HR 11 May 2017

Six valuable hiring tips for startups and small businesses

Hiring tips for small businesses
Getting recruitment wrong can be time-consuming and painful

Callum Negus-Fancey, CEO and co-founder at StreetTeam, uses his experience of recruitment to provide some insightful hiring tips for those new to the task.

“You can dream, create, design and build the most wonderful place in the world – but it requires people to make the dream a reality,” said Walt Disney once.

It’s widely recognised that building a world class team is the most important thing any company does, however a study by professor John Hunter of Michigan State University showed that a typical employment interview is only 57 per cent effective in predicting subsequent success, seven per cent better than flipping a coin.

I think this contradiction exists because hiring successfully feels intangible – it’s hard to get objective feedback on your approach, it takes a long time to find out if the hire was successful and ultimately it’s impossible to know if the candidate was the best choice. I’ve made lots of recruitment mistakes, but through learning the below hiring tips I’ve increased my one-in-two success rate to three-in-four.

(1) Learn a good interview technique

Too often people will say things to me like ‘this person is so charming they’re perfect for sales” or “ this person went to a top university, so they must be a better coder”.

The most common hiring mistakes are due to personal bias or because a candidate is intelligent but hasn’t had enough relevant experience or isn’t motivated by the work you need them to do. I discovered “performance-based hiring”, developed by Lou Adler, which is the process I have used since.

It’s a methodical approach based on the concept that past success predicts future success. Your starting point is working out what success looks like in the job you are hiring for and what the best people do differently from average performers.

Then you look at whether they have successfully performed comparable work in a similar environment. For example, managing a 70-strong sales team doesn’t mean you can build a sales team from scratch, and working for a large company with lots of resources doesn’t mean you can successfully deliver in a small company where things are always changing.

If you hire somebody who has delivered the results you need in a similar environment in the past, then you know they can do the job you need them for, and they are motivated to do it.

(2) Hire top down

A common mistake new companies make is hiring lots of inexperienced people. This is usually motivated by a desire to save money but ignores the opportunity cost associated with being slowed down by the drain on your time and all the rework.

I found that hiring a few experienced people who can deliver great results autonomously works better than having a lot of inexperienced people in your team. On top of this, as a founder you can’t be an expert at everything, so you need to hire people who are better than you as soon as you can and then – as Lee Iacocca said: “Get out of their way”.

One of the biggest step-changes I experienced was hiring people to lead departments who knew far more than me about their field. Not only did they deliver results faster than I could, but they also hired teams for their departments better too because of their domain experience and utilising their personal networks to hire people they have worked with before.

(3) Pay top of the market

“If you pay peanuts, you get monkeys.” The tangible savings you make in paying less won’t make up for the intangible cost in the loss of quality. It’s often argued that startups can’t afford to pay as much as bigger companies, but I recommend paying as much as is reasonable in cash and then making up the difference in equity.

Top people have choices and being competitive is vital – this approach will mean you can attract the best talent with a meaningful stake in your business who are then even more motivated to make it succeed.

(4) Keep track

There’s a proverb that asks whether a pharmacist or a weatherman learns faster on the job – the answer being the weatherman because he finds out within 24 hours if his prediction was correct, unlike the pharmacist who never finds out if his prescriptions cured the problem.

Keeping track of your successes and failures is one of the best ways to learn fast and whenever I ask a top manager how they know they are good at hiring, they will always be able to quote stats on their hit rate and talk me through the career progression of people they’ve hired.

(5) Prepare for interviews

“Put employees first, your customer second and shareholders third,” advises Richard Branson.

I get more excited about hiring great talent than I do about closing a big deal, because I know that ultimately the former will have a much bigger impact on my business. I believe in preparing for an interview in the same way as you would for a pitch because the candidate needs to be impressed with you and you need to be sure about them – being unprepared and not conducting adequate due diligence will put the candidate off the job. Analyse their CV, prepare your questions and spend a lot of time with the candidate.

(6) Don’t involve inexperienced people

The last of my hiring tips is never get inexperienced recruiters involved in the process, because they will naturally let their own personal bias rule and if they don’t like a great candidate then immediately you have a lose-lose situation – you either overrule and demotivate your team or lose a talented candidate.

I believe in training anyone who is part of our hiring process, especially if they haven’t hired regularly before, so that they know the right things to look for and the right things to ignore.

Callum Negus-Fancey is CEO and co-founder at StreetTeam, a peer-to-peer sales software for live entertainment. If you’ve enjoyed reading about his hiring tips then check out our list of essential do nots.

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