Combing through yesterday’s WSJ I came across a piece on the phenomenon of the ‘Bullwhip Effect’ and how it was beginning to be observed in the broader US economy. While this phenomenon is usually discussed in terms of manufacturing and distribution channels, an analog to the Bullwhip Effect is also apparent in markets where young, high growth companies are typically concentrated. Demand kicks up and market sentiment improves which sends companies scurrying to bring back laid-off workers or to engage anew in hiring if such plans were put on hold.
While I have long been an advocate for being methodical in building out young start-up teams — especially small, fragile teams where each additional hire can dramatically affect a company’s culture and DNA — I find too many emerging growth companies make critical mistakes in hiring that can have long-ranging consequences. Here are just a few:
1. Jesus Christ is not currently available. Being picky is one thing, but there is sometimes an arrogance that seeps into a hiring process that is both counter-productive and bad for broader public relations. All companies would love to be able to identify the best candidates that represent an ideal match for the company and that have the potential to become future leaders of the enterprise in the years ahead. The truth is that no hiring process is ever really capable of that level of granularity and foresight. As such, the general rule (for most start-ups) should really be to find the best person available for a given role with respect to the current needs at the company and hope that that individual can grow into a long-term future at the company as he or she demonstrates value to the enterprise. Assessing fit on the basis of a handful of artificial and scripted meetings is hardly optimal. No matter how rigorous the process, no one can really assess the fitness of a candidate for a given role until that candidate is performing that job, at that company, and working with that set of peers, superiors and subordinates at day-to-day challenges in the fast-moving environments in which most start-up companies operate.
For years I have heard stories from long-suffering colleagues about withering multi-month processes over positions that were hardly the most influential at the companies in question. Making a hiring process a Bataan Death March for candidates may feed egos at the company and reinforce some internal sense of superiority among managers there about how exclusive and discriminating the company could be, but chances are that taking that long to fill a critical role is exacting a significant cost on the company in terms of lost opportunities. The next time you find yourself interviewing for your company, say, a Sr VP of Alliances candidate on his or her 11th interview in month five, consider for a moment your most direct competitor and the hypothetical impact of that competitor having found a Sr. VP of Alliances three months earlier and that person being on the job during that time pursuing all the market and alliance opportunities that your company would be pursuing had it brought someone aboard months ago.
2. Hire cooks, not chefs. Celebrity chefs are great but it’s the line cooks that really keep restaurants humming. Food writer Anthony Bourdain had a great line about the difference between cooks and chefs. His point, if I recall, was that people who considered themselves cooks, and were not ashamed to use the term to describe themselves, were better hires. Cooking is a craft, not an art form. Those who consider it an art form often require constant stroking and handholding and don’t think it’s important to show up for work on time. The analogy for start-ups teams is to do your best to avoid prima donnas by finding versatile, hungry managers who would not think it “beneath them” to incorporate tasks into their workload that might be lower than their job titles might suggest. A natural salesperson loves to sell. A great Corp Dev, BD or Alliances person lives to do deals. If a senior sales person accustomed to managing large enterprise sales accounts is not open to helping a junior colleague with closing a small sales opportunity, that should tell you something. Great hires strive at every opportunity to add value, especially in the early days of a new role. Even in more established, successful start-ups there remains a culture and mentality of everyone grabbing an oar and helping however they can. Getting stuck on formalities or on what it says on the business card should be a red flag.
3. Hire fast, but fire faster. Many VCs and HR execs may take issue with me here, but I am a big believer that when it comes to fast growing start-up companies in an economy pulling out of a deep recession, the right move is often to (1) set a tight spec and a fair but rigorous hiring process and stick to it; (2) hire quickly and deploy that candidate as quickly as practicable; and, (3) if the candidate turns out to clearly be a bad hire — every company has them — remove the problem quickly through transfer or termination, bring on a better candidate, and move on.
4. Fewer constituents, fewer hands, a tighter process. Nothing both complicates hiring and aggravates job candidates more than a hiring process that lurches forward without direction, that has too many constituents that demand that they touch and sign off on all candidates, and that has a spec that undergoes constant evolution. Clearly decide what the spec is early on and decide who will be vetting candidates. Decide, also, how long each step in the funnel will be and who shall have ultimate authority to waive candidates through to subsequent steps. Finally, be disciplined about setting an end date to when new candidates are added to the top of the funnel. It’s bad form to bring in new candidates when others are already nearing the end of a multi-month process. Not closing off the process to new candidates brings about the tendency of companies wanting to see everyone and of putting off hiring decisions on the off-chance that the perfect candidate is just around the corner but has yet to emerge. Too often, companies that fall victim to this trap ultimately never find the candidate everyone can agree upon, no one is ever hired, a long-suffering junior staffer ends up having to pick up the slack, headhunters get frustrated and stop referring candidates, and the company misses out on accelerating its business because the need is never filled.