Module 8 - Your dream team
1. Building a team
“The one thing that always stands out the most in an early stage startup is the team”
– David Pakman, Partner at Venrock
The people you bring on board are one of the most important components of your startup success. Building the right team plays a huge part in how your startup will do from your employees to the support network you build around you. In this chapter, we’ll look at recruitment practices, how to retain great employees, whether you should take on advisors and how to create a winning business culture.
“As the founder of a company, you need to be the coach, not the quarterback. You want to identify the best players in their best positions at a price you can afford.”
– Daniel Epstein, CEO and Founder at Unreasonable
Hiring your first team members is a very exciting step but it’s also a challenging exercise. Finding the right people in terms of skill, experience and personality is not an easy task. How do you go about knowing whether someone will be right for your team in a few short meetings or interviews? It’s a high-stake process: hiring the right person can have an incredible impact on your business in terms of productivity and team moral, whilst hiring the wrong person can have the exact opposite effect. In a very small team, the impact one person has on how the business performs is huge compared to larger businesses. It’s thus worth thinking about the recruitment process carefully.
Why diversity is key
Diversity in all its forms is mission-critical for financial performance today and in the coming years; it should be a key consideration for creating the most robust and innovative company possible.
- McKinsey’s Diversity Dividend found gender diverse companies had a 15 percent increased chance of outperforming companies that were comparatively not gender diverse.
- For ethnic diversity, there’s a 35 percent increased chance very diverse companies will financially outperform the least diverse companies (Source).
Hiring diverse candidates – particularly in some sectors – can be more difficult. Think creatively about where you might find talented people; there may be specialist networks you can contact, or diverse leaders in the space who can help reach out to people they think might be appropriate candidates.
You may also find that by looking for people who have less of the traditional markers of success, such as attending elite universities or working for particular companies, but who demonstrate the qualities and skills you are looking for, will land you with really strong candidates who have had to demonstrate grit, resilience and creativity in a way that has massive benefits for your business.
Think carefully about the language you use when writing job descriptions; this has a marked effect on what kinds of talent you attract. A much-cited internal report from Hewlett Packard found that men apply to jobs only if they meet 60 percent of the criteria, but women only apply if they meet 100 percent (Source). So, the words we choose in postings has a huge impact on who feels qualified enough to apply. Check out Textio – it’s essentially a spell check for gender bias, and it helps companies write more inclusive job postings.
And remember there are many kinds of diversity which are not visible, but still important – such as socioeconomic status, educational background, family status, disability, sexual preference, gender expression or identity, political inclination, religious affiliation and neurodiversity.
Identifying the gaps you have in your team
The first step in building your team is to figure out the gaps that exist and what roles need to be filled. It’s useful for you/the founders to spend time assessing where your strengths and preferences lie and what the needs of the business are more widely. You’ll then be able to identify where filling the gaps make sense and when to hire for the gaps identified. It won’t make sense to recruit a business development person if you’re still in early product development phases and have nothing sell. You only have limited resources at the beginning so think carefully about the type of hire that will have the biggest impact at that specific time.
In terms of when to hire: this varies drastically from startup to startup, and will depend on your speed of growth, your personal capabilities and resources to recruit employees. Early on, it’s likely you’ll know when the time is right. As you grow past the initial phase and raise your first round of funding, you may want to think about a recruitment timeline along with the rest of your business planning. It’s worth scoping out what the people you recruit will be doing when they start, in 6 months’ time, in a year’s time and so on. This is to ensure resources are used wisely and that you hire someone who can grow with the business.
Your business needs will drive your staff requirements. For example, a company developing a new range of food additives is likely to have a team weighted towards research & development. A farmer’s employment roster will lean towards labourers. And a food brand that outsources production will probably recruit sales and marketing people first.
Entrepreneur testimonial on bringing the right talent
“The team has grown to 7 people and I crucially attracted Laurence Kayson, a leader in the smart packaging industry to come lead Mimica into success as the CEO of the company, bringing his food industry contacts and knowledge. This has led to the company attracting almost £1m from investors and a pilot pipeline in the dairy and meat industries. He‘s been in the food industry for ages and so he knows how to deal with the various requirements and personalities within it and most importantly, he‘s made all the mistakes in the book already so we don‘t have to!“
-Solveiga, Founder at Mimica Touch
This is a great lesson in not being too proud to know your own strengths and weaknesses. Startup founders are not always the best placed to run the business at a later stage. Know when you have the right skills and experience,n and when you need help from others.
Attracting talent
To attract the right people to your company, you’ll need to advertise the role. It’s worth noting that for many, working for a startup is a high-risk strategy, particularly those who may be leaving a job in a large established company. The way you advertise for a role and where you advertise for it will thus play a key part in attracting a certain type of profile. Your job description, like any communication you put out there, reflects your business and your brand. Make it exciting and engaging by using your tone of voice and making it genuine to who/
the founders are. Remember to share your vision and give an indication of company values. This should help attract people who identify with both and increases the chances of finding the right cultural fit for your team. A job description will usually have the following sections, but be as creative as you want with this as long as the information is there:
- About the company: this is where you clearly explain what you do, what your mission & visions are and give a flavour of the type of company culture you strive to create.
- Role description: this should explain what the role will entail. In the startup world, what needs to get done evolves all the time, so it might be worth focusing on objectives rather than strict tasks the new recruit will be performing.
- What you’re looking for: you may want to split this into essential and desired. Startups need people who are versatile and finding the right attitude and cultural fit is often more important than having the exact correct skills and experience. You don’t want to put anyone off from applying if they don’t exactly match what you’re looking for.
- Perks/compensation: you may want to leave the detail of this to have in conversation, but you should give an indication of what will be offered (salary, equity, other perks).
Where should you advertise the role? The first place to start is on your own networks. Share this on your business & personal social media channels. If your website doesn’t have a blog feature, use www.medium. com so you can easily share it across different platforms. There are also lots of startup dedicated websites.
You may also want to actively look for people instead of waiting for them to come to you. LinkedIn is a great resource for this as you can search by job roles and by different companies. And you can always be in “recruiting mode.” By building a strong network, you may come across people who would be great for your business, perhaps not straight away but at a later stage.
Interview process
Time is one of your most precious resources as a founder so before inviting people for interviews, you want to make sure you’ve screened their applications properly. This will entail deeply considering their CVs, screening their online presence (look at their social media channels, their LinkedIn profiles), and what they communicate in their cover letter/email. Try to get a sense of whether they’d be a good cultural fit for the company and whether they can be successful at the role you’re hiring for depending on their skills, experience and potential. You may also want to ask potential candidates to carry out an exercise before inviting them for an interview. For instance, if you’re hiring a marketing person, you could ask them to write a blog, draft a one-page marketing strategy overview, or an audit of your current marketing activities. If someone isn’t successful, whether pre or post interview, make sure you get back to them as quickly as possible. This will take time but it’s part of building your company’s reputation. You never know who they know or whether they might be suitable for another role in your business in the future.
When you’re ready to interview, it’s best to prepare for this rather than leave it to be an informal conversation. As tempting as it is to be unstructured about the whole process, hiring should be taken seriously. Doing it properly will increase your chances of hiring successfully. You can carry out interviews in person straight away or conduct initial ones over the phone to save time. When preparing questions to ask, think carefully of what you want to get out of the interview. A large part of this should be whether the person is a good cultural fit as this is such an important part of having a strong startup team. You should be able to assess their skills and capabilities from their CVs, previous experience and the exercise they completed. You can ask them specific questions relating to your company values to gain a sense of how they view them. You can also tell a lot about a person from how they speak about other companies they’ve worked for and projects they’ve worked on. Are they negative about past experiences or are they able to be constructive in criticism/positive? Do they use “I” a lot instead of “we”? A good litmus test is to ask yourself if this is someone you’d like to sit next to at dinner. If your gut says no, they’re probably not a good fit for the team.
Entrepreneur top tips on recruitment
“We only work with young and relatively unexperienced people. Always attitude over skill. They work hard, with their heart and are full in our mission. But even with
a small team, put effort in team building. You need different types of people in a team but working together doesn’t work automatically. You have to invest in this.”
-Chantal Engelman, Co-Founder at Krommkommer
“Hire people with commitment and passion (like in marriage).”
-John, Co-Founder at Own Greens
“We hire for mission first. We’re a mission-based company with a big and bold mission. That’s going to require a lot of work and a lot of passion. And our first filter is the mission. Because even the best performer, if they don’t believe in the mission, it’s not going to get them through the challenging times where things are uncertain, or something doesn’t work out the way we planned. If people are equally mission driven as us the founders, that will get them through the ups and downs.”
-Saasha Celestial-One, Co-Founder at Olio
“There is nothing more dangerous than confident but incompetent people and nothing less productive than unmotivated superstars. Skills are as important as attitude and motivation is the fuel of everything. The hard truth is that recruiting is fundamental, but it takes time, effort, resources and luck.”
-Stefan Meyer, CTO at Ambrosus
Compensation
Attracting and retaining great talent will largely depend on how you compensate them. When financial resources are scarce, there are other ways to do this. People who join startups often do this because they have more than just financial aspirations. However, it’s worth remembering that your employees are likely to be paid less than in more established companies or may take a pay-cut so find other ways to make it worthwhile.
You may want to give out equity to certain employees. This will require some legal help to ensure it’s structured properly – you’ll want the employee’s equity to vest over a certain period of time. This prevents them from leaving three months into the job with a stake in your business having not contributed to the company’s growth. It’s essentially a promise of equity if they stay in the business for a certain period of time. There are many ways to structure this. For example, equity could be vested over 2 years with 25% received for every 6 months of employment, or you could link the vesting to reaching certain milestones. Other perks to incentivise employees can relate to job responsibility and autonomy, flexible working hours, unlimited holidays, free lunches, paid travel… the opportunities are endless.
Onboarding
Once you’ve gone through the hiring process and found someone great for your business, it’s important to invest as much time into making sure they’re a success once they join the team. Here are a few suggestions to make that happen:
- Get the boring bits sorted: get your paperwork in order such as contracts and payslips. Sort out logistics like desks, computers, stationary. You may work in public spaces with your teammates in the very early stages of your startup, but it’s still important to put some thought into how they will physically work. Create email addresses and access to any online tools you’re using.
- Before their first day, plan and set objectives for their first month/two or three months. You don’t need to lay out exactly what they’ll be doing, especially if you’re taking on someone with skills and knowledge you don’t have, but you should have an idea of what you want from them nonetheless.
- Organise one to ones on their first day (and then regularly after that) to discuss their personal objectives, go through your company’s objectives short and longer term, and to make them feel invested in the business’s success. If you have company guidelines, or a finished business plan, share it with them so they fully understand the business. It might be worth organising a team lunch or some more informal time together to build up relationships as a team.
Letting go of someone
There will inevitably come a time to let go of a team member. This will tend to come at a later stage than this guide is intended for, but we thought it’d be useful to address it anyway.
Firing someone isn’t easy. In fact, it might be one of the hardest things you’ll have to do as a manager, especially if you’ve built a strong relationship with this person (which is likely the case given how small startup teams are). There’s a saying in startups that says, “hire slow, fire fast”. If you’re starting to think about firing someone, it probably means you should do it sooner rather than later. It will affect how you interact with them and ultimately the atmosphere in your office. It’s also important to remember that startup teams need to be edited as the business grows: the right people for the first stages of your business are not necessarily the right ones later on. Being open and transparent about this will help with managing your team, it doesn’t have to come about negatively. People will often want to move on to other things when the time is right and know they best served the business’ mission in their time spent there. Whether they just aren’t a right fit for the company, or they’re not delivering the results you want, remember to let someone go with grace.
The legal stuff
Hiring employees will be subject to your country’s employment laws. You will be subject to statutory requirements like providing a safe workplace, social contributions, minimum wages, pension contributions and so on. These vary greatly from country to country so it’s best to research these yourself. Each stage of the recruitment process will be subject to some regulation – from the interview process (making sure you’re not discriminating, making an offer) to letting someone go if you need to. You can use legal advice and tools provided in the legal chapter to help you with this.