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Hiring for Startups: 6 Practices to Build a Winning Team

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Google consistently ranks as one of the top companies to work for. It offers attractive compensation packages and tons of perks, like free food and onsite gyms. The company even has a “20 percent time” policy, where employees can spend 20 percent of their time on side projects.

It’s no surprise that Google receives an astounding three million applications per year. Needless to say, Google and other major corporations have no problems attracting talent. But startups face significant challenges right off the bat when it comes to hiring.

Challenges of Hiring for Startups

Startups don’t have the same reputation as more established companies. This makes attracting talent difficult in the early stages.

Most startups also lack the funding to invest in HR. Without a department to handle recruitment, company founders often have to take on hiring duties on top of their workloads. Even if they do find qualified candidates, they might lack the skills to assess their abilities.

A lack of hiring experience and an inability to offer competitive compensation packages make hiring all the more challenging for startups. So how can you overcome these hiring challenges?

Top 6 Practices to Build a Winning Team

Hiring the right people is crucial for the success of any startup. A survey by CB Insights revealed that one of the top reasons startups fail is because they don’t have the right teams.

It’s not an understatement to say that your hiring decisions could make or break your company. Follow these best practices to build a winning team for your startup.

1. Hire slow, fire fast.

Bigger companies can afford to leave positions vacant until they find the right person. Startups don’t have that same luxury. A skills gap can hamper growth and put projects at stake. But rushing through the hiring process can result in poor decisions.

“Hire slow” means hiring with intention, and “fire fast” means parting ways with employees who don’t work out sooner rather than later. Evaluate what positions you need to fill and get clear on the qualifications that new hires need to succeed in their roles.

For any documents you and your employees will need to sign, consider using document signing software. This will help shorten the time to productivity for new hires.

2. Don’t hire based on hard skills and experience alone.

It makes sense to hire the most qualified candidates you can. But hiring solely on skills and experience can limit your talent pool. Don’t shy away from hiring qualified and passionate candidates when building your team.

Passionate employees are highly engaged. They’re enthusiastic about the work they do and have a vested interest in helping your startup succeed.

Deloitte defines three characteristics of passion:

Commitment to the domain: Employees are committed to the work they do.

Questing disposition: Employees are always seeking new challenges.

Connecting disposition: Employees seek deep interactions with others.

Look for employees who exhibit these characteristics. During the interview process, ask potential candidates why they chose this particular industry and what kind of challenges they’re looking for.

3. Decide when to hire generalists vs. specialists.

One important decision you’ll make when hiring for startups is whether to hire generalists or specialists. Hiring a combination of both is crucial to building a winning team.

A generalist is a “jack of all trades” individual with a wide range of skills. They could pitch prospective clients one day and contribute to a marketing campaign the next. Generalists are valuable hires, as they can draw from their vast experience to solve different problems.

Specialists, on the other hand, are experts in their respective fields. While specialists cost more to hire, they can contribute to key growth areas in ways that generalists can’t. For example, when choosing an appropriate business structure for your startup, you’ll want to work with a specialist to help you navigate this complex process.

4. Hire based on company culture fit.

Hiring candidates based on company culture fit is just as important as finding employees with the right skills. Employees whose values align with their employers are more likely to enjoy their jobs and perform better. This ultimately leads to a more productive workforce.

Define your company culture and identify the core values that your startup represents. Have these core values ready as you interview candidates and highlight them in your job postings. Consider using behavioral assessment tests to determine whether candidates will fit in with the company culture and the rest of the team.

5. Diversify your potential hires.

Hiring people from different backgrounds offers numerous benefits. Workplace diversity fosters creativity as each team member can share their own unique perspectives. This inclusiveness makes employees feel more valued and willing to contribute.

Employees who also speak different languages can contribute to the team from their diverse cultural backgrounds. While it’s best to speak business English if you’re based in the U.S., you should also encourage your bilingual and multilingual employees to enlighten other team members about their language and customs.

Ways to diversify your workforce include writing more inclusive job descriptions, advertising listings on different job boards, and turning to existing employees for diversity referrals.

6. Consider investing in a recruiter.

Taking on recruitment duties takes you away from other responsibilities like reaching out to investors, developing product roadmaps, researching new markets, etc.

To help with your hiring efforts and save a great deal of time, consider working with a recruiter. These individuals do a lot of the legwork to find qualified candidates. Alternatively, you can also work with a PEO company (Professional Employer Organization) to help with employee recruitment and retention. Hiring such an organization will provide the data and tools that you need to save time during this process.

What happens next?

Employees are perhaps the most valuable asset for any company. They carry out your vision and work directly with your customers. As you build your team, it’s important to exercise strong leadership and practice team building to encourage collaboration.

Provide opportunities for growth and ongoing education. This will motivate employees to work harder and increase retention rates.

Finally, continue to refine your hiring process. Even if you’re not hiring right now, you most certainly will be in the future. Solicit feedback from current employees and work on your content using content optimization software to make it easier for potential candidates to find you online.

Hiring can be a complex process for any organization, but hiring for startups comes with its own set of challenges. The people you hire now can mean the difference between growing your startup or seeing it stagnate. Implement the tips outlined here to build a winning team and hit the ground running.

Startups are Failing Miserably by Ignoring Human Resources Strategy – and There’s Statistical Proof!

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You’ve heard the statistics about how hard it is to run a business these days but have you considered that neglecting startup Human Resources strategy issues are a major blind spot hurting small businesses across the country? If you talk to many Founders, the reality is that Human Resources is an afterthought and strategic HR is rarely discusses until a) the company is in serious trouble financially or b) a serious HR issue happens that might land the organization in court. Recently, Entrepreneur.com shared an infographic that chronicled why businesses fail, how many companies are started and closed every year, and how long most startups last (hint: 50% fail by year five). When we consider the amount of time, money, and momentum invested in starting and running a business, a 50% failure rate is not okay. I’ve met business owners who’ve dumped their 401k’s into a debt-ridden business and worse – entrepreneurs whose home life has been wrecked due to the difficult rollercoaster ride of running a startup. Running a startup is a grueling grind and there’s no guarantee that you’ll be successful; but the one area that startups should try to invest in if they want to succeed is their strategic startup human resources operations.

Here are the five reasons why startups fail and my take on the HR adjustment that can fix or alleviate these challenges:

19% of small businesses fail because they are outcompeted.

The Strategic HR Fix: Small businesses that are outcompeted either need a) faster, smarter decision-making skills or b) talented and qualified people on board who can address business issues of the day and the future. The reality is that some small businesses hire with a collaborative mindset that gives unqualified people chances to do things they’re passionate about but not technically proficient in. I once had a $13million dollar software development client but the CTO had very little experience in modern technologies that were relevant in their field. The company was losing market share to competitors who did not offer the total package approach my client offered but instead they offered modern solutions that were easily upgradable and plugged in well with other tech systems in their customer’s organizations.

When you’re losing to competition you need intel and a plan. A strategic HR advisor can identify skills gaps within your organization and set growth goals for your people or suggest new hires that need to come in and breathe life into your organization.

Key Takeaway: A strategic HR advisor can be the champion for creating a competitive learning environment which raises the quality of your team output.

23% of small businesses fail because they don’t have the right team.

The Strategic HR Fix: This one is pretty obvious – you need new players on your team – but the “why” behind having the wrong employees varies from small business to small business. In my experience, family businesses tend to struggle with this the most because sons, spouses, and siblings can be given preferential treatment when it comes to hiring and promotions – which means responsibility is being given to someone who hasn’t actually proven they can get the job done. Small businesses can also have a “family” atmosphere which means relationships are formed and it’s harder to make decisions based on a person’s ability to get their job done. Small businesses that ignore sound HR influences suffer from having team members they might love as people but hate from a productivity and results perspective.

When you don’t have the right team, it’s important to assess what’s working and what isn’t. A strategic HR advisor can identify who is making the greatest contributions to your organization and who are the bottlenecks.

Key Takeaway: A strategic HR advisor can be the neutral third party who makes recommendations based less on relationships and more about a small business’s strategic business goals.

29% of small businesses fail because they run out of cash.

The Strategic HR Fix: Did you know that the top expenses in business are 1) insurance 2) taxes and 3) employees? (source). If you do not have a strategic HR advisor there to assist you in managing these expenses, it’s quite possible that you’re paying too much. Recently, a former client of mine was struggling with letting a six-figure executive go who’s impact and skills were no longer felt in a tangible way at the company. To make matters worse, the company was very much cash-strapped and failed to have oversight on employee vacation accrual and use. We were able to put the financial projections and implications on paper and make recommendations for what to do next. The difficult decisions to let the executive go (gracefully) and put in accountability measures for vacation usage wound up saving the organization a significant amount of money that could be re-invested into the business or set aside for a rainy day.

Key Takeaway: A strategic HR advisor can project the financial implications of employee-oriented decisions and recommend a clear path forward.

42% of small businesses fail because there is no market need for products or services.

The Strategic HR Fix: This one can be tricky because in a small business – especially in a startup where the current owners are the founders – there can be a dogged obsession with seeing a singular idea come to fruition. This obsession can pay dividends if there’s a market for the product and/or services the founder wants to bring to market but what happens when there is no market? What happens if there is a market but the company is trying to sell to the wrong demographic or packages it the wrong way? I remember feeling really bad for an older gentleman at my incubator who dumped his entire 401k into entrepreneurial efforts. He was working on developing a mobile game that was so singular in focus that there was no market for it and the cost to bring it to market was too much of a burden to bear. Small businesses who fail because there is no market need for their products or services usually establish an organizational culture where no one can tell the CEO “no.” It doesn’t take a rocket scientist to figure out no one’s buying what you’re selling but it does take a reality check and courage to pivot and say “okay, what’s next?” and to create an environment where subordinate employees feel empowered to add value even if it means disagreeing with senior leadership.

Key Takeaway: A strategic HR advisor can help create a culture of trust and help identify talented professionals who can help your vision become profitable.

82% of small businesses fail because they experience cash flow problems.

The Strategic HR Fix: If we are being totally honest here, most small businesses are one emergency away from going out of business. That emergency could be dried up sales, an inability to make a bloated payroll, a customer who wants to sue the organization, or legal fines and fees due to legal non-compliance (just to name a few). A strategic HR advisor is able to help manage corporate expenses and make smart recommendations – like business and errors and omissions insurance – that reduce overhead and serve as a safety net in the event of a business emergency. Taking an intentional and strategic approach to managing the human resources in your organization is the missing key to small business longevity.

Key Takeaway: A strategic HR advisor can manage costs on the biggest overhead items in your budget while also making recommendations that preserve peace of mind in the midst of the ebbs and flows of business.

This article was first published on Jumpstart HR.