We all know a company is only as good as its team, which is why the hiring process is so critical as you build out your venture. And anyone who has made a bad hire along the way (as most of us have) knows that hiring the wrong person can cost you far more than time and money. It ultimately makes the difference between market leaders and market laggards - or worse still - failed ventures entirely.
So what can we learn from this? As I transitioned from an entrepreneur of two decades to a VC over the last decade I was determined to study this, and observed the same fundamental mistake made over and over again.
Startups often hire the brightest talent they can find, expecting it to mean they will produce the greatest results, without checking for whether those hires are the best fit.
In fact, some startups in their enthusiasm recruit aggressively, selling hard, or paying up to get the perceived best person, only to find they just don’t fit. With all the right intentions, I see great entrepreneurs, founders, investors and even boards use substantial powers of persuasion to compete for what they consider the best candidates. But with all the will in the world, a force-fitted hire may work for some period of time but ultimately it will be rejected like a misplaced organ transplant.
And finding people who fit does not mean giving up on diversity. Personally, I believe strongly in the benefits of diversity in teams and organizations. In fact, by definition diversity allows a company to collect from a fuller range of talents, capabilities, and learnings available in the labor pool. And I've also seen first-hand that:
- diversity fosters more innovation and creativity;
- diverse backgrounds and experiences bring broader problem solving skills;
- different perspectives and 'lenses' born of diverse backgrounds help teams find solutions that might otherwise be overlooked;
- serving a global customer base, a diverse workforce can better personally relate to and understand international needs, styles and approaches.
Now - what should you do to ensure a prospective hire is a great fit? This article shares a framework comprised of three areas of focus critical to hiring success. And if you want to review the slides associated with this, they are also embedded below.
By leveraging this framework, you should be able to build an A+ team of hires that will play an integral role in your company’s success. The three areas you need to address are:
1. Will they reinforce and add to your culture?
2. Will they really love the job?
3. Can they be successful at the job?
As simple as these steps seem to be, they play a vital role in bringing on the right type of hire.
Step 1: Will they reinforce and add to your culture?
This question is important in that you don’t want to fall into the trap of simply hiring for smarts. Many founders like to start with IQ measurement, which is important (and will be covered in Step 3 below). However, even the brightest person will fail if they are disrespectful of your values, divisive or political, and unable to socially connect with your team. So, your hiring process could start with a focus on CQ (Cultural Quality) and EQ (Emotional Quotient).
Cultural Quality (CQ)
When evaluating for Cultural Quality, you need to ask yourself: does this person naturally align with your cultural values, work ethic, and style of working? As part of this process you should feel comfortable with (or better yet – inspired by) their passions, beliefs and aspirations.
In fact, there are specific interview questions designed to help you asses CQ, such as: What are you passionate about?
By being mindful of CQ, each person involved in the hiring process should be able to rate the cultural quality of fit of the candidate and should ultimately check their gut instincts. The result? A hire that will be additive to you culture and have a positive impact on company morale and success rather than be dilutive or worse still divisive.
*If you haven’t declared your culture explicitly, take a look at approaches related to Company Formation because it’s foundational to this process and serves as a key filter for CQ and hiring.
Emotional Quotient (EQ)
Alongside CQ is EQ, which speaks to how aware people are of themselves; their fellow players and how they build functional connections and relationships that are appropriate to the situation.
This is an important measure in a startup hire for many reasons, such as the need for speed, multipliers and intimacy.
Startups by definition have limited resources and the number one way they can compete with larger players is by moving fast. That requires people adept at what I call “speed teaming”. This involves the formation of cross-functional and interdisciplinary teams that would simply be too organizationally onerous or politically challenging in larger companies, yet absolutely advantageous for startups. And individually, good startup hires are great at experimenting and failing fast, yet learning even faster. (I call this having a high “learn/burn” rate and it’s vital for startup investing) This all takes a certain EQ in a team not just IQ.
Secondly, organizations with good EQ (collectively across the employee base) multiply their effectiveness externally. For example, they are able to build relationships with key partners that provide leverage in their sales and marketing. And they build better stakeholder relationships in general that improve their support base, costs or time to market with supportive supply chains and even investor groups.
And as a last example, EQ is critical for early customer intimacy, an often-crucial part of the startup success formula. This intimacy helps shorten the time and distance in market feedback cycles and drives faster product cycles, fosters loyalty and translates into critical elements in a business like low churn rate.
Without EQ in your team from the outset, a startup is likely to sub optimize or worse still face significant challenges.
I’m sure you can think of many other reasons to recruit for EQ, so be sure to include them in your hiring scorecard. It’s often proven to be a more important measure than IQ in business success, and critical for a functional startup. Example questions to get you started include:
- What do people think of you?
- What work relationships are you most proud of and why?
- What environment do you like to create?
… see the presentation below for other questions
As you can see, in reviewing the first step alone there is a lot to consider when interviewing candidates for your venture. Invest in thinking differently about your hiring process and you will find enormous benefits.
Step 2: Will they really love the job?
For an ideal hire, you’ll seek out your candidate’s passions and aspirations and check for alignments with the vision and mission of your business and the role you want them to play.
If they are inspired to go after the goals you are pursuing and see their particular role as meeting their own aspirations then they will likely be a good hire. Why? Because they will be doing the job for their reasons - not just yours. You’ll tap into their energy – while inspiring them with yours – resulting in a mutual fit.
And don’t worry about being too literal on this front. Few people - other than the founders or real natural entrepreneurs – may have vision. However, the candidate should at least be able to relate to your goals in some way. Good leaders help people see the impact individual roles and objectives can have on the bigger picture, ensuring employees feel they really can make a difference.
Through this approach, you can at least tap your potential recruit’s personal aspirations and determine if they naturally align with those of the position offered. At a minimum, make sure they are not opposed to it.
In the end, no matter the assigned role, people tend to naturally fall back to doing what they enjoy. Therefore, try to uncover their passions early and check if they meet your needs and have a place on your team.
Simply put, people who are passionate about what they do tend to take pride in and thrive in their role…and the results and rewards typically follow from that.
Step 3: Can they be successful at the job?
Evaluate for IQ and EKS balance
This is often the easiest question to answer as it relies on more tangible measures of your potential hire’s capabilities. IQ is very important, but not every role is about IQ, so I strongly advocate breaking a job down into the required Experience, Knowledge and Skills so that candidates can be appropriately assessed beyond just how intelligent they are.
The key question I always ask is:
- What is the most relevant Experience, Knowledge or Skill (EKS) you bring to the job?
(Obviously you have to drill into the EKS that you need to match your job spec.)
This question brings out the basics and if they’re listening the key word is “relevant”. This will tell you how much thinking they’ve done about your particular job and how (in their mind) they fit it.
All of this said, there is one area in particular I love to dig into - experimentation and problem solving. If you’re going to make a difference as a startup, hopefully it’s a big difference! And that may imply a breakout strategy or a breakthrough discovery or even invention, and at least some experimentation. Example questions include:
- How do you experiment?
- In your previous role(s), what did you learn, prove and act on?
- What are examples of problems that arose and where did they lead you?
Think about what EKS is relevant to you and what attributes might be important to the particular job you’re hiring for. And whether it’s intense creativity for a hire in your design team or at the other extreme, plodding patience for your support group, weight them on your hiring checklist appropriately. One oft forgotten that’s pretty nearly always required in a startup for example is risk tolerance.
Identify the A players
Startups all want to hire ‘A’ players – and this can be accomplished by looking at three important ‘A’s. With Ability being the first ‘A’, that we’ve largely covered, two more to look for are Aptitude and Attitude.
Previous EKS is great. But with the rapid growth and change typical in a startup, you need the Aptitude to be able to adapt and learn new skills and knowledge or you’ll just as rapidly fall behind. Personally, I look for quick learners who are hungry to self-educate and are adept at handling change. Remember, if you’re going to make real breakthroughs, you will require a willingness to fail fast and learn even faster, as you break into new areas with undefined outcomes or boundaries.
This brings into play the other ‘A’. Attitude. Pursuing breakout opportunities requires the right Attitude toward things like problem solving, persistence, and participation in a team.
At early stage startups for example, I look for self-starters with positive attitudes who have the courage to embrace challenges as opportunities to learn and not just for themselves, but also from and with others.
A-players not only have the right Ability but also the right Aptitude and Attitude.
The + factor
In this world of hyper-competition, people often extend the notion of ‘A’ players to looking for A+ players. The best startups are clear that they have to have an edge in pursuing talent and they find ways to define it. It can be elusive, and I have talked to many startups about this. Everyone will have their own way of defining what makes their team stand out. But what might be in that A+ for you? There are three things I look for: Athletes, who are Self-Aware and truly Authentic. They’re all pretty obvious qualities, but specifically relevant to startups.
Athletes (not necessarily literally physical athletes, though that can correlate too) often triumph over adversity, using their strength of mind and trained goal driven persistence. And startups in particular need the agility of an Athlete to adopt to change as discussed earlier.
I also love working with people who are self-aware because they are easy to work with and they are open about their self-professed strengths and weaknesses. This makes it easy to add people around them to complement them and set them up for success. They then usually team better with others and are amenable to mentoring and coaching.
And last but not least, the hire really needs to be Authentic. Believe it or not I find some people have even convinced themselves of some things they really are not! For instance, a sales person may convince you with their selling skills that they are a fit when they really aren’t. Nothing against sales people, as I was one once, and respect the role. But it’s their job to sell and you don’t want to sell or be sold in an interview. There need to be authentic synergies between the startup and the hire.
Make Each Interview Count
To ensure a great fit, you need to be strategic with your interview process. This includes developing thoughtful questions and listening closely to the answers. The slide show below includes a compendium of many of the questions I like to ask, but consider them as guidelines and nothing more. They are simply my own way of getting you to think about how to get to know a candidate. Keep in mind: every job and every candidate is different (and therefore every interview unique). Some of the best interviews I have enjoyed have gone completely off script and conversational in a natural way. In the end, I still try to cover the key aspects that enable me to understand a potential hire thoroughly.
I highly recommend you find your own personal approach to interviewing, based on your startup’s culture, and then add your own style to it. For example, sometimes to get my candidates to relax, I take them for a walk. Ultimately, however you do it, you need to feel comfortable with the real person in front of you.
Take Real Raw References Regardless and always Reciprocate
Even if you’ve done all the right things in your recruitment and interview process and you love the candidate and you're ready to hire them....
Go blind first!
Don’t pull the trigger. Because no matter how much you may think you've gotten to know someone during the interview process, you can't know them as well as people who have already worked with the person before. Instead step back and take some blind references first. They will prove invaluable, because even if all your instincts turn out correct and she’s a great hire, you’ll learn more about her to mentor her, get her up to speed faster and complement her in the workplace. And if your instincts turn out wrong of course, you’ll avoid that most costly mistake.
Here are some key tips for referencing:-
Look for real, unprepared or so-called "blind" references where you can. Blind references are those beyond the obvious ones that your candidate will give you and usually therefore ones that haven't been pre-warmed.
Qualify who is giving you the reference. If they are not an A player themselves you're not going to get as valuable a reference as you need. So where possible ask people who you already know to be A players or can connect with via known A players that you know will have the quality bar you want.
Seek a 360 reference from their peers, their boss and whoever worked for them. And if you can, even include a customer or external person they served. (This can be hugely informative for sales, services or other externally facing people. For example I once called the press about a PR person I was about to hire and quickly realized that they didn’t have their confidence - an easy mistake avoided.) Regardless, each person and their viewpoint will bring a different and important perspective from which to evaluate your candidate.
If you can, prepare the person you're taking the reference from with an overview of job you're hiring for. It gives them context of what they're speaking to, and allows you to ask specific questions of what your candidate's experience for the job has been.
Ask as many questions as you need of the reference to get comfortable. And don't be shy. Be real. Ask the hard questions and ask for raw unfiltered answers, not sugar coated platitudes. Tell the person you're asking upfront that you want them to be real, raw and unfiltered and ensure they know you are going to hold this in the strictest confidence - which you must absolutely abide by.
Always offer to reciprocate and return the favor for people you reference from, on any future reference they may need. And when you give a reference, reciprocate by being raw and real.
There are many good questions you may want to ask during a reference call. Always check under what circumstances the person left the job and whether the person would work with them again and why. And dig to find out what's behind that. If you hear all positive feedback about a candidate, you're probably not getting a "real" reference. No one is perfect. Even if I've decided to hire someone, I like to know where they have weaknesses, because it's then an opportunity to team them up with others who complement them or to learn how to mentor them. Get the facts, including their weak or blind spots, and at least be prepared to work with those if you hire them.
It's probably politically incorrect now, but the old saying was "you can never be too beautiful, too smart or too rich!". My version has always been "you can never be too healthy, too knowledgeable, or too humble".
But when it comes to hiring people it's even more specific:
"You can never take too many references, be too well informed or too well prepared"
Human Capital is your biggest and most impactful investment by far. Invest it like it's your only capital. Don’t make hiring your most costly mistake, make it your most profitable investment.
And that brings me full circle to conclude where I started out. It really is all about fit. If you can work your hiring and referencing process to evaluate whether you genuinely have found someone who can be successful in the job; love it for their reasons too; and reinforce your culture, you are likely onto a great hire. It will be a mutual fit, one that will not require you selling them to join you. They will know it’s right for them, just as you will know it’s right for you.
And as ever, with humility, I am curious to hear what you have learned from your hiring experiences that we may share for other entrepreneurs to benefit.