The Startup Guide to Solve for Hiring Part 1: Identifying the Problem

Good hiring is the foundation on which startups are built. Without good hires, one can’t make a product, grow sales, build a brand, or run operations. Generally speaking, founders are aware of this truism. Hiring is a common conversation topic in entrepreneur groups I’ve been part of - only next to investor/funding talk.

Yet, most founders find the hiring process painful. And even though the talent market ebbs and flows cyclically from too-few-candidates (candidate’s market) to too-many-candidates (recruiter’s market), hiring for startups remains problematic in all seasons. 

The Value of Great Hires

It’s always helpful to remember that a small team can move mountains. WhatsApp had 35 engineers when it was acquired for $19b. Another excellent example of a stellar company with a small group is Zerodha. 

Even if these are considered exceptions, the fact that a small, well-knit, well-skilled team can move mountains remains true - and obvious. Startups with perfectly aligned teams generate more value and have better work cultures.

A caveat: some jobs need more people because of the nature of the work. Image annotation. Translation. Voice call centres. Cab drivers. And some business models are salaries-plus-margin. Content farms. Outsourced programming.

This article is not for these jobs. We’re strictly discussing startups looking to hire top-quality talent to solve wicked problems - startups where a fabulously recruited team is the difference between success and failure.

The cost of a bad hire

It’s worth reflecting on: what is the actual cost of a bad hire? 

• The time and cost involved in the recruitment process
• Any actual losses the employee might have caused
• The lost opportunity cost
• The severance cost
• The cost associated with hiring a replacement.

You can add the emotional cost of the failure - the frustration, disappointment, anger, and sadness - that you and your team felt during the entire process.

The time lost in dealing with “people problems” instead of customer problems is truly frustrating.

Startup founders who acknowledge the value of good hires, and the cost of bad hires, make an effort to improve their hiring practices. It takes time, energy, and money. But the RoI on this investment is very high.

Identifying the Problem(s)

Let’s start by listing the significant problems associated with hiring:

What are the biggest problems in hiring? 

1. Finding qualified candidates can be tricky, especially for specialised roles.
2. Attracting a diverse pool of applicants takes a lot of work.
3. The full screening and interview process can be time-consuming and expensive.
4. Even after a thorough process, there is always a risk of making the wrong hire.
5. Verifying the candidate’s background and previous experience is tricky.
6. It can be challenging to make accurate judgments in remote interviews.

What about the problems that are specific to startups?

1. There are no hiring teams, managers don’t have the time to dedicate to hiring, and there is no budget for hiring-related activities.
2. Startups don’t have brand recognition and therefore attract low-quality talent.
3. Startups don’t have a proper process.
4. Talented but risk-averse candidates don’t want to apply to new companies.
5. Startups can’t afford high pay and benefits.
6. Young entrepreneurs and managers don’t have hiring experience from earlier and are learning on the go.

As a startup founder, you may have felt some (or all) of these issues. In addition to these, you may have problems that are specific to you. 

One of the problems that I have seen very often in startups is that hiring requirements are always “immediate.” Because of this, startups can’t keep jobs open for a month or two. Yet, a broader time window would have allowed for a wider pool of applicants. 

Clean-ish Slate

Unlike established companies, startups have a clean slate. They can set up a clean hiring process from day 1. If founders do the right thing, the first 10-20 hires can be rock stars.

Personal story: My first ever hire as a startup founder, back in 2009, didn’t show up for work. I felt hurt but learnt. In 2021, when Amrit and I started CoreVoice, I ensured the process was in place from day 1. Each hire was qualified, vetted, skill-checked and ref-checked. A set of excellent early employees gave us the confidence to grow our company without worrying about whether our employees could deliver or will we fail.

For startups that have been hiring for a while and feel the need for improvement: identifying problems is a crucial first step. In our consulting practice, we audit existing hiring processes before jumping to conclusions on what to add or improve.

An interesting case study here is our work with Chargebee, in 2018. I was leading the talent branding exercise for this project. The brief for the project was that “The TOFU (top-of-funnel) quality and funnel conversion is low and has to be improved.” 

During the audit, we uncovered five key data points:

1. Applicants who met the founders early in the process had a higher conversion rate.
2. Engineering applicants were mostly from IT services backgrounds (and not product).
3. The solutions team wanted engineers, but they were getting resumes from customer support executives.
4. There were too few women applicants.
5. Talent from other cities (Bangalore, Pune) wasn’t applying to Chargebee because it’s Chennai based, and they didn’t see it as a favourable destination.

Since we had identified very specific problems, we could create precise solutions. More details on these problems and our solutions are shared here.

The 5-step process

We recommend a 5-step process to improve your hiring process:

1. Create better roles and JDs.
2. Publicise the positions and attract candidates.
3. Filter applicants via a pre-interview test.
4. Set up a process from the first call to the final interview, and follow it.
5. Closing: make compelling offers + follow up till joining.

In addition, CoreVoice believes in the power of a talent brand that can position you positively in the candidate’s mind. 

In the following three articles, we will go in-depth on these topics. Read part 2 here.