As soon as the check hit the bank, almost without fail, the very next conversation we have with a CEO is “Who else needs to join the team, and how fast can we get them onboard?” In fact, by the time an investment closes, we have usually had several of these conversations, helped source candidates, and have strong alignment with the CEO on what skills we need to add to the management team and when we need them.
The challenge is building a strong pipeline of candidates, testing for culture and capabilities fit, and closing on a finalist. While some entrepreneurs have seen the movie before, for many, this is uncharted territory and an area where your board can really dig in and help. Getting this right is critical – not filling a role hurts, but experience (and research) shows that making a bad hire is an order of magnitude more costly. And the earlier stage the company, the more it hurts.
So how do you execute a successful recruitment strategy? We recently had Dr. John Sullivan, one of the pre-eminent thinkers and consultants in the recruitment space, spend a session with our portfolio companies to help them develop their process of recruiting star players. He has developed 10 principles for “Advanced Recruiting” which provide a great framework for any company thinking about upping their recruiting game.
1. Recruiting is an aggressive activity by nature, and getting more so.
Everyone knows the war for talent is on. If you want to hire the best, its not enough to post jobs, attend career fairs, and sift through resumes. Even recruitment agencies cold calling/emailing their lists aren’t going to cut it. You need to be aggressive and be creative. Put on an event, throw a party, sponsor a show – and invite your recruiting audience. Better yet, get them in your building and meet your employees.
Don’t forget your employees are your best recruiting asset. Recruitment bounties and referral bonuses work, and if you believe in the research (see #2 below), are an incredibly good investment if they help you get the right people.
2. A focus on top talent has huge ROI.
Research has shown that top performers drive outsized returns for companies, but how great is the leverage? There is consistent evidence across industries, stages, and geographies that the top 5% of a workforce produces 25%+ of an entire company’s output. Making just one of those hires can be absolutely transformative for your company.
3. Innovation produces a higher economic value than productivity.
A great work ethic is terrific, but in reality it should be table stakes at a high growth company. What you really need are employees that think beyond their own four walls. You need people that are dissatisfied with the status quo. They are impatient, and sometimes a little bit difficult, and they know that to drive exponential growth. You can’t just keep doing the same thing quarter after quarter. These types of employees are often force multipliers, as they can instill a culture of innovation in the rest of the workforce and push everyone to up their game.
4. Like any other business process, recruiting must be managed.
Despite the level of importance assigned to recruiting A players, many companies take a pretty lassez-faire approach to recruiting. Like a sales process, metrics and methodology matter. Recruiting A-players is hard work and takes consistent effort over extended periods of time. If you don’t have a process, and active oversight and management, you’re setting yourself up for mediocracy.
5. Candidate assessment can be easily improved.
There is lots of research around interviewing and assessment methodology out there. Use it. Developers subscribe to rigorous development frameworks that have been battle-tested in the field by others when writing code. Why wouldn’t you use a similar, proven tool when you go out to recruit them?
6. Not being data-driven will cost you.
There are many available public data points on candidates you can leverage during the assessment process. They should be an integral part of your recruitment efforts. Even better, leverage the data from your existing employees to help guide you. What data points can be indicators of success, and which are red flags? Rigorous use of data can help you avoid making the panic hire that helps you put out a short-term fire, but ultimately carries a much larger cost down the road from dealing with a bad hire.
7. Great talent management creates a culture of speed.
Speed should be one of the key items you recruit for in a high growth company. People that can come to decisions quickly, and with conviction, are highly valuable. These sorts of folks don’t typically put up with slow, unclear recruitment processes and endless layers of interviews. Make sure anyone who is running a recruitment process in your organization understands how important it is to create a good candidate experience in order to attract the real cream of the crop.
8. Don’t hesistate to adopt processes from innovative firms, even if they are much larger than you.
While Apple or Google might not seem like an appropriate benchmark for your recruiting process, it doesn’t mean you can’t steal from the best of them. They have devoted many man-hours to optimizing their process, it’d be foolish not to leverage what they’ve done. In fact, you are likely at war with them for talent, so better make sure your recruitment process is competitive!
9. Most retention efforts aren’t data driven.
The best way to recruit top talent is… to keep the people you already have. The best people in your organization should, by definition, be continually getting recruited by others. Keeping these employees is essential to success. Just as you devote brainpower to recruiting talent, you need to make sure you are systematic about retaining high performers. Leverage data you have about your own employees to inform these efforts and create some level of process to make sure you don’t lose line of sight on your best people.
10. Your talent management employees may be too conservative.
Many HR or talent management resources don’t come from a discipline like the above. Its often a profession that encourages administrivia and compliance. Fight this tendency tooth and nail. Charge your talent management employees to make tough decisions and take risks, especially with recruiting. Push them to understand just how incredibly competitive the marketplace for talent is, and that it is not one that rewards the meek or tentative. Make sure they understand the strategic importance of their role – their job is not just to fill seats with bodies, but to bring in the resources that will ultimately enable exponential growth.
Defining, identifying, calibrating, and retaining talent are all necessary steps in your recruiting strategy. A well-managed program brings a tremendous opportunity for competitive advantage and is probably one of the most important things a company can do. Stay tuned for my next article on developing top talent.