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Hiring in Start-Ups and What Big Businesses Can Learn From It

startup.png April 26, 2013 / Roope Heinilä

Hiring in start-ups is one of the most important business decisions the founders need to make. Finding a suitable candidate can be difficult with limited resources and brand awareness.

Having hired many great employees during our first few years we have run into multiple obstacles and found many best practices that have helped us get to where we are today. Many of the following principles could and should also be adapted by larger organizations as talented individuals are shifting their goals and criteria for selecting their next employer.

1. Awareness

The first step is getting the best candidates to know about you and think of you as a potential employer. A start-up rarely has a lot of resources to put into raising awareness so they need to get creative. The first place to look is the founders’ and current employees’ own networks that can be contacted directly. The easiest way of raising awareness in this pool is by telling everyone about your business and simply having your own employees post about the openings and discuss their work for example on LinkedIn. This way the potential candidate can talk directly to a person they know about the company and get a realistic picture of what it is like to work there.

Big business lesson: Get your employees involved in building awareness of you as an employer

 

2. Employer branding

Even for a small start-up employer branding is critical. This is the image potential candidates, as well as your current employees, have of you as an employer. You should encourage your employees to share as much about what it is like to work for you as possible. This should not be just praise but instead realistic experiences about what they enjoy and the challenges they face every day. This will lead to candidates who better fit the team and also lower turnover.

Big business lesson: Let your employees tell about what it is really like to work for you and build your employer brand around that

 

3. Aligning goals and expectations

Aligning goals and expectations. Once you have found the seemingly right person for your company you should clearly discuss their goals and your company’s goals. Everyone is looking for success and in a start-up personal success and company success go hand in hand. You should start by discussing the candidate’s own goals and why they want to work for your company. Next you should discuss in detail where you see your company heading and what possibilities there are for the candidate. By doing this you are getting a realistic picture of how your company’s and the candidate’s goals align and if they are committed to what you are doing. This is pretty much both the candidate pitching himself/herself to the start-up and the start-up pitching to the candidate and trying to find a mutual tone and goals. If the candidate is not vigorously excited by the opportunity of being a part of what your company is doing they are probably not the right candidate for you.

Big business lesson: Look for people whose goals and passion align with the objectives of your organization

 

4. Compensation

Compensation is a difficult subject in a start-up. Resources are usually tight but getting the right person will likely have a huge impact on the overall success of the business. There are three options when it comes to compensation:

  • Above market compensation: You may choose to pay above market compensation to attract the best candidate if you can afford it (most start-ups can't). The benefit here is that there is minimal risk that the candidate will refuse the offer and this will also increase short-term retention as he/she will be getting a better wage than by working for someone else. The risk is that they may accept the offer just for the money and not be as committed to your long term goals.
  • Market par compensation: Many start-ups offer about the market salary to make sure that the wage is not the reason for the candidate not joining the company. This is good if you only want the candidate to work for you for a short time period but again this does not guarantee that they are committed to your long term goals. In my opinion this is the worst option as you are not giving any additional incentive for the candidate to stay nor testing their commitment.
  • Below market compensation: This is the other common option for start-ups mainly because of the financial constraints faced by many early-stage businesses. The risk here is that some of the best candidates may not join your company because they are not willing to take the added risk of a lower wage. However, this also weeds out the candidates who do not believe in your long term goals and tests their commitment. If they join your company with a lower compensation than they would get elsewhere, they are obviously doing it for reasons other than money. They truly believe in what you are doing and are willing to share some of the risk involved and thus are highly motivated to succeed.

With any of these options, especially offering below market compensation, it is important that the individual will personally benefit from your businesses success. This can be done by offering stock-options, bonuses, continuous development and most importantly the opportunity to grow with the business. You will need to offer above-market rewards for success in the long term, which also ties the employee’s goals to the goals of the organization.

Big business lesson: Don’t compete with base wages but instead with employee experience and compensation for success

 

Conclusion

Top performers are no longer looking for just a high wage and steady career path. Instead they are looking for experiences that enhance their own professional competence and jobs that allow them to do what they love. By recruiting people who are true believers in your business and allowing them to really take part in shaping its future you are essentially allowing your employees to feel as though they are working with you instead of for you. This will motivate them and drive innovation, which will lead to long term business success.

Career paths, high wages and good benefits may be motivators for joining your company, but will they really help you find the person that is committed to what you are doing?

 

Want to show potential candidates what your business is really about? Our services will train your employees to work as brand ambassadors for you company and reach the best candidates in their networks.