It's an important form of social proof" - Baris Akis - Founder of Nav Talent.
Your investors, former colleagues and fellow friendly entrepreneurs can help you with some individual referrals - especially for more senior people you may want to hire early on. However, they are likely to be even more useful helping to convince candidates to accept your offer once it has been made. Remember, these investors have put their money into your company and believe in you, thus, they are the best people to sell on your behalf. Similarly, former colleagues and fellow entrepreneurs provide an outside perspective and additional social validation to a candidate of you, your company, and product.
Recruiting is Everyone’s Job
Finally, you must remember that recruiting is the number one priority and as such, everyone at your company must make recruiting their job. Great people tend to attract more great people. They are often friends, went to school together or worked together previously. Naturally, as you grow, these people will attract each other to your company. To bolster this, you must incentivize sourcing among your team. Make referring an important part of your values, reward employee referrals with company-wide recognition or even some form of monetary or material reward.
The smaller the team, the greater the impact a single hire can have on your startup’s outcomes. Early hires will set the talent bar for the rest of your early team and can be the difference between success and failure. Therefore, you must spend a lot of time, effort and creative energy to close these very first hires.
In effort to provide transparency to startups navigating the same decisions as we did, we are sharing our own experience. This is not an official endorsement of any decision path or product decision.
Brex had to make to make a few senior hires early to build out its regulated and somewhat capital-intensive product. Once we did so, we quickly turned to growing the engineering and business teams.
We found out the hard way that the “spray and pray” recruiting tactic of sending mass LinkedIn messages wasn’t getting the job done. So, our early recruiting team – which included many existing employees who were not full-time focused on recruiting – selected 500 profiles from our networks that we thought would be an excellent fit at Brex. We then did some more extensive research on their backgrounds and wrote 500 handwritten letters that were delivered over the course of a few weeks. The letters were personal and actually somewhat cryptic. We were trying to get candidates’ attention and definitely did. One thing that worked for us was to specifically target the candidates and messaging to South Americans, who we thought were most likely to resonate with our story and background, given our founders are from Brazil. The conversion into actual interviews was six times higher than when we were using broad LinkedIn outreach. While this was a manual process, we got invaluable talent that was crucial for that phase of our company.
In terms of process, we tracked everything in spreadsheets initially, and as things became unmanageable - particularly coordinating onsite interviews with multiple people and collecting their feedback - we purchased Lever software.
At Brex we take recruiting very seriously and highlight it as an important part of everyone’s job and of the success of the company. Every week, during our all-hands meeting, we acknowledge the team members who have been referring the most candidates. In fact, we made referrals so inherent to our culture that it now comes naturally to our team, which was formed by over 30% referred candidates.