Why most Founders don’t put their attention on this important early growth lever.
There’s a lot of material out there on HOW founders should hire for their business. I’m happy to work with Founders on this (been there, done that!) but I found this article really succinct and relevant as an overview of the pillars.
However, I find even before getting to how you hire and compete for talent, there are so many Founders who devalue the broader strategic talent approach right from the word go. We spend so much time mapping our ideal customer profile, our go to market sales approach, our dev ops processes… and yet most of us woefully underinvest time and energy in our approach to people until it starts to hit the fan. Some Founders just fundamentally don’t believe it’s important (either based on their personality, experience, product or industry culture), but for most, they’ll agree it’s an integral part of their growth plans - they simply de-emphasize it by comparison to their other business growth levers.
Need proof points that it’s important? A google search tells me everything from 68% to 79% of startup failures being related to people and culture. Anecdotally, I’d support that, and I believe there’s a few things going on here:
The following is my rambling opinion based on a general view - of course we’d need to work out the phases and drivers for your business! I’m giving my opinions here, but of course as a coach we work together on YOU growing your leadership skills in this area too.
On timing and effort - you don’t want to have the cart before the horse with your talent strategy. What works for an established corporate, or even a more established startup, won't necessarily be right for your business and stage. Talent strategy is an esoteric, nonsense exercise when you have 3-10 people, however as you start to grow, typically how you hire, and the culture you want to foster become really pertinent. Start here:
This can be a combination of current reality and aspirations. Capture approximately 5 describing words that are succinct, accurate, and real for you. Think about the behaviours that demonstrate those describing words. POST your language somewhere common - a shared trello board or slack channel etc. Come back and review them every 6 months until you get to 40-50 people. Then you need something a little more formal. This language should come through your leadership comms, your website, your hiring process… think about some simple touch points. It doesn’t need to be fancy, just signal who you are! To keep it relevant, schedule it onto your leadership agenda in advance - no doubt it gets bumped down the list of urgent and important things unless you block the time purposefully. This shouldn’t be more than a 30 min jam session. Here’s some more musings on how to get this right.
Make it simple enough that you can engage candidates, but thorough enough that you’re accurately measuring the success factors for the role. Make sure the process is consistent for all hiring, but know where the variations are for technical assessments etc. Remember: YOU”RE SELLING. In most markets, you’re competing for talent, and you’re usually trying to get the best possible candidates within your budget. You CAN’T compete on just compensation (that’s easy to get in the market for any good candidate) so you need to know why they should work for you. What interesting problems are you solving, what aspects of your culture will they enjoy, what development experience will they get with you? At the beginning, you won't use a recruitment agency or have a HR person - this is the job of the CEO usually. Your first hires are critical, but also your time is imperative, so ideally get an advisor who can work through a hiring plan with you so you’re efficient with your time and get the right hires.
As your business grows, and you make your first HR hire, then you want to get into consistency of processes, bring in performance and feedback, review your values to ensure they’re accurate, and start thinking about how you develop people. Talent strategy becomes so much more than just hiring. Don’t under-hire this first HR role - hiring a junior admin and expecting them to be the custodian of your culture and people processes will set up a scenario for future HR failure - your team will be under-serviced as they go through rapid growth, and you will end up with a transactional ‘personnel’ team. Likewise, hiring a senior exec who isn’t hands-on can be a huge cost and time-spend, and it’s really hard to get HR executives who know the start-up scene. Ideally, try to hire an executive Advisor who can be hands on to establish the frameworks, set the course with your stakeholders, and hire a junior full time (usually a recruiter and HR admin) to execute. This senior leader should be set up as a transitional role - they put the strategy in place and hire your team as you grow, and eventually they might be a key hire onto your board. This starting combination of a full-time junior and retained exec keeps your cost low, but gets your partnership model established for a future strategic impact as you grow. Here’s some info on what you might expect your HR team to work on at this stage.
Finally - ‘people’ are tricky for most Founders. A simple question: ‘who is going to deliver your product / service / growth?’ pretty quickly brings the people conversation into focus. What I usually find is that Founders want hard working, smart, motivated people working on their business, but because they don’t instinctively know how to attract them, engage them, develop them and keep them, they divert their attention onto the problems they KNOW how to solve and put ‘randoms’ into key positions, often avoiding friction or hard conversations, or simply because they believe they can’t find better in the market for the salary they can offer. It’s somehow easier to solve customer and product problems, so even though we have agreement that people are important, they go into the too-hard basket, even when you have the right HR team and partners in place.
In that critical moment, when a Founder agrees their people are the biggest opportunity to win in their market, and are also their biggest business challenge, we need to open up a critical conversation.
Some of these questions can help a Founder open up their understanding of the challenge, and this is the first step towards growing people-leadership skills. Talent strategy can be super empowering and give a Founder a sense of agency, if the curtain is pulled back and they see HOW it works. Just like having a good finance partner and strategy, or a strong product maturity plan, simply addressing what scares you, asking honest questions to fill in gaps in understanding, and documenting a clear and measurable people-plan, can demystify the impact that your people approach has. Again, it doesn’t need to take a lot of time, but it does need to be a permanent fixture on your leadership agenda. If you have underlying concerns about your capability, your communication skills, or your ability to inspire, that’s exactly where you can work with a coach. Unleash this capability in yourself - having a comprehensive people plan is a real differentiator for early stage seed to B businesses.
Early-stage investors definitely don’t probe for your people's strategy enough. They want to know your headcount, your org structure, and your cost base (with people usually being your biggest cost!) but in terms of how you’ll attract, engage, and develop them - these questions don’t usually hit you until the B and C rounds, and if then! Just because your investors don’t see the importance here, don’t be misguided. They want to know about financial results and product market fit, and you know it’s the PEOPLE that will enable you to deliver those things.
Down the track, you’ll have to think about whether your early stage hires are the right people for your next phase of growth. A concern for another day :)