Journey of a Serial Entrepreneur

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How to get from where you are to where you want to be

Non-Financial Metric #2: Employee Loyalty

“I believe the real difference between success and failure in a corporation is how well the organization brings out the great energies and talents of its people.” Thomas Watson Jr.

Volumes of books and years of study materials have been developed to enable managers to attract better talent and retain them. From an entrepreneur’s point of view there are several structural differences compared to those faced in larger organizations. First off, much of the time a new start up will have an untested product/service with a small team which may or may not have the relevant experience needed. What they do have is an intense passion for what they want to do, that is probably the only way they can attract quality talent. Even though they are convinced and on board, things do not become easier. Salaries are usually minimal, stress levels are very high and burnout thresholds are reached much earlier. Losing a critical member of a team for a start up can signal the end of the road. Therefore this metric has to be given due importance to ensure that goals are met. Listed below are a couple of steps that have helped me keep the employee loyalty index high at businesses I have been part of :

1. Full Disclosure of Position: When recruiting someone for your start up team, one needs to ensure that you communicate clearly what role they will have to play. We all know that at smaller start ups many different hats need to be worn during the course of the day. The individual needs to be comfortable with this and willing to put in the long hours which will be required. Salaries, equity stakes, confidentiality agreements and all other formalities should be openly discussed and negotiated before hand. If these factors are left to be discussed at a later date, there is bound to be trouble and the situation becomes sticky.

2. Open Communication & Fairness: Take for example,  two founders who want to add a new marketing individual to the team. Whether this individual comes in with a substantial equity stake or on a salary it is important for the founding team to keep communication channels as open as possible. I have noticed that when groups are formed or information withheld, it leads to a drastic decrease in loyalty as the feeling of being ‘part of the team’ is not there. Have regular feedback sessions to understand the sentiments of the team. Trust has got to be earned and the only way this can get done is by communicating and getting to know the individual better.

3. Development Opportunities: Do your best to give everyone the opportunity to showcase their skill sets as well as learn new ones. I have been pleasantly surprised many a time when I found that a technical team member had some pretty extraordinary presenting skills or marketing insights. At a start up there needs to be strong focus on getting your team members to open up and move out of their comfort zones. If they don’t feel like they are growing and getting experience, which they would not have received in large organizations, chances of them defecting increase dramatically.

4. Fair Compensation & Reward: As hard as we attempt to get people to work for as little as possible in lieu of a big pay day, down the line, chances are they are going to react at some point in time. First off, compensation and rewards need to be discussed before adding the individual to the team. They should have a good idea what to expect to make, as well as how they will be compensated with non cash benefits. There will be times when cash flows are thin and payroll expenses may not be met. This is a time for open communication and ways of compensating them differently, greater equity or the ability to work part time needs to be offered.

Employee loyalty is directly linked to customer loyalty and corporate profitability. Whether you are a new start up or an established one, this measure needs to be continuously monitored. Sub indicators such as burnout thresholds are critical to ensure that you know when to apply the brakes. It is undoubtedly a challenging juggling act and becomes harder as the team begins to expand. By monitoring this metric from the beginning a start up has a substantial advantage and can use it to develop a sustainable competitive advantage.

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5 Steps to Hiring Better

“Hiring good people is hard. Hiring great people is brutally hard.” Jack Welch

Hiring great people is very difficult, however we have to make sure that we do all that is possible to make the process as streamlined and efficient as possible. Once you achieve that, it will be much simpler for you to identify the good from the bad and more importantly the good from the great. Outlined below is a framework to help you get started:

1. Company Frameworks: Before setting out to hire someone to be part of the team you need to analyze the current environment of your organization. How is your workplace structured? Next identify the personality traits of the people who succeed at your organization? Lastly map out how this new resource is going to be integrated into the current environment. To learn more on how to setup a framework please click here.

2. Job Descriptions: Using a framework we need to put down a structured format about the position, responsibilities, experience and educational background. Job descriptions are very important to make clear to the candidate what is expected of them. It also helps the company to put in place certain benchmarks to measure performance in the future. To learn more on writing a job description please click here.

3. Sourcing for talent: Once a job description is created we need to source for candidates who fit the role. Depending on the budget allocated to this, there are a variety of options available. What is important is to select the options intelligently to target the kind of talent you are looking for. If you are looking for highly specialized skill sets, public job boards may not be the most effective method as compared to say head hunting or industry related networking sessions. To learn more about some of the sources available please click here.

4. Interviews and Psychometrics: In my opinion use structured interviews whenever possible. Compared to traditional interviews they provide the interviewer a host of advantages from keeping control of the dialogue to providing an objective measure to benchmark every candidate against. If you can use psychometrics to evaluate personality types, you will get a better understanding of the candidates work place preferences. To learn more please click here.

5. Final Selection: Before you make a selection make sure you run some reference checks on the candidate you are about to hire. This provides additional insight into the candidate and may even be the deciding factor when the decision between two candidates is very close. To learn more about the steps for the final selection please click here.

This is a basic framework which should provide your organization with a more structured approach when wanting to recruit. Over time the framework will get refined to incorporate steps and stages which you consider may be necessary in the selection of talent in your organization. What is important is that you put a process into place for recruitment as it is the most critical factor in any organization. Who you hire in your firm is a clear reflection of the type of organization you are wanting to build. Make sure you send a signal which communicates those objectives.

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Final Selection

“You’re only as good as the people you hire.” Ray Kroc

After setting up a framework and job description, conducting structured interviews and tests you arrive at a pool of short listed candidates . Before making any final decisions, there is just one last step which is almost always overlooked and that is, Reference Checking. This is a critical step which must be followed up on to get a better understanding of the candidate. In an ideal situation I usually request for references from superiors, colleagues and subordinates if any. This helps assess whether the deductions from the recruitment process are correct and gives deeper insights about the candidate. 

Once you have successfully carried out the reference checks you now have all the data required to make an informed decision. If you are recruiting someone who is going to be working with the rest of the team it is a good idea to have the candidate meet the team. Make everyone in the core team a part of the recruitment process and get their opinions about the decision to be made. In the past I have come across teams which ran into trouble when an autonomous decision was reached for hiring without a collective accord .

When the team reaches a collective decision about the candidate they want to hire, you need to get the paper work in place and make an offer to the candidate. Another round of negotiations usually ensues on the terms and conditions of the contract and I recommend getting help from a lawyer when you are drafting this agreement for the first time.

After the negotiations are complete and you have signed a contract, it is time to celebrate. Not only have you hired your first employee you have successfully created a process which will help streamline your hiring in the future into a more effective and efficient process.

 

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Interviews and Psychometrics

“”I had a job interview at an insurance company once and the lady said “Where do you see yourself in five years?” and I said “Celebrating the fifth year anniversary of you asking me this question”” Mitch Hedberg

After the sourcing exercise is complete, you have to select a list of candidates having the correct skill sets and background to succeed at your organization, based on their resume. Resumes should be used as a reference point to form your own image of the candidate. In my opinion, interviews which have a structured format give the employer an upper hand to navigate the conversation. This is in comparison to unstructured interviews where the candidates navigate interviews based on topics they are more comfortable with.

Creating a structured interview requires creating a set of questions to be asked of each candidate. This allows you to document information in an objective manner as well as make comparisions between candidates easier . They key quality to be looking out for is passion, willingness to learn and honesty during the interview process. Use the questionnaire to devise questions to test for these. 

We have recently introduced psychometrics into our hiring process. Psychometrics is a tool used to evaluate a candidates cognitive abilities and personality traits. It provides an in-depth evaluation of the candidate and allows us to determine if he/she will fit into our workplace environment. Used together with structured interviews it provides an infinitely more comprehensive overview of the candidate and makes hiring more objective and transparent.

Interviewing candidates becomes a whole lot easier, the more you do it. In the beginning, especially if you are hiring for the first time it can be a little intimidating. By using a structured methodology and tools such as psychometrics you can drastically cut down the learning curve until you develop the ability to read people more accurately.

A tip I was given by one of my mentors when I was setting off to hire for the first time was: “Always trust your gut, if it doesn’t feel right don’t hire him/her.”  The one time I did not follow this advice, got me into a lot of trouble, so just go with your own instincts and you will do just fine.

 

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Sourcing for talent

“Time spent on hiring is time well spent.” Robert Half

Sourcing for quality talent at a startup is not an easy task. The obvious reason is that we have to convince candidates about the future prospect of our organization and how they are going to benefit by being part of the process. These candidates usually have other offers through the corporate world and are, in my experience usually tempted to stick with the tried and tested path. However being an entrepreneur you need to be out there convincing just about everyone about the growth and prospect of your organization. It could be to a potential customer, a potential employee, your core team and friends and family. You have to have your selling mode always on to create a buzz about what you are doing.

Since we have a prepared job description, we now need to spread the message. There are many options available to you depending on your budget.

1. Advertising in Schools: If you are still based in university advertise your openings on the university job posting boards, if they have any. Attend as many entrepreneurial networking mixers and ask for the opportunity to pitch your company and openings to the audience. In my first couple of ventures on campus I found these to be effective mediums to get the word out.

2. Social Networks: We have recently started using Linkedin and facebook to scout for potential talent in the core teams network. We have had more success using facebook by advertising positions on dedicated company pages. These networks are powerful mediums to get your message across to your second and third degree networks which are difficult to reach otherwise.

3. Corporate site & Blogs: You should do your best to allow your website to post job openings and accept structured resumes to help you continue to grow your resume bank. This will help you to minimize the time it takes to fill positions in the future. If you or your company have a regularly updated blog I would definitely use that medium to attract talent as well.

4. Referrals: This is how we carry out most of our hiring. When we have the job description ready I send it out to friends in the industry to get it to individuals who they feel may fit the role we are looking for. My friends realize how we work and are able to scout intelligently for talent.

5. Job Boards: Whether you use paid ones or free ones, in my experience, the selection process takes a lot longer using this medium. Firstly there is much sorting to be carried out, the quality of candidates is not the best and without any references it is more of a risk. However if the options mentioned above are not available to you this medium has the capability of getting your message out to a large number of individuals.

6. Head Hunters & Executive Search: This is an expensive option which becomes necessary sometimes if you are looking to fill a key role in your team. This is used as a last resort and only for very critical job roles. Selecting the right recruiter is a subject which I will write about in the coming weeks.

This is a preliminary list of tactics that you can implement to start your talent search. Avoid making rushed decisions and do your best to find talent through referrals and references whenever possible.

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Job Descriptions

“It is all one to me if a man comes from Sing Sing Prison or Harvard. We hire a man, not his history.” Malcom S Forbes

Once you have developed a framework for your organization, you are now equipped with the knowledge needed to develop a simple job description to help attract the talent that you need in a more focused manner. Job descriptions are often overlooked or not given enough attention at younger organizations. Since growth is organic and structure is often not in place  this is often disregarded. Say you are looking for an associate web developer to help support your core team of developers with some flash developmental work. In your mind you are perfectly clear about the sort of resource you require. However, later on if you tell the individual to help you out in your php developmental cycles and other administrative functions there may be unpleasantness. 

First we need to map out the main areas of a standard job description. 

Position: The title of the opening at your organization. Keep the title simple and avoid fancy titles which only cause confusion about what the role actually entails.

Responsibilities: This is where you outline in detail all the tasks which the resource will be responsible for. At startups, this should include a broad spectrum if your team is small because we all have to wear multiple hats at the beginning. If you are already at an established stage and are taking on a specialist then you make sure you have covered all the areas of responsibilities. 

Division: You will need to outline which department the resource will be under and the departments main role and functionalities. This will help put the responsibilities into context and bring clarity to the actual job requirement. You can also include details covering who the person will be reporting to and working with.

Education and Experience: Depending on the level of candidate you are looking for, you can fill this category likewise. Any relevant industry experience that may be required should be highlighted here.

Workplace environment: You can refer to the framework list to gather details to fill in this section about the working environment of your organization.

Personal Attributes: If you require any particular attributes which you think will be critical to succeeding at the job then this is the section where they should be highlighted.

These points will help you create a short job description which will help convey your message effectively to potential candidates. It will also help you benchmark performance against responsibilities assigned for the future , making it a critical document in your hiring and talent management process.

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Hiring Revolution: Job Descriptions

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Frameworks

“Hire people who are better than you are, then leave them to get on with it. Look for people who will aim for the remarkable, who will not settle for the routine.” David Oglivy

Your startup is growing fast and you need more helping hands to take you to the next level. Congratulations on reaching this far on your journey as an entrepreneur, it is going to get a lot more exciting from here on . Hiring is perhaps one of the most critical as well as the most difficult functions that any company has to undertake. There is a reason why Jack Welch has stated that Head of HR should be at the same level as the CFO at a company. What a lot of startups end up doing when things are in a tizzy with growth is to hire the next guy who looks good on paper. We did the same in a couple of ventures earlier on  and suffered as a result. This is not a process you want to rush, each hiring decision you make is going to have a impact on your business and the smaller your organization the larger the impact. 

The entire objective of hiring is to find a resource who possesses the skill sets, abilities and personality traits which match the opening position. To identify skills sets and abilities is relatively straight forward. If you are looking for a web developer you will require proficiency in certain programming languages and cognitive abilities which can be gauged through the applicants resume, portfolio and ability tests. The tricky part comes when you are looking for specific personality traits. Not every web developer will be suited for your team. If you are a highly structured and analytical team and you find a brilliant developer who however has a strong preference for unstructured working environments you are most definitely going to have a problem very soon.

When I am consulting clients on hiring these are three factors that I ask them to identify prior to the development of a job description ;

1. Work place preferences: Some workplaces thrive in unstructured environments while others require a routine to function in. Other places value team work more than solo operations. You need to correctly identify what preferences have been put into place by your current team. This will allow you to define and clearly communicate to the applicants the environment they are going to be working in.

2. Intellectual capabilities: This is where you identify what sort of intellectual capabilities you are looking for in the designated role. Will the resource have to be involved in creative development work or heavy research position or in a position where he/she needs to be making many decisions. Each will require you to keep a look out for particular characteristics.

3. Personal Attributes: If your position requires the resource to motivate and energize teams then you will require someone who has high levels of energy and the capability to energize. They will require them to have immense passion and the ability to infuse it into the organization. If your position is research heavy and it doesn’t require the individual to be in such a position this attribute will not be necessary. Other attributes such as personal drivers are very important. Some individuals are purely driven by monetary compensation while others require less and more personal satisfaction. 

Formalize your list into a framework and you will be clearer as to what sort of individual you need to succeed at your organization.

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