The math and sales behind hiringKanika Jain
Hiring is a top-of-the-mind but often low-on-to-do-list problem for most early-stage companies.
The above insights are part of an in-depth survey conducted by First Round Capital which found that hiring is the Number 1 concern of startup founders (ahead of even customer and revenue growth), and yet majority spend less than 20 percent of their time on it.
All Founders understand the importance of hiring, but this still does not change the fact that:
- Hiring is often extraordinarily challenging, time consuming, and mentally draining, particularly when you have limited time/ resources.
- You are competing against large brands (and equally large pay packages) such as the Googles and Amazons of the world.
- As an early stage founder, you are constantly being pulled in multiple directions - solving many hair-on-fire problems simultaneously.
In the face of these challenges, how do you solve for hiring? We believe that ‘people’, along with revenue and product, are the top three problems for us to solve. We look at people hiring similar to revenue growth.
Over the course of the last year, after experimenting with multiple (successful and not-so-successful) approaches, we finally filtered it down to five must-haves for people growth, which we felt would be valuable to share.
- Product: Having a solid company culture and a core ‘exciting problem’ that your startup is solving is extremely helpful for attracting good talent. Functionally, this is what you 'sell'! If either is bad, your hiring conversion rates will be low, and employee churn will be high. It’s similar to sales - if the core product is bad, it will be very hard to close deals. Culture, of course, is what will ultimately make your employees happy and productive at work, so it’s crucial that candidates are able to get a feel for it when doing their company research and during their interview.We finalised our core values when we crossed 20 people. The values can be driven by what your first 20 employees highlight as their philosophies for successful work environments. In order to communicate these values more explicitly, we wrote down several anecdotes from our everyday life to help potential candidates to get a ‘peek’ into our culture.
- An important part of this is clearly formulating and pitching your business. Startups that are successful in recruiting do a great job of telling their story, explaining their vision, and sharing how the candidate will be an important part of reaching that goal. We’ve found it helps to be extremely upfront about your financial situation with regards to funding, profitability, and expected growth. To get more inspiration you can check out some culture decks here.
- Sales: The best talent isn’t out looking for job opportunities - so don’t just rely on inbound resumes, but rather have direct inside recruitment-type sales to relevant candidates. Initiate as many conversations you can, even with people who are not actively looking; it might not result in a hire today, but you’ll start building relationships and a pipeline for the future. There are several channel partners here to get leads - consultants, portals like Angellist, job boards, etc. Personal networks and network of networks (2nd/3rd degree connections on LinkedIn/ referrals) are also a must tap!You need two levels for ideal hires, and set up both an internal and outsourced outbound recruitment sales engine. Our recruitment agency was able to consistently reach out to 100+ candidates a day, freeing up our internal team’s time. However, the quality of candidates rarely matched our requirements. We decided that instead of finding a replacement agency, and then another, and another; we would set processes in place to make the current agency almost a natural extension of our internal team.
- To this end, we prepared an e-docket containing detailed job descriptions, defined pitches, and template emails, and each of these were sent out to the third-party recruiter for every position. We even trained recruiters on our sales pitches by sharing recordings and collateral. This clear process ensures that there is no room for ambiguity, and that only high-quality candidates are passed onto the internal team.
Even with all these changes taking place, one thing was constant: You need to have a solid outbound strategy to find the right 'persona' of the candidate for the opening. Attack all the relevant channels. Sell. Sell. Sell.
- ‘Pricing’ exercise for defining compensation: To ensure that the best candidates were sufficiently motivated to join us, we carried out a comprehensive hiring compensation analysis and found out approximately how much our target candidates were getting paid. It’s important to match the right ‘personas’ with market data. Then, we optimised the salaries for each role to attract the best talent. One insight we had here was to optimise our offers, rather than going over the top as a lot of Indian tech start-ups tend to do. Finally, we canvassed our candidates with the optimal mix of a good salary and Employee Stock Ownership Plans (ESOPs); of course, along with the promise of working for a company with a solid culture, plenty of upside, and a focused vision for the future.
- Operations: The hiring funnel is very similar to a sales or marketing funnel. It’s important to define the various stages of your funnel (Resume review, Phone screen, Activity, Onsite interview, etc) and optimise each of those stages on an ongoing basis. That means continual analysis of key metrics at each stage of the funnel.
The interview and filtering process should optimise for converting the best hires.
Here is what we think are some practical learnings from setting up filtering processes:
- Find out what tool stack works best for your hiring goals and for each specific role: We did a comparative analysis of several tools and services available, and figured out the right tool stack that met our hiring needs.
- CRM / Application Tracking System (ATS): We compared tools like Recruiterbox, BreezyHR, Greenhouse, Streak, and Lever, to understand features and suitability for our needs and budget. We looked at features such including Email Drip Systems, Team Collaboration, Reporting, Customisation, and Parsing. We finally decided to go with BreezyHR which meets our current needs quite well.
- Candidate Assessment Tools: We use these tools for top of the funnel candidate filtering. Here you have options like HackerRank, HackerEarth, DoSelect, and Mettl, among others. We ultimately decided to go with DoSelect which thus far has been a wonderful experience.
- Hiring Channels: The tools and platforms that worked well for us are Instahyre, LinkedIn and AngelList, with Instahyre leading the way.
- Emails were our most impactful candidate outreach method: Inspired by the funnel approach adopted by the sales guys for each stage of engagement, we introduced multiple touch points for our candidate outreach. Our three touch point emails, were automatically sent out to prospective candidates by an Application Tracking Software (ATS), to ensure that they were regularly reminded of the position opening. The mail, for each role, was tailored to project Squad as the employer-of-choice to the specific candidate.
- Put a strong filter at the top of the hiring funnel: An online coding test ensured that only worthwhile and capable candidates were called to interview for a specific engineering role. We used DoSelect’s platform, which automatically grades the tests for us, giving us a cumulative score without making our engineers go through thousands of lengthy code submissions. Talk about time saved for all parties involved! This filter and its difficulty level may need to be personalised for each role in your company.
- Treat every candidate differently, with a uniquely human perspective: There’s more than just technical expertise that you’d want from your ideal candidate. During interviews we scan each candidate thoroughly for cultural fit and resonance with our core values. So much so that no one is hired without going through a final meeting with the CEO. This results in a very low churn rate at the organizational level.
- Branding This is longer-term brand building effort to build an inbound pull with the big hairy audacious goal of building an inbound funnel-like Google or AirBnB. This involves actively talking about your product to the relevant target audience through blogs, community outreach, social media etc. If you solve this well, then you don't need a lot of outbound sales efforts, which of course is great. While we have invested some time and resources in marketing and brand building activities, obviously, we still have a very long way to go and lots to figure out. What we have learned so far is that that applicants first and foremost want to know if a company shares some of their values and objectives. Candidates also pay attention to the potential employer’s products and services, and the satisfaction of their current employees.
There is no denying that hiring takes up considerable founder bandwidth. And why not, arguably people is the most critical function that defines the growth trajectory of your company. But, through minor adjustments and careful optimisation of the hiring process, we found tremendous ROI. Within the first six months, we grew from 15 to 50 employees. We also achieved lower churn rate; and reduced time invested in hiring from a whopping six hours to one hour per day. What’s more, we decreased interview process duration from 14 to four days.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)