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Top 5 Hiring Mistakes to Avoid at a Start-up
(12 votes, average: 4.83 out of 5)
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Building a high performance team is definitely not an easy job. Finding right people and convincing them to join your startup is an art which only a few people are gifted with. However, if you start avoiding some basic mistakes, more often than not, you will end up with a high performance team.
After observing many startups in the last 3 years and after experiencing the difficulties myself in the last 18 months, here are the top mistakes that I feel one should avoid while looking to build a high performance team.
1.   Sameness versus Suitability:
Most of the times, we get into the trap of hiring people because we know them or because we feel that we can get along with them quite easily. One should remember that we are not looking for partners with whom we can share our emotions rather we are looking for partners with whom we want to create a high performance organization. Hence suitability to the profile and to your company culture is the most important thing.
However, if you find that a friend or relative of yours is suitable to the profile and to the culture of company; don’t hesitate to offer him the job.
2.   Followers versus Leaders:
Irrespective of its stage, domain and funding status, any company needs a healthy mixture of followers and leaders. Before finalizing the hiring process, you should be clear whether you want a follower or a leader for that particular profile. If you are looking for a leader, you should check whether the person whom you want to hire is a product of environment or who has created an environment on his own.
Just look at their past experiences, you will find enough examples to judge. Even while looking for a fresh and young leader, you can look at his academic approach or at his social approach to judge.
3.   Profile for the candidate versus Candidate for the profile:
You met a candidate at some networking event or at a conference and you felt that he is right fit for the culture of your company and he is a star whom you just don’t want to loose. But, you don’t have any current opening that suits him. What should you do now?
Don’t be nervous. There are enough stars in our society, who can bring great value to your company and you can start searching for them when time arises. Never create a profile just to accommodate somebody. It just destroys the value chain of your company.
4.   Equity versus Higher pay:
Most of the times, critical and important profiles need you to pay pretty hefty salary checks. At the same time, you will find people who will be interested in working for your company for very low salaries, provided they are given some equity.
What to do in this situation? Given the current stage and low (or no) valuation of the company, it is always tempting to give away some equity as you can decrease lot of strain on your payroll immediately. But, remember that you are not getting a new employee on board rather you are getting a new partner (or share holder) on to the board. If he doesn’t have the right qualities that a partner requires then you are done and out. It creates a negative impact in the market, in front of investors, and on your organization as a whole.
Hence, try and outsource the profile, if possible. This is the best possible option. There are specialized companies which deal in outsourcing of Finance, HR, and even sales & marketing. If it’s not possible, get some money from somewhere and pay him the hefty salary that he needs. I am sure; you will find the required money.
5.   Overheads versus Value add:
An established organization like GE or Infosys can afford to have overheads. At start up there is just no place for those profiles.
Only go for profiles that can directly impact your top line or your valuation. Every profile should either generate new business or should execute business. Never go for profiles that act as over heads or that may seem to be important in future. Mostly, well funded companies commit this mistake and burn lot of cash even before they realize their mistake.
At a startup more than 90% of the success depends on hiring and building a high performance team. It’s just about finding people with right attitude, skill and personality at the right time. Any VC will tell you that the 5 most important things they look at are team, team, team, team and team.
Post written by Guest Author Srinivas Nudurupati of TechZing.com
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nice post…………….:)
Kool Post.
Looks like an article from self experiences. I agree with all the points except 4th. I feel, there can be enough cases where it is better to give away some equity for some crucial profiles. It will increase accountability and involvement of the candidate. Once you offer ownership, you can rest assure that the person gives more than 100% to the company.
Agreed, very sharp post, especially numbers 3 and 4. Talent is a currency right now, we are living in an age of talent mercantilism, and companies will throw their hierarchy into upheaval just to make room for a star. I agree with Harsha that equity can be given away in some instances (hell, I have equity at my startup) but you can’t view it as a moneysaver as it is viewed all too often — view it as an incentive to the employee.
One thing you don’t mention — where to find these employees? Another big mistake startups make is putting their trust in the almighty cheapness of Monster rather than coughing up recruiting fees. Let me tell you, it ain’t worth it. There are enough options out there that aren’t astronomically priced — recruiting markets like Dayak that allow for cheaper placements via a princeline model — and you somewhat lessen the burden of having to sift through mountains of sand for tiny pearls. I managed a startup last year that refused to post to anything but job boards, and the time lost was ridiculous — that early in the game the focus needs to be on the company, not on searching through resumes. But, that’s my opinion.
Thanks for your comments
@raghav soni : thank you for liking the post
@Harsha: I agree with you completely. But as “theinterface” rightly mentioned, you shouldn’t view it as a money saver.
@theinterface: Finding right employees at right time and getting maximum productivity from them, deserves a blog post altogether. However, I feel, it depends on whether you are looking for leaders/followers. Job boards are definitely a great place as a starting point to find followers. But, you just can’t confine yourself to that option. Venues like startup lunch, market places like Dayak and most importantly references have also to be used in the process of recruitments.
Good one. Would disagree a bit with the 3rd one but the other 4 are true in their own right.
though i liked ur post but it could be cery confusing for early starters or college starters……so here is i smy guide for all of them including myself………..
hiring process at nascent stage:-
1. when u start a company hire any one u can find with a passion to earn money even though they know nothing abt ur business ………the reason is simple every person has some ability and if you really are a leader then u should be knowing the formula to use it to your benefit…….a startup with u only working for it would soon be dead b4 even starting…….cos out of 100000 capable people only one think of starting a startup so dont lose out on that
e.g one of your friend is good at networking while other might be good at presentations so u can ask them to join ur venture if they really want to and benefit from their capabilities cos u might not be a good at those things so offering them departments according to their domain knowledge…….and hiring and teaching them abt your business if they really want to……..
2. make them work like owners rather than employees cos cos then they would be giving 101% to the venture :-funny part at time of failure they would be with u rather then laughing at u………
3. hire your first employees on pay to performance basis +their expenses while working for you…..cos in starting you would not be in a position to pay them so the condition no.2 given above would save you from this situation as they all would be like owners getting pay when ur company makes profit and other extracting perfomance out of them
at early growing stage:-
when u nedd to step out of your networking list to hire….(and dont have time to teach like b4)
hire employees from other firm in the same sector cos even though they where working at lower positions cos ur quality of giving freedom and paying a little higher salary +incentives would make them switch to your company and you would even be gaining their knowledge cos their are many emplyees who work for peanuts due to their incapability to derive more so try to leverage from them by benefiting them 2…….
……btw srinivas keep writing chapters on entrepreneurship cos other young people needs it
suggestion to wat designers working day and night to design this site but forgot to add notifications to comments in the blog and caching comments not working i loosed my 15 min bcos of that …….and ur whois ranking down 250000 from 100000 in one day due to comment notifications being off …..so i want to ask kyon apni wat laga rahe ho!!
@ Nishant : Thank you bhai for the appreciation and disagreement.
@ Raghav Soni: Its good that you liked the post and have shared your thoughts on the same. Let me share my perspective on the your suggestions point-by-point.
1. “hire any one u can find with a passion” : Passion is a must for all early employees. However, its not the only quality. Early stage employees should share your vision and understand the business in the best possible way. Of course, its your job to make them understand your business.
2. “make them work like owners”: Perfectly right. However, it doesn’t mean that every employee should be offered equity. ESOP is a great option and slowly startups and early stage employees are giving importance to it in India.
3. “pay for performance model”: I agree completely that there should be some good part of the compensation that is to be paid according to the performance. The metrics that will be used to decide the performance should be decided right at the time of profile creation and the employee should be educated well before the appointment. This helps the startup to increase the productivity enormously.