I received an invitation to an event a couple of weeks ago. When I read the speaker’s name I felt a slight shiver. It reminded me of a game we used to play over a beer after work. A group of us used to challenge each other to recall our worst hiring mistakes. The name I had just read was always high up that list. And every name on the list resulted from someone who had forgotten the basic lesson. In hiring, maybe means no.
Best I don’t disclose that name. Or worse the reasons it featured in those discussions. But it did get me thinking about the whole recruitment challenge. After funding and making sales, it is the question I get asked most often by SaaS founders and leaders.
And so it should. In almost any business the biggest factor that impacts on performance is the quality of the team. In a startup the existing team will be small. So every error in recruitment will be amplified. Of course the benefit of adding one more great person will also be that much greater.
The great leaders I have worked with over the years understood this. We all ended up crying into our beer. But those chats served an important purpose. Learning from each other and trying to improve. So I thought it would be fun to share the most important lessons (or at least those I can remember!)
Mistake 1. Allowing track record to trump talent
In my corporate days HR professionals were often part of the hiring process. Many of these were very smart people. But they shared one common blind spot. HR people have an ingrained belief in track record. Making decisions on hiring, bonuses, promotion based on evidence of past performance.
It sounds simple and unarguable. Yet it is not how people work. Every hire is a decision about the future. A small (or large) investment in your future dreams and hopes for the business. So the things that matter are potential and ability to learn. Angus Woodman, the CTO of Crew wrote a post Why we hire noobs on exactly this point.
Past performance matters. If only as evidence of integrity - is the story on the CV in front of you backed up by the facts. But it is only a guide. Be data influenced, not data driven on hiring.
Mistake 2. Believing sales people are rain makers
And be careful of that data when it relates to sales. Sales numbers are the easiest thing in the world to fake. I realise some people will be horrified/ outraged by this assertion. Yet it is true. It applies to whole companies as well as individuals. Sometimes people don’t even know they are doing it.
This will also be scary for some. Hiring sales people is one of the toughest calls in a startup. If you can’t rely on the numbers, how do you choose? Imagine the potential recruit alone in front of your best customers. When that feels wrong, the answer is no.
It is a tough decision. But take my word for it. Hiring based on sales numbers alone is always a mistake. Always.
Mistake 3. Failing to take up references
The oldest and most obvious mistake in the book. Yet it still happens. Even in the biggest companies the basic process steps get missed. Time and again we would find surprises. People who just couldn’t do what they had been hired for. More than half the time the issue was avoidable. All that was needed was a basic reference check.
You have a lot on your plate in a startup. And some corners have to be cut. Not this one.
Mistake 4. Falling for the illusion of psychometrics
Psychometric testing has grown in popularity. The attraction is simple. All those tests appear to turn gut feel and emotion into hard data. What could be better?
Except that clarity is deceptive. I have seen a whole bunch of different approaches over the years. At one time we used to run a two day testing based assessment centre for big promotions. Quite often the data aligned with the judgement of colleagues and peers.
But when it was wrong it was spectacular. One year our top candidate scored the absolute bottom marks not he assessment. The best scores came from someone we had to fire 3 months later.
We also used simple psychometrics in screening for recruitment. This looked OK for a while. Until we took a high level look at the data. One thing stuck out. Candidates who did not have English as a first language had the worst scores. We were killing diversity by screening out too many international prospects.
Psychometrics are a bit like horoscopes. When you dig in there is something for everyone in the conclusions. The data-like appearance is a delusion and it can be a distraction. Given the time and money available, it is not a worthwhile investment for a startup.
Mistake 5. Filling up the next level in the depth chart
There is no substitute for judgement when hiring. In the end of the day it is a people decision so it can’t be reduced to a spreadsheet or a checklist. But there is one common tendency to watch. If you ask people what their recruitment priority is, the answer is always a No 2.
It is human nature. The person you need is whoever will take the most pressure away from you. In an early stage business this tendency is acute. There is so much that matters. So confidence is essential before you delegate. And for the first couple of hires you may be making the right decision.
The problem is that hiring is cumulative. Once you reach 20 plus people the depth chart should show a range of experience. By the time you hit 100 all the levels need to be balanced. Yet if you keep hiring the top priority, the junior staffers will never arrive.
The economics of your business depend on leverage. Your long term sustainability relies on a constant flow of talent. Both aspects need a team with depth as well as breadth.
Mistake 6. Relying only on social fit and missing diversity
Once you start making human judgements, conscious and unconscious bias play a big part. Nowhere does this have more impact than around fit. The most natural thing in the world is to pick people that will fit in well with the culture and style of your team. It is a short step from this to selecting on how much you enjoy the company of like-minded individuals.
And before you know it you are baking in complacency and narrowing your thinking. Great teams are not just about social factors. Range of skills. Leadership and teamwork. Specialisms and strengths. Even creative conflict. All play a part in building a team for long term success.
I benefited from this for a long time before I learned to recognise it. In my early years at work I found myself working with a wide variety of new people. I became close friends with men and women that I would never have spoken to at school or university. Diversity of roles, of thinking, of cultural and social background all played a part. I learned faster and I learned more. My education went far beyond the acquisition of technical skills and experience.
So look for people that fit into your team. And broaden the thinking and experience at the same time. The best analogy is a jigsaw puzzle. The pieces are all different shapes, sizes and colours. They need to join together to make a greater whole.
Building a great team - maybe means no
All those tears and beers arise because I have made all these mistakes and had to live with the consequences. You will make some too. When in doubt remember 3 words that sum up the right approach to hiring. Maybe means no.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.