Scaling to $20MM Series: Putting Your People First... The Right Way
When starting your business, people are inevitably the X factor. You can have a sales and distribution plan perfectly in place, a comprehensive marketing plan, and clear goals for business development, but it takes the right people on your team to make sure that everything runs as smoothly as planned.
With the right hires in place, your team can grow at a sustainable pace that won’t keep you up at night because you know that all core functions of your growing business are in strong and capable hands. The wrong hires, however, will leave you stressed around the clock wondering when someone in a core position is going to inevitably drop the ball.
So how do you ensure that you’ve got the right folks on board? At what point do you need to bring in human resources support, and with what functionality? When can you no longer handle all recruiting on your own?
The Right Hires Early On
In the earliest days of your company (think your first 10-15 employees), you’re likely mining your warm network for the best folks that you know. These are the people that you were comfortable enough sharing your vision with, and the ones who are willing to roll up their sleeves while they hitch their own wagon to your star.
As Jim Conti from Hyde Park Venture Partners in Chicago, IL explains, “the first 15 or so hires are going to be the Jacks- and Janes- of-all-trades. They’re pretty independent, they’re self-motivated, they get the big picture and they like that they have independence and autonomy and space.” Conti has had a multifaceted career advising start-ups, scale-ups, and non-profits on their human resources and culture needs, and has tremendous insight into the challenges scale-ups face as they grow their teams.
The most important thing early-stage companies need to look for when hiring is individuals who have no fears about navigating ambiguity. For those core individuals who can later evolve into building their respective teams, much of their work involves continuously re-inventing the wheel while the car is already in motion. Those in the hiring seat need to ask how candidates have previously navigated similar challenges to what they might face in your organization, and what did they learn from those experiences that they’re bringing with them?
From there, the teams begin to grow – next to hiring generalists, who are capable of handling specific areas of a business with skill (think marketing manager or sales leader), and then into a specialist (like a graphic designer or copywriter) that’s a core support in one specific area. Naturally as the headcount grows, the hiring process in turn becomes more and more complex to find the right fit.
The Importance of the Scorecard
As the team grows, you’ll focus on hiring in accordance with the employee experience. The first hires on a human resources team often focus on recruitment and onboarding, and then the later additions deal with more specific functions such as benefits, payroll, etc. How does a company in growth mode know, though, that they’re bringing on the people who will actually fit?
For Conti, it’s all about using a scorecard, which he views as a crucial companion piece to any external job ad. “I often find that founders are able to articulate roughly what they’re looking for, but they often miss on the creation and then use of the scorecard for staying focused on finding the right candidate.” said Conti.
By evaluating employees properly and thoroughly during the interview process, employers can assess an employee not only through their credentials, but by how well they might fit into those day-to-day situations they’ll experience while working on your team. Conti also noted that this is a great way to track expectations and ensure that they’re communicated clearly. Not only is the scorecard key to the hiring process, but it can continue as a living document moving forward.
Often, when a new hire does not work out in the early stages, the underlying issue is that expectations were not communicated properly. An employee who does not know how to succeed is essentially set up to fail. While founders may have a clear idea in their heads about what success looks like in a role, communicating those ideas clearly from the outset is helpful not only for finding the right talent, but for setting them up for success from day one.
Know Where You’re G(r)o(w)ing
So what’s Conti’s secret to hiring at the early stages? Sometimes it’s about not hiring at all! “Your human team members are the most expensive part of your business most often,” said Conti, “and they add the most complexity to the business as well.”
Instead of hiring, Conti recommends that companies scaling up first look towards automating tasks where possible in order to save on funds. Instead of bringing in specialists too quickly to focus on a specific task, see if there’s an automation or an accrued process that can make the task run more efficiently without the added costs of bringing on a new employee.
Conti’s other recipe for success involves workplace culture, but not in the way that it’s traditionally regarded. “For me, culture is a platform upon which all employees stand, not a box in which they’re put,” said Conti. Instead of trying to mold new hires into an existing culture, know your culture first, and then see what potential new team members can add to the mix rather than forcing them into something that does not work for them.
Instead of focusing solely on the headcount, Conti advises scale-up companies to look at their goals first, and then work backwards to determine what team will be needed to achieve those goals. Be clear with candidates about who the company is, and what the expectations are for success in any role. Then, ensure that performance is measurable – good goal setting is key to avoid over-hiring, under-hiring, or missing goals.
“The number one reason why people leave their jobs is a lack of career development, learning development, and advancement opportunities,” said Conti. “You need to have a clear direction for your team, and yourself.” Once those are in place, articulated clearly, and measured routinely – employers and employees can know exactly how to succeed.
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About Hyde Park Venture Partners:
Hyde Park Venture Partners (HPVP) is a venture capital firm headquartered in Chicago, IL. Founded about a dozen years ago and currently investing from their third fund, HPVP supports founders and entrepreneurs based in the US Midwest, Toronto, and Atlanta who are building SaaS, marketplace, and tech-enabled service businesses.